Venezuela: Making of a Failed State

President Nicolas Maduro’s coordinated campaign of repression, directed against once political and ideological confederates, represents, perhaps, the penultimate progression toward Venezuela becoming a single-party state. Maduro’s cannibalism of leftist defines the present iteration of state coercion, former supporters residing in rural, socialist enclaves.  

The violence perpetrated seems to be deliberate and tactical.  The strategic objective is further to consolidate the regimes’  power through the parliamentary elections on December 6th.   The opposition does not recognise the legitimacy of the elections and has refused to participate due to flagrant illegalities.  Should Maduro be successful in the imminent elections, Venezuela will, effectively, exist as a rogue, single-party state.       

Current Overview 

Venezuela’s economic disintegration, precipitated by the translation of populist, socialistic ideology into state policy, the recent US drug trafficking indictments filed against Nicolas Maduro and other high-ranking members of the Chavismo regime, mass emigration causing regional instability, the imprisonment of political opponents and, finally, proven human rights violations, contribute to its present existence as a failed state.  

Fraudulent parliamentary elections of December 6, 2020, exacerbated the country’s present political dysfunction. It resulted in competing assemblies and augers the entrenched continuance of fractured governance.  Will the Venezuelan imbroglio necessitate a more aggressive variant of Western intervention?      

Indicators of the Failed State 

The Venezuelan state exists as a disintegrating kleptocracy, with neither its president nor its legislature recognised by a broad swath of western democracies. Myriad illegalities orchestrated from Caracas and perpetrated throughout the increasingly lawless western territories by various paramilitary factions loyal to the Maduro regime sustain the regime. This is partly due to sweeping sanctions; specifically, those directed toward its oil industry and the additional targeted sanctioning of the political and military elite. 

Governmental institutions, reduced by political chicanery and gross fiscal mismanagement, are incapable of providing citizens with essential state services. The judiciary, a flagrant extension of the kleptocracy, supports and defends the regime and its security apparatus’ lethal iteration FAES, the reach and influence of which is magnified by the utilisation of armed civilian groups that retain the appellation “colectivos”.  

Hyperinflation has led to food shortages, rampant malnutrition and an absence of essential, life-sustaining products. The lack of running water and perpetually insalubrious hospitals’ conditions coupled with degenerating infrastructure assures that the coronavirus’s proliferation will be both devastating and protracted. The prospect, predicated on the state’s incompetence and willful disregard, that the virus will extend indifferent carnage and death to cities and indigenous communities alike is a near certainty.  

As the endogenous consequences of corruption and mismanagement accumulate, the regime will be compelled, whether through diplomatic or coercive occurrence, to address parallel, exogenous repercussions including the recent narcoterrorism indictments filed against the administration by the US Department of Justice and the regional instability precipitated by Venezuela’s emigration crisis.      

Overview of Venezuelan Economy   

The vitiation of the Venezuelan economy was and continues to be, conducted under the administration of variant, successive incarnations of kleptocracy, the conceits of which manifest themselves in political corruption, gross mismanagement of oil revenues and demonstrable governmental incompetence within the public sector.

Two reasons have caused an annual contraction of GDP since 2014. First, the precipitous decline in global oil prices. Second, the stubborn continuance of Chavismo economic policy which, amongst numerous deleterious dogmas, advocates for the expropriation of foreign-owned oil endeavours and the nationalisation of utilities. 

The present growth for Venezuela’s GDP is -26.8% and is forecast to continue this contraction as it descends to a predicted -35% by 2022.  In addition to the perennial contraction of GDP, Venezuela’s hyperinflation rate is 1,813.1% as of September 2020.  The ascendant inflation rate was precipitated by Maduro’s adherence to peripheral, Marxist economic theory. It is argued that printing currency is the sound policy mechanism required to balance the state’s budget amidst volatile global oil markets and declining national revenue. 

The catastrophic economic corollaries of printing money to right a listing economy are observed in Zimbabwe’s continued fiscal crisis.  Zimbabwe’s governing kleptocratic syndicate of elites has, historically, rectified state budget deficits by printing money.  The decision to finance state budgets through printing money harboured grim practical consequences for Zimbabwe’s population and resulted in crippling hyperinflation, worthless currency, and limited access to affordable essential goods.     

