Author : Ketan Mehta

Expert Speak Raisina Debates
Published on Feb 08, 2019
Why is Venezuela on the boil?

Source Image: Edilzon Gamez/Getty Images

Venezuela is facing one of its worst crises for nearly two weeks now. Worse, there seems to be no end in sight to the crisis which has resulted in the National Assembly President and leading opposition figure, Juan Guaidó, declaring himself the Interim President last month and getting recognition from the US, European Union and many countries in the region like Brazil. However, the incumbent President Nicolas Maduro, facing massive protests and rallies by disgruntled people, has the support of countries like Russia, China and others. With both sides sticking to their stands and fighting it out, the international focus, at least for the present, seemed to have shifted to this South American country from Syria and its regime.

While the Inter-American Commission for Human Rights, a body of the Organisation of American States (OAS), has asked the Venezuelan authorities to ensure protection of Guido’s life, Maduro has warned US President Donald Trump that he risked staining "his hands with blood" if he pursued military action in his nation. Speaking to Spanish channel LaSexta on 3 February, Maduro asked Trump for mutual respect and asked him "not to repeat Vietnam in Latin America."

The new leader in focus, Guaidó, seems a politician of a different class than what Venezuela is used to, though he was relatively less popular until sometime back. In his speeches, Guaidó talks about human rights, separation of powers, restoring power in the legislature and granting amnesty to military officers if they switch their allegiance. This is in contrast to what Maduro and his predecessor Hugo Chavez believed in -- centralisation of power and authoritarianism to ensure the longevity of their regimes.

What is fueling the ongoing discontent in Venezuela? The opposition to President Maduro and his way of politics is partly an outcome of the economic crisis facing the country. However, things were not the same earlier. In the 1970’s, Venezuela was on the verge of becoming one of the most prosperous country in Latin America. It was a fledgling democracy, though with its share of deficiencies. It had better healthcare, education and infrastructure facilities than many other Latin American nations.

However, with the rise of Hugo Chavez -- regarded as one of the most popular proponent of populism and anti-imperialism in Latin America, Venezuela saw weakening of its democratic institutions, dilution of the separation of powers and an increasingly authoritarian leadership which promoted cronyism over merit.  This negatively affected the functioning of the Venezuelan state that gave little incentive to private businesses to invest or prosper. Chavez focused on expropriating foreign companies involved in various sectors of the economy and envisioned an overarching authority of the state in managing the country’s oil reserves, said to be the largest in the world. Chavez further undercut ties with the US and instead strengthened Venezuela’s ties with autocratic regimes like Cuba, Iran and Belarus. As part of its foreign policy objective of denouncing US influence in the America’s, Chavez and later Maduro sought to give greater emphasis to Venezuela’s ties with Russia and China which today are viewed as key supporters of the regime.

On the economic front, Venezuela succumbed to the practice of barter trade, exchanging its oil for valuable expertise in sectors such as petroleum and infrastructure with countries like China, Cuba and Belarus.  In other words, it vehemently opposed policies which are deemed to be practised by liberal and free market economies.

Even in the 70s, Venezuela’s economy struggled to diversify from its dependence on crude oil exports which is its primary export and revenue. This meant its economic health depended  on the health of the international oil market. Maduro assumed office in 2013 after the death of Hugo Chavez. In 2014, oil prices crashed and the Venezuelan economy too started facing serious crisis and soon it came to standstill. With lower oil revenues, the regime introduced a cut in public spending on social programmes and introduced other measures such as the devaluation of the currency.

Since Maduro assumed office in 2013, its economy has contracted by nearly 50%. Naturally, this  economic downturn has given rise to unprecedented levels of unemployment and  a grave migration crisis as ordinary Venezuelans are crossing over to other Latin American states hoping to escape the dire situation back home. There is a massive food shortage in the country and 64% Venezuelans have lost an average of 11 kg of bodyweight due to hunger. 61% of the population is living in extreme poverty. Alongside, hyperinflation has reached alarming figures.

