US concern grows over possible Venezuela meltdown

3:24 pm on 14 May 2016

The US is increasingly concerned about the potential for an economic and political meltdown in Venezuela, spurred by fears of a debt default, growing street protests and deterioration of its vital oil sector, US intelligence officials said.

 as they demand a referendum in Caracas on May 11, 2016.

Venezuelan police officers block the road during a demonstration held by opponents of Venezuela's President Nicolas Maduro. Photo: AFP

In a bleak assessment of Venezuela's worsening crisis, the senior officials said on Friday there was doubt the unpopular leftist President Nicolas Maduro would allow a recall referendum this year, despite opposition-led protests demanding a vote to decide whether he stayed in office.

But the two officials, briefing a small group of reporters in Washington, predicted that Mr Maduro, who heads Latin America's most ardently anti-US government and a major US oil supplier, was not likely to be able to complete his term, which is due to end after elections in late 2018.

They said one "plausible" scenario would be that Mr Maduro's own party or powerful political figures would force him out, and would not rule out the possibility of a military coup.

However, they said there was no evidence of any active plotting or that he had lost support from the country's generals.

Venezuelan President Nicolas Maduro speaking on a TV programme at the presidential palace in Caracas on 10 May 10 2016.

Venezuelan President Nicolas Maduro speaking on a TV programme earlier this week. Photo: AFP

The officials appeared to acknowledge that Washington has little leverage in how the situation unfolds in Venezuela, where any US role draws government accusations of US-aided conspiracies.

Instead, the administration of President Barack Obama wanted "regional" efforts to help keep the country from sliding into chaos.

"You can hear the ice cracking, You know there's a crisis coming.

"Our pressure on this isn't going to resolve this issue," one official said.

Venezuela's Information Ministry did not immediately respond to a request for comment.

Mobs in Venezuela have stolen flour, chicken and even underwear this week as looting increases across the crisis-hit OPEC nation where many basic products have run short, and the US officials said this could spiral into widespread unrest.

Soldiers fired tear gas at stone-throwing protesters on Wednesday (local time) as Venezuela's opposition marched to pressure electoral authorities into allowing a recall referendum against Mr Maduro.

Venezuelan opposition activists clash with the police during a demonstration in San Cristobal, on May 11, 2016.

Venezuelan opposition activists clash with the police during a demonstration in San Cristobal. Photo: AFP

The president has sworn he will not be forced out before his term expires in 2019 and has accused the opposition of seeking a coup against him to destroy the socialist legacy of his predecessor, the late Hugo Chavez.

Washington has had an acrimonious relationship with Caracas for years, especially following US support for a short-lived 2002 coup against Mr Chavez.

The US officials insisted that the United States was not "rooting against" Caracas but just wanted to see the crisis defused.

They expressed concern for a possible spillover to its neighboring countries, especially Colombia, but said most of the instability would be "self-contained" to Venezuela.

Such intelligence assessments help US policymakers decide on how to respond.

There was no immediate comment from the White House. The administration quietly sought last year to improve relations but the imposition of new US sanctions and drug-related indictments stoked fresh tensions.

The officials also cited the risk of a Venezuelan debt default, although Mr Maduro's government has consistently paid its debt on time and has slammed market fears of a default as an international smear campaign.

Weak oil markets and an unraveling socialist economy have fanned concerns that the Venezuelan oil firm PDVSA will be unable to make nearly $US5 billion in bond payments between now and the end of the year.

-Reuters