• Joe NeJame and Sophie Egar

Venezuela's Converging Crisis

by Joe NeJame and Sophie Egar


A stronger, safer Latin America is in the U.S. best security interests; however, many countries within the region are deeply mired in political, economic, and humanitarian crises.


Venezuela presents a primary concern because of its institutional corruption, and the continued state of humanitarian emergency. This crisis is marked by hyperinflation, crime, corruption, disease, and escalating shortages of food, water, and essential services, resulting in massive emigration from the country. Given these regional implications, along with the increasing political, diplomatic, and economic presence of competitor nations, the U.S. Intelligence Community (IC) should treat this situation as a pressing national security concern. This report provides a brief historical overview of the crisis in Venezuela, then focuses on Venezuela’s most pertinent bilateral relationships: China, Russia, Iran, Turkey, and Cuba.


I. Historical Background/ Issues of Contention


Economic and Humanitarian Crises:

Millions of Venezuelans are unable to access adequate nutrition, safe drinking water, or basic medical services. The IMF estimates the annual inflation rate to date in 2020 is 15,000 percent. There is a reasonable basis to believe that Venezuelan authorities have committed crimes against humanity. The COVID-19 pandemic has compounded these humanitarian, economic, and political crises. Since 2015, more than 5.5 million Venezuelans, or one in six residents, have fled the country. This mass exodus of Venezuelans created one of the largest displacement crises in the world, which has far-reaching implications on nearby countries, such as Argentina, Brazil, Ecuador, Peru, and Colombia.


To understand Venezuela’s current crisis, it is crucial to consider the historical elements that contributed to its escalation. Since the nation’s inception in 1811, there has been a legacy of repressive leaders, corrupt institutions, economic mismanagement, and a lack of distribution of resources. Even when Venezuela saw its per capita gross domestic product (GDP) skyrocket in the 1960s and 70s, inequitable social customs and economic structures remained. These inequities, along with declining oil production and the failure to move resources into alternative industries all contributed to a cataclysm during the 1980s. Oil prices collapsed, the economy contracted, and inflation skyrocketed.


Authoritarianism and Political Tensions:

Enter Hugo Chavez: a charismatic, third-party candidate in the 1998 presidential election who promised to reallocate the profits from the state’s oil company toward social welfare programs. After winning the election, petroleum prices surged, and Chavez spent billions on subsidizing food, the educational system, and the health care system. However, Chavez did not restrain spending or scale back dependence on oil, even as prices began to decline. Failing to diversify the economy cemented a cycle of economic extremes. Meanwhile, Chavez expanded constitutional powers, often passing “rule by decree” measures to limit free speech and punish critics.


This consolidation of executive authority would continue in the hands of Nicolas Maduro, Chavez’s vice president and hand-picked successor. The Maduro administration and government security forces have been accused of many cases of human rights abuses, including extrajudicial executions, torture, sexual violence, and enforced disappearances. Venezuela’s judicial system has played “a significant role” in the state’s repression of government critics, according to an investigation by the United Nations. Additionally, Venezuelan government officials are actively involved in international criminal activities such as money laundering and drug smuggling, often by exploiting their access to state resources and information.


On January 10, 2019, President Maduro was sworn into office for a second term, despite widespread condemnation that his re-election was illegitimate. On January 15th, the National Assembly declared the usurpation of the presidency by Nicolas Maduro. Eight days later, the opposition leader and president of the National Assembly, Juan Guaidó declared himself interim President. More than 50 countries, including the United States, recognize Juan Guaidó as interim president until free and fair elections can be held. The United States has pushed for the resignation of Nicolás Maduro by enacting sanctions that aim to disconnect the regime from its illegal sources of revenue.


In early 2015, the U.S. began its campaign of strategic sanctions, starting by revoking the assets and visas to eight influential members of the Maduro regime. As conditions and human rights abuses continued to worsen, the U.S. shifted the focus and severity of sanctions from individuals to industries. In August 2019, the U.S. Treasury enacted a complete embargo of Venezuela, including loosely linked sources to illicit activity. To date, the U.S. has sanctioned 119 individuals and 47 entities linked to Venezuela, including the Central bank of Venezuela, state-owned oil companies, and government officials aiding the illegal gold mining industry.


II. Foreign Influence


Russia, China, Cuba, Turkey, and Iran provide key lifelines of support to Nicolas Maduro and his administration. These nations recognize Maduro as Venezuela’s legitimate president, maintain amiable diplomatic interactions, and share deeply rooted anti-U.S. sentiments.


Russia is the primary international protector of the Maduro regime. This diplomatic and financial partnership began in the early 2000s under Chávez and continues under Maduro. Given Venezuela’s geographical proximity to the United States, many foreign policy experts see Venezuela as a strategic political foothold for Russia in its goal of offsetting U.S. influence in Latin America. Russia’s preferential access into Venezuela’s oil and gas sector is a leading factor of exchange between Caracas and Moscow. Russia provides the majority of economic support for Venezuela’s state-run oil company and is the country’s largest supplier of military assistance. The Venezuelan armed forces are equipped almost entirely with Russian arms and depend on the Federation for weapons maintenance, servicing, and ammunition. In 2020, Russia sought increased influence through “vaccine diplomacy”. The first delivery of “Sputnik-V,” Russia’s first officially-registered vaccine, into Caracas’ Simón Bolívar International Airport was broadcast live in Venezuela and across Latin America.


