fbpx Understanding the Venezuelan Crisis with Ricardo Hausmann | Harvard Kennedy School

Once one of the wealthiest nations in Latin America, Venezuela is undergoing the biggest economic collapse this hemisphere has ever seen accompanied by rampant inflation, degradation of infrastructure, and a growing number of refugees. How should Venezuelans respond to this crisis? Listen to this Wiener Conference Call with Ricardo Hausmann, director of HKS’s Growth Lab, former minister of planning in Venezuela, and former member of the Board of the Central Bank of Venezuela, who shares his thoughts on the crisis.

Wiener Conference Calls recognize Malcolm Wiener’s role in proposing and supporting this series as well as the Wiener Center for Social Policy at Harvard Kennedy School.


Mari Megias: 

Good day everyone. I am Mari Megias in the Office of Alumni Relations and Resource Development at Harvard Kennedy School. I'm delighted to welcome you to this Wiener Conference Call. Today we are joined by Professor Ricardo Hausmann, who is the director of the Growth Lab at Harvard’s Center for International Development. He is also the Rafik Hariri Professor of the Practice of International Political Economy at Harvard Kennedy School. Formerly, the Director for the Kennedy School Center for International Development, he also previously served as a First Chief Economist of the Inter-American Development Bank, as Minister of Planning of Venezuela, and as a member of the Board of the Central Bank of Venezuela. He also served as Chair of the IMF World Bank Committee. His research interests include issues of growth, macroeconomics stability, international finance, and the social dimensions of development. We're so fortunate that he has chosen to share his expertise today with the Kennedy School's alumni and friends. Ricardo.

Ricardo Haussmann:

Thank you. Thank you very much and thanks for this opportunity to speak about Venezuela and not only a Venezuelan, a proud Venezuelan, but in the Growth Lab, among other countries that we work on. We have a big program on Venezuela since end of 2015. So, we monitor the Venezuelan economy quite closely and we, that program is called “A Morning After Plan for Venezuela,” so we have been working on a strategy to help Venezuela recover after a political transition is secured.

Let me start by saying that the catastrophe of Venezuela is really inexplicable proportions. To put things into context, it's about twice as deep as the U.S. Great Depression and longer than the U.S. Great Depression. We're now into year five of the recession. It's two times bigger than the Spanish Civil War. It's bigger than any collapse after the end of the Soviet Union. It's bigger than the collapse in Germany, either after the first or the second World War. It's more than three times bigger than the largest recession South America has ever seen. It has had a hyperinflation that the world has seen in very, very few occasions with the Weimar Republic in Germany right after the end of the second World War. In Zimbabwe, it has the biggest out migration crisis this hemisphere has ever seen. It's competing with Syria in terms of generation of refugees where up to five million people have left the country in the last few years. So, it's really daunting. It's really daunting. The health conditions are disastrous. Electrical supply commissions are disastrous, water and so on. The transport system has collapsed. It's really a collapse of inordinate proportions.

So, you might want to ask yourself, "How did you get there? How did the country have such bad luck?" The truth of the matter is that this is not the consequence of bad luck. This is in spite of incredible good luck because, between 2004 and 2014, the country benefited from the largest oil boom in history. The largest and longest oil boom in history. It should have been able to do very well and prepare itself for eventual decline in oil prices. But, what happened is that Chavez used the oil windfall to essentially accelerate his vision. You can choose what you want to call it. It's sort of a totalitarian vision in which the state controls everything. Then rights are taken away from people.

He started on expropriated bills. He expropriated oil companies. For example, Conoco, Exxon, and a bunch of others. He expropriated oil service companies. He expropriated over 10 million acres of agricultural land, cement companies, steel companies, seven electricity distribution companies, ferry ships, supermarkets, dairy plants, coffee processing plants, detergents, banks, telecoms. In addition to a part of the economy he didn't expropriate, he imposed exchange controls, price controls, import controls. Even controls on the movement of goods, controls on the firing of workers, etc.

