Anatomy of the current crisis in Venezuela
Part 1: US meddling and failed coup attempt
News analysis by PRISM Editors
2019 April 24
As of April 2019, the Bolivarian Republic of Venezuela remains under serious threats of US military intervention which pursue the aim of ousting legitimately elected President Nicolas Maduro and replacing him with a puppet regime subservient to US interests.
Especially in the first three months of the year, a US-led imperialist cabal openly supported domestic reactionaries in their brazen attempt to forcibly replace Maduro with Juan Guaido, speaker of the National Assembly and leader of the extreme right-wing opposition. They claimed that Maduro’s presidency is illegitimate and dictatorial, and blamed his leadership for the worsening economic and humanitarian crisis—a big part of which is artificially created.
Right after Guaido illegally declared himself interim president, US-imposed sanctions escalated, together with calls on the Venezuelan armed forces to “withdraw support” from Maduro (essentially urging a coup) and other threats directed against other states and forces that uphold Maduro’s legitimate rule.
Despite all these, Maduro remains in control. Three months after claiming “interim presidency,” Guiado’s bid has fizzled out while the US “slow squeeze of sanctions” is apparently not working effectively as expected. The US continues to talk tough, even alluding to the option of direct military intervention, but international public opinion largely opposes that scenario and favors intra-Venezuela dialogue.
Maduro’s May 2018 electoral victory
Maduro, like his predecessor Chavez, carries the flag of the PSUV (United Socialist Party of Venezuela), the country’s largest political party. The PSUV had won almost every election held since 1998 when Chavez was first elected as president. In 2015, however, the opposition (a coalition of about 20 parties) won two-thirds of parliamentary seats, thereby gaining control of the National Assembly.
This gave the opposition an effective national platform with which to try to undermine the Maduro presidency and erode his power base, thus setting the stage for a new political crisis. In December 2017, the National Assembly officially blamed Maduro for the burgeoning economic crisis. In January 2018, it declared that Maduro had effectively abandoned his post. However, the country’s Supreme Court judged that the National Assembly had no constitutional power to unseat Maduro.
Maduro ran under the PSUV banner in the May 2018 presidential election and was reelected with 68% of the vote. The anti-Maduro opposition forces boycotted the election. Citing irregularities, they together with their imperialist allies disputed his reelection. The US and its allied “Lima group”—13 Latin American countries plus Canada—promptly declared the May 2018 election as illegitimate and launched a comprehensive anti-Maduro campaign. (The Lima Group includes Argentina, Brazil, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay, and Peru, among others.) Thus began blatant calls to oust Maduro with the use of violence.
Just a month after the elections, the June 2018 issue of US imperialist mouthpiece Foreign Policy sounded most sanguinary: an article was brazenly titled “It’s time for a coup in Venezuela.” (https://foreignpolicy.com/2018/06/05/its-time-for-a-coup-in-venezuela-trump/ ) It stated that “dialogue or diplomacy cannot bring a resolution to the Venezuela crisis,” and that “the only institution capable of instigating a real political transition in Venezuela is the Venezuelan military.”
Ominously, in August 2018, Maduro faced a failed assassination attempt, which used two drones to detonate explosives. Five months later, US President Trump named long-standing fascist Elliott Abrams as US Special Envoy to Venezuela. Abrams is notorious for his involvement in the Iran-Contra affair and other US covert programs in Latin America.
Guaido’s January 2019 gambit
Maduro was sworn in for his second presidential term on Jan. 10, 2019. Right the next day, Guaido asserted that since Maduro’s reelection was invalid, the presidential seat was vacant and that, based on the constitution, he as Speaker of the National Assembly must assume as interim president.
On Jan. 21, opposition-led protests started. On Jan. 22, the National Assembly officially declared that Maduro had usurped power. At a rally in Caracas on Jan. 23 (and after direct consultation with Washington by his own admission), Guaido proclaimed himself interim president and vowed to lead a “democratic transition” government that will pave the way for the next election. Not surprisingly, the US and the “Lima Group” swiftly recognized Guaido as interim president and called on Maduro to step down. Other US allies including EU states, Japan, Australia, and Israel did the same.
