Tag Archives: Venezuela

An Energy Crisis Is Putting Cuba’s Post-Castro Leadership to Its First Test

William M. LeoGrande | Tuesday, Oct. 8, 2019

Venezuela’s economic collapse and Washington’s new sanctions on companies shipping Venezuelan oil to Cuba have plunged the island nation into its most severe energy crisis since the collapse of the Soviet Union in the early 1990s. In response, Havana is looking to its old ally Russia to plug the hole in energy supplies left by the decline in Venezuelan shipments. But the crisis is hampering plans to implement economic reforms that Havana hopes will respond to popular demands for economic liberalization while retaining the Communist Party’s political dominance.

Continue reading: An Energy Crisis Is Putting Cubas Post-Castro Leadership to Its First Test

Image result for cuba energy refineries gas

Posted in Blog | Tagged , , , | Leave a comment

SPECIAL REPORT: HOW CUBA TAUGHT VENEZUELA TO QUASH MILITARY DISSENT

Angus Berwick,  REUTERS, CARACAS, AUGUST 22, 2019

Original Article:     HOW CUBA TAUGHT VENEZUELA,,,,

In December 2007, Venezuela’s Hugo Chavez suffered his first defeat at the polls.  Although still wildly popular among the working class that had propelled him to power nearly a decade earlier, voters rejected a referendum that would have enabled him to run for re-election repeatedly.

Stung, Chavez turned to a close confidant, according to three former advisors: Fidel Castro. The aging Cuban leader had mentored Chavez years before the Venezuelan became president, when he was still best known for leading a failed coup.

Now, deepening economic ties were making Cuba ever more reliant on oil-rich Venezuela, and Castro was eager to help Chavez stay in power, these advisors say. Castro’s advice: Ensure absolute control of the military.

Easier said than done.  Venezuela’s military had a history of uprisings, sometimes leading to coups of the sort that Chavez, when a lieutenant colonel in the army, had staged in 1992. A decade later, rivals waged a short-lived putsch against Chavez himself.

But if Chavez took the right steps, the Cuban instructed, he could hang on as long as Castro himself had, the advisors recalled. Cuba’s military, with Castro’s brother at the helm, controlled everything from security to key sectors of the economy.

Within months, the countries drew up two agreements, recently reviewed by Reuters, that gave Cuba deep access to Venezuela’s military – and wide latitude to spy on it and revamp it.  The agreements, specifics of which are reported here for the first time, led to the imposing of strict surveillance of Venezuelan troops through a Venezuelan intelligence service now known as the Directorate General of Military Counterintelligence, or DGCIM.

Under Cuban military advisors, Venezuela refashioned the intelligence unit into a service that spies on its own armed forces, instilling fear and paranoia and quashing dissent.  Now known for its repressive tactics, the DGCIM is accused by soldiers, opposition lawmakers, human rights groups and many foreign governments of abuses including torture and the recent death of a detained Navy captain.

According to the documents reviewed by Reuters, the agreements, signed in May 2008, allowed Cuba’s armed forces to:

  • Train soldiers in Venezuela
  • Review and restructure parts of the Venezuelan military
  • Train Venezuelan intelligence agents in Havana
  • And change the intelligence service’s mission from spying on foreign rivals to surveilling the country’s own soldiers, officers, and even senior commanders.

The first agreement, according to the documents, would prepare Venezuelan intelligence agents to “discover and confront the subversive work of the enemy.” The second agreement authorized Cuban officials to oversee the “assimilation” and “modernization” of Venezuela’s military.

The presence of Cuban officials within Venezuela’s military has been known for years. President Nicolas Maduro, Chavez’s disciple and increasingly beleaguered successor, said in a 2017 speech: “We are grateful to Cuba’s revolutionary armed forces. We salute them and will always welcome them.”  But neither country has ever acknowledged details of the agreements or the extent of Cuba’s involvement.

In March, after U.S. Vice President Mike Pence denounced Havana’s “malign influence” on Caracas, Cuban Foreign Minister Bruno Rodriguez downplayed the relationship. “I strongly reject repeated and false accusations,” he tweeted, “of Cuban military ‘training,’ ‘controlling’ or ‘intimidating’ in Venezuela.”  Neither Venezuela’s Defense Ministry nor its Information Ministry, responsible for government communications including those of Maduro, responded to emails and phone calls for this article. Cuban officials didn’t respond to requests from Reuters for comment.

Eleven years after they were forged, the military agreements have proven crucial for Maduro’s survival as president, according to security experts, people familiar with the administration and opposition politicians.  With Cuba’s help and training, the military has stood by Maduro and helped him weather an economic meltdown, widespread hunger and crime, and the emigration of more than 4 million people – more than 10 percent of Venezuela’s population in recent years.

In June, Reuters explained how a reshuffling of the armed forces, and proliferation of senior officers, has kept military leadership beholden to Maduro.

Now, the documents laying out Venezuela’s agreements with Cuba – and interviews with dozens of current and former members of the armed services, government officials and people familiar with the relationship between Caracas and Havana – show how instrumental Castro’s help has been as well.

The transformation of the DGCIM, these people say, has been particularly effective. “The most important mission for the intelligence service once was to neutralize any threat to democracy,” said Raul Salazar, a former defense minister under Chavez who opposes Maduro. “Now, with Cuba in charge, the government uses it to stay in power.”

Once Cuba began training DGCIM personnel, the intelligence service embedded agents, often dressed in black fatigues, within barracks. There, they would compile dossiers on perceived troublemakers and report any signs of disloyalty, according to more than 20 former Venezuelan military and intelligence officials.  The DGCIM also began tapping the phones of officers, including senior military commanders, to listen for conspiracies.