So, he essentially destroyed the invisible hand of the market. That meant that the outer market rebalancing mechanisms that when something is in short supply, prices go up, they become more profitable, so somebody decides to supply them. That mechanism was broken. Instead, they assigned to a Minister of Defense the responsibility of assuring supplies. They militarized many, many value chains and essentially destroyed the invisible hand of the market. As they were doing that in the middle of the boom, agricultural and manufacturing production collapsed. They did not care too much because higher prices and the capacity to borrow meant that they could import the things they were no longer producing. They used the boom to multiply by a factor of six, the external public debt, which went from something like 25 billion dollars to something like 150 billion dollars between 2004 and 2012.

Even before the oil prices fell in 2014, by the end of 2013 the economy already started a recession because they sort of lost access to borrowing. In 2012, the government spent, the price of oil was at 200 when it was only at 100. By 2013, they could not spend as if the price of was at 200. By 2014, the price of oil went from 100 to 30.

That meant that they could no longer support the level of imports that they were having in order to compensate for the collapse in domestic production. Imports went from something like $85 billion in 2012 to an estimate of $7 billion this year. They have fallen by over 90%. With no imports you have no raw materials, no intermediate inputs, no spare parts, so production collapses. Output collapses. With $7 billion in imports, you don't import enough to import the medicines or the calories or the proteins that people need to live. You don't import the spare parts and equipment necessary to replace the depreciation in capital. We have, in theory, in small capacity of 35 gigawatts of energy, but we seem to be unable to produce 12. That's what's behind the electricity shortage and so on.

In 2018, Maduro had to have elections, but he decided to rig those elections by calling them with six weeks of notice instead of the required constitution for six months of notice and by outlawing all of the major political parties and the major candidates from participating in that election. So the world did not recognize that election. So by the moment that his first term ended, the world decided not to recognize him as a legitimate president and to recognize, instead, the president of the National Assembly as an interim president. In the process, very similar to what's happening right now in Bolivia.

President Guaidó was recognized as president on January 23rd of this year, by now something like 59 countries. There was an enormous amount of enthusiasm at the time in January, February, March, and the perception that change was imminent. Change hasn't happened. In part because the Venezuelan armed forces have not behaved like the Bolivian armed forces. The Bolivian armed forces said essentially to Evo Morales, “You tried to steal an election. You're no longer legitimate, so we will apply the constitution and see who's next in line.” They didn't do that in Venezuela. They haven't done that in Venezuela. They haven't done that in Venezuela in spite of very severe personal sanctions on much of the leadership. Right now the personal sanctions have been extended to anybody in a senior position in the Chávez government.

President Guaidó was recognized as president on January 23rd of this year, by now something like 59 countries. There was an enormous amount of enthusiasm at the time in January, February, March, and the perception that change was imminent. Change hasn't happened. In part because the Venezuelan armed forces have not behaved like the Bolivian armed forces. The Bolivian armed forces said essentially to Evo Morales, “You tried to steal an election. You're no longer legitimate, so we will apply the constitution and see who's next in line.” They didn't do that in Venezuela. They haven't done that in Venezuela. They haven't done that in Venezuela in spite of very severe personal sanctions on much of the leadership. Right now the personal sanctions have been extended to anybody in a senior position in the Chávez government.

So, right now we're in a period of stasis in which Maduro has difficulty operating internationally. Only China, Russia, Iran, Belarus, Cuba have been helpful to him in some ways. But he's facing very serious opposition from the bulk of the Latin American countries through the Lima Group, by the European Union, Canada, the U.S.. So on that side, he's weak, but on the other side he's in control of the country. He’s in control militarily, he's in control of the country. Not in a very unified way, he has ceded control of regions of the country to different criminal organizations, to the remnants of FARC, the ELN from Colombia, criminal narco trafficking groups, illegal mining and so on. So he's not in a good control of the situation, but he's uncontested from the point of view of control of arms.

There is the perception of some kind of stasis in the political situation but this is a very unstable stasis because the economy keeps on collapsing. The economy collapse has not ended. The economy is still shrinking. The perception is that things are not moving but it may be that, as they say, unsustainable things are typically not sustained and we're in a bit of an unsustainable situation.

There's an important date. This Saturday, November 16th, there is a call for a major mobilization and demonstrations. This is happening under the cloud of what has just occurred in Bolivia. There's the perception that change is possible. If we have been at it for longer than Bolivia then how come it happened there and not to us, etc. So, that's a little bit of context.