In quick response, the Venezuelan government blasted the US for organizing a coup. Maduro said the US is unleashing an “oil war to invade our homeland and rule here” by imposing sanctions and other pressures to incite popular unrest and eventually to install Guaido as a US puppet through a hard or soft coup. He cut off diplomatic ties with Washington and demanded that US diplomats leave Venezuela within 72 hours, although both sides would keep lines open through “offices of mutual interests.”
Meanwhile, the Venezuelan government has stripped Guaido of parliamentary immunity and instituted criminal proceedings – clearly a step towards arresting him or limiting his movement. Guaido’s dream of a quick power grab is fading fast.
On the military front
The imperialists and local ultra-rightists wanted the Venezuelan armed forces to withdraw support from Maduro and defect to the opposition—a key factor for the US-Guaidó tandem to actually take power. But most political analysts think the army and other key government machineries are siding with Maduro in the imminent future.
No military about-face or major split has happened since the standoff began in January, despite explicit and repeated calls by top US officials and domestic opposition leaders for such a thinly veiled coup d’etat. The anti-Maduro campaign in the international arena also appears to have lost momentum. Even some Latin American governments which previously supported Guaidó are having second thoughts.
However, the threat of direct US military action continues to hang like a sword over Venezuela. US President Trump himself hinted that such armed intervention was “an option”. At the same time, some factors prevent the US and its allies from immediately taking this path.
First, the Maduro camp appears to be expanding and consolidating its military mass base, which is hardly a pushover weakling. Venezuelanalysis.com estimates the “frontline” strength of the National Bolivarian Armed Forces at 235,000, augmented by least 1.6 million members of “Defence Brigades” militia. This April, Maduro announced that the number of Venezuelan militia officers would be increased from 2.1 million to 3 million by December 2019, and the militia would become a “full-fledged part” of the national army.
And second, the US wants local partners to shape its military intervention strategy in Venezuela. In particular, the US is expected to flex its military muscles alongside Colombia, which shares a 2,000 kilometer border with the Bolivarian republic. Notably, the US and Colombia are ostensibly in a tight military handclasp in the fight against drug trafficking. But some political analysts think that Colombia as well as other states ruled by pro-US regimes such as Brazil may be reconsidering the military option due to the potentially disastrous impacts of a US-backed shooting war (with or within Venezuela) on their own internal problems of social unrest and insurgency.
On the diplomatic front
On Jan. 26, a UN Security Council meeting convened at the US request to discuss the Venezuela crisis. UK, Germany, France and Spain vowed to recognize Guaido as interim president if no snap presidential election is announced within eight days.
But Venezuela’s allies fought back, accusing the US of fomenting a coup and using the UNSC to whip other states in line with the US regime-change calls. A significant lineup of countries continue to support Maduro’s presidency. These include Russia, China, South Africa, Turkey, Syria, Iran, Bolivia, Cuba, El Salvador, Mexico, and Nicaragua. Russia, China and South Africa, in particular, warned the US against new sanctions or military interference, pledged to support Maduro’s efforts in upholding national sovereignty and stability, and opted for an intra-Venezuelan dialogue as the only way to resolve the crisis.
The US, however, remains tireless in its diplomatic isolation campaign vs. Maduro. On Apr. 11, US Secretary of State Mike Pompeo called on Latin American multilateral institutions to apply further pressure on Maduro. He reiterated the US threat of using every economic and political means to tighten “the political and diplomatic noose… around Maduro’s neck.” US officials particularly focused on Cuba as a “bad influence” on Venezuela, warning Havana that “there will be cost associated with continued support of Nicolas Maduro.”
The US-led cabal had imposed harsh sanctions right after Maduro’s reelection in May 2018. These sanctions restricted trade, blocked access to medicines, food and other basic commodities, stopped payments, and froze financial assets of the Venezuelan government.