The crackdown has led to hundreds of arrests. At least 200 military officials are currently detained, according to the opposition-led National Assembly. Citizen Control, a Venezuelan organization that studies the armed forces, says the number is over 300.

In a June 2017 report, reviewed by Reuters, the DGCIM accused a soldier, who enrolled in a university considered to be aligned with the opposition, of “ideological and political subversion.” Speaking out for the first time, the former lieutenant recounted how he was handcuffed to a chair in a continuously lit room and beaten until two vertebrae broke.  “Those days had no end,” he recalled. He revealed his story to Reuters on the condition that the news agency use only his first name, Daniel, and not disclose his age.

Since its remaking, the DGCIM’s ranks have swelled – from a few hundred agents early in the Chavez administration to at least 1,500 now, according to former military officials.

A recent United Nations report accused the DGCIM of torture – including electric shocks, suffocation, waterboarding, sexual violence, and water and food deprivation. Under Maduro, DGCIM officers have been promoted to senior positions, including the command of his personal security detail.  The repression, opposition leaders say, has cowed the armed forces. Juan Guaido, head of the National Assembly, early this year denounced Maduro’s 2018 re-election as a sham and declared, with the support of most Western democracies, that he was Venezuela’s rightful leader.

But opposition pleas for a military rebellion have gone unheeded. “We have failed,” said a senior opposition official involved in attempts to broker talks with military leaders. “We have nothing to offer to convince them.”

“A BASTION OF LATIN AMERICAN DIGNITY”

For Chavez, the changes foreseen by the two agreements resonated on a personal level.  Castro, whom he had long admired, was the first international leader to embrace Chavez as a rising politician in the 1990s.

Venezuela’s military intelligence unit, meanwhile, was run by officers allied with the conservative elite and opposed to Chavez’s vision of transforming a country which, despite boasting the world’s biggest oil reserves, suffered rampant poverty.

When Chavez’s 1992 coup failed, officers from the unit, then known as the Directorate of Military Intelligence, or DIM, were the ones tasked with arresting him. They initially jailed him in one of the same underground cells at the DIM’s Caracas headquarters where Chavez would later detain some of his own political opponents, according to several former officials.

Months after his release from prison because of a presidential pardon, Chavez in 1994 flew to Havana, where Castro, in their first in-person meeting, greeted him at the airport.

In Chavez, Castro saw a like-minded leftist leader of the sort that had become rare since the end of the Cold War. In Venezuela’s vast oil wealth, Castro saw potential nourishment for a Cuban economy starved by the collapse of its former sponsor, the Soviet Union.  With Castro looking on, Chavez in a speech at the University of Havana called Cuba, then in its fourth decade of authoritarian rule, “a bastion of Latin American dignity.” He vowed to cure the capitalist “gangrene” afflicting Venezuela.

After the visit, the two men began to speak regularly, former advisors said.

By the late 1990s, high inflation, low economic growth and increased poverty made Chavez’s Socialist message attractive to a growing number of Venezuelans. In 1998, he was elected president. Almost immediately, he deepened formal links with Cuba.

In October 2000, Castro traveled to Caracas to sign a series of economic agreements. Venezuela would give Cuba enough oil to meet half its energy needs.

Since then, Venezuela has sent at least 55,000 barrels per day to the island, or more than $21 billion worth of oil, according to government figures and average prices over the period. In exchange, Cuba sent thousands of doctors, teachers and agricultural specialists to help diversify Venezuela’s grass-roots economy.

By 2002, many of Venezuela’s elite had tired of Chavez. That April, conservative opposition leaders teamed up with military chieftains, including senior DIM officials, and detained him. But the coup, after a massive popular uprising on his behalf, failed within two days.

Back in power, and with Castro’s blessing, Chavez placed Cuban advisors within his inner circle to tighten security, according to his former advisors and several former military officials. He began a purge of the intelligence service and other top ranks of the military.  He appointed Hugo Carvajal, a lieutenant colonel who had joined Chavez’s 1992 coup effort and later headed the DIM’s investigations division, to be its subdirector. Within two years, Carvajal became its director general.  Carvajal began modernizing the DIM. In an email to Reuters, Carvajal said Venezuela’s central bank provided millions of U.S. dollars in cash to the DIM for new technology, including surveillance equipment and a database to centralize intelligence.

The intelligence boss would lead the service for nearly a decade. Now out of office, he has been sanctioned by the United States Treasury Department for allegedly helping Colombian guerrillas. Last April he was arrested in Spain and remains detained in response to a U.S. warrant for alleged drug trafficking.

In the email, sent through his lawyer in Spain, Carvajal denied the accusations.

In July 2007, Chavez named Gustavo Rangel, a loyalist who headed the army reserves, as defense minister.

At his swearing-in, Rangel spoke of the need for “new Venezuelan military thinking” to counter the “real enemy.” The “empire,” he said, using common Caracas shorthand for the United States, was sponsoring “subversive groups” bent on destroying the revolution.

Reuters was unable to reach Rangel, now retired, for comment.

That December, Chavez lost the referendum on term limits. On television, he vowed a “new offensive” to pursue the goal.

Defense talks with Cuba began. At a meeting in Caracas on May 26, 2008, Rangel and General Alvaro Lopez, Cuba’s vice minister of defense, signed the two agreements.

Under the first agreement, Cuba’s defense ministry would oversee a restructuring of the DIM and advise on creating “new units” inside the service. The DIM would also send groups of as many as 40 officers to Havana for up to three months of espionage training.

According to the documents, Venezuela would send resumes of training candidates for Cuba to vet. Courses included how to handle “secret collaborators,” how to conduct criminal investigations and how to select new intelligence agents.

