Trump's Venezuelan Headache

US policy is in chaos as oil state’s population suffers, writes Christopher Sabatini

The World Today
Published 26 September 2019 Updated 3 February 2020 3 minute READ

 A couple walks by graffitis reading "We Are Hungry" and "Maduro Dictator" in Caracas on August 8, 2017.

A couple walks by graffitis reading “We Are Hungry” and “Maduro Dictator” in Caracas on August 8, 2017. (Photo credit should read Ronaldo Schemidt/AFP via Getty Images)

On January 23, 2019 Venezuela’s National Assembly, the country’s last remaining democratically elected institution, declared its head, Juan Guaidó, a relatively unknown opposition politician, the country’s interim president.

Guaidó’s claim to constitutional legitimacy stemmed from the argument that Nicolás Maduro’s re-election as president eight months earlier had been rejected by much of the world, making him unfit to govern.

The White House, along with 50 other countries, moved quickly to recognize Guaidó in the belief that international support and popular street protests would lead to defections within Venezuela’s security forces and trigger Maduro’s removal.

When that didn’t happen, the Trump administration doubled down on the message that change was just a few street protests and high-level defections away.

On February 23, with support from the United States, Guaidó tried to lead an aid convoy across the Colombia-Venezuela border, hoping that Venezuelan security forces would have second thoughts about a government denying the country’s humanitarian crisis and blocking outside help. Again, he failed.

On the morning of April 30, Guaidó appeared on social media surrounded by military officers calling for more troops to join him and the people in overthrowing Maduro. By the end of the day, the uprising had fizzled out and the government had arrested dozens of the renegade officers, many of whom who were later tortured, for supporting Guaidó.

Since then, White House policy has been reduced to tightening sanctions and targeting individuals close to the Maduro regime. US diplomatic efforts to prod regime change have been reduced to toughtalking tweets and a series of contradictory declarations of alleged secret negotiations with the government.

Amid the deadlock, Venezuela’s economic meltdown goes on. Since 2013, Venezuela’s economy, once considered Latin America’s richest, has contracted by more than 60 per cent, with 90 per cent of the population living in poverty. More than four million Venezuelans have fled to neighbouring countries such as Colombia and Brazil or to the United States and Europe. And between 2016 and 2018 some 21.2 per cent of its citizens were malnourished, a number that the Financial Times reported could well explode next year.

The situation is expected to get worse. With an estimated 5,000 Venezuelans fleeing each day, if conditions don’t improve by the end of 2019 more than 5 million Venezuelans will have sought refuge from the world’s worst economy in which inflation is expected to top more than one million per cent this year.

Economic collapse

Much of the blame for this economic and social catastrophe lies at the feet of Maduro and his mentor, the former president Hugo Chávez. First Chávez and then Maduro nationalized key industries, including the semi-independent state oil company PDVSA, and broke the independence of the Central Bank.

All this was to further their Bolivarian Revolution, named after Venezuela’s aristocratic 19th-century independence leader Simon Bolívar. Instead of creating 21st century socialism, the arbitrary nationalizations and byzantine currency controls led to huge levels of corruption and inefficiency.

As the economy collapsed, with oil production dropping from 3 million barrels a day to an estimated 1.2 to 1.5 million, the very people the Chavistas claimed to represent bore the brunt.

Despite a short-lived reduction in poverty when Chávez first came to power, paid for by oil revenues and unsustainable state largesse, the drop in the price of crude quickly turned Venezuela into the world’s leading economic basket case.

The anti-democratic behaviour of the Chávez and Maduro governments began to attract international attention from the early 2000s after Chávez convened a constituent assembly to rewrite the country’s constitution.

Once approved via referendum, the constituent assembly bypassed the National Assembly to fill key positions in the judiciary and other nominally independent branches.

That power grab resulted in the death of democracy by a thousand cuts. The independence of the country’s electoral authority was undermined, while state control of the media was consolidated. In addition, changes to the constitution allowed the president to be re-elected in perpetuity and there was selective repression and even arrests of opposition leaders and protesters.

When Chávez died from cancer shortly after his re-election in October 2012, his successor Maduro inherited a consolidated autocratic government. In elections with no credible international observers, Maduro won by a mere 234,900 vote difference against Henrique Capriles Radonski of the opposition Democratic Unity Roundtable.

In 2017, irritated by the opposition-controlled National Assembly’s attempts to check his power, Maduro called for elections to select a new constituent assembly to rewrite the constitution his mentor had installed. The opposition boycotted the vote, and soon after being seated, the Maduro-packed constituent assembly sought to overrule the National Assembly, with no sign of actually revising the constitution.

Most of the four million refugees from Venezuela have taken up residence in neighbouring countries: Colombia has housed more than 1.2 million, Peru more than 900,000 and Brazil 80,000. Unfortunately, until now the US, despite its vocal support for the democratic opposition and regime change, has failed to establish temporary protected status for fleeing Venezuelans.

The White House initiated targeted sanctions on members of the Maduro government during Barack Obama’s administration, freezing the assets of officials linked to illicit activities or human rights abuses and refusing them visas. These measures have increased under the Trump administration.

It wasn’t until 2017 that the US government started placing broader sanctions on the government, prohibiting US investors from financing or re-financing Venezuelan debt. This wasn’t simply a political move; there were genuine concerns in financial markets about the Venezuelan government’s creditworthiness. By this time, the Venezuelan economy had shrunk by more than half and the country’s Central Bank was practically broke, a result of the government’s complicated exchange regime. Then, shortly after the swearing in of Guaidó in January of this year, the US slapped the most damaging sanctions on Venezuela’s oil industry, the source of more than 90 per cent of whose exports. These prohibited Americans from buying Venezuelan oil and petrol or exporting diluents, additives needed to process heavy Venezuelan crude for export.

As a result, the Venezuelan economy effectively ceased to exist. For many citizens, queuing up for food, healthcare and public services has become commonplace, as has the use of barter. The well-placed can use bitcoin to pay for goods, but for most it has become a barter economy.

What is the United States’ plan?

When the supposedly military-popular uprising of April 30 failed, John Bolton, then National Security Adviser to Donald Trump, said again that desertions among Maduro’s inner circle were imminent, describing his inner cadre as like ‘scorpions in a bottle’. No evidence was produced to back any of this up, however.

With the exception of a new round of sanctions, announced at the start of August, on businesses and governments that work with Caracas, the administration’s tactics now seem reduced to tough talk and clumsy ‘psy-ops’. Bolton continued to tweet aggressive messages saying Maduro must step down and warning him he could not last long. Yet, after Bolton’s departure, the Venezuelan leader is still in place.

Later in the month, an NSC staffer claimed that the White House had been having secret talks with Diosdado Cabello, one of the most powerful members of Maduro’s inner circle.

The briefing was clearly intended to stoke paranoia in Caracas about palace intrigue, although Maduro claimed the next day that he had known about the talks all along. A week later, Elliott Abrams, the White House’s special envoy for Venezuela, said that negotiations had never taken place, adding, curiously, that the US would grant Maduro amnesty should he step aside.

What has become clear is that the Trump administration had no backup plan once the military failed to step in and remove Maduro on January 23, February 23 or April 30. The White House’s Venezuela policy now looks increasingly chaotic and offers little comfort for Venezuelans continuing to suffer under a repressive, corrupt autocratic regime, suffering made worse as US oil sanctions start to bite.