Knowing that Venezuela desperately needs liquid cash just to continue functioning at minimum levels, the US again moved this January to block the Maduro government’s access to financial resources and to transfer these to Guaido. In the past three months, more US sanctions were imposed to cripple Venezuela’s overall trade (especially its oil sales) as well as its ability to handle international financial transactions, and also to warn other states against supporting Maduro lest they suffer the same backlash.
- The IMF froze Venezuela’s access to about USD 400 million SDR’s (special drawing rights). Until now, the IMF continues to block the said access until the “issue of government recognition” is clarified.
- The US imposed sanctions on the Petróleos de Venezuela, S.A. (PDVSA, Venezuela’s state-owned oil and natural gas firm), blocking all its assets within US jurisdiction amounting to at least USD 7 billion, while another USD 11 billion could be lost in terms of oil deliveries over the next year.
- US firms could still buy Venezuelan oil, but the payments would go to an account not accessible to the Maduro government. (Up to 90% of PDVSA’s income comes from its US sales.) At the same time, US State Secretary Pompeo also certified Guaido’s control over some assets held by the Federal Reserve Bank of New York or any other US-insured banks.
- The Bank of England (UK’s central bank), upon US urging, rejected Maduro officials’ request to withdraw USD 1.3 billion worth of Venezuela’s gold, on the excuse that these would be used by Maduro “to repress” his own people. The imperialists know that Venezuela could use this gold for last-resort liquidity.
- In late March, the US Treasury further targeted Venezuela’s gold operations by imposing sanctions in Venezuela’s state-run Minerven mining firm.
- Just this April, the US announced a new batch of anti-Venezuela sanctions, targeting the country’s Central Bank, four shipping firms (three in Liberia and one in Italy), and nine ships linked to the firms.
US officials justify the sanctions by claiming that the international community is “safeguarding” Venezuela’s overseas resources “in the interests of the Venezuelan people.” The utter hypocrisy and blackmail value of this line, as reechoed by IMF-WB officials, is that these two financial institutions could in fact move quickly to help ease Venezuela’s humanitarian crisis—but are withholding resources because “the issue of government recognition” is yet unclear, and that “the situation is still troublesome on the ground.” The US has the gall to promise that it would use the same resources “to rebuild Venezuela … at the appropriate time of the transition” under so-called interim Guaido government.
The struggle for control of Venezuelan oil
The extended and extreme obsession of the US in meddling in Venezuela’s affairs must be understood in the context of oil. Venezuela has the largest confirmed oil reserves in the world. In 1976, Venezuela’s oil industry was nationalized under President Carlos Andres Perez. All foreign oil firms were replaced by domestic ones, which were later absorbed by the newly-created PDVSA. Over 25 years, the PDVSA grew to become the biggest oil and gas firm in the region.
When Chavez became president, he strengthened state control over the oil industry. By the early 2000s, Venezuela was the world’s fifth largest exporter of crude oil, which accounted for 85% of the country’s exports. To further strengthen state control, Chavez raised royalty taxes on oil firms and formed “mixed companies” through which the PDVSA exercised joint control with private firms. By 2006, PDVSA had acquired majority control of all these joint ventures—although some oil multinationals retained their minority presence.
Chavista policies as well as favorable OPEC rules resulted in windfall revenues from increased oil prices. This provided resources for the Venezuelan government’s other socio-economic priorities. On the other hand, contradictory forces within and outside the country created problems for the oil industry. For example, a crippling political strike of PDVSA employees in 2002 affected 40% of the work force. Then global oil prices collapsed in 2014, followed by US-led economic sanctions.
At present, this intense tug-of-war is focused on control over the PDVSA especially its foreign operations. The main assets targeted by US sanctions belong to CITGO, a US-based subsidiary of PDVSA and reportedly Caracas’ main source of foreign income. One third of Venezuelan oil is processed in US refineries, mostly to CITGO and two others. CITGO is the eighth largest U.S. refiner, with a network of some 5,000 gas stations in 30 states.