Most of the training, according to the documents, took place at the Comandante Arides Estevez Sanchez Military Academy in western Havana. At the academy, a cluster of white four-story buildings and parade grounds, Cuban instructors told DIM agents their mission henceforth would be to infiltrate and control the military, according to five people familiar with the courses.

The second agreement created a committee known as the Coordination and Liaison Group of the Republic of Cuba, or GRUCE. The GRUCE, comprising eight Cuban “military experts,” would send Cuban advisors to Venezuela to inspect military units and train soldiers.

One former Venezuelan intelligence official recalled training he received by Cuban instructors on a farm in the eastern Venezuelan state of Anzoategui. Instructors, he told Reuters, drilled students with questions about their political beliefs. The DIM, they said, must be the “tip of the spear” in the fight against “traitors.”

Chavez, fortified by increases in government spending that boosted his popularity, won a new referendum to end term limits.

In 2011, he changed the DIM’s name to include the term “counterintelligence,” reflecting its mission to thwart sabotage from within. By then, the new DGCIM was several hundred agents stronger, former officials said.

Fresh from Cuban training, the new agents began infiltrating barracks. “We lived and trained with the troops to monitor them, keeping the bosses informed,” another former DGCIM officer told Reuters. “We had an iron grip.”

Some agents pretended to be regular soldiers. Others donned their DGCIM uniforms and regularly encouraged soldiers to report on each other. They came to be known as “the men in black,” according to several former soldiers. “I’ll hand you to the DGCIM,” a battalion commander warned would-be rebels, one soldier recalled. Stories of detentions and torture by DGCIM agents, sometimes wearing skeleton masks and balaclavas, spread through the ranks.

“YOU CAN’T FIGHT THE STATE”

Chavez, following four surgeries in Cuba, died in 2013. Castro in a newspaper column called him “the best friend the Cuban people had in their history.” Voters elected Maduro to succeeded him.

In 2014, oil prices plummeted.  Maduro’s effort to spur the economy failed.  Hunger and shortages hit even the armed forces. A military doctor told Reuters recently that many enlisted soldiers are underweight, subsisting primarily on pasta and lentils.

As growing numbers of troops sought to desert, the DGCIM grew more aggressive. It expanded surveillance, wiretapping senior officers.

On the top floor of its headquarters, some 40 agents in its Operational Communications Division used a platform called Genesi, according to a former member of the team.

The system, designed by Italian telecommunications firm IPS SpA, allows users to “intercept, monitor and analyze every kind of information source,” according to the company’s web site.

IPS didn’t respond to calls, emails or a letter seeking comment at its Rome headquarters. Reuters couldn’t identify an IPS office or personnel working in Venezuela.

In July 2017, Daniel, the Army lieutenant in Caracas, was summoned to his battalion commander’s office. Once a Chavez supporter, Daniel had joined the army in 2004 but under Maduro lost enthusiasm and told superiors he planned to leave. He had enrolled in law classes at a local university while still in the military and taken part in some opposition marches. Daniel’s behavior, according to the intelligence report reviewed by Reuters, was “counter-revolutionary.” The report described the university, whose name Daniel asked Reuters not to disclose, as a school for the opposition.

Upon reporting to the commander’s office, Daniel said, three uniformed counterintelligence agents confiscated his phone and said he was needed for an “interview” at DGCIM headquarters.

Daniel said agents transferred him to an underground cell and handcuffed him to a chair. Each day, a man entered and punched him repeatedly. The beatings broke two vertebrae, according to a physician’s report reviewed by Reuters. The cell was lit all hours, causing Daniel to lose track of time.

After 20 days, a military court charged him with treason, rebellion and violating military decorum. Pending a trial, he was transferred to another prison. Six months later, after entering a guilty plea, the court released Daniel on condition he remain in the country. He was expelled from the Army.

Daniel returned to law classes, but regrets pleading guilty. “I’m not sure it was the right thing to do,” he said, but noted that many who don’t enter a plea remain detained indefinitely. “You can’t fight the state.”

The surveillance has hurt even senior officers.

One case sparked national outrage, forcing the government to recognize DGCIM abuse. Rafael Acosta, a 50-year-old Navy captain, died in DGCIM custody on June 29, eight days after agents arrested him.

Tarek Saab, Venezuela’s chief prosecutor, said Acosta was detained for participating in an unspecified “right wing” plot. Acosta’s wife, Waleswka Perez, said the accusations were untrue and accused the DGCIM of torture.  On July 1, Saab said the government had charged two DGCIM agents with homicide. He gave neither a cause of death nor the circumstances in which it occurred. The charges, Saab said in a statement, followed an “impartial” investigation into the “unfortunate event.”  Most DGCIM handiwork never comes to light.

In March 2018, five DGCIM agents summoned Lieutenant Colonel Igbert Marin, commander of the 302nd mechanized Army brigade, in Caracas. Marin, now 40 and the father of two young children, for most of his career was a rising star who had excelled at Venezuela’s top military academy.

His wife, Yoselyn Carrizales, told Reuters the agents took Marin to the Defense Ministry, where he was met by officials including Defense Minister Vladimir Padrino and Ivan Hernandez, the current head of the DGCIM.

The officials accused Marin of scheming against the government, said Carrizales, who is acting as one of Marin’s attorneys. They said they had video evidence of Marin and eight other officers conspiring, she added, but didn’t show him the video.  Marin denied the allegation, saying that the meeting in question had been merely a gathering of old academy classmates. Indignant, he told the defense minister that such accusations were counterproductive, especially at a time when most of the military was suffering from shortages of food, pay and equipment.

The minister should “leave his office, open his eyes and see how soldiers actually feel,” Marin told Padrino, according to Carrizales. Another lawyer defending Marin, Alonso Medina Roa, confirmed her account.  Neither Padrino nor Hernandez could be reached for comment.

