The crisis that Venezuela is experiencing has no external culprits.
Chavismo squandered his wealth in a party he thought was endless.
In the spring of 2017, and all through the year, social media feeds in Venezuela were filled with images of deprivation and despair: long lines of people hoping to purchase food; women fighting over a stick of butter; mothers who could not find milk to buy; children picking through garbage in search of something to eat; empty shelves in pharmacies and stores; hospitals without stretchers, drugs, or minimum levels of hygiene; doctors operating on a patient by the light of a cell phone; women giving birth outside of hospitals. Venezuela's economy, the economist Ricardo Hausmann wrote in a recent study, is suffering a collapse that is “unprecedented” in the Western world. 1 Between 2013 and 2017 the country's national and per capita GDP s contracted more severely than those of the US did during the Great Depression and more than those of Russia, Cuba, and Albania did after the fall of communism.
This is a humanitarian crisis of immense proportions. By May 2017, Venezuela's minimum monthly wage wasn't enough to meet even 12 percent of a single person's basic food needs. 2 A survey of 6,500 households by three prestigious universities showed that 74 percent of the population had lost on average nineteen pounds in 2016. Infant mortality in hospitals has risen by 100 percent. Diseases nearly eradicated in many countries, like malaria and diphtheria, have flourished; illnesses largely new to the area, like Chikungunya, Zika, and dengue, have spread. Caracas is now the most dangerous city on the planet. All this is happening in a country that has one of the largest oil reserves in the world.
None of the present crises seemed likely in 2007 and 2008, when I made a number of visits to Venezuela. Caracas was seen as the new Mecca for the European, Latin American, and American left. Progressive news organizations, magazines, and newspapers including The Guardian , The New Yorker , and the BBC reported favorably on Hugo Chávez, whose presidency lasted from 1999 until 2013. They mentioned the dangers of his cult of personality but yielded to it all the same. Chávez, as the writer Alma Guillermoprieto succinctly noted in these pages, was “indisputably fascinating, and often even endearing.” 3
Despite ever-growing limitations on freedom of expression and the canceling of the license of RCTV (the principal independent radio and television service), some analysts, including the British writer Tariq Ali, kept proclaiming that Venezuela was the most democratic country in Latin America. Since they were indulgent of Cuba, they didn't mind that Venezuela was drifting toward the authoritarian Cuban model. They rightly celebrated Chávez's successes at reducing poverty, but they failed to see the damage his administration was meanwhile inflicting on the country's entire productive infrastructure—most consequentially, on Venezuela's state-owned petroleum company, Petróleos de Venezuela ( PDVSA ).
In 1998, as the development specialists Ramón Espinasa and Carlos Sucre note in their recent study of the Venezuelan oil industry, 4 PDVSA employed 40,000 people and produced 3.4 million barrels of oil per day. By the first decade of the twenty-first century, it projected it would be producing 4.4 million barrels per day. It operated autonomously and by law deposited its profits in the country's Central Bank. With Chávez's election, all this changed. He ordered that PDVSA personnel be hired for their political credentials rather than their technical skills, and that oil be sold at highly discounted prices to Latin American countries sympathetic to his administration.
In December 2002, the employees of PDVSA went on strike. The government responded by stripping the company of its administrative autonomy, nullifying the exchange agreement that required PDVSA to sell all foreign currency resulting from the sale of oil to the Central Bank, and handling those resources discretionally itself, outside the budget approved by the Venezuelan National Assembly. Roughly 20,000 employees were dismissed, two thirds of them with technical and professional skills. In the years that followed, PDVSA became a super-ministry; it distributed food, built houses, and managed some of the 1,400 businesses that Chávez frenetically nationalized starting in 2007. During Chávez's presidency, it came to employ three times as many people as it had before 1998. Its productivity, on the other hand, fell significantly; it produced 700,000 fewer barrels per day. This reduction was masked in part by the surge in oil prices that began in 2002 and peaked in 2008 at $147 per barrel.
