Welcome to another edition of “What’s the Deal?” the blog that only takes aim with words.
In this week’s edition we’ll look back at a vivid aerial attack in Venezuela and determine some background to the incident and what may come of it.
On Saturday August 4, President Nicolas Maduro was speaking at a military event in Caracas when an explosion near the stage sent security forces scrambling to protect the president and first lady. The attack was directed from a flying drone that triggered an explosion, seemingly in order to assassinate Maduro. Maduro pulled through unscathed from the incident and immediately placed the blame on right wing elements and its next door neighbor Colombia and its president Juan Manuel Santos,
“All the investigations point to Bogotá,” he said, referring to Colombia’s capitol and government, accompanied by his ministers and military high command. “They have tried to kill me today.”
In addition to blaming Bogota, Maduro has insinuated that the United States, a long-time foe of the Venezuelan government since the Bolivarian revolution in the 1990s, had been behind the attack as well or was plotting to remove him from office.
This is not the first time that Maduro has been targeted. In 2016, a former military official attempted a grenade attack on government buildings that fizzled and whose call for force against Maduro’s government died out after he was later killed by security forces. Mr. Maduro was also accosted by protestors with pots and pans that were part of massive protests in 2017 because of severe food shortages and rising hunger. It is still not clear if the drone was actually an assassination attempt as the Venezuelan government contends as no one has claimed responsibility and the explosion was not necessarily directly at Maduro.
Some fear that the drone explosion will trigger a backlash or crackdown from the government on an opposition and public that has seen rampant crackdowns on the main opposition party and protests.
Why an Attack?
When one examines the Venezuelan situation outside the attack incident, it becomes clear as to the possible motive. The country has been in a continual downward spiral economically over the past 4 years with food shortages, hyper-inflation, and a mass exodus of people fleeing an increasingly repressive government led by Maduro. Images of Venezuelans standing in long queues for basics like gasoline, rice, and other items highlight the dismal economic situation. Formerly middle income generating jobs now are barely enough to scrape by with. The inflation rate has risen from 254% in 2016, to 1,088% in 2017 and reached an eyepopping 25,000+ % inflation between May 2017 and May 2018. By any economic measure from currency valuation, fiscal debt, financial risk from international creditors, cash reserves, and basic goods and services – Venezuela is in crisis.
In addition, Maduro has blocked aid shipments of medical supplies to the country, deepening the crisis to include access to health care and medicine. Indicators of overall health show a dark landscape: a rise in infant mortality rate by 30% in 2016 and a 76% increase in malarial infections.
Not surprisingly, this has resulted in significant migration out of Venezuela to escape the economic collapse, with an estimated 4 million Venezuelans departing for the Dominican Republic, Cuba, Brazil, the U.S. and other countries; often illegally.
The Venezuelan congress or unicameral Constituent Assembly reformed by President Maduro in 2017 to be a legislative body with supportive members (the democratically elected congress had been full of opposition representatives since 2015) had recently voted in July 2017 to follow the decree by President Maduro that the Congress had the power to amend the constitution, pass laws, and sack government employees and remove institutions – a powerful role that puts more power into Maduro’s hands.
A move by the Assembly in 2017 to appoint judges to replace those they deemed illegally appointed during the previous Assembly in 2015 was rejected by pro-Maduro socialist party (PSUV) appointed judges and the nominee judges have been exiled or imprisoned in the time since. This effective grip-tightening on three branches of government along with the silencing of the opposition through control of media and opposition leadership has marched the Maduro government closer to dictatorship.
Surprisingly, despite his abysmal economic record and decreased quality of life for venezolanos Maduro won reelection once again in May 2018 to keep his job. Many point to the disorganization of the opposition party movimiento unidad democratica or MUD along with the prevention of opposition leaders from running as to Maduro’s reelection, but fear was also cited as a driving factor. Many Venezuelans reported receiving government handouts near polling stations, presumably for a positive vote for Maduro, and other fishy ballot security measures that had international observers calling the elections undemocratic.
So Maduro has presided over a plummeting economy, increasingly has consolidated his power by removing opposition leaders from his midst and shoring up his support from the other branches of government, and has used fear or intimidation as a method for retaining power in unfair/unfree elections. The clouds over the purpose behind the drone attack are beginning to lift.
This was all over a month ago.
On September 8th, the New York Times reported that officials from the Trump administration had met with dissidents within the Venezuelan military who were bent on removing Maduro through a coup. The report detailed how after several hesitant meetings, administration officials agreed to listen to the dissidents’ plan and possibly offer support, but never fully agreed to provide financial or physical backing.
While the U.S. did not participate officially in a coup plan, the news of these meetings are likely to fuel Maduro’s insistence of outside influence that is attempting to remove him. In addition, the individuals listed as participants in the meeting have records of possible human rights abuses and connections to armed groups including FARC – a group the U.S. considers a terror organization. Needless to say, the meeting does not help the already unflattering American reputation in Latin America.
Venezuelan Economic Life-Blood
While it seems that Nicolas Maduro is the culprit behind the tumult that is now striking back at him, the seeds for Venezuela’s economic collapse had been planted many years prior.
Venezuela sits on one of the world’s richest deposits of oil reserves (read: fossilized marine organisms) and was one of the original founders of OPEC, the Organization of the Petroleum Exporting Countries. For decades following its first oil wells in 1912, Venezuela benefited economically from its oil resources and was a relatively wealthy country with a per capita GDP* higher than Brazil’s and even approaching the U.S. level in the 1960s.
