All posts by John C. Hulsman

Corbyn’s beloved Venezuela is sinking further into the socialist abyss

The definition of a fanatic is someone who doesn’t let the facts get in the way of their theories. By this standard, hapless, gormless Jeremy Corbyn is truly (if serenely) living in another galaxy.

 Heroes are important and Corbyn is crystal clear that Hugo Chavez and his charismatic, populist, socialist Bolivarian movement—long in charge of resource rich Venezuela–is a model he is just itching to emulate. Let us take him at his word and look at the prototype of the socialist paradise Corbyn dreams of.

 With any sort of remotely competent leadership, Venezuela ought to be one of the wealthiest countries in the world, as it possesses the planet’s largest known oil reserves. So economic illiterates Chavez and his even more clueless successor as President Nicolas Maduro have form, as wrecking such a paradise has taken real talent. When Chavez and his Bolivarian revolution took power in 1998, Venezuela was one of the richest countries in Latin America; now it is one of the poorest.

 What does this mean practically? Presently there are shortages of medicine and food staples, a direct result of government policies. The inflation rate in 2016 has been estimated a stratospheric 800%, with output falling by a precipitous 18.6% last year, after a mere 180% rate of inflation and 5.7 percent contraction in 2015. Simply put, due to economic negligence, the place is falling apart at the seams.

 Under its socialist champions and despite the incredible bounty of its oil reserves, Venezuela is desperately, irredeemably poor, and there is no sight whatever of even the smallest effort on the part of the gormless Maduro government to even attempt to right the ship, as to do so would be to abandon the socialist snake oil that they and Corbyn so enjoy peddling.

 Venezuela’s problem is structural, and simply isn’t going away. With the global price of energy halving (and with the American shale revolution now functioning as a permanent ceiling on global oil prices), the latest socialist fantasy is fast approaching its sell-by date.

 It is the easiest political risk call in the world to note (as almost everyone has) that the Bolivarian revolution is on its last legs. But tragically, it is unlikely the fetid, discredited regime will go without a fight.

 Maduro is Chavez without the charisma, meaning he is nothing. With his popularity rating plummeting to near Hollande-like levels of 24% in February 2017, the thuggish President has done about everything he can to change the subject from his obvious and glaring incompetence.

 Maduro has blamed the US (somehow its Washington’s fault as it would surely be for Corbyn) for his self-inflicted wounds. He charges the opposition are fascists and in the pocket of Donald Trump, rather than being a disparate, desperate group of Venezuelans trying to stave off economic disaster, and save what’s left of their country. Having lost December 2015 parliamentary elections to his foes, Maduro, rather than change course and tack towards sanity, has set about organising a takeover of the Venezuelan political system.

 He cajoled the pro-government Supreme Court to recently announce its assumption of legislative powers, in lieu of the opposition-controlled congress. Having extra-legally quashed the opposition’s effort to recall him (which given Maduro’s great unpopularity was sure to have succeeded), the Venezuelan President is not intent on re-writing the Constitution presumably to see that his political opponents, are never, ever in a position to threaten him again.

 Predictably, the opposition are in the streets this spring, leading ever larger demonstrations that have already resulted in the deaths of at least 36 people. Venezuela is a hair’s breath from revolution.

 Maduro will talk about anything, anything other than the undeniable economic mess he and his mentor Chavez have driven his country into. But in the end, the laws of political risk analysis—as is true for the laws of physics—cannot be indefinitely ignored. The disastrous socialist Bolivarian revolution that the Labour leader so admires is not long for the earth. Thank God, as the poverty-stricken people of Maduro’s country deserve far better.

 It is my strong bet that the people of Britain do not need this political risk lesson as to why a vote for Corbyn is a vote for economic suicide (beyond the Shadow Home Secretary’s disastrous inability to do simple maths).

 However, alternate realties and alternate paths not taken are an important comparison metric voters can use to gauge what taking a chance on a radical candidate would look like.

 In the case of Corbyn, one has only to look at the death throes of the economically-challenged Maduro regime to get a sense of what his government would deliver. To look, and then to shudder.