The annual contraction of Venezuela’s GDP and staggering rate of hyperinflation has made the servicing of Venezuela’s public debt impossible. Venezuela’s inability to obtain credit is further exacerbated by the US’s sweeping sanctions, which prohibit the government from accessing US equity markets while terminating Venezuelan oil importation.

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Venezuela: GDP Growth Rate 

 Ideological Translation and Historical Survey

The examination of the populist, socialistic agendas of Hugo Chavez and Nicolas Maduro demonstrates, at once, the entrenched ideological mechanisms responsible for the assemblage of theoretical, Marxist disquisitions and the material polices that survive as corollaries to doctrinal exegeses.  

Will the recurrent, historical translation of populist, socialist ideology into willfully imprudent economic and social policy, specifically expropriation and nationalisation, represent an essential catalyst for the Venezuelan state’s failure? Will it provide a quantifiable aperture in which the transformational instruments of exogenous intervention and, critically, foreign investment can be inserted? The thorough analysis of the question of intervention in Venezuela cannot, prudently, proceed without a brief historical review of these translations.

Chavez’s ascension to power was predicated mainly upon his implementation of populist rhetoric to denounce austerity measures enacted in 1998 by the Venezuelan government in response to declining oil prices and the increasingly stagnant economy.  In 2001, after Chavez winning the presidency, the philistinism inherent to populist ideology was directly translated into his land reform decree which was, essentially, a policy instrument employed to facilitate dictated expropriations.  Chavez’s order, “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”.  The left observed the decree as a prudent redistribution of resources by a government seeking economic equality.  The corollary of these expropriations was the disintegration of food production and the broad vitiation of land resources.

Following the land reform order, foreign oil endeavours were expropriated without indemnification.  Each business’s leadership was replaced by political elites who did not possess the technical or managerial expertise to operate the ventures successfully.  Chaves also nationalised Venezuelan utilities.  The consequences of nationalisation, lack of running water and rolling blackouts, have yet to be rectified and contribute to Venezuelan infrastructure’s present, dire condition. 

In perhaps the most damaging and enduring instance of socialist ideology being translated into economic policy, Chavez, following the strike of 2002, terminated nearly half of the employees at the state-operated oil company PDVSA while manipulating the currency exchange rate. In exchange for the military’s broad acquiesce, Chavez appointed military officers to the executive positions at PDVSA. Again, they lacked the technical expertise to operate the oil behemoth and who, leveraging their proximity to power, created a favourable environment for arbitrage that took advantage of Chavez’s currency manipulation. In a country where oil constitutes 25% of GDP and 95% of exports, the pillaging of PDVSA’s technically competent leadership was particularly devastating.  

These flagrant translations of populist, socialist ideology into codified economic policy offer a glimpse into the origins of the present kleptocracy.  Will exogenous actors view the regime’s current repressive campaign as a transformational opportunity, realised through foreign investments, open markets and cross-sector development?  Such coercive activity definitively demonstrates the necessity of expansive institutional transformation within the Venezuelan government.    

The Abandonment of Democracy and Maduro’s Consolidation of Power

Through both subterfuge and belligerence, Venezuela’s democratic institutions have suffered deliberate, habitual harm and dismembering.  Any rational, strategic assaying of the Venezuelan imbroglio and its resolution will require that these institutions be restored, protected, sustained and, further, that their dismantling complexities are understood.  

In May of 2017, Maduro announced the convening of a National Constitute Assembly with the express intention of revising the Venezuelan constitution.  The delegates of the assembly would be selected in elections scheduled for the 30th of July.  Despite the constitutional requirement of holding a popular referendum before the assembly’s convocation, the Supreme Court ruled in the regime’s favour, allowing Maduro to convoke the body without a referendum.  The election created the 545-member National Constitute Assembly which would begin the process of revising the constitution.  Subsequently, the National Assembly was effectively dissolved, allowing Maduro infinite latitude to consolidate his power and persecute the opposition with interminable impunity.  

The pervasive, autocratic stratagems employed by the Maduro regime reveal the corrupt linkages between seemingly disparate sectors of the Venezuelan state.  In an attempt to further consolidate his power, Maduro, buttressed by the substantial political victory of dissolving the National Assembly, appointed, to the office of oil minister and, also, to the top leadership position at PDVSA, a general with no technical expertise in the field.  This strategy agrees with Venezuela’shistorical trend of appointing the military elite, through felonious quid pro quos in which monetary compensation is exchanged for the unwavering support of the regime, to high-ranking positions in government and industry.   