China’s relationship with Venezuela is principally commercial. It dates back to the early 2000s when Hugo Chavez initiated several multi-billion-dollar state-to-state loans-for-oil deals. From 2007 to 2017, Beijing provided more than $60 billion in financing to Venezuela, representing more than 40 percent of total Chinese lending in Latin America. Although Beijing’s support for Caracas has diminished over the years along with the drop in oil prices, there continues to be cooperation between the two nations. In 2018, Nicolás Maduro traveled to the PRC to sign twenty-eight bilateral agreements with China and expressed public support for China’s Belt and Road Initiative. Additionally, the Maduro regime has relied upon Chinese technological assistance for disinformation campaigns and surveillance systems, such as the widely criticized “Fatherland Identity Card” used to administer scarce food and COVID-19 vaccines. Akin to Russia’s “vaccine diplomacy”, China increased its presence in Venezuela by sending more than $100 million in medical supplies, including rapid coronavirus tests, face masks, and protective equipment. One apparent goal of Beijing is to lure away Latin American and Caribbean countries from diplomatically engaging with Taiwan, also known as the “Republic of China.” Only 9 countries in the region recognize Taiwan, and Venezuela is one of the remaining 24 countries in the region that recognize the PRC.


Cuba’s alliance with Venezuela blossomed in the late 1990s, and remains so close that the two countries have been referred to in tandem as “Venecuba” and “Cubazuela”. The partnership traces back to Chavez’s friendship and ideological similarities with past Cuban president Fidel Castro. This relationship served as a foundation for the 2004 establishment of The Bolívarian Alliance for the Peoples of Our America (ALBA), an intergovernmental organization that now includes Antigua and Barbuda, Bolivia, Dominica, Ecuador, Honduras, Nicaragua, Saint Vincent and the Grenadines. One of the most preeminent aspects of the Venezuelan-Cuban relationship is professional-oil deals, wherein Venezuela exchanges their oil and economic support, for Cuban medical, educational, and sports professionals. Less publicly, Cuba has deployed its military, security, and intelligence services within the Bolívarian Republic. These Cuban security officials exercise influence in Venezuela and help the Maduro government to remain in power.


Iran, on the other hand, resembles renewed commitments. The partnership between Venezuela and Iran helps both countries demonstrate resilience to US economic sanctions and diplomatic isolation. Iran has delivered several shipments of oil tankers, parts, and refinery personnel since 2020. Additionally, on September 25th of this year, Venezuela and Iran struck an oil export deal wherein PDVSA receives condensate to dilute oil for shipment to the National Iranian Oil Company (NIOC). The NIOC resells this oil at a higher price to other Asian countries. Iran, like Venezuela, is subject to stringent financial sanctions, which prevented the nation from using conventional bank payment methods. These fuel shipments provide Iran with hard currency in the form of gold, which Iranian authorities can use to buy dollars and euros to purchase needed food and manufactured goods from Russia and China. Iran’s cooperation with the Maduro regime has been facilitated by Hezbollah, a primarily Lebanese terrorist group that has played a key role in turning Venezuela into a hub for the convergence of transnational organized crime and international terrorism.


Turkey’s interest in and support for Venezuela has grown in recent years. In October of 2016, Nicolás Maduro met Turkish president Recep Tayyip Erdoğan at the World Energy Congress in Istanbul. They signed a series of bilateral agreements on energy, trade, and air transportation. Shortly after this meeting, Turkish Airlines initiated direct flights to Caracas, just as other large international airlines were contemporaneously suspending operations in Venezuela. This support fills a critical void in access to air travel. The alliance is driven by the close personal relationship between Erdoğan and Maduro, who use mutual visits to show their populations that they are well respected internationally. According to a 2020 report by The Wilson Center, Venezuela does “not appear to be part of a long-term strategic project for Turkey” and is “an alliance of convenience, characterized by growing bilateral trade, mutual dislike of the United States and closer relations with Russia, and the personal chemistry between Erdoğan and Maduro.”


Conclusion:

In addition to institutional corruption and the continued state of humanitarian emergency, Venezuela’s international relationships should subject concern within the U.S. Intelligence Community. Venezuela’s enduring crisis is also an urgent matter because of the security threat to neighboring countries. Given the region’s geographical proximity and economic importance to the United States, Latin America’s stability is consequential to the United States and should be handled as such by the U.S. Intelligence Community. Venezuelan bilateral relationships with China, Russia, Cuba, Iran, and Turkey further illustrate why the IC should be attentive to Venezuela, and to Latin America as a whole.


Peer Reviewed by: Madison Lockett, Academic Incubator Editor, The Cipher Brief


Find out how your University’s national security program can join The Cipher Brief as an Academic Incubator partner.


Read more expert-driven national security insights, perspective and analysis in The Cipher Brief


The Cipher Brief’s Academic Incubator Program partners with national security-focused programs from colleges and universities across the country to share insights from the next generation of national security leaders. The views expressed are those of the authors.


About the Authors: Joe NeJame is a current Cipher Brief Intern and a first-year student at Washington University in St. Louis. Sophie Egar is a Cipher Brief Intern and a senior at American University studying International Relations, with a Minor in Spanish and a Certificate in Spanish Translation.

19 views0 comments