The agents took Marin and the eight other officers to DGCIM headquarters. Marin later told his attorneys that agents handcuffed him to a chair, placed a bag over his head and filled it with tear gas. His lawyers detailed the alleged abuse to Reuters.  A week later, at a hearing Carrizales attended, a military court charged Marin with treason, instigating rebellion and violating decorum. Agents then took Marin away. He remained incommunicado for 78 days.

“I didn’t know if he was alive or dead,” said Carrizales.

Marin remains detained, and his wife continues to work for his release. Venezuelan officials haven’t publicly commented on the case or shown Marin’s lawyers the alleged video. No trial date has been set.

“They fear him,” Carrizales said. “He is an obvious leader within the armed forces. That’s why they arrested him.”

Posted in Blog | Tagged , , , , | Leave a comment

EL IMPACTO EN LA ECONOMÍA CUBANA DE LA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

Carmelo Mesa-Lago,  Catedrático de servicio distinguido emérito en Economía y Estudios Latinoamericanos en la Universidad de Pittsburgh

Pavel Vidal Alejandro, Profesor asociado del Departamento de Economía de la Universidad Javeriana Cali, Colombia

30 de mayo de 2019

Articulo originalLA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

 

 

 

Índice

Resumen, Abstract……………………………………………………………………………………….. 2

Introducción ………………………………………………………………………………………………… 3

(1) Antecedentes de la relación económica entre ambos países …………………………. 4

(2) Análisis de la severidad de la crisis económica-social venezolana ……………….. 5

 (3) Evolución del comercio exterior cubano con Venezuela……………………………….. 7

(4) Las medidas de Trump contra Venezuela y Cuba ……………………………………….. 14

(5) Los efectos del shock venezolano ……………………………………………………………….. 18

(6) ¿Viene otro Período Especial? …………………………………………………………………….. 22

 (7) Posibilidad de que otros países (Rusia o China) sustituyan a Venezuela ……….. 23

(8) ¿Hay alternativas viables para Cuba? ………………………………………………………… 24

(9) Conclusiones……………………………………………………………………………………………… 30

 

Resumen

Históricamente, Cuba ha padecido la dependencia económica de otros países, un hecho que continúa después de 60 años de la revolución. La dependencia con la Unión Soviética en 1960-1990 dio lugar al mejor período económico-social en la segunda mitad de los años 80, pero la desaparición del campo socialista fue seguida en los años 90 por la peor crisis desde la Gran Depresión. Este documento de trabajo analiza de manera profunda la dependencia económica cubana de Venezuela en el período 2000- 2019: (1) antecedentes de la relación económica entre ambos países; (2) análisis de la severidad de la crisis venezolana; (3) evolución del comercio exterior cubano con Venezuela; (4) medidas de Donald Trump contra Venezuela y Cuba; (5) efectos del shock venezolano en Cuba; (6) ¿viene otro Período Especial en Cuba?; (7) posibilidad de que otros países (Rusia o China) substituyan a Venezuela; y (8) alternativas viables a la situación. El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump

Abstract

Cuba has historically endured an economic dependence on other nations that continues after 60 years of revolution. Dependence on the Soviet Union in 1960-90 led to its best economic and social situation in the second half of the 1980s, but the disappearance of the socialist world was followed in the 1990s by its worst economic crisis since the Great Depression. This Working Paper analyses Cuba’s economic dependence on Venezuela in 2000-19, as follows: (1) antecedents of the economic relationship between the two countries; (2) evaluation of the severity of Venezuela’s economic-social crisis; (3) evolution of Cuba’s trade relationship with Venezuela; (4) Trump’s measures against Venezuela and Cuba; (5) effects of the Venezuelan shock on Cuba; (6) is another Special Period in the offing?; (7) possibility of another country (Russia or China) replacing Venezuela; and (8) viable alternatives to Cuba.

 

 

 

 

…………………………………………..

Conclusiones

Este estudio ha aportado evidencia abundante y sólida (respecto a Venezuela) que ratifica la histórica dependencia económica cubana de otra nación y la necesidad de subsidios y ayuda sustanciales para poder subsistir económicamente.

A pesar del gran peso de la beneficiosa relación económica externa, Cuba no ha logrado financiar sus importaciones con sus propias exportaciones. La ayuda externa resulta, al menos por un tiempo, en un crecimiento económico adecuado (en 1985-1989 con la URSS y en 2005-2007 con Venezuela), pero cuando desaparece o entra en crisis el país subsidiador, ocurre una grave crisis en Cuba. La dependencia sobre Venezuela ha sido menor que la relativa con la Unión Soviética y hay además otros factores que podrían atenuar la crisis resultante de la debacle en el primer país; aun así, Cuba ya ha sufrido

El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump Documento de trabajo 9/2019 – 30 de mayo de 2019 – Real Instituto Elcano 31 desde 2012 una pérdida equivalente al 8% de su PIB y una caída del régimen de Maduro agregaría otro 8%. Las medidas de Trump contra Venezuela no han conseguido hasta ahora derrocar el régimen de Maduro y este ha logrado circunscribir algunas de ellas, pero han agravado la crisis en la República Bolivariana creado una situación peliaguda que se agravará en el medio y largo plazo.

Por otra parte, las políticas trumpistas contra Cuba probablemente tendrán un impacto adverso sobre las remesas externas y el turismo (respectivamente la segunda y tercera fuentes de divisas cubanas), mientras que la aplicación del título III de la ley Helms-Burton generaría costes considerables por las demandas interpuestas y un efecto de congelamiento en la inversión futura.

