Default risk drives Venezuela institutional crisis

Significance

In a major misstep linked to frantic efforts to raise monies for looming bond payments, on March 29 the Supreme Court (TSJ) temporarily usurped the functions of the opposition-dominated National Assembly. Under intensified international scrutiny, President Nicolas Maduro forced a reversal of the move, but the TSJ actions have exacerbated a fraught and volatile situation.

Impacts

• Critics will redouble efforts to invoke the OAS Democratic Charter and suspend Venezuela from the regional body.
• The issue will divide the OAS for a long period.
• The opposition will be lured back into protests and resist pressure for dialogue with the government at the cost of a stable transition.
• The government will pursue opaque bilateral lending to cover its financing needs.