This requisite strategy has three essential outcomes. The first is that the fraudulent quid pro quo is an effective deterrent against the inevitable coup d’état. Secondly, it ensures that industries, due to executives having no technical expertise in the fields that they now lead, underperform or comprehensively fail to provide services or manufacture products. Finally, it actively preserves the kleptocratic ecosystem, ensuring that it is sustained in perpetuity.   

The fraudulent 2018 presidential election is an unresolved, continuing affront on the rules-based international order. It represents the urgency with which multilateral actors must consider their response if the evolution of more sophisticated, entrenched repression methods are to be prevented.  Third-party electoral monitors were not present for the election, and government employees were compelled to vote for the United Socialist Party of Venezuela in fear that their food assistance would be withheld.

The election’s blatant expression of political and electoral graft preceded western democracies designating Maduro’s second term as illegitimate while simultaneously recognising the legitimacy of Juan Guaido’s assumption of presidential powers.  By extension, the Maduro regime members of the United Socialist Party of Venezuela have, since January of 2019, administered the Venezuelan state illegitimately and without official recognition from occidental actors.  Will international actors continue to countenance such illegitimacy if the instability, previously defined as intrastate and now established regionally, mutates further? 

In a 2019 report, Freedom House reported that Venezuela devolved from “partly” free under Chavez to “not free” under Maduro. The unmitigated descent into autocracy possesses disturbing downward limits in which the Venezuelan state begins to parallel Zimbabwe:

“Zimbabwe: a semi-elected dictatorship monopolising power for years despite long-term economic hardship…another possibility is…that Venezuela will enter a prolonged civil conflict, as Libya and Syria have”.   

Do such harrowing comparisons necessitate deliberate discourse regarding the prospect of intervention?  Will international actors refine a suite of actionable objectives as Venezuela writhes in the shadow of civil war?  Venezuela’s authoritarian regression demonstrates a further unfettering of the state from internationally accepted democratic practices.  It has yet to be determined whether concentrated, interventive measures, constructed upon an efficient policy infrastructure are, at this late hour, the corrective actions required to avoid the proliferation of intrastate violence and to assure the restoration of democracy.  

The presiding international order has consistently determined to palliate Venezuela’s diplomatic, economic isolation and endogenous, social despondency. Definitive answers are premature. Whether Western stakeholders will choose to understand then eliminate the myriad causes of state dysfunction, through the articulated ultimatum of forcible engagement is yet to be seen.  

 Regional Instability and Migration Crisis 

The abject failure and criminality of the Venezuelan state have precipitated various concerns — amongst a superfluity of ruinous human rights corollaries, expansive regional instability engendered by mass emigration into bordering states, particularly Columbia, which has absorbed the highest number of Venezuelan migrants.  Venezuela’s inability to provide even rudimentary state services to its citizens continues to accelerate the course of the subregional migrant extremity whilst exacerbating the political incongruities between interstate actors.

Amongst the diverse causes of Venezuelan emigration, cited by the Office of the High Commissioner for Human Rights, are political persecution and lack of access to food or healthcare.  Migrants are often unable to acquire secure, motorised transportation when seeking asylum. They are lacking preferable contingencies, compelled to walk considerable distances in which their exposure to the elements and the inadequacy of shelter are certainties.  Migratory routes often necessitate transit through difficult terrain and encompass vast swaths of lawless, western territory effectively, if not explicitly, governed by paramilitary factions conducting drug and human trafficking, illegal mining ventures and extrajudicial executions. 

According to the OHCHR report, migrants arriving at a destination country will realise their plight’s full impossibility through their lack of “regular migration status, inadequate living conditions, labour exploitation, discrimination and xenophobia”.  There is no legal recourse for Venezuelan migrants within destination countries, nor are they able to obtain, from the Venezuelan government, the immigration documentation essential for acquiring a nationality that assures, theoretically, access to legitimate work and education.

The proximate objective of the US and western democracies more broadly is, seemingly, to alleviate the present, categorical suffering of Venezuelan migrants within the subregion by providing direct medical and food assistance through UN subsidiaries and adjacent NGO’s.  Avoiding further regional instability will require that versatile aid is also administered to the states that continue to absorb migrants against their national interests.  Should a timid or preoccupied occident permit, whether through deliberate inaction or tardiness induced by procrastination, the further expansion of migratory flight, the hemispheric consequences could be grievous and irreversible.