La reacción de la dirigencia cubana frente a la crisis que se agrava ha sido el continuismo, de lo que no ha funcionado por seis décadas; muy poco se dice oficialmente (aunque se destaca por los académicos economistas del patio) sobre la urgente y necesaria profundización de las reformas económicas fallidas de Raúl Castro, a fin de adoptar algunas de las políticas del socialismo de mercado practicado con éxito en China y Vietnam. Para que Cuba pueda encarar la dura crisis que se avecina a corto plazo y conseguir escapar de la dependencia económica externa a largo plazo, esa es la alternativa más viable.

Posted in Blog, Featured | Tagged , , , , , , , , , | Leave a comment

VENEZUELA’S SUICIDE: LESSONS FROM A FAILED STATE, With emphasis on Cuba-Venezuela Relations

By Moisés Naím and Francisco Toro

Original Article: Venezuela’s Suicide,  Foreign Affairs, November –December 2018

Consider two Latin American countries. The first is one of the region’s oldest and strongest democracies. It boasts a stronger social safety net than any of its neighbors and is making progress on its promise to deliver free health care and higher education to all its citizens. It is a model of social mobility and a magnet for immigrants from across Latin America and Europe. The press is free, and the political system is open; opposing parties compete fiercely in elections and regularly alternate power peacefully. It sidestepped the wave of military juntas that mired some Latin American countries in dictatorship. Thanks to a long political alliance and deep trade and investment ties with the United States, it serves as the Latin American headquarters for a slew of multinational corporations. It has the best infrastructure in South America. It is still unmistakably a developing country, with its share of corruption, injustice, and dysfunction, but it is well ahead of other poor countries by almost any measure.

The second country is one of Latin America’s most impoverished nations and its newest dictatorship. Its schools lie half deserted. The health system has been devastated by decades of underinvestment, corruption, and neglect; long-vanquished diseases, such as malaria and measles, have returned. Only a tiny elite can afford enough to eat. An epidemic of violence has made it one of the most murderous countries in the world. It is the source of Latin America’s largest refugee migration in a generation, with millions of citizens fleeing in the last few years alone. Hardly anyone (aside from other autocratic governments) recognizes its sham elections, and the small portion of the media not under direct state control still follows the official line for fear of reprisals. By the end of 2018, its economy will have shrunk by about half in the last five years. It is a major cocaine-trafficking hub, and key power brokers in its political elite have been indicted in the United States on drug charges. Prices double every 25 days. The main airport is largely deserted, used by just a handful of holdout airlines bringing few passengers to and from the outside world.

Bottom of Form

These two countries are in fact the same country, Venezuela, at two different times: the early 1970s and today. The transformation Venezuela has undergone is so radical, so complete, and so total that it is hard to believe it took place without a war. What happened to Venezuela? How did things go so wrong?

The short answer is Chavismo. Under the leadership of Hugo Chávez and his successor, Nicolás Maduro, the country has experienced a toxic mix of wantonly destructive policy, escalating authoritarianism, and kleptocracy, all under a level of Cuban influence that often resembles an occupation. Any one of these features would have created huge problems on its own. All of them together hatched a catastrophe. Today, Venezuela is a poor country and a failed and criminalized state run by an autocrat beholden to a foreign power. The remaining options for reversing this situation are slim; the risk now is that hopelessness will push Venezuelans to consider supporting dangerous measures, such as a U.S.-led military invasion, that could make a bad situation worse.

CHAVISMO RISING

To many observers, the explanation for Venezuela’s predicament is simple: under Chávez, the country caught a strong case of socialism, and all its subsequent disasters stem from that original sin. But Argentina, Brazil, Chile, Ecuador, Nicaragua, and Uruguay have also elected socialist governments in the last 20 years. Although each has struggled politically and economically, none—aside from Nicaragua—has imploded. Instead, several have prospered.

If socialism cannot be blamed for Venezuela’s demise, perhaps oil is the culprit. The most calamitous stage of Venezuela’s crisis has coincided neatly with the sharp fall in international oil prices that started in 2014. But this explanation is also insufficient. Venezuela’s decline began four decades ago, not four years ago. By 2003, Venezuela’s GDP per worker had already declined by a disastrous 37 percent from its 1978 peak—precisely the decline that first propelled Chávez into office. Moreover, all of the world’s petrostates suffered a serious income shock in 2014 as a result of plummeting oil prices. Only Venezuela could not withstand the pressure.

The drivers of Venezuela’s failure run deeper. Decades of gradual economic decline opened the way for Chávez, a charismatic demagogue wedded to an outdated ideology, to take power and establish a corrupt autocracy modeled on and beholden to Cuba’s dictatorship. Although the crisis preceded Chávez’s rise to power, his legacy and Cuba’s influence must be at the center of any attempt to explain it.

Chávez was born in 1954 into a lower-middle-class family in a rural town. He became a career military officer on a baseball scholarship and was soon secretly recruited into a small leftist movement that spent over a decade plotting to overthrow the democratic regime. He exploded into Venezuela’s national consciousness on February 4, 1992, when he led an unsuccessful coup attempt. This misadventure landed him in jail but turned him into an improbable folk hero who embodied growing frustration with a decade of economic stagnation. After receiving a pardon, he launched an outsider bid for the presidency in 1998 and won in a landslide, upending the two-party system that had anchored Venezuelan democracy for 40 years.

What drove the explosion of populist anger that brought Chávez to power? In a word, disappointment. The stellar economic performance Venezuela had experienced for five decades leading up to the 1970s had run out of steam, and the path to the middle class had begun to narrow. As the economists Ricardo Hausmann and Francisco Rodríguez noted, “By 1970 Venezuela had become the richest country in Latin America and one of the twenty richest countries in the world, with a per capita GDP higher than Spain, Greece, and Israel and only 13 percent lower than that of the United Kingdom.” But by the early 1980s, a weakened oil market had brought the era of fast growth to an end. Lower oil revenue meant cuts in public spending, scaled-down social programs, currency devaluation, runaway inflation, a banking crisis, and mounting unemployment and hardship for the poor. Even so, Venezuela’s head start was such that when Chávez was elected, it had a per capita income in the region that was second only to Argentina’s.

