Perils Of Political Risk Forecasts
Last week, I posted a roundup of the better articles on Venezuela's meltdown on Reductio Ad Absurdum ("Meltdown In Venezuela"). Reynolds also posted a piece that turned out to be on the fantastic side.
But that's the problem of trying to predict international politics. In my professional opinion, conditions are ripe for a significant meltdown in Venezuela, as Chavez has mucked up every aspect of his nation, from botching the new petroleum law to hanging out with all the wrong people (Castro and Saddam), to alienating key military leaders, to screwing up the currency. Up to now, he has remained relatively popular, but when that support begins to waver -- as it has lately -- that's a sign of trouble.
All that said, it doesn't mean that Chavez is likely to be thrown out of power anytime soon, either by military or popular revolt. The conditions are ripe for it, yes. But that doesn't mean the revolution is hours away. And one major obstacle could very well be the military: it's not clear that the military wants the headache of fixing the messes Chavez has created. It may well be that Chavez will have to be defeated at the ballot box (and will have to step down if it does happen -- neither proposition being a certainty) for that nation to improve.
That's one of the problems of political risk forecasting. It's not all that hard for trained analysts to assess the possibility of certain scenarios -- a risk capacity, if you will. But nailing the likelihood, or probability, is much tougher. Of course, given their affinity for "decision-tree analysis" that's what energy firms tend to want. And who can blame them? It's just not easily done. :)
[Posted at 13:55 CST on 02/17/02] [Link]