We have been working on the plan to help the economy recover. We, as I said before, we started late, 2015. We have been able to present this plan to the political leadership in Venezuela. We organized an important event about 14 months ago to serve with them. We helped them come together with a national plan. We've helped socialize that plan among the international communities, the different governments, different institutions, the IMF, the World Bank, Inter-American Development Bank, the Europeans, the Lima Group and so on. I think that if there was a political position, we would have a set of more or less diagnostics, initiatives, clear ideas, amounts on how to turn the situation around.

Obviously, if we turn the situation around, economic rights and political rights that have been taken away from people have to be returned so that they have the power to help recover the economies so that they are independent people with authority to manage their own lives. That involves the reestablishment of economic rights, the election of a government to free and fair elections, but also it will require to make more foreign exchange available to a country because with $7 billion in imports, the country will just disappear. We need to relax the foreign exchange constraint. We've had very significant understandings with the international community on how much financial assistance will be required and we've worked also very hard on trying to think of parameters of debt restructuring for the legacy debts that right now have the country in quite a bind.

So, that's more or less, where we are at, I think I've taken more than enough time so let me stop there. I hear that there are plenty of questions so I'm looking forward.

Q: What effects will the outside influence such as Cuban and Russian support for the Maduro regime or your stress on military intervention have on how the crisis will be resolved?

Cuba is essentially helping to run the Venezuelan government. Cuba runs the security services. Cuba runs the counterintelligence services. Cuba has been very important in teaching torture techniques and identifying political leaders to persecute. They've been running Venezuelan foreign affairs for quite some time. Cuba is extremely influential. They're not a source of money because actually Venezuela supports the Cuban economy, massively, right now. We're shipping over 100,000 barrels of oil a day to Cuba. In the past, I haven't seen late figures, but in 2012 Venezuelan assistance to Cuba represented 12% of Cuba's GDP. Cuba is a drain on Venezuelan resources, but it's a supplier of very important political and intelligence savvy. They've been at it for a long time.

Russia interestingly has given the Maduro regime quite a lot of political backing. But not money. In fact, Rosneft has been collecting on the loans at a very high speed while the government has defaulted since November 2017 on everybody else. They haven't been a source of money for the government but they are important also, as military support, intelligence support, and probably they're playing the shenanigans through social media that they have played elsewhere.

With regards to the U.S., I would say that nobody takes seriously military actions. It's more bluff, bluster and bluff than right and everybody knows that. What has been important is the set of sanctions that happened in post, because at points in this crisis, the government has been willing to negotiate but the only thing that brings them to the table are the sanctions. There's no other asset. There's no other pressure point. There's nothing that the Maduro regime wants from the Venezuelan opposition that the Venezuelan opposition can creatively give them. But the only thing that hurts are the sanctions and especially the personal sanctions because they're essentially billions of dollars that have been seized of drop in money globally. They do stick their ability to do things in the world. I guess, I think, that more or less is the answer.

Q: Is there anything that could have been done by foreign countries that could have helped avoid getting to this situation?

That's an excellent question. We should ask ourselves the question, "When?" Because I must say that the international community has done a hell of a lot over the last year. Maybe a little bit longer. But it took a long, long time for the international community to get its act together. I think the OAS leadership on the recent module has been extremely forceful of calling out the violations of the democratic right and the democratic charter. The previous Secretary General of the OAS was essentially condoning gross violations of democratic principles in the country. I think the Lima Group has been getting more forceful but Latin America does not have a sanctions regime the way the U.S. has a sanctions regime, so they have actually sanctioned or seized very few people or assets. They don't really have the regime.

There has been a little bit of a lack of, the European Union has been a weak entity. They have to act unanimously, and it's been difficult for them to act unanimously. Right now there are billions of dollars of ill-gotten money and many of the families of the regime living in Europe and enjoying their resources without pressure. That has also kind of weakened the whole effort. I think there hasn't been enough effort directed at the criminal nature of many of the actions of the Venezuelan armed forces that are part of this illicit trade in drugs, money laundering, illegal mining, and so on, smuggling, human trafficking.