The management of its Black Gold along with global oil prices explain a great deal as to how Venezuela’s economic collapse progressed. The decline and collapse of the Venezuelan economy can be tied to its oil industry from the following key developments:
- Nationalization of its major oil company: PDVSA in 1976
- Started by President Carlos Andres Perez to control its resource and use its oil wealth to develop the country further.
- This led the nationalized company to be more directly tied to whoever was leading the country politically and more closely aligned with the country’s economic outlook
- Lack of investment and research in the industry
- During the oil booms with high prices in the early to mid 2000s, other countries continued to invest in oil extraction methods and outputs but Venezuela did not –
- This was especially onerous due to Venezuela’s higher levels of heavy crude oil deposits which require more effort to refine – something that had to be outsourced because of the lack of oil infrastructure.
- Appointment of inexperienced or crony officials to lead the national oil company
- Following the oil strikes of 2002 after then president Hugo Chavez began to fire high level PDVSA managers, Chavez then purged the company of human capital – 18,000 oil workers received pink slips
- Pay for oil workers slipped and there was political pressure to support the Chavez government.
- Overreliance on oil as a main economic driver
- Lack of diversification has led to oil revenue and since then foreign debt from China and Russia covering all of government spending and a transition to importing basic goods such as agricultural products and even gasoline!
- When oil prices decreased, as they have several times, the Venezuelan economy suffered with today’s crisis marking the final outcome of a long downward spiral.
Each of these, which are profiled in further detail from other sources (listed below) has helped to bring about a crisis in which hyperinflation presides and lack of basic food and medical supplies have become staples.
So given the extreme humanitarian situation in Venezuela and the throttling of democratic processes by the Maduro government, does the recent revelation of U.S. contact with rebellious Venezuelan military officials indicate American intervention is around the corner?
*Per capita GDP is an average measure and is a flawed statistic of average wealth because if some individuals have high levels of income, this throws off the overall average.
American Regime Change in “Its Backyard”
Nicolas Maduro and many of his countrymen may indeed harbor such thoughts of American intervention. In several instances in the 20th century, the American government has directed or been behind regime changes in Latin America. In many of these instances in America’s imperial history, it has left a lasting stain on the reputation of the United States in the region. The interventions often removed democratically elected governments and replaced them with American-business friendly leaders who often were dictatorial and have been main drivers of economic malaise and restriction of democratic norms to the present.
- Direct American military rule after uprisings in 1906 that arose – lasting 3 years
- American support for authoritarian strongman Fulgencio Batista and his crackdown on the Communist Party, suspension of the constitution and other political liberties. He also conducted a coup and cancelled the 1952 congressional elections that spurred the Cuban revolution in 1959 led by Fidel Castro.
- The removal of Jacobo Arbenz, a democratically elected president who nationalized industries to control domestic resources.
- The removal of Miguel Davila in 1912 for nationalizing agricultural land held by foreign banana planters (United Fruit, of the U.S.)
- Using the Honduran military and its bases to launch its anti-Sandinista or Contra war in 1981.
- After attempting to regulate American business, President Jose Santos Zelaya was forced from power in 1909 by surrounding American naval vessels and support of small scale militias.
- The backing of the Contra rebels by the Reagan administration through the covert and illegal shipment of Iranian arms to fight the Castro-aligned Sandinista rebels against the Nicaraguan dictatorship of the Somoza family.
- The coup that took over and toppled the presidency of the democratically elected Salvador Allende. The coup was perpetrated by a military general Agustin Pinochet who installed a brutal dictatorship that was responsible for decades of repression and thousands of disappearances of political dissidents.
While there are several other instances of meddling, support of non-democratic ideals, and direct U.S. military intervention in Latin America, these previous examples lend serious weight to many ideas of American intervention.
With the economy in ruins and an increasingly authoritarian, but vulnerable president, what will become of Venezuela’s future? The cracks in the military armor for support for Maduro are beginning to show, but it is not clear if a change in power is on the horizon – nor if that would solve the crisis.
The news of American officials visiting with anti-Maduro Venezuelan military officials is a worrying wrinkle to the fabric of the story. The Trump administration has made wind of military intervention in Venezuela a possibility, and this remains a wild-card. With the attention so far paid to dissidents with planned violence or a bloody take-over, the political future is bleak indeed for both Venezuela and America’s already tarnished Latin image. If the attention, however, was to forge better relations with opposition parties and other international and regional groups to revert back to more democratic processes, then there is a better chance to enact political change peacefully.
Economically, since the Venezuelan economy (and its debt) is so tied to its oil, an extreme overhaul of the industry and how it is managed and run is long overdue – this must (despite it being anathema to the Chavista model) include assistance and investment from foreign enterprises. This, while difficult to reverse after decades of antagonism and distrust, would likely be welcomed by the private oil sector as a chance to help stabilize the company that sits on top of the world’s largest oil reserves and begin to reverse decades of decline.
Outside of oil, the Maduro government must find ways to invest in other sectors of the economy to hedge against the decline in oil prices and revenue. Adding some stability to these sectors may encourage other areas to stabilize and offer a chance for international loans to become available once again to help provide the basics for Venezuelans as they recover.
None of this will be possible of course if the Maduro government continues to turn inward and grows more and more distrustful and authoritarian – that path would only lead to greater chances of a violent revolution and possible installation of corrupt or even more authoritarian military leaders.
Until the next flying drone scare,
Your Faithful Historian,
Eric G. Prileson
Sources and Further Reads:
Kinzer, Stephen. Overthrow! America’s Century of Regime Change. Times Books, Henry Holt and Co. 2006, New York.