The US had been trying to seize CITGO for many years. This February, Guaido’s US office announced CITGO’s new board of directors. The company then promptly cut ties with its parent firm (including halting payments, communications, and promotions) to align itself with the US sanctions.
Clearly, the US wants to regain control of Venezuela’s oil industry. Trump’s national security adviser John Bolton recently boasted that the US government is talking with major US oil firms about prospects of investing in or taking over oil production in Venezuela as soon as the crisis is resolved in Guaido’s favor.
Contradictory forces in Venezuela’s economy
Venezuela suffers from a skewed internal economy, which before 1998 was basically extractive and largely petroleum-dependent. It remains hugely reliant on oil exports, which value varies from 65% to 95% of total exports. Thus, recent US-led sanctions have targeted this weak spot. Previous economic sanctions are estimated to have cost Venezuela USD 350 billion in the production of goods and services in the 2013-2017 period.
Such contradictory forces serve as factors for crisis and clearly point to big gaps in Venezuela’s capacity for socio-economic self-development. Hence, when world oil prices fell in 2014 and the government responded with the issuance of new bank notes by end-2016, the result was even worse hyper-inflation. Venezuela is facing the world’s highest inflation rate for five years in a row. It is estimated to run at 25,471% from May 2017 to May 2018.
Furthermore, imperialist corporations and Venezuela’s big bourgeoisie have retained influence in the economy, with the government relying on them for basic goods and services. For example, the giant Empresas Polar—owned by Venezuelan billionaire and key opposition leader Lorenzo Mendoza—controls the production of processed food and beverages. Mendoza has been accused of leveraging his industrial control to induce domestic food shortages.
Venezuela’s big bourgeoisie is also able to manipulate the banking and finance system, which the Bolivarian government failed to expropriate and control. Thus, under Chavez, Venezuela could not stop the massive capital flight of USD 134 billion in the 1999-2012 period, which further undermined the economy.
Under Chavez, on the other hand, the government instituted several social programs directed at improving the lives of the country’s poor, including blacks and indigenous communities. It introduced universal access to education; by 2005, UNESCO said that Venezuela had eradicated illiteracy. It implemented a national health care system and set up nearly 8,000 new medical centers between 2005-2012, with the help of several thousand Cuban medical professionals. It has constructed 2.5 million houses for poor families in the last eight years.
More than 1,000 communes were set up to allow people to exercise their right to self-governance with the land given by the government. For example, the El Maizal commune covers 2,300 hectares, where 9,000 people grow corn and raise cattle. The El Panal, in Caracas itself with 3,600 families, grows yuca and plantains and has its own sugar-packaging plant. The government has instituted 30,000 Local Production and Supply Committees (CLAP), which ensure adequate supply of basic food staples at subsidized prices.
Despite these gains, the Venezuelan people have been facing hardships in the past years due to the economy’s basic reliance on oil revenues, which have been plummeting, followed by US-led economic sanctions and domestic sabotage by anti-Maduro forces.
Impacts of economic sabotage, dubious “humanitarian aid”
Venezuela is experiencing a severe humanitarian crisis, with shortages of basic commodities including food, water, and medicine. The electric grid has suffered repeated outages, the worst occurring from March 7 to 13 when outages affected 21 of 23 Venezuelan states. The government traced the problem to some form of “cyber-attack” on the Guri hydroelectric power plant. Power authorities say they neutralized up to four attacks on the electric grid every day, while the Venezuelan armed forces immediately set up an air surveillance system for power lines and occupied all strategic facilities “to stabilise the system and prevent any other attacks.”
The government blamed the power outages on US-sponsored rightist sabotage. Maduro stated that “Venezuela … is a testing ground for new cybernetic, electromagnetic war weapons and a new war strategy, which is not a direct invasion or bombing by missiles, but the bombing of vital public services.” Significantly, a few hours after the massive March 13 blackout, Mike Pompeo tweeted the following: “No power, no lights, next — no Maduro.”
