Venezuela is rapidly becoming the most dramatic political crisis in Latin America since the Cuban revolution. Unlike Cuba, events in Venezuela are being driven by a massive, and totally unnecessary, humanitarian disaster.
Venezuela should be the richest country in Latin America, if not the entire Western Hemisphere because it sits on the largest known oil reserves in the world — enough to make every citizen affluent. Instead, Venezuela in the 1990s, like many oil-producing countries, had a population with a few ultra-rich and a great many poor. But Venezuela was also a functioning democracy and in 1999 a firebrand populist named Hugo Chavez won election as president. Chavez fit the mold of the Latin American political left, championing “socialism” on the Cuban model — including a radical redistribution of the nation’s wealth. Chavez, in fact, instituted programs that improved the circumstances of the poor and won him an impassioned following among them. But Chavez, like so many populist “revolutionaries,” was an autocrat at heart. He was not about to allow mere elections to unseat him. Chavez’s “Bolivarian Revolution” came with nonstop political mobilization against the enemies of that revolution — the rich and the United States. There was more than a little irony in all this because the money that enabled his regime came from oil sales to the United States. [CITGO is the marketing arm for the state oil company]. Moreover, the viability of the oil industry, including investment, exploration, extraction, marketing and transportation, depended on the expertise of managers and technicians drawn from the middle and upper classes, all of whom were suspect as unsympathetic to the revolution.
The result was a classic pattern; ideologically driven populism alienated the very people needed to keep the oil sector and the broader economy healthy. As time passed, the autocracy became increasingly personalized, oppressive and corrupt, including the involvement of senior regime officials in narcotics trafficking and other criminal enterprises. All of this was accompanied by increasingly strident anti-U.S. propaganda that portrayed the revolution as under unrelenting threat from the rapacious Yankee. Chavez died of cancer in 2013, but the character of the regime remained intact under his chosen successor, Nicholas Maduro. In fact, the toxic dynamics of the Chavez period have only intensified, particularly as concerns the economy. For years now, oil output has been declining thanks to rampant mismanagement — producing falling revenues and pervasive shortages of food, medicine and consumer goods. The national currency is effectively worthless with annualized inflation running at 10 million percent.
An increasingly impoverished and desperate middle class has gone into the streets demanding that Maduro step down and hold new elections. Over half a million Venezuelans have taken the desperate last resort of leaving the country — mostly on foot into neighboring Brazil and Colombia. Ominously for the regime, growing numbers of the poor have joined them. Maduro has responded with increasingly brutal suppression with police using live ammunition. It is noteworthy that the demonstrators have not taken up arms but have insisted on a democratic, political solution, i.e. new elections.
So what does all this mean for the United States? If Venezuela were simply a political and economic disaster, the likely response from Washington would be rhetorical/diplomatic pressure on the regime, calls for elections, possible sanctions, and even humanitarian aid. But two developments have changed that equation. First, the broad but poorly organized opposition to Maduro received new life when the leader of the elected parliament, Juan Guaido, declared himself the legitimate, interim president. Suddenly, opponents of the regime had an articulate, attractive leader to rally behind. Very quickly, the United States, along with over 50 other governments, formally recognized Guaido. Second, both China and Russia have become heavily involved in Venezuela in support of Maduro. In China’s case, that involvement has been economic with over $30 billion in loans — based on the assumption that Venezuela’s oil wealth would ensure repayment. There is ample evidence China has come to regret its largesse. Current unpaid Venezuelan debt to China exceeds $20 billion. Russian motives are far more geopolitical; Moscow sees a chance to undercut U.S. influence in the Western Hemisphere. When China held back on further loans, Russia came to Maduro’s rescue — in return for a major equity stake in Citgo and Venezuelan oil and gas fields. Even more significantly, Russia has provided the Venezuelan armed forces with over $4 billion in equipment while conducting joint military exercises over the Caribbean. Meanwhile, Cuban secret police trainers have been helping Maduro keep his populace under control.
Faced with this escalating challenge, the White House has taken an increasingly tough line, recognizing Guaido, demanding Maduro step down and adopting stringent economic sanctions designed to cripple the Caracas regime. The most serious of these involves impounding revenues earned by Citgo in the United States, thereby cutting off the cash flow that Maduro has used to pay off his military, police and assorted thugs. The latest gambit came this past weekend when trucks carrying U.S.-supplied humanitarian aid tried to cross into Venezuela from Colombia and Brazil. Aid workers hoped the Venezuelan army and police would defect rather than stop the aid. It did not happen, though some signs of disaffection within the security forces appeared.
Now what? With the administration insisting that “all options are on the table,” we seem to be facing a choice between: (1) wait and let sanctions bite and/or (2) start operational planning for a military intervention (hopefully) with the joint participation of Colombian, Brazilian and perhaps other Latin American units.