It has been a lot but a little bit too late. Maybe if the pressure had been put earlier, it might have forced the government to accept electoral results. For example, the international community was extremely important in forcing Maduro to recognize the results of the 2015 legislative elections in which the opposition won a two-thirds majority in the national assembly. But then, Maduro decided to completely ignore the national assembly and rule by decree with no respect to the constitution and the powers of the legislative branch. That was not responded much by the international community until events unfolded last year. So it's a little bit, the problem was allowed to grow for too long. And right now, the actions are strong but the other side has already undone the basis of a free society to the point that the sanctions may not be as effective.

There's one important question that I always get, which is "How come these guys can survive such a recession or all these sanctions and so on?" The answer I typically give is that sanctions, recessions weaken the government. But the recession also weakens the society. What matters is not the absolute power of the government but the relative power of the government, vis-a-vis society. If society is starving and emigrating and fending for itself, it doesn't necessarily have the capacity to organize itself more effectively, vis-a-vis the government. You don't see a swing in the politics in relative powers are not changed. Absolute powers are collapsing, but relative powers don't necessarily change. That may change. We're still working on it to see how we turn the situation around.

Q: I respect and appreciate your insight. But my question/comment to you, sir, is this existential question. As you may know, in DR Congo last year, they had elections, which were profoundly flawed. The individual who won the election was not appointed president due to internal machinations because of power, whatever. My question to you, it's almost as if there's a type of two-tier democracy; that for the West and that for the Africans. This is what I'm suggesting or asking from you and you articulated this extremely ably. Why is it that we who are privileged, I'm a Canadian and America, in terms of the intervention, and you expressed that. Why is it that there is so much what I call lassitude? Because it's the innocents that are suffering profoundly in both Venezuela and Congo. But it's the innocents regardless who are suffering. It's the tragedy that Venezuela, which is so rich in intellectual human resource, blessed with natural resource, in terms of oil, is suffering profound. Why is no one calling what I call the metaphorical epistemic trigger, in terms of recalibration in allowing at least the people to engage in a civil conversation? And I thank you for your insight sir.

Thank you, thank you for your question. I think that, Venezuela was the longest democracy in Latin America after Uruguay and Colombia until Chávez essentially destroyed it. So Venezuela has a long history of democracy and elections and alternations of power and so on. It's very clear what would have happened had the constitution been respected. There would have been an election, probably before the election, there would have been a primary in the opposition. There probably would have been a decisive government elected from a coalition of the opposition parties. There would have been a process. The national assembly there, they've already approved a plan and so on of what they would want to see done. So there would have been a resolution of the political crisis by going back to the  and allowing them to elect a leadership. And that government would have received a significant international assistance to get the situation in a good place.

Now, the current government has decided that for them the revolution comes before the constitution and holding power comes before the welfare of the people. They have decided that they will violate anything that they need to violate in order to assure them holding power. That includes, for example, having paid back to Russia $1.5 billion this year alone, money that they could have used to buy food and medicine and stuff. But they decided that the Russians are going to help them stay in power, they'd rather pay the Russians instead of negotiating a political transition and getting significant amount of resources from the international community. I think that the solution to Venezuela goes through a return to democracy and the adoption of a plan that will need significant international support. But, what's preventing us from getting there is the regime that remains in power in spite of the fact that it's deeply unpopular.

Q: I believe that you're strongly involved in the prospect for debt restructuring for Venezuela. Coming from Argentina, this is a topic that I follow closely. I heard that the complexities of dealing with a Venezuela debt is going to be even much bigger than the Argentina or the Greek case. I wanted to hear your perspective on this.

The government has put out, the Guaidó government has put out four basic principles that it intends to follow in order to restructure the legacy debt. The first principle is that this is going to be a restructuring of all claims, not just formal financial debts, but there are many other claims because in Venezuela, many of the companies that Venezuela expropriated have gone, some of them have gone to the international court to settle the investment disputes, others are suing outside of that. There's a lot of claims besides financial debts. There's commercial debts. There are other, it's a set of claims and obligations that go beyond traditional bonds and loans.