Another common explanation for Chávez’s rise holds that it was driven by voters’ reaction against economic inequality, which was driven in turn by pervasive corruption. But when Chávez came to power, income was more evenly distributed in Venezuela than in any neighboring country. If inequality determined electoral outcomes, then a Chávez-like candidate would have been more probable in Brazil, Chile, or Colombia, where the gap between the well-off and everyone else was larger.

Venezuela may not have been collapsing in 1998, but it had been stagnating and, in some respects, backsliding, as oil prices slumped to just $11 per barrel, leading to a new round of austerity. Chávez was brilliant at mining the resulting discontent. His eloquent denunciations of inequality, exclusion, poverty, corruption, and the entrenched political elite struck a chord with struggling voters, who felt nostalgic for an earlier, more prosperous period. The inept and complacent traditional political and business elite who opposed Chávez never came close to matching his popular touch.

Venezuelans gambled on Chávez. What they got was not just an outsider bent on upending the status quo but also a Latin American leftist icon who soon had followers all around the world. Chávez became both a spoiler and the star attraction at global summits, as well as a leader of the burgeoning global wave of anti-American sentiment sparked by U.S. President George W. Bush’s invasion of Iraq. At home, shaped by his career in the military, Chávez had a penchant for centralizing power and a profound intolerance of dissent. He set out to neuter not just opposition politicians but also political allies who dared question his policies. His collaborators quickly saw which way the wind was blowing: policy debates disappeared, and the government pursued a radical agenda with little forethought and no real scrutiny.

A 2001 presidential decree on land reform, which Chávez handed down with no consultation or debate, was a taste of things to come. It broke up large commercial farms and turned them over to peasant cooperatives that lacked the technical know-how, management skills, or access to capital to produce at scale. Food production collapsed. And in sector after sector, the Chávez government enacted similarly self-defeating policies. It expropriated foreign-owned oil ventures without compensation and gave them to political appointees who lacked the technical expertise to run them. It nationalized utilities and the main telecommunications operator, leaving Venezuela with chronic water and electricity shortages and some of the slowest Internet connection speeds in the world. It seized steel companies, causing production to fall from 480,000 metric tons per month before nationalization, in 2008, to effectively nothing today. Similar results followed the seizure of aluminum companies, mining firms, hotels, and airlines.

Diaz-Canel and Maduro

In one expropriated company after another, state administrators stripped assets and loaded payrolls with Chávez cronies. When they inevitably ran into financial problems, they appealed to the government, which was able to bail them out. By 2004, oil prices had spiked again, filling government coffers with petrodollars, which Chávez spent without constraints, controls, or accountability. On top of that were the easy loans from China, which was happy to extend credit to Venezuela in exchange for a guaranteed supply of crude oil. By importing whatever the hollowed-out Venezuelan economy failed to produce and borrowing to finance a consumption boom, Chávez was able to temporarily shield the public from the impact of his disastrous policies and to retain substantial popularity.

But not everyone was convinced. Oil industry workers were among the first to sound the alarm about Chávez’s authoritarian tendencies. They went on strike in 2002 and 2003, demanding a new presidential election. In response to the protests, Chávez fired almost half of the work force in the state-run oil company and imposed an arcane currency-exchange-control regime. The system morphed into a cesspool of corruption, as regime cronies realized that arbitraging between the state-authorized exchange rate and the black market could yield fortunes overnight. This arbitrage racket created an extraordinarily wealthy elite of government-connected kleptocrats. As this budding kleptocracy perfected the art of siphoning off oil proceeds into its own pockets, Venezuelan store shelves grew bare.

It was all painfully predictable—and widely predicted. But the louder local and international experts sounded the alarm, the more the government clung to its agenda. To Chávez, dire warnings from technocrats were a sign that the revolution was on the right track.

PASSING THE TORCH

In 2011, Chávez was diagnosed with cancer. Top oncologists in Brazil and the United States offered to treat him. But he opted instead to search for a cure in Cuba, the country he trusted not only to treat him but also to be discreet about his condition. As his illness progressed, his dependence on Havana deepened, and the mystery about the real state of his health grew. On December 8, 2012, an ailing Chávez made one final television appearance to ask Venezuelans to make Maduro, then vice president, his successor. For the next three months, Venezuela was governed spectrally and by remote control: decrees emanated from Havana bearing Chávez’s signature, but no one saw him, and speculation was rife that he had already died. When Chávez’s death was finally announced, on March 5, 2013, the only thing that was clear amid the atmosphere of secrecy and concealment was that Venezuela’s next leader would carry on the tradition of Cuban influence.

Chávez had long looked to Cuba as a blueprint for revolution, and he turned to Cuban President Fidel Castro for advice at critical junctures. In return, Venezuela sent oil: energy aid to Cuba (in the form of 115,000 barrels a day sold at a deep discount) was worth nearly $1 billion a year to Havana. The relationship between Cuba and Venezuela became more than an alliance. It has been, as Chávez himself once put it, “a merger of two revolutions.” (Unusually, the senior partner in the alliance is poorer and smaller than the junior partner—but so much more competent that it dominates the relationship.) Cuba is careful to keep its footprint light: it conducts most of its consultations in Havana rather than Caracas.

