The Slow Disintegration of Venezuela

BY PETER MILLS

A demonstrator throws a tear gas canister back at the police during a rally against Venezuelan President Nicolas Maduro, in Caracas on April 19. (Juan Barreto / AFP – Getty Images)

A demonstrator throws a tear gas canister back at the police during a rally against Venezuelan President Nicolas Maduro, in Caracas on April 19. (Juan Barreto / AFP – Getty Images)

Though protests have occurred in Venezuela on and off since 2014 in response to its worsening economic situation and increasing rates of violence, these past few weeks have seen the opposition movement mobilize unprecedented levels of support. On April 19, protestors against the Venezuelan government launched what they called “The Mother of all Protests,” during which hundreds of thousands flooded the streets of the capital to protest the dire crisis within Venezuela. The Venezuelan President Nicolas Maduro, from the United Socialist Party of Venezuela, PSUV, and a protege of the former President Hugo Chavez, has responded with repression. This has seen the deployment of hundreds of police and national guard, resulting in several deaths and hundreds of arrests.

This is only the latest in the growing crisis that has engulfed Venezuela since the 2013 election that saw Maduro elected – an election that Henrique Capriles, a prominent leader of the opposition, claimed was riddled with fraud. In 2014, Leopoldo Lopez, another major opposition leader, was arrested and is still being held on charges of plotting violence at protest rallies. By 2015, the opposition had won elections and taken control of the National Assembly, Venezuela’s unicameral legislative body. Since then, the courts system has slowly reduced the National Assembly’s power, stripping it of the power to review the budget, amongst others. In response, the National Assembly launched an effort to recall Maduro but was blocked by electoral courts. Had this recall effort gone through, there would have been a new election for the presidency that the opposition likely would have won. Finally, on March 29, 2017, Maduro seized power from the National Assembly and granted the Supreme Court legislative powers. Given that the Supreme Court, and the Venezuelan court system in general, is stacked with Maduro loyalists, this was a clear move to undercut opposition efforts to check Maduro’s regime. While Maduro was forced to rollback this measure a few weeks later, this clearly shows that he is not above trampling the rule of law to suppress the democratic opposition to his rule. In response, both the Organization of American States (OAS) and the United States condemned the move and regarded it as a clear step to marking Venezuela’s departure from democracy.

Underlying all of this, and perhaps the primary source of the crisis, is the slow unfolding economic collapse of Venezuela. Under Hugo Chavez, the president of Venezuela from 1999 to 2013, the country pursued socialist policies that reduced severe poverty and economic inequality within the country. However, these policies relied on unusually high oil prices to pay for them and involved nationalizing many industries and major companies within the country. In an attempt to increase the standard of living for Venezuela’s poorest citizens, Hugo Chavez enacted price controls and set low prices on food staples and basic consumer goods. However, these prices were often below the cost of production, which resulted in shortages of basic consumer goods and food staples such as toilet paper, coffee and meat.  Fortunately for Venezuela, oil prices were incredibly high during these years. As a result, Venezuela could easily afford to import the goods that it needed to sustain itself. Still, this over-dependence on oil produced a result similar to Dutch Disease, where the export of natural resources drives up a currency’s value, thus undercutting manufacturing competitiveness. In the case of Venezuela, the flood of dollars into the country combined with Hugo Chavez’s policies, made importing goods cheaper than producing them domestically which further hurt Venezuelan businesses.

By 2014, oil prices began to fall and Venezuela’s fortunes fell with it. Without high oil prices, the government lacked the funds necessary to pay for all of these imports, and since the country’s economic base had been nationalized and neglected necessary investment, it could no longer fill the domestic demand. The result has been a shortage of everything from food to toilet paper to other basic consumer goods.

As the government tried to print money to cover its increasing debts, inflation rose dramatically. Estimates on the rate of inflation range from 400 percent to over 700 percent, but given government currency controls, which, like other government attempts at control, have only grown with the black market, nobody really knows. Unemployment is estimated to be approaching 20 percent and debt levels are rising while the government lacks any means to repay them.

With Venezuela struggling to afford the food imports it needs to feed its people, there is a possibility that the military could turn against Maduro and force him to accept the power of Venezuela’s remaining democratic institutions. Unfortunately, this scenario is unlikely because Maduro has charged the military with control of distributing food. Because the country imports almost all of its food, giving the military control over food has given a huge amount of power to the military and ensured that they remain well fed. In addition, because of spiraling corruption and a growing black market, generals within the military have been able to acquire enormous sums of money as a result of their control over food imports. One retired general, Cliver Alcala, even went so far as to remark, “Lately, food is a better business than drugs.”

Maduro’s government has also made use of “collectivos,” far-left socialist groups who are adamant supporters of Maduro. Initially, they functioned as community groups, helping support Hugo Chavez’s PSUV through marches and running small community services. But over the past few years, these collectivos have been armed with tacit government support and have morphed into paramilitary groups who act with impunity. Since then, these collectivos have resisted government efforts at controlling them, even clashing with Venezuelan soldiers and controlling the local drug trade. Still, some support these collectivos, as they impose a sort of order and security that is attractive in the face of Venezuela’s sky-high homicide rate of more than 90 murders per 100,000. These militias are a sign that while control of Venezuela is slowly slipping away from Maduro, he is unlikely to be removed by force. Given their loyalty to socialist ideas, the collectivos will likely support the present socialist government to the end.