Protracted emigration at once ensures the acceleration of Venezuela’s demographic deficits and further diminishes the vicinal states’ financial resources and domestic political benevolence supporting displaced Venezuelans.  The northwestward migratory progression coupled with the regional, societal ends presently apparent, have yet to provide the political expedient required to defend and advance, domestically, through bicameral legislatures, formal proposals of intervention.  The comprehensive rectification of the refugee matter, which will represent the future curtailing of mass migration into Central America and the US, is accomplished, through the restoration of Venezuela’s state institutions which, in practice, will require transformational measures within each branch of government.      

Domestic Political Dysfunction

The National Assembly’s continuity vote follows the December 6th parliamentary elections that Venezuela’s four principal opposition parties boycotted due to concerns regarding the electoral process’s transparency. Before the elections, the EU stated that it would not send observers to ensure the integrity of the electoral process because the Nicolas Maduro regime provided insufficient notice.  The national polls were roundly denounced as fraudulent by the US, EU, and a broad swath of Latin American countries.  Domestically, Maduro successfully consolidated his power by installing, through internationally uncertified elections, loyalists to parliamentary seats. 

The vote to extend the National Assembly revealed the different strategies employed by the opposition parties for achieving democratic stability. Guadio’s Popular Will party seeks transparent congressional and presidential elections to restore popular rule.  The Democratic Action party targets mayoral and gubernatorial elections to buttress democratic institutions.  It is unclear how inter-party divisions will impact domestic electoral politics and the diplomatic negotiations that support democratic governance.  

Compounding Venezuela’s ever-evolving domestic political dysfunction, Maduro announced on December 18th that he would dissolve the country’s National Constituent Assembly (ANC).  Maduro convened the ANC in May of 2017, without the constitutionally required national referendum. This was in response to nationwide protests that demanded the release of political prisoners, recognition of the opposition-held National Assembly, and the announcement of presidential elections.  Opposition parties boycotted the election of the ANC.  The US and EU denounced the elections as a direct attack on Venezuelan democracy and a belligerent attempt to consolidate dictatorial power. 

The mandate of the ANC was to reform the constitution, but such ambitions were never realised.  Instead, it was employed as an institutional bludgeon to pass a collection of legislation that supported Maduro’s political opponents’ detention and ultimately undermined democracy.  

Maduro stated that the ANC could now be safely discarded as it had accomplished the objectives of its remit by,

“[restoring] the peace of the republic, internal security, national union and the stability of the country”

But for Maduro and the ruling Socialist Party, dissolving the assembly is a practical consideration.  The blatantly fraudulent Dec 6th parliamentary elections allowed Maduro to consolidate power and the Socialist Party he controls to dominate the assembly. Currently, the ANC is, due to the recent undemocratic legislative developments, a vestigial, repressive political body unable to achieve its supposed mandate.  

With the Socialist Party’s power confirmed in parliament, the redundancy of the ANC is readily apparent.  Diplomatically, the ANC was observed as an illiberal institution established to subvert democratic norms.  Dissolving the ANC represents a strategic, political manoeuvre to maintain power through parliament while eliminating the internationally censured assembly.  


External Concerns: Many and Measured

 The fractured Venezuelan government faces chronic external issues that threaten to further deteriorate in 2021.  Venezuela must continue its crippling external debt service.  The country’s principal investors are China and Russia. China injected $62.2 billion in financing into Venezuela from 2007 to 2016.  The Venezuelan government has employed the investments to fund infrastructure projects and to purchase equipment for the military.  The loans are to be serviced through oil shipments, but the payments have fallen into arrears as institutional dysfunction and corruption limit the Venezuelan government’s functional capacity.  

Russia provided Venezuela with the opportunity to restructure its massive debt in 2017.  Russian state-owned oil companies concentrate their investment in the energy sector. Venezuela has purchased surface to air missiles from the Russian government, further solidifying their economic and military relationship.

