Venezuela: A Failed State in Latin America?

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By John Feffer, June 8, 2016. 

For a country that depends on oil for 95 percent of its exports, the prolonged drop in the price of crude has been a serious financial blow.

If nothing else, though, Venezuela should be able to use its oil resources to keep the lights on and the factories going. After all, Venezuela has the largest proven oil reserves in the world. It has more than Saudi Arabia. It has more than Africa, Eurasia, and Asia combined. Only Russia and Iran are sitting on more overall energy resources.

But most of Venezuela’s energy is slated for export or is hard to access. Not to worry: Some years ago, the country diversified its electricity supply to rely more on renewables. Hydroelectric power now supplies 60 percent of the country’s energy.



Ordinarily, diversifying away from fossil fuels is a smart move.

But not when there’s a drought, which the country experienced in 2010 and again even more devastatingly this spring. Thanks to a combination of El Nino and global warming, the dams are dry. The result: widespread power outages.

Even the best-managed government would have difficulties coping with these twin problems of oil and water. Venezuela is not blessed with such a government. Nicolas Maduro, who took over from Hugo Chavez in 2013, has not been adroit in his handling of the crisis.

To retain public support, he’s tried to keep consumer prices low and wages flowing by printing money and maintaining government subsidies. As a consequence, the country has suffered hyperinflation, the highest in the world last year. The economy shrank by nearly 6 percent in 2015 and is expected to contract another 8 percent in 2016. The country owes $120 billion, with a $7 billion debt repayment expected this year. Default is a possibility, though the government has gone to great lengths to meet its obligations.

Some Venezuelans are doing well. For instance, black marketeers are making a killing by reselling subsidized goods at higher prices. Political insiders have privileged access to hard currency, which one former government adviser estimates has cost the country $25 billion. Some of the corruption is even uglier. High-level officials — including the former head of the anti-narcotics agency, the former speaker of the national legislature, various military officers, and two nephews of the first lady — have been charged with drug trafficking.

Virtually everyone else in Venezuela is frantic. The lack of food in supermarkets has created long lines and the prospect of widespread food riots. The crime rate has surged. Government services, once the pride of the government of Maduro’s predecessor Hugo Chavez, have practically disappeared, with government offices open only two days a week to save electricity. A huge swath of the population is sinking into poverty as inflation and recession have eliminated the gains made during the Chavez years. The medical system, with shortages of critical drugs, verges on collapse.

As New York Times reporter Nicholas Casey observes, parts of the country now look like a war zone:

And these hospitals, they look like — they look like hell on earth, basically. You’re seeing people on gurneys and on the floor in their own blood. One of the hospitals that we went to, there had been a number of newborn infants who had died the day before when there was also a power outage.

Maduro’s Response

President Maduro has reacted to this economic decline with bluster, nationalism, and his now routine reliance on ruling by decree.

As if soldiers can defeat global warming and economic mismanagement, he recently put together the largest military exercise in his country’s history. His specific recommendations — for instance, that women should forgo blow dryers to save electricity — have attracted the ridicule of none other than late-night TV host John Oliver.

Last December, the political opposition to Maduro, a coalition of not terribly united parties, won the legislative elections. The elections, moreover, were free and fair. All of this seemed to disprove the contention of critics both inside and outside the country that Venezuela had departed from democracy.

Unfortunately, Maduro has gotten around these electoral results in a classic autocratic manner by declaring a state of emergency and then expanding and extending this period until at least the end of 2017. The Supreme Court, which Maduro allies in parliament packed with supporters just before they lost control of the legislature in December, nullified the election results in Amazonas state and prevented the opposition from acquiring a sufficient parliamentary majority with which it could, for instance, remove Supreme Court justices. The court has granted Maduro his emergency powers and prevented the opposition from having much influence at all over the country’s direction.

In early May, the opposition put together a petition demanding the removal of Maduro from power. Nearly 2 million people signed (out of a population of 30 million). Indeed, two-thirds of Venezuelans want the president to resign this year before his term is up. But even if the authorities validate the petition, organizers will then have to collect another 4 million signatures to trigger the recall referendum.

Meanwhile, street protests continue. But they’re not as big as they were a couple years ago. Many people are worried about violence — dozens died in the 2014 protests — or are preoccupied with survival issues. Plus, a lot of people have voted with their feet. In the last 15 years, a million people have left Venezuela, and of those remaining, an astounding 30 percent of the population is making preparations to leave.

Venezuela’s descent into chaos owes much to factors beyond Madura’s control, such as the price of oil and the scarcity of rain. But Venezuela, under both Chavez and Maduro, failed to break its dependency on oil for its exports earnings.

