by Bill O’Grady
On May 10, 2018, Nicolas Maduro was reelected as president of Venezuela. However, there were numerous irregularities during the vote and, as such, the U.S. and the Organization of American States (OAS) refused to view the election as legitimate. Shortly after Maduro was officially inaugurated on January 10, 2019, the National Assembly, which is controlled by Maduro’s opposition, declared Maduro’s election illegitimate and, following the Venezuelan constitution, installed Juan Guaido as the interim head of state until new elections are called. More than 50 nations have acknowledged that Guaido is the legitimate head of state; however, Maduro, supported by China, Nicaragua, Russia, Turkey and Cuba, remains in Miraflores Palace, the official residence of the Venezuelan president.
As a result, since late January, Venezuela has had two leaders. The U.S. has increased sanctions on Venezuela, including the overall economy and on individuals in the Maduro government. However, the impact of sanctions is somewhat limited given the terrible state of the Venezuelan economy. In addition, Venezuela has become something of a proxy conflict between the U.S. and Russia, with both sides allied with other nations. In a sense, Venezuelans have lost some degree of control over their destiny, complicating matters.
In Part I of this report, we will offer a short history of Venezuela to give readers some context to the current situation. In Part II, we will examine the opposition’s attempts to oust Maduro, the problems the opposition faces in removing the current leader and the interests of foreign players. As always, we will conclude with market ramifications.