Venezuela’s bilateral arrangements with China and Russia will complicate the westward-facing foreign policy of the newly extended National Assembly and the Socialist Party-dominated parliament.  The US is prosecuting an active trade war against China and is reeling from a debilitating, sophisticated cyber-attack seemingly conducted by Russian intelligence agencies.  Such developments will act as additional stressors as the US pursues further diplomatic negotiations with the Venezuelan government.  It is also unclear how foreign policy will be practically conducted with competing assemblies.

Entering 2021, the EU will be preoccupied with addressing the fallout from the recent Brexit deal and distributing covid-19 vaccines to its populations.  Though the US will confront a raft of domestic issues, specifically, the distribution of covid-19 vaccines, a presidential transition, and perhaps the passing of another economic stimulus package through Congress, her foreign policy also requires urgent attention. 

Joe Biden’s foreign policy team will seek to restore order and consistency to American foreign policy following the Trump presidency’s diplomatic carnage.  Reestablishing bilateral relationships with historical allies will be a primary focus of the Biden administration’s early months.  Such Western immediacies may distract from Venezuela’s mounting political instability.  Shifting Western priorities may ultimately benefit the Maduro regime and the Socialist Party-controlled parliament as they preside with impunity over increasingly weakened and corrupt institutions.

Sanctions and Deepening Ties With Iran                      

The fraudulent parliamentary elections of December 6th directly precipitated another suite of US imposed sanctions.  The recently imposed sanctions target a Venezuelan company specialising in biometric technology Ex-Cle Soluciones Biometricas C.A.  The company assisted the Maduro regime by providing services that facilitated the fraudulent elections.  Sanctions were also imposed on two of the company’s representatives.

The current round of targeted sanctions is imposed in addition to the sweeping financial sanctions, previously established, that bar the Venezuelan government from accessing US financial markets and capital.  Iran and Venezuela have flouted US sanctions by exchanging Iranian petroleum products for Venezuelan oil or gold reserves.

The deepening bilateral relationship between Venezuela and Iran is a corollary of the US imposed sanctions on Venezuela and the Trump administrations “maximum pressure” campaign against Iran.  Their governments’ shared exile from global financial markets continues to unite the two regimes both economically and militarily. 

Iran has provided the Venezuelan government with arms and personnel from Iran’s Islamic Revolutionary Guard Corps.  Elite Iranian paramilitary forces were sent to Venezuela to helpMaduro retain power and support Venezuelan intelligence services.  This arrangement also benefits Tehran by establishing a foothold in the Western hemisphere to menace US interests in the region.    

The plethora of US imposed sanctions, and Cuban, Russian, and Iranian military and intelligence personnel within Venezuela is alarming to Western actors and presents the next National Assembly with limited political options.  Sanctions will continue to restrict Venezuelan access to international financial markets, and members of the National Assembly may be targeted by international intelligence services that support the Maduro regime.  Social instability, internecine political violence, and intrastate conflict may become entrenched features of a state governed by combative assemblies.

Outlook 

The practical functionality of competing assemblies will be tested.  It is uncertain how Western actors will engage diplomatically with these. The existence of two assemblies may engender a crisis of legitimacy in which Maduro and the Socialist Party-controlled parliament retain practical domestic legitimacy.  Conversely, Juan Guaido and the Opposition-held National Assembly will maintain their international legitimacy through the continued recognition of their assembly by most Western powers.  What this discordant arrangement augurs for Venezuelan governance is unknown, but political instability and economic uncertainty will persist.

The Venezuelan military has consistently remained loyal to Maduro. However, should the allegiance of high-ranking officers shift, perhaps following novel sanctions employed by the Biden administration that further isolate the military elite from illicit revenue, Maduro’s political survival could be jeopardised. Maduro’s present, political cannibalism suggests both a brazen, authoritarian gambit and a shift toward a single party, criminal regime. How a kleptocratic administration, operating without an externally supported opposition, will conduct domestic and foreign policy in the wake of a global pandemic is unknown. 

Venezuela’s competing assemblies must function against the backdrop of domestic political instability and the external twinning pressures of declining global oil prices and the grim implications of the coronavirus pandemic.  The National Assembly will require continued foreign recognition and functioning diplomatic channels for support.  The presence of Iranian paramilitary forces in Venezuela coupled with the fraudulent December 6th parliamentary elections may represent actionable developments for a Biden administration that will confront an obstructionist US Senate.  How the Biden administration approaches the fractious Venezuelan government will directly impact the National Assembly and Venezuelan democracy’s survival.     

        

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