It did not escape anyone’s attention that the leader Chávez annointed to succeed him had devoted his life to the cause of Cuban communism. As a teenager, Maduro joined a fringe pro-Cuban Marxist party in Caracas. In his 20s, instead of going to university, he sought training in Havana’s school for international cadres to become a professional revolutionary. As Chávez’s foreign minister from 2006 to 2013, he had seldom called attention to himself: only his unfailing loyalty to Chávez, and to Cuba, propelled his ascent to the top. Under his leadership, Cuba’s influence in Venezuela has become pervasive. He has stacked key government posts with activists trained in Cuban organizations, and Cubans have come to occupy sensitive roles within the Venezuelan regime. The daily intelligence briefs Maduro consumes, for instance, are produced not by Venezuelans but by Cuban intelligence officers.

With Cuban guidance, Maduro has deeply curtailed economic freedoms and erased all remaining traces of liberalism from the country’s politics and institutions. He has continued and expanded Chávez’s practice of jailing, exiling, or banning from political life opposition leaders who became too popular or hard to co-opt. Julio Borges, a key opposition leader, fled into exile to avoid being jailed, and Leopoldo López, the opposition’s most charismatic leader, has been moved back and forth between a military prison and house arrest. Over 100 political prisoners linger in jails, and reports of torture are common. Periodic elections have become farcical, and the government has stripped the opposition-controlled National Assembly of all powers. Maduro has deepened Venezuela’s alliances with a number of anti-American and anti-Western regimes, turning to Russia for weapons, cybersecurity, and expertise in oil production; to China for financing and infrastructure; to Belarus for homebuilding; and to Iran for car production.

As Maduro broke the last remaining links in Venezuela’s traditional alliances with Washington and other Latin American democracies, he lost access to sound economic advice. He dismissed the consensus of economists from across the political spectrum: although they warned about inflation, Maduro chose to rely on the advice of Cuba and fringe Marxist policy advisers who assured him that there would be no consequences to making up budget shortfalls with freshly minted money. Inevitably, a devastating bout of hyperinflation ensued.

A toxic combination of Cuban influence, runaway corruption, the dismantling of democratic checks and balances, and sheer incompetence has kept Venezuela locked into catastrophic economic policies. As monthly inflation rates top three digits, the government improvises policy responses that are bound to make the situation even worse.

ANATOMY OF A COLLAPSE

Nearly all oil-producing liberal democracies, such as Norway, the United Kingdom, and the United States, were democracies before they became oil producers. Autocracies that have found oil, such as Angola, Brunei, Iran, and Russia, have been unable to make the leap to liberal democracy. For four decades, Venezuela seemed to have miraculously beat these odds—it democratized and liberalized in 1958, decades after finding oil.

But the roots of Venezuelan liberal democracy turned out to be shallow. Two decades of bad economics decimated the popularity of the traditional political parties, and a charismatic demagogue, riding the wave of an oil boom, stepped into the breach. Under these unusual conditions, he was able to sweep away the whole structure of democratic checks and balances in just a few years.

When the decadelong oil price boom ended in 2014, Venezuela lost not just the oil revenue on which Chávez’s popularity and international influence had depended but also access to foreign credit markets. This left the country with a massive debt overhang: the loans taken out during the oil boom still had to be serviced, although from a much-reduced income stream. Venezuela ended up with politics that are typical of autocracies that discover oil: a predatory, extractive oligarchy that ignores regular people as long they stay quiet and that violently suppresses them when they protest.

The resulting crisis is morphing into the worst humanitarian disaster in memory in the Western Hemisphere. Exact figures for Venezuela’s GDP collapse are notoriously difficult to come by, but economists estimate that it is comparable to the 40 percent contraction of Syria’s GDP since 2012, following the outbreak of its devastating civil war. Hyperinflation has reached one million percent per year, pushing 61 percent of Venezuelans to live in extreme poverty, with 89 percent of those surveyed saying they do not have the money to buy enough food for their families and 64 percent reporting they have lost an average of 11 kilograms (about 24 pounds) in body weight due to hunger. About ten percent of the population—2.6 million Venezuelans—have fled to neighboring countries.

The Venezuelan state has mostly given up on providing public services such as health care, education, and even policing; heavy-handed, repressive violence is the final thing left that Venezuelans can rely on the public sector to consistently deliver. In the face of mass protests in 2014 and 2017, the government responded with thousands of arrests, brutal beatings and torture, and the killing of over 130 protesters.

Meanwhile, criminal business is increasingly conducted not in defiance of the state, or even simply in cahoots with the state, but directly through it. Drug trafficking has emerged alongside oil production and currency arbitrage as a key source of profits to those close to the ruling elite, with high-ranking officials and members of the president’s family facing narcotics charges in the United States. A small connected elite has also stolen national assets to a unprecedented degree. In August, a series of regime-connected businessmen were indicted in U.S. federal courts for attempting to launder over $1.2 billion in illegally obtained funds—just one of a dizzying array of illegal scams that are part of the looting of Venezuela. The entire southeastern quadrant of the country has become an exploitative illegal mining camp, where desperate people displaced from cities by hunger try their luck in unsafe mines run by criminal gangs under military protection. All over the country, prison gangs, working in partnership with government security forces, run lucrative extortion rackets that make them the de facto civil -authority. The offices of the Treasury, the central bank, and the national oil company have become laboratories where complicated financial crimes are hatched. As Venezuela’s economy has collapsed, the lines separating the state from criminal enterprises have all but disappeared.

THE VENEZUELAN DILEMMA

Whenever U.S. President Donald Trump meets with a Latin American leader, he insists that the region do something about the Venezuelan crisis. Trump has prodded his own national security team for “strong” alternatives, at one point stating that there are “many options” for Venezuela and that he is “not going to rule out the military option.” Republican Senator Marco Rubio of Florida has similarly flirted with a military response. Secretary of Defense James Mattis, however, has echoed a common sentiment of the U.S. security apparatus by publicly stating, “The Venezuelan crisis is not a military matter.” All of Venezuela’s neighboring countries have also voiced their opposition to an armed attack on Venezuela.