Another factor that remains underreported but just as important is Cuba’s influence within Venezuela. While attention has often focused on the medical workers that Cuba sends to rural areas of Venezuela in return for cheap oil, Cuba’s influence in the country extends far beyond simply doctors and health workers.  In 2007 there were at least 30,000 Cuban officials, advisors, health workers, and military attaches in Venezuela. Operating across the Venezuelan bureaucracy, military, police, and intelligence services, Cuban officials exert a growing influence on Venezuela. A legacy of Hugo Chavez, who admired Cuba and worked to build close relations with them, Cuba now receives somewhere between 40,000 and 60,000 barrels of oil per day from Venezuela. These figures are a decrease from the 100,000 barrels of oil per day that Cuba used to receive from Venezuela in 2000. This oil, received at subsidized prices, was crucial to propping up Cuba’s economic system and preventing further economic stagnation after the fall of the Soviet Union. In return for oil, Cuba’s advisors have worked to prevent a potential coup in Venezuela, like the one that almost occurred in 2002. They have succeeded in this regard by infiltrating and assuming control of a wide array of Venezuelan government decision-making. Even Venezuelan military cooperation plans with other Latin American countries are subject to veto by Cuban officials. For Cuba, maintaining such control is indispensable to its own economic survival and it is expected to do everything in its power to ensure that oil continues to flow from Venezuela to Cuba.

While the United States has targeted sanctions against certain individuals, such as Venezuelan Vice President Tareck Aissami for alleged involvement in drug trafficking, it has taken no other significant action against Venezuela. One problem is that a large portion of Maduro’s rhetoric and propaganda rests upon blaming his economic difficulties on American imperialism, and thus any U.S. attempts to impose sanctions or to publicly critique Venezuela merely plays into Maduro’s hands. Instead, the United States has worked with other regional Latin American organizations to secure the release of political prisoners and encourage support for a return towards more democratic rule in Venezuela.

So far this approach has yielded fruit, as Maduro has been widely condemned for his anti-democratic actions, and many Latin American states and international organizations, such as the OAS, are working together to try and push Venezuela toward holding elections and moving back toward democracy. While Donald Trump has said little about Venezuela, current Secretary of State Rex Tillerson has largely continued previous U.S. policy of encouraging regional cooperation to deal with the situation.

While the influx of refugees from Venezuela has been manageable – at least some 30,000 have fled into neighboring Brazil’s Roraima state – these numbers will likely increase. Due to border conflicts with Colombia, at least 16,000 Colombians were expelled from Venezuela and the border was temporarily closed. With the recent reopening of the border, thousands more Venezuelans have crossed into Colombia to find food and buy necessary medicines. However, as increasing numbers of people flee Venezuela’s worsening situation, this may grow into a more serious refugee crisis that will require more concerted efforts to address the rapidly deteriorating situation.

At the moment there are a variety of endgames for the current crisis in Venezuela, almost none of which are good. Maduro could continue to pursue border conflicts with his neighbors, such as Colombia, and the ongoing territorial dispute over Guyana Essequibo. In regards to Guyana, Maduro has previously tried to declare a maritime defense zone which included Guyana’s territorial waters and conducted a buildup of troops along the border with Guyana. These actions led to both countries withdrawing their ambassadors. Although tensions have since cooled and diplomatic relations have been restored, the dispute remains. Given the rich oil and natural resource deposits in Guyana Essequibo and Guyana’s small population, it is possible that Maduro could pursue a military confrontation in an attempt to unite the population behind him and seize Guyana Essequibo’s natural resources to bolster Venezuela’s economy. Such a confrontation would draw condemnation from across Latin America and could draw in American military involvement. As a result, success is unlikely but given Maduro’s increasing desperation, it remains a possibility.

On the other hand, Maduro could also be removed in a coup, which would likely see him replaced with a leader from the PSUV who would likely continue these same policies. The end result would be a socialist dictatorship culminating in poverty and repression. Even if Maduro was removed and a more democratically inclined leader were brought to power, they would face both the power of the collectivos and Cuban agents who would be violently opposed to any meaningful reform. So far, the one thing preventing a full-on civil war is that all of the major armed factions in Venezuela – the collectivos, the police, and the military – are on the side of the government. However, with a diminishing pool of resources and an increasing number of protesters being killed in the streets, this situation is unlikely to last. If Venezuela lurches into a full-blown socialist dictatorship, then the opposition will gradually become radicalized as the last remaining hope of democratic change fades. This would likely result in the opposition arming itself in response. Regardless of the scenarios pursued, Venezuela’s near-term future is likely to be marked by increasing violence and poverty. The only question is what sort of country will emerge from this maelstrom over the next decade.

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