The second principle is that we’ll try to give equal treatment to the different creditors. The third principle is that we’ll have to reconcile this debt because not all of that debt is legal, in some cases, the government paid $100 of obligations by giving $400 of bonds that were traded at twenty-five cents. Do you recognize $100 or do you recognize $400? So, debt will have be reconciled.

The final principle is that we're going to need a very large financial package from the IMF. The IMF will have to come and say, "What level of debt is sustainable? What level of new debt the international community will have to pitch in, in order to start the recovery? How much of the legacy debt will be, will have to be pared down or diminished in order to make the overall program, at the end of the program financially sustainable?" Everybody understands that in an economy right now, the economy used to be a $300 billion economy. It's now a $70 billion economy. A $70 billion economy with a $150 billion in foreign debt. That would make it the largest foreign debt in the world by a mile. If you take it as years of exports, the foreign debt is probably now something like seven years of exports. It's by far the biggest in the world. A significant haircut will have to be applied to these debts in order for the country to have the wherewithal to recover. What you don't want is to fix all the policies that leave a country that’s so over indebted that no investment comes in because everybody knows that any revenues will have to be taxed just to pay the old debt and it won't be any incentives for new investments to happen.

Those are the principles and that's the dire situation. A lot of people invested in a regime that took the economy to hell and those investments didn't pan out the way anybody expected. Some people were unwise to borrow but other people were also very unwise to lend. We will have to accept that reality.

Q: Excellent analysis. Clearest I have heard. This kind of a situation in Venezuela much happens on the surface as you've been describing, but a great deal happens also on the global intelligence level. You've mentioned Cuba and Russia. But we also know that China has been very involved in an economic way in South America and in the last two years has leveraged that economic power into more geopolitical power. Could you describe a little bit the Chinese perspective on Venezuela?

Excellent question. Thank you very much. Venezuela is for China their biggest black eye. China has a few black eyes in international finance. They went through a lending boom at a point in their process of managing their economy in the last few years, especially around the financial crisis after 2008/9. They tried to encourage their Chinese firms to develop activities in the rest of the world in Africa and Latin America, financed by the Chinese government. So there was a Chinese lending boom in many countries and investments that were not very well thought out. A lot of white elephants. We’ve encountered them in Sri Lanka. We've encountered them in Ethiopia. We've encountered them in Ecuador. But those are all relatively modest and relatively honest by Venezuelan standards because China lent Venezuela over $60 billion for a bunch of projects that were announced but don't exist, although all of the money has been dispersed.

Like they did elsewhere, they lent relatively short term money to very long term projects and they have been forced to restructure them in the rest of the world. In the case of Venezuela, that lending actually destroyed the system of budgetary controls and the corruption controls that usually characterizes any fiscal regime. So, for example, they lent to one entity, the entity that got the money was outside the budget, so it didn't go through the controller general or it didn't go through budgetary approvals. it was outside the budget, but that entity that received the money was not responsible for paying it back. That was supposed to be paid back by the oil company. The oil company had not borrowed the money, they didn't generate the revenues with which to pay back an increased debt. Essentially, that bankrupted the oil company. The oil company, in order to pay its costs, started to borrow from the Central Bank. That created hyperinflation.

The Chinese, and by the way, the Chinese did all of this in the middle of a boom. They did this when the price of oil was over 100. Instead of helping a country after the price of oil collapse, they were lending in the middle of the boom. Actually, the Chinese have been collecting. Of the $60 billion they lent, something like $ or $20 billion are now owed because the rest they have collected on.

So the Venezuelan experience with the Chinese finance has been quite disastrous and they know it. Now, they also are very disappointed with the corruption and the inefficiencies of the Maduro regime. In fact, they are in a confrontation with the U.S. and I understand that the Venezuelan chapter is also part of the trade war and that they have no incentive to play ball in Venezuela when there are other issues at stake with the U.S. My impression is that the Chinese have been, have not been helpful to the Venezuelan opposition. They have been modestly helpful to the Maduro regime, but they're not enthusiastic supporters.

