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6 June 2020

Global Trends Affecting Venezuela

Tag(s): Foreign Affairs, Politics & Economics, People
 Like most people I imagine during this lockdown I receive numerous invitations to join webinars and if I accepted all of them I would do little else. But I attended one this week which I found fascinating. My wife and I are both members of the Anglo-Chilean Society and my wife is their Secretary. A fellow member of her Committee is also married to a Chilean lady but they also spent considerable time in Venezuela and he is the Chairman of the similar British Venezuelan Society (BVS).

He hosted a webinar on the subject “Global Trends Affecting Venezuela” and was joined by Dr. Moisés Naím, a distinguished Fellow at The Carnegie Endowment for International Peace and widely recognised as one of the world's leading thinkers, and Dr. Vanessa Neumann, official Representative of President Juan Guaidó to United Kingdom and Honorary President of BVS.

Dr. Naím has an MSc and PhD from MIT. His former posts include Minister of Trade and Industry of Venezuela; Director, Venezuela Central Bank; Executive Director, World Bank; Professor of Business and Economics, and Dean, IESA, Venezuela; Editor-in-Chief, Foreign Policy. As well as his role at the Carnegie Endowment he is Chief International Columnist, El País and La Repubblica, and has columns carried by publications internationally.

In 2013, the British magazine Prospect listed him as one of the world's leading thinkers and in 2014 and 2015 he was ranked among the top 100 influential global thought leaders by Gottlieb Duttweiler Institute (GDI) for his book The End of Power. This publication was also selected as the first book for followers of Mark Zuckerberg's 2015 book club to read.

Dr Naim explained that there were six global trends that were serious at the global level affecting many countries in the world but would be even more serious in Venezuela because of the disastrous state of that country.
  1. Climate change. The Latin American and Caribbean region of the world is the most exposed to the effects of climate change partly because of geography but partly also because of widespread corruption and the erosion of building standards in several countries. In addition, in Venezuela there is particular weakness of civil defence and the state’s ability to make a national response to the effects of climate change is extremely limited. It is certain that Venezuela will be shaped by significant climate accidents in the coming years.
  2. Criminalisation of state and society. While Latin American accounts for 8% of the global population it accounts for 33% of its homicides. The most murderous country in Latin America is Venezuela and five of the 10 worst cities in the region are in Venezuela. In the slums of the big cities in Venezuela gangs constantly fight over the right to control those areas. Corruption has been a familiar problem in various states but now in Venezuela the government is the main actor. President Maduro leads a criminal enterprise. The people live constantly in an atmosphere of lawlessness.
  3. Decarbonisation.  Venezuela has the largest reserves of oil of any country in the world but through its appalling mismanagement the Chavez and Maduro governments have destroyed its principal industry and its main source of export earnings. There is widespread investment in renewables around the world and growth is expected of 50% by 2024, led by solar but also including wind and water. So while oil will continue to play a role in the world’s energy needs it will have a significant rival. Venezuela would need to develop a sense of urgency in order to solve this problem. Huge investment would be needed. But large investors like the Norwegian sovereign fund[i] and BlackRock in the United States are now disinvesting in both producers of oil and polluters. Netflix is now a more valuable company than ExxonMobil.  Netflix’ assets consist primarily of intellectual property rights and content while ExxonMobil’s assets are stranded. Venezuela was an oil state but it seems the idea that it could regain that position or alternatively invest in other sources of fuel is a somewhat heroic assumption
  4. Digitisation: Growing utilisation of artificial intelligence machine learning and big data are undoubtedly a threat to many conventional jobs and some estimates suggest that as many as two thirds of jobs will be lost to AI. On the one hand a country like Venezuela might have the opportunity to leapfrog this transition or likely this challenge will intensify its existing difficulties. On the other, in order to address this at the very least Venezuela would need a strong development in its academic capacity and there is no sign of that today.
  5. Democracy: There are three trends taking hold in democratic countries: populism, polarisation, and post-truth. Populism is not an ideology; it is neither right nor left, North nor South.  What it is is a distortion of democratic tradition. Polarisation to some extent has always been present whether it is between race, religion or economic differences and in some ways it is healthy for there to be different points of view. In a good democracy that is what should happen but if the polarisation is extreme then it paralyses its decision-making. In a post-truth world people are finding it very difficult to know whom to believe and what to believe. Sources of information are distorted, particularly on social media. All three of these trends are present in Venezuela to a very high degree and it’s not just in this case the question of Maduro’s style but even in the opposition there are differences of views as to how to proceed and achieve change.
  6. Superpower rivalry:  The rivalry between China and United States has long been a factor but then it seemed to decline after the rapprochement by the United States under President Nixon and as China to some extent opened up its economy. But now it has returned to a very high degree with a populist president in the United States and an autocratic president in China. But even a change of government in Washington following this year’s election is not going to remove the underlying frictions that are deeply rooted in the different cultural styles of the countries. The Cold War between Russia and United States has also been over for some time but Russia now fights in a more innovative way. It is expensive to maintain the traditional role of superpower relying on considerable military force and a physical presence all over the world. Russia now fights its war in cyberspace and there are 17 intelligence agencies in the United States that are agreed that Russia had an important role in the 2016 US presidential election.
Venezuela is clearly a failed state. It has control of its airports and to some extent its military but not really of its land and borders.  Cuba is a central player in the government of Venezuela and effectively Venezuela is an occupied state.  Cuba interferes with its security, its politics and its economy and the Cuban leadership have veto power over Venezuela’s decision-making. Appointments have to be cleared in Havana. This goes back to the relationship between Fidel Castro and Hugo Chavez that continues to this day and there are 20,000 Cubans involved in government positions in Venezuela.

Venezuela is a criminalised state. Its governing bodies have their hands in every pie.  Venezuela is disintegrated with the world. Even before the Covid-19 crisis the number of flights in and out of the country had been substantially reduced. It is effectively isolated and broken, so its future depends on the interplay between Cuba, Russia, China and the United States. These are not happy bedfellows and there is little sign of them agreeing a common strategy to persuade Cuba to withdraw and to allow Venezuela to start to recover.  If the relationship between these four powers remains in gridlock then Venezuela will continue in its present parlous state.

So what opportunities are there to turn the tide? Sanctions have been tried out in different ways by the United States and by the EU but plainly they have not worked. Dr Naim has testified to the United States Senate to say that what works are sanctions that are targeted to individuals and their ecosystems. There have been successful sanctions implemented where not only key individuals were identified but also their ecosystems including their lawyers,  their banks, their computer experts and the other people who help them with their finances. These have to be sustained at a high level but they can work but have not been properly tried.

Some people suggest that one could offer incentives to the military to remove Maduro but that would not work either. In the present conditions the Venezuela military are under Cuban control, even repression. Cuba has had over 60 years of dictatorship and understands very well that the military is always the biggest threat. Being a military officer in Venezuela is very dangerous if you don’t show your hearty fealty to the leadership all the time.

60 countries have now shown their support for Guaidó as the official leader of the country instead of Maduro. They are certain that Maduro rigged the last election and the legitimacy of his government is irrevocably lost. He is now planning an election later this year but this is unlikely to be different. First of all it takes at least a year of preparation in a country like Venezuela where all the election equipment was burnt by the Chavez government. For any election to be credible there have to be a minimum set of conditions including independent international monitoring. Dr Naim thinks that the road to recovery will be very long. It is not like switching something on. It will require massive foreign aid and investment. This is impossible while the country is in anarchy. But it will be a fascinating project when it finally happens.

[i] Ironic given that Norway’s fund was founded on Norway’s oil wealth.

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