Chavismo, though it pulled many out of poverty, also constructed an economic patronage system — or, rather, replaced the old patronage system with a new one — that guaranteed political loyalty but at the expense of building durable democratic institutions or a sustainable economy. Venezuela could have broken the resource curse — the convergence between resource wealth and corruption, mismanagement, and gross economic inequity.

Instead, Chavez redistributed the windfall profits from the oil industry and did little to prepare for the future.

Chile Redux?

Maduro has pinned much of the blame for his woes on the United States.

“Washington is activating measures at the request of Venezuela’s fascist right,” he intoned recently. Washington has indeed applied sanctions against Venezuela, but they focus only on a handful of individuals. The United States also supported a coup against Hugo Chavez back in 2002, and the Obama administration would surely like to see a different team in charge in Caracas. But “Yankee imperialism” is not really a major contributing factor in Venezuela’s current crisis.

The great irony, of course, is that the Obama administration has expended considerable political capital in pursuing a rapprochement with Cuba, a country that’s had a more implacably hostile relationship with the United States for a much longer period. The U.S. Congress maintains an economic embargo against Cuba even as the two countries reestablish diplomatic relations. The United States and Venezuela enjoy very close economic ties, by contrast, but haven’t hosted each other’s ambassadors since 2010.

In March 2015, a few months after the United States and Cuba announced that they would restore diplomatic relations, Maduro reached out quietly to Washington to see whether he could benefit as well from the new good-neighbor policy. Washington responded positively, and a two-track set of negotiations began, with one track devoted to shared interests and the other to disagreements.

A détente has yet to materialize. Even though diplomatic relations between the two countries remain in limbo, business as usual has proceeded. Venezuela has major economic interests in the United States — including the Citgo refining complex in Lake Charles, Louisiana, and thousands of gas stations. Meanwhile, the United States is Venezuela’s largest trading partner, with 500 U.S. companies invested in the country.

Although Maduro suspects that Washington is plotting a coupe, the Obama administration seems more worried of late about Venezuela becoming a failed state than Maduro maintaining his hold on power. The Obama administration has been quietly supporting Spanish efforts to mediate between Maduro and the opposition-controlled parliament, and has even been trying to rope in the Vatican, a key mover behind the Cuba détente.

No doubt Washington would prefer a more pliant partner in Caracas. But with Venezuela one of the top five suppliers of oil to the United States, Washington doesn’t want the country to disappear into the black hole of chaos.

In other words, the standoff in Venezuela today is not Chile 1973 all over again. It’s not the United States that has destabilized the Maduro government. And Maduro is not a noble, idealistic leader, like Salvador Allende, who is trying to take his country in a bold new direction. If you want to see what the United States would look like after a dozen years of Trumpismo, behold Venezuela.

International Response

International pressure has been building against the Maduro administration.

Human rights organizations have slammed the government’s record. The head of the Organization of American States, Luis Almagro, has been complaining that Venezuela has violated the organization’s charter through its undemocratic practices, thus risking suspension. Almagro published a detailed report backing up his charge. Maduro responded with characteristic bluntness:

I suggest you put this democratic charter in a very thin tube and find a better use for it, Mr. Almagro. You can shove that democratic charter wherever it fits. Venezuela has self-respect and no one will apply this charter to Venezuela.

But it’s not just organizations like the OAS, which has a reputation of being a U.S. lapdog, that are criticizing the Maduro government. The Socialist International — to which Maduro’s United Socialist Party of Venezuela belongs — has slammed the Venezuelan government on several occasions, most recently around democratic irregularities, political prisoners, and the overall “deterioration of institutional life.”

So, let’s put to rest the notion that the travails of Nicolas Maduro are in any way connected to some retreat of the “pink wave” that swept away decades of authoritarian, right-wing rule in Latin America. Venezuelans are tired of corruption, economic mismanagement, and political repression. Fewer than half of those who self-identify as leftists believe that the country is heading in the right direction, according to a December Pew poll. Venezuelans of all persuasions want a change.

In a future column, I’ll take a big-picture look at the Latin American left and what’s happening in Argentina, Brazil, Chile, and elsewhere. But the turn against Maduro has little to do with any rejection of the left. Maduro is a populist with autocratic tendencies, and the opposition coalition consists of parties across the entire political spectrum, including Radical Cause, the Progressive Movement of Venezuela, Progressive Advance, and several social democratic parties.

Hugo Chavez is dead. Chavismo, which was more of a cult than a political ideology, is on its last legs. Before Venezuela succumbs as well, it’s time for a radical restart in the land of Bolivar.