Q: I lived 15 years in Latin America. I think that the presentation is sobering and I really respect you, Ricardo, for giving us all this information. It occurs to me that the root of the solution, besides the Venezuelan people themselves, is really, has to route through powerful countries in the region stepping up and really speaking to Maduro and really saying, “You need to come to the table. There needs to be a proper election process. There needs to be some transition.” I know there were efforts by Mexico and Uruguay about six months ago to have that meeting. I thought, "Wow. Perfect. That's exactly who should be doing this." I think when Guaidó pulled out, or something happened to mess that up. The question is, can that kind of an effort be put back in place? Can the OAS play a big role in this and as a backup maybe the United Nations, has the United Nations done a special session on Venezuela in sort of trying to create pressure from international agencies?

Thank you for your question. I think that the reason why Mexico and Uruguay offered, it was called the Contact Group, was as a way of undermining the alternative approach. The alternative approach was to say Maduro's period is over. There's going to be an interim president who's going to cause the unfair elections, the Chavistas might participate in those elections, but they're not going to get the chance to run those elections while in power because they've already stolen the previous elections. So we need to clean up the electoral system, we need to clean the electoral council, and we need to run free and fair elections without the kind of government interference that have characterized the previous ones.

The pressure was there for Maduro to leave. So, what Uruguay and Mexico did, they were sort of like soul partners, was to say, "No, no, no, let's negotiate something that would leave Maduro in power and maybe while we organize free and fair elections, so that it's not that this is going to be an interim regime that organizes those elections, it's going to be some political agreement with Maduro in power.” I thought that was a nonstarter and that's why it didn't go anywhere. The Europeans initially got excited about it, but then they realized that this was really a road to nowhere.

The problem in Venezuela is not one that can be solved through negotiations in my mind because the way we teach negotiations at the Kennedy School, is we teach the concept of the B.A.T.N.A., the Best Alternative To a Negotiated Agreement. In this case, the idea is that you'll execute your best alternative to that negotiation. The best alternative to that negotiation is for Maduro to stay in power. The alternative is for Maduro to believe that some guarantees will be given to him about his freedom, about his money, about something else but he has no security about those guarantees. He would much rather stay where he is. So there's very little that the opposition can credibly and legitimately give him and there's very little that he would be willing to accept. I don't think that the problem in Venezuela can easily be addressed through some kind of negotiation unless you start by making the present very uncomfortable for them. So, that's why pressure is so important to get this situation resolved. It has to be to a point where either them or the people they need to stay in power believe that it's now too costly and too painful for them to keep on playing ball and that the best alternative is to leave or to accept a regime change. That's, in my mind, what needs to happen. It's not two groups of people that have different interests and some intermediate solution can be found for all of them to live happily ever after. The guys in power understand that they have too much to lose by losing power.

Q: Thank you for the discussion in this. I just wanted to follow up on a point you've used in the opening presentation. You used an interesting word to describe the current situation, stasis, which I usually would understand it as a relative stable equilibrium. What do you see as a catalyst for moving away from this equilibrium and have you seen any historic precedence for such a catalyst? Thank you.

Thank you for your question. The Venezuelan situation has been characterized over the last several years by the massive mobilizations for some period of time that led to the idea that change was imminent, followed by failure and by a situation of political calm that looked like the present. But, those situations of calm tend not to last because they tend to be triggered or provoked by something that rekindles the political mobilization. So there were very large political mobilizations in 2014, the government responded by putting large numbers of people in jail, starting with Leopoldo López. There were massive mobilizations in the year 2017 that was like a 100 days of protests ending in a referendum that was organized by civil society asking for political change. That was, ended inexplicably by some very poor political moves that the Venezuelan opposition did in the end of July/August 2017. That led to stasis again and negotiations that ended nowhere in the Dominican Republic.

The situation turned around at the beginning of this year with the appointment of Guaidó as the interim president and massive mobilizations again. Those had several dates in which things were supposed to change. February 23rd was an important date. May 1st was supposed to be an important date. Now the next important date is November 16th. But, in between those periods of a lot of mobilization and political pressure, in both of these periods in which nothing much seems to happen on the political front. That's the stasis I was characterizing. I don't think it's a very durable stasis. It's not a real equilibrium but it’s sort of like a calm between battles.