The present regime is also accused of mismanagement of critical institutions of the country and preferring loyalty over merit. It has strategically coopted the military by giving key positions to military personnel thereby reducing the possibility of a coup d'état.  President Maduro handed over the leadership of the Venezuela’s prime oil production company, Petróleos de Venezuela, S.A (PDVSA), to the head of the National Guard, Maj. General Manuel Quevedo. Food distribution services are too in the hands of the Defence Minister, Vladmir Padrino. In a bolder step, Maduro had earlier declared the Venezuelan National Assembly as unconstitutional. Many also claim that the elections were too manipulated which, however, is reported to have helped the opposition’s cause.

As protests intensified, on January 23 this year, Juan Guaidó  declared himself as Venezuela’s Interim President. However,  despite the opposition parties’ recent success in generating momentum against the regime, both at domestic and international levels, Maduro stuck to his position, helped by a  range of factors, such as his grip on the military leadership, disunity in opposition ranks and the staunch international support  from countries like Russia, China and Cuba.

Role of Russia and China

Following the US’ decision to recognize Guaidó as the Interim President,  Russia’s Prime Minister  Dimitry Medvedev stated that the US’ support for Guaidó  was a quasi-coup. Russia’s Foreign Minister Sergey Lavrov also called the decision as an “obvious call for a coup d’etat”. Moscow further stated, “destructive interference from abroad blatantly violates basic norms of international law”.

The strong support from Russia was expected as it has always been a vital ally of the regime. Russia also sent two Tu-160 bombers to Venezuela last year. It has also provided Venezuela with some military equipment, including AK-104 assault rifles and T-90 battle tanks. China too has been its economic lifeline in difficult times. By 2017, the same year when protests erupted against President Maduro, Venezuela was the largest recipient of Chinese financing. Since 2007, Beijing has loaned more than $60 billion to Venezuela and has significantly invested in the country’s oil sector. Its flagship investment includes the $16.3 billion worth Junin-4 oil bloc in Venezuela’s Orinco oil belt. Venezuela had earlier also sent its engineers to China for technical training. China has helped the country in gaining much needed self-sufficiency in oil production. China also accepts Venezuelan oil as mode of repayment for its loans. On the other hand, Venezuela sees China as a strategic partner against the US influence in the Americas. In these times of growing pressure against the Maduro regime, China’s Ministry of Foreign Affairs stated that Beijing supported the Venezuelan government’s effort in preserving the country’s sovereignty.

The other country supporting  Maduro is Cuba, a well-known opponent of the US. In fact, Maduro and earlier Chavez were heavily influenced by the Cuban experience which they sought to implement in their country.

Maduro today continues to carry forward this legacy as he appoints people who are inspired/trained in Cuba in the government and resist any form of debate or discussion regarding governance. The regime continues to maintain extensive ties with Cuba and under Cuban guidance there is little chance that the regime would do away with cronyism, corruption and embrace economic reforms which are need of the hour.

Indian position

From India’s perspective, though Venezuela is not the most important country in its foreign policy in the Latin American region, there is some trade and relationship between the two countries in the field of energy. However, in 2016, Indian Prime Minister Narendra Modi gave a miss to the NAM summit in Venezuela, which point to the archaic significance of NAM in New Delhi’s current foreign policy.  In the current crisis, India has taken a neutral position. Recently, the spokesperson of the Ministry of External Affairs stated, “We are of the view that it is for the people of Venezuela to find a political solution to resolve their differences through constructive dialogue and discussion without resorting to violence”.

However, the US sanctions on Venezuela’s state-owned petrol and gas company, PDVSA, could provide an opportunity for Indian oil companies to purchase more Venezuelan crude oil at cheaper rates. India, currently the third largest consumer of its crude oil, has earlier paid for the crude in Indian rupees owing to the sanctions regime. It remains to be seen whether New Delhi would exploit this opportunity in its favour by accessing Venezuelan crude at heavily discounted rates, though there remains a threat of secondary sanctions from the US too as was evident in the case of India’s investment in Iran’s energy and Port sector.

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Author

Ketan Mehta

Ketan Mehta

Ketan Mehta was a Junior Fellow with ORF’s Strategic Studies programme. He is currently working on the phenomenon of ‘Rising Powers’ with an emphasis on ...

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Editor

Heiner Lupke

Heiner Lupke

Heiner Lupke Senior Researcher DIW Germany

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