 Published in City AM London, May 9, 2017.



Apres Macron le deluge: This is the European elites’ last chance to avert disaster

You have to hand it to Louis XV of France. He may have been a mediocrity, but at least as a political risk analyst he knew the price for continual policy failure. A lowlight of his long, stagnant reign (1715-1774) was the Battle of Rossbach in 1757, where Frederick the Great of Prussia rang strategic rings around him.

Louis, upon observing the defeat of the joint Franco-Hapsburg forces, immortally replied, ‘Apres moi, le deluge,’ after me comes the flood. And in his political risk analysis, the hapless monarch was surely right; his grandson and heir, Louis XVI, was to lose his crown and his head in the French Revolution, just a generation on from Louis’s first-rate prediction.

And that is just where the European elite now finds itself, though critically unlike the prescient Louis they think they have seen off the menace to their political survival. Yet in reality, the populist flood waters are rising though the gormless commentariat is bound to get this wrong too.

I can already see the end of 2017 headlines; indeed, the false narrative is already building steam. ‘With the defeat of populists in the Netherlands, France and Germany, wise enlightened Europe (unlike its Anglo-Saxon Neanderthal cousins) has combatted populism head-on, proving itself more stable, wiser, and far more politically mature than the rest of the West. By virtue of its inherent resistance to extremism, Europe has yet again been underrated.’

I almost don’t know where to begin with this pathetic wish-fulfilment masquerading as analysis, except to say these are the very same people who over the past year were wrong about the Dutch referendum on Ukraine, wrong about Brexit, wrong about Trump, wrong about the Columbian referendum on a peace deal with the Farc rebels, and wrong about the Italian referendum. Surely at some point, their doleful analytical record should make the rest of us just a little bit leery of their grand pronouncements?

The French presidential vote is particularly instructive. Yes, as I have long said, Emmanuel Macron will be elected to the Elysee palace, and by a decisive margin. And in doing so, the odds are he will become Louis XV, the last member of a rotting elite to haplessly fail to grapple with the revolutionary forces that are swirling all around him.

Far from saving France and the EU (as much of the breathless left would have us believe), there is absolutely no empirical evidence that Macron can reform a reactionary country which would like it much better if globalisation had simply never happened.

For the most worrying thing about French politics is that presently it is only the far-right, xenophobic Front National (FN) and its champion, Marine Le Pen, who seem to understand political risk analysis.

Here is their calculation. Le Pen will get 35% plus of the vote in this Sunday’s second round of the presidential vote, double the support her father received in the second round of the 2002 presidential election. By this real-world metric, support for the FN has doubled in under a generation, as the flood waters rise to the chins of the highly gormless French elite. As such, Macron as Louis XV, is the last, best, chance for the current political order in France to save itself.

But Macron has no political party behind him. Indeed, a salient point of the 2016 election has been that, for the first time in the history of the French Fifth Republic, the two mainstream parties of the left and the right—the Socialists and the Republicans—do not have candidates in the final round of the presidential contest. The elite is hallowed out and discredited. June’s two-stage parliamentary elections will not give Macron’s En Marche movement (created just a year ago) a majority in parliament.

As such, Macron will have to (in the quite short span of five years) fundamentally reform heretofore unreformable French society, and do so without any sort of parliamentary majority. Add in the tragic reality that France will probably endure another major terrorist attack or so per year over the next five years, and the far more likely political risk outcome is that, by the end of his term, Macron will have not significantly lifted France’s economic growth numbers, or made the French feel more safe.

That is what Le Pen and the FN are betting on, and frankly, it seems the most likely outcome. She has always been playing for the next French election, not this one. Macron may surprise, he may be the reincarnation of FDR and shrewdly transform France politically and economically. But the far more likely outcome is that he will fail.

In either case, one thing is for certain. Rather than signalling Europe’s decisive victory over populism, Macron represents the continent’s last desperate gasp to avoid being Louis XVI.

Published in City AM London, May 2, 2017.