And rightly so. Trump’s fantasies of military invasion are deeply misguided and extremely dangerous. Although a U.S.-led military assault would likely have no problem overthrowing Maduro in short order, what comes next could be far worse, as the Iraqis and the Libyans know only too well: when outside powers overthrow autocrats sitting atop failing states, open-ended chaos is much more likely to follow than stability—let alone democracy.

Nonetheless, the United States will continue to face pressure to find some way of arresting Venezuela’s collapse. Each initiative undertaken so far has served only to highlight that there is, in reality, little the United States can do. During the Obama administration, U.S. diplomats attempted to engage the regime directly. But negotiations proved futile. Maduro used internationally mediated talks to neutralize massive street protests: protest leaders would call off demonstrations during the talks, but Chavista negotiators would only stonewall, parceling out minor concessions designed to divide their opponents while they themselves prepared for the next wave of repression. The United States and Venezuela’s neighbors seem to have finally grasped that, as things stand, negotiations only play into Maduro’s hands.

Some have suggested using harsh economic sanctions to pressure Maduro to step down. The United States has tried this. It passed several rounds of sanctions, under both the Obama and Trump administrations, to prevent the regime from issuing new debt and to hamper the financial operation of the state-owned oil company. Together with Canada and the EU, Washington has also put in place sanctions against specific regime officials, freezing their assets abroad and imposing travel restrictions. But such measures are redundant: if the task is to destroy the Venezuelan economy, no set of sanctions will be as effective as the regime itself. The same is true for an oil blockade: oil production is already in a free fall.

Washington can sharpen its policy on the margins. For one thing, it needs to put more emphasis on a Cuban track: little can be achieved without Havana’s help, meaning that Venezuela needs to be front and center in every contact Washington and its allies have with Havana. The United States can cast a wider net in countering corruption, preventing not just crooked officials but also their frontmen and families from enjoying the fruits of corruption, drug trafficking, and embezzlement. It could also work to turn the existing U.S. arms embargo into a global one. The Maduro regime must be constrained in its authoritarian intent with policies that communicate clearly to its cronies that continuing to aid the regime will leave them isolated in Venezuela and that turning on the regime is, therefore, the only way out. Yet the prospects of such a strategy succeeding are dim.

After a long period of dithering, the other Latin American countries are finally grasping that Venezuela’s instability will inevitably spill across their borders. As the center-left “pink wave” of the early years of this century recedes, a new cohort of more conservative leaders in Argentina, Brazil, Chile, Colombia, and Peru has tipped the regional balance against Venezuela’s dictatorship, but the lack of actionable options bedevils them, as well. Traditional diplomacy hasn’t worked and has even backfired. But so has pressure. For example, in 2017, Latin American countries threatened to suspend Venezuela’s membership in the Organization of American States. The regime responded by withdrawing from the organization unilaterally, displaying just how little it cares about traditional diplomatic pressure.

Venezuela’s exasperated neighbors are increasingly seeing the crisis through the prism of the refugee problem it has created; they are anxious to stem the flow of malnourished people fleeing Venezuela and placing new strains on their social programs. As a populist backlash builds against the influx of Venezuelan refugees, some Latin American countries appear tempted to slam the door shut—a temptation they must resist, as it would be a historic mistake that would only worsen the crisis. The reality is that Latin American countries have no idea what to do about Venezuela. There may be nothing they can do, save accepting refugees, which will at least help alleviate the suffering of the Venezuelan people.

POWER TO THE PEOPLE

Today, the regime is so solidly entrenched that a change of faces is much more likely than a change of system. Perhaps Maduro will be pushed out by a slightly less incompetent leader who is able to render Cuban hegemony in Venezuela more sustainable. Such an outcome would merely mean a more stable foreign-dominated petro-kleptocracy, not a return to democracy. And even if opposition forces—or a U.S.-led armed attack—somehow managed to replace Maduro with an entirely new government, the agenda would be daunting. A successor regime would need to reduce the enormous role the military plays in all areas of the public sector. It would have to start from scratch in restoring basic services in health care, education, and law enforcement. It would have to rebuild the oil industry and stimulate growth in other economic sectors. It would need to get rid of the drug dealers, prison racketeers, predatory miners, wealthy criminal financiers, and extortionists who have latched on to every part of the state. And it would have to make all these changes in the context of a toxic, anarchic political environment and a grave economic crisis.

Given the scale of these obstacles, Venezuela is likely to remain unstable for a long time to come. The immediate challenge for its citizens and their leaders, as well as for the international community, is to contain the impact of the nation’s decline. For all the misery they have experienced, the Venezuelan people have never stopped struggling against misrule. As of this summer, Venezuelans were still staging hundreds of protests each month. Most of them are local, grass-roots affairs with little political leadership, but they show a people with the will to fight for themselves.

Take Back Venezuela With Votes, Not Violence

Is that enough to nudge the country away from its current, grim path? Probably not. Hopelessness is driving more and more Venezuelans to fantasize about a Trump-led military intervention, which would offer a fervently desired deus ex machina for a long-suffering people. But this amounts to an ill-advised revenge fantasy, not a serious strategy.

Rather than a military invasion, Venezuelans’ best hope is to ensure that the flickering embers of protest and social dissent are not extinguished and that resistance to dictatorship is sustained. Desperate though the prospect may seem, this tradition of protest could one day lay the foundations for the recovery of civic institutions and democratic practices. It won’t be simple, and it won’t be quick. Bringing a state back from the brink of failure never is.

 

Posted in Blog | Tagged , , , , | Leave a comment