The US also tried to pry open Venezuela’s borders by offering to deliver foreign aid into the country with the opposition’s help, in the hope that this would further sharpen popular criticism of Maduro. The deliveries were supposed to arrive across the borders with Colombia and Brazil—whose governments supported Guaido. Caracas exposed the hypocrisy of the US-led alliance, which claimed to offer humanitarian aid with one hand, and yet with the other hand imposed sanctions that crippled Venezuela’s socio-economic capacity.
The Maduro government condemns these sanctions as totally illegal and immoral, and as attempts to steal the Venezuelan people’s wealth, even as it assured the Venezuelan people that the sanctions will “give us even more strength.”
The wider big-power struggles
The US strategic plan in the region is not merely to control Venezuela and its resources, but—in Maduro’s words—“to re-colonize Latin America and the Caribbean.”
The US had long treated Latin America as its own backyard since the infamous Monroe Doctrine in 1823. This claim was backed up by armed force many times, including through the Spanish-American War. Especially after Roosevelt’s 1904 declaration that the US had the right to act as “international police power” in the region, all countries in Latin America had experienced US meddling, both overt and covert, until today. Venezuela is no exception, with US having supported several puppet regimes in the country’s history.
Alarmed by Chavez’s rise to power in 1998 and his popular measures, the US redoubled its efforts at intervention. It supported the 2002 right-wing coup attempt, which the Venezuelan people defeated. Even Trump’s predecessor Obama, who had promised to normalize diplomatic relations with its arch-enemy Cuba, declared in 2016 that Venezuela was a “rare and extraordinary threat to US national security and foreign policy.”
China and Russia, despite being on the other side of the world, have become among the most vocal states opposed to US meddling in Venezuela and the rest of Latin America. The two have played the role as the core of the BRICS bloc, with their own strategic interests to protect in the region despite Brazil’s apparent shift of big-power loyalty under its new president Bolsonaro.
China has been expanding into Latin America through infrastructure projects and investments, and thus sees improved relations with oil-rich Venezuela as a strategic move. China is now Venezuela’s biggest creditor; half of all Chinese loans to Latin America in the past decade went to the Bolivarian government.
Venezuela has been paying its debts with oil shipments, and plans to triple its oil exports to China. In 2018, China and Venezuela signed 28 cooperation agreements, mostly related to crude oil processing, energy engineering, and mining. China has pledged continued support to Venezuela, and Maduro himself said recently that he could rely on China as an ally to survive a US “economic war.”
The fast-growing Chinese presence in Venezuela has alarmed the US and its allies, and imparts an added urgency for them to oust Maduro soon if only to stem the Chinese tide and take back control of Venezuelan oil with Guaido’s help. Washington also views the Venezuelan arena as part of its bigger geopolitical aim of containing China and its energy interests, at least in Latin America as the US backyard.
Meanwhile, India remains one of the main buyers of Venezuelan crude oil, ignoring barefaced US threats against trade with Venezuela. Cuban aid in various forms is also expected to grow. Russia, for its part, has provided Venezuela USD 17 billion in loans and investments. The two allied states clinched a deal in December 2018, in which Moscow will invest USD 6 billion in Caracas’s oil and gold sectors.
On Mar. 23, some 100 Russian military staff arrived in Caracas on board two planes and with 35 tons of cargo as part of a deal on defense industry cooperation. Trump’s officials quickly slammed the Russian military presence as “an unwelcomed provocation.” Russia, on the other hand, twitted the US about its own bad record of invading countries and then not pulling out as promised, such as in Afghanistan and Syria.
The US wants to restore its complete hegemony in Latin America as its backyard like in the days of yore, although this time with the help of its allies within and outside the region. But with Guiado’s power bid fizzling out and its international support beginning to thin down, the voice of Venezuela especially of its toiling masses calling for relentless defense of national freedom and people’s democracy resonates once more, stronger than ever, in Latin America and throughout the world. #
Next in Part 2: The Venezuelan people’s struggle surges forward