In the meantime, the real situation deteriorates, so relative powers are also changing. Maybe in the next occasion, you will find that the capacity to mobilize, either for them to mobilize their goons or the police force or the armed forces. So it might have changed. Our capacity to mobilize people in the street might have changed. The real forces on the ground might have another confrontation, another meeting at the battle front. But in between those periods you observe this respond like this Holy War.

Q: I'm from Bogota talking to you today. We Colombians are very, very sorry of what's happened to our neighbor Venezuela. You already said November 16 is going to be important actually. Please release without some additional forecasting. The situation is getting worse and worse and you said society is weakened. Any estimate when change is going to happen? Are we talking months, years, 2020? The whole [inaudible] period?

Thank you for the question. Let me thank you as a Colombian for all the things you've done for the 1.6 million Venezuelans that have moved to Colombia. This is an enormous human shock to the Colombian economy. I think it's important that we act to make it a positive shock to the economy. It's people willing to work. It's people with skills. It's people with abilities with the willingness to move ahead and it's great that Colombia has been such a good brother in this respect.

I must say that when we started this program on the morning after, the end of 2015, for many moments in these last few years, I thought that change was imminent and that we were not ready. In 2017 we were all hands on board, thinking change is imminent and we need to accelerate, no vacations, no summer. We need to get this job done. We were writing a memorandum of understanding with the IMF on what the program would be like and so on that we needed, we wanted to have ready, imminently. For several times, I mean same thing, early this year, we thought that change was completely imminent. I wouldn't trust me as a predictor of change. I have assumed that change would have happened already several times. I guess my, it's probably spectators are better at predicting the outcome of a game than players. To some extent, we are players. It's not really useful for me to, if we need to both play and predict, I mean a player that predicts that he's going to lose the game is probably not going to play very well. So I'm going to keep on being sort of biased towards optimism but without losing consciousness of the seriousness of the situation.

Q: I'm calling from Minneapolis. I'm wondering if you can comment on the contagion on unrest and protest that seems to be spreading all across Latin America right now? How does it relate to the political and economic situation in Venezuela? Why is this happening now after what seems like there've been decades of pretty relative stability? What are the most significant contributing factors? Thank you.

Well, thank you for that question. That's a deep question. I think, we are a little bit too close to events to have all the information that would be needed. Obviously, there are grievances across Latin America. In addition to that, there was confrontation. The Lima Group started to act against the Venezuelan regime and the forces of the Venezuelan regime. That means Cuba, Nicaragua, Bolivia, etc., probably with Russian help, they wanted to counterbalance that. One mechanism to counterbalance that is to use the political movement that supports them in these other places. I think that right now there's information, there's some pictures coming out today and yesterday of Cuban agents in Bolivia and organizing protests in support of Evo Morales. There have been claims of foreign intervention in the violence in Chile. There's some claims of foreign intervention in trying to get things to happen in Colombia.

On the other hand, the event in Bolivia is a movement in the opposite direction. The same tools were applied. Evo Morales went to an election of a third term. There had been a threat aside, asking people if they wanted to authorize a third term and people said no. Then Evo Morales went to supreme court and the supreme court said it would be a violation of his human rights for him not to run for a third term. So they allowed that election to happen and then he went out and stole the election. OAS documented that. What happened next was that the armed forces said, "In that case, you're out." The police forces in that case, "You're out. We're not going to be shooting at people who are upset because you stole an election."

So, in the case of Bolivia, things turned out the way you might have expected them, they would have turned out in Venezuela had Venezuela still had, sort of like the checks and balances and the political structure that survived in Bolivia. So, I think that there are international actors probably involved and they're exploiting the fractures that happen in society that are as unequal as Latin America societies are.

I wrote my latest op-ed, a column I write monthly op-ed for Project Syndicate. The last one was why I think that, it was about the issue of urban mobility and why urban mobility is such a contentious issue. I think it has to do with the fact that mobility is key for getting access to opportunity and how societies manage urban mobility, the public infrastructure that is needed, the rules and the use of public space and so on, are key to the perception that people have access. These things generate grievances and these grievances give rise to political activities, some legitimate, some exploited by foreign and domestic actors.

Mari Megias: 

Great. Thank you very much. With that we are about at the end of the hour. I'd like to thank Ricardo for sharing his expertise with us today. Thank you to all of our callers on today's Wiener Conference Call.