Venezuela 2006 ... three scenarios

www.vheadline.com Posted: Wednesday, March 05, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: No one can predict the future, although many try. The problem with trying is that the risks and costs of being wrong are too high.

In Corporate Strategic Planning, foretelling the future has been replaced ... decades ago ... by the drawing of multiple scenarios, and the analysis of the impact that each scenario can have on our company, family or country, as the case may be.

• In this manner we can prepare ourselves to minimize the negative impact of an unfriendly scenario or maximize the benefits of a friendly one.

Planning our strategies for multiple futures has the additional advantage of being able to choose the preferred one and try to "make it happen."

This type of planning is very rational, but still largely limited to private business in developing countries ... national planning in these countries still tends to be highly deterministic and based on political dogma, more than on a more pragmatic analysis of possible futures.

These governments tend to assume that their "favorite" scenario is the only one worth considering, so that their planning becomes just a linear prediction.

Trying to anticipate where Venezuela will be in a few year's time requires drawing scenarios based on economic, political and social assumptions.

Such an exercise is characterized by uncertainty, although it is possible to assign probabilities to every assumption. In doing this we can be greatly helped by a cautious extrapolation of past trends.

Some of the key assumptions in the drawing of three basic Venezuelan scenarios include:

1. Political Environment, % Probability A. Consolidation of the Revolution B. Early elections, change of Government C. Open political violence

2. Economic Environment A. Low private investment, high unemployment, low government investment; B Increasing private investment, rising employment more capital expenditure by government C. Economic paralysis

3. Social Environment. A. Continued class struggle, great social unrest B. Diminishing social tensions, reconciliation C. Civil War.

Obviously the exercise calls for objective evaluation of probabilities rather than assigning maximum probabilities to our preferred scenario.

Although I clearly prefer scenario 1B, I can only assign it at this time equal probabilities to that of 1A ... and only a little more to 1C ... something along the lines of 35%, 35% and 30% respectively.

This is not what I would prefer since the "negative scenarios" combine for 65% of probability.

Whatever the political scenario becoming real, it will very strongly influence the economic and social scenarios.

The consolidation of the "revolution" would most probably lead, due to its ideological nature, to less private investment, higher capital flight, more unemployment, more State control ... more than good or bad this is factual.

Of course many followers of the current Venezuelan government will be most reluctant to accept that the "revolution" can only bring more poverty and increasing social and economic disarray.  They will be against accepting statistics to this effect.

• This is why I would recommend that international organizations such as the UN, the IMF, the IDB and the OAS provide most of these statistics.

I think it would be most advisable that the "Group of Friends" promotes a poll, supervised internationally, to measure the "mood" of the country ... today we have the government "truth" and the opposition "truth" but not the "truth."

So, where will Venezuela be in 2006?. Nobody knows...

But, every one of us can draw his/her own scenarios...

Many years ago, a bright student who wanted to make his old teacher look foolish, hid a small bird in his hands, behind his back. He asked his teacher: "Master, Is the bird I have in my hands dead or alive?" If he says dead, I will let it fly. If he says alive, I will strangle it...

The old teacher looked at him evenly and replied: "It will be as you wish..."

So it will be with Venezuela 2006.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve