Venezuela Teetering on the Edge

Venezuela is teetering on the edge of implosion, with intertwined economic and political crises spinning out of control. The country is entering its second month of mass protests where tens of thousands of Venezuelans have taken to the streets daily to call for President Nicolás Maduro to go. The demonstrations began in earnest after a Supreme Court decision in March would have stripped power from the opposition-controlled National Assembly. That decision was quickly reversed, but it proved the spark that lit the smoldering unrest.

The country was hit hard by the collapse in global oil prices a few years back, given that more than 90 percent of Venezuela’s export revenue comes from oil. That – along with alleged economic mismanagement by the Maduro regime – plunged the Latin American nation into economic turmoil. Food and medicine shortages now abound, and violence has skyrocketed. Some 30 people have died over the past few weeks of protests.

Meanwhile, the Maduro regime is doing all it can to retain power, including jailing opposition leaders on trumped up charges and – most recently – decreeing a citizen’s assembly to rewrite the constitution, in a move National Assembly President and opposition leader Julio Borges called a “giant fraud” to keep Maduro in power. “What the Venezuelan people want isn’t to change the constitution but to change Maduro through voting,” he said.

The problem for Maduro and his allies with a change in government is not only loss of power, but also the likelihood of criminal charges. Maduro’s Vice President, Tareck el Aissami, for example, was recently named a drug kingpin by the United States. There are also allegations that el Aissami has been facilitating the sale of passports to terrorist operatives in Hezbollah, according to former DEA Chief of Operations and Cipher Brief Expert Mike Vigil.

“Venezuela has provided thousands of phony IDs, passports, and visas to persons of Middle Eastern origin,” Roger Noriega, former U.S. Ambassador to the Organization of American States (OAS) and former Assistant Secretary of State for Western Hemisphere Affairs, told a congressional hearing in 2012.

This raises the concern of the terror-narcotics nexus that seems to be growing in Venezuela, where alleged members of terror organizations – with the help of the Venezuelan military – aid in the transport of cocaine through Venezuela and onto the United States and Europe.

“I look at Venezuela as basically a failed state. I look at it as a country that is a narco state,” said Vigil, noting, “there’s a linkage to Hezbollah,” as well as to the Iranians, Colombian [drug] cartels, and the FARC (the Revolutionary Armed Forces of Colombia).

With the economic and political turmoil in Venezuela right now, Vigil said, “that is going to allow the drug trade to flourish even more.”

Currently, about 200 metric tons of cocaine transit Venezuela per year, with about two-thirds of that going to the United States, Vigil told The Cipher Brief.

Beyond drug trafficking and alleged Iranian influence in Venezuela, other major U.S. adversaries are also using this critical moment to gain power in the region. Russia and China, for example, are two of Venezuela’s largest sources of income. Russia has been financing Venezuela’s debt by providing loans to keep the country afloat.

Rosneft, a Russian government-owned oil company, loaned Venezuela $1.5 billion last year, using a 49.9 percent stake in U.S.-based (and Venezuela owned) oil company Citgo as collateral. Senators Robert Menendez (D-NJ), Marco Rubio (R-FL), John Cornyn (R-TX), Ted Cruz (R-TX), Bill Cassidy (R-LA), and Richard Durbin (D-IL) wrote a letter to U.S. Treasury Secretary Steve Mnuchin in April, warning that if Venezuela defaults on its debt, “This could leave Rosneft, a Russian company controlled by oligarchs with close ties to Vladimir Putin, in control of critical energy infrastructure in the United States.”

Former U.S. Ambassador to Venezuela Patrick Duddy told The Cipher Brief that China is also raising red flags for U.S. interests in the Western Hemisphere. “China is not only Venezuela’s largest source of external funding. China has also replaced the U.S. as Brazil and Chile’s largest trading partner,” he said.

Although Russia and China – along with the United States, which continues to purchase Venezuelan oil – are helping the Venezuelan economy survive, the dire impact of the oil price drop and the subsequent lack of basic necessities is contributing to migration from Venezuela.

An estimated 1.5 million Venezuelans have left the nation in the nearly two decades of Chavista rule, which started with Hugo Chávez’s presidency in 1999. In the past year alone, around 150,000 Venezuelans have left. Evan Ellis, a research professor of Latin American studies at the Strategic Studies Institute of the U.S. Army War College, who was recently in Colombia, reported that many of those fleeing Venezuela are crossing the border into Colombia and also going to nearby Caribbean islands, like Aruba, Curacao, and Trinidad and Tobago.   

“Their [Venezuelans’] exodus [to the Caribbean] has led to a range of effects including expanded criminality and even piracy off Venezuela’s coast. But it’s Colombia that has felt and will likely feel the brunt of the crisis and likely collapse of the failed Bolivarian project in Venezuela,” wrote Ellis on the Latin America Goes Global website. Colombia is one of America’s strongest allies in the region.

U.S. President Donald Trump called Venezuela a “mess,” and, while meeting with the wife of jailed Venezuelan opposition leader Leopoldo López in February, tweeted, “Venezuela should allow Leopoldo Lopez, a political prisoner… out of prison immediately.”

But the current U.S. policy on Venezuela seems to be to let the OAS deal with it. “The OAS as a body can have, we believe, a constructive influence on Venezuela, on Maduro, on the Venezuelan Government, in urging it to respect its own constitution and fulfill its democratic commitments to its people,” State Department spokesman Mark Toner said in a briefing last week.

This policy of letting the region deal with Venezuela makes sense, given America’s touchy history of aiding regime change throughout Latin America. Noriega suggested at an American Enterprise Institute (AEI) event in February that the U.S. work both through the OAS and directly with surrounding governments – like Colombia, Brazil, Argentina, and Peru – to address the Venezuelan crises. Targeted sanctions should also be on the table, he said.

On Wednesday, a bipartisan group of U.S. senators led by Ben Cardin (D-MD) and Marco Rubio (R-FL) are filing legislation that would address the Venezuelan crises by, among other things, sanctioning individuals implicated in corruption or involved in undermining democracy. 

Meanwhile, Maduro says he will pull Venezuela out of the OAS, isolating the country even further. “Many countries at the [OAS] have ratcheted up pressure, seeking to issue a formal condemnation. In response, Maduro has announced his intention to withdraw from the organization – increasing his government’s diplomatic isolation, but also cutting off one of the few multilateral mechanisms that could be used against him,” Michael Shifter and Ben Raderstorf of the Inter-American Dialogue told The Cipher Brief.

Therefore, they said, “A multilateral and carefully considered strategy of diplomatic pressure and humanitarian assistance will be essential. Yet regardless of what happens in Caracas – and how Washington chooses to respond – there will be no easy way out for Venezuela.” 

Kaitlin Lavinder is a reporter at The Cipher Brief. Follow her on Twitter @KaitLavinder.