Critics of Chávez—former guerrillas, opposition leaders, left-wing intellectuals, labor and religious leaders, artists, businessmen, students, academics, and former military officers—foresaw what was coming. One of those voices was Espinasa, who told me in 2008 that “the prices will fall; the government will not be able to halt its expenditures and production will not recover; the collapse is inevitable; the perfect storm is coming.” But oil revenues remained high for four years, and Chávez used these revenues to spend more than ever. Each year he left a public-sector deficit of around 10 percent of the GDP . Between 2014 and 2015—by which point oil prices had collapsed, Chávez had died, and Nicolás Maduro had succeeded him as president—those deficits reached 20 percent of the GDP .
The government justified such spending by wagering that the price of oil would simply continue to rise. In 2008, Alí Rodríguez Araque, one of Chávez's main advisers and at that time minister of finance, told me that the price would go as high as $250 per barrel. In June 2014, when prices fell, the country would have been less badly damaged had the government saved at least part of the profits it had made during the boom, as PDVSA had previously been required by law to do. Studies have shown that these savings could have amounted to $233 billion. Not only did the government fail to do this; it sextupled its external debt to $172 billion, making Venezuela the most indebted nation in the world.
Between 1999 and 2017, PDVSA earned $635 billion in cash and produced an additional $406 billion worth of oil, which it used to subsidize the internal market (gasoline in Venezuela is virtually free) and reward countries seen as politically sympathetic to the regime. What happened to the rest of this money? Jorge Giordani, a former minister of planning who left the government in 2014, estimates that $300 billion was simply stolen. Another portion was wasted on unfinished pharaonic projects (rail lines, bridges started but left incomplete), purchases of Russian military equipment, opaque and unaccountable multibillion-dollar public entities such as the Venezuelan Economic and Social Development Bank and the Fund for National Development, costly and unproductive expropriations, wasteful imports to compensate for the lack of internal production, purely sumptuary imports (500,000 automobiles in 2006 alone), and excessive growth in public employment. From 1998 to 2013, consumption grew by 60 percent but production barely increased.
From this pattern a clear conclusion can be drawn: the tragedy of the Venezuelan economy is due not to the fall of oil prices in 2014, but to PDVSA's historic collapse in production. The dismantling of that institution set a pattern of politicization and opaque and inefficient management for the rest of Venezuela's economy, including the steel, farming, cattle, fishing, transport, construction, food, and fertilizer industries. In 2007, the country exported 85 percent of its cement; today it has to import cement from abroad.
It became common to call Chávez “the soul of the fiesta.” The people of Venezuela hung on his every declaration. In December 2007, he scheduled a referendum that proposed dozens of constitutional changes meant to consolidate the Venezuelan socialist state: unrestricted presidential terms, limitations on private property, a “new political geometry” (which in practice would become a form of gerrymandering), the consolidation of his personal guard as a kind of army parallel to the country's military, suppression of the autonomy of the Central Bank, direct access for the president to the country's international monetary reserves and the license to use them however he pleased, and the establishment of a “popular power” based on the creation of communes.
The referendum required a single “yes” or “no” vote for all the provisions together, but to Chávez's surprise the negative votes prevailed. Students made important contributions to the mobilization against the initiative, but Venezuelans in general rejected the radical drift Chávez was proposing toward the Cuban model. “Enjoy your shitty victory,” Chávez said, promising to advance his project through decrees instead. Over the last decade, his government and that of his successor have fulfilled that promise.
Chávez wanted to create a federation with Cuba. He had since his youth been intoxicated by a heroic view of history. His favorite work of political theory was The Role of the Individual in History by Georgi Plekhanov, whose vision of the Great Man distinctly equipped to address “the great social needs of his time” Chávez dreamed of applying to Venezuela, and to himself. He would present himself as the heir of Simón Bolívar, erasing or rejecting all of the country's history between the death of Bolívar and his own accession to power.
But it was Fidel Castro who became his “spiritual father.” Before Chávez was elected president, after a trip to Cuba, he emphasized his admiration for Castro's relation to his people: “It's as if Fidel is everything.” During the first year of his presidency, in a speech at the University of Havana, Chávez predicted that “Venezuela is heading toward the same sea as the Cuban people, a sea of happiness, of true social justice, of peace.” When Castro fell ill in 2006, Chávez accelerated his revolutionary project, against the counsel of his most experienced advisers.
For Cuba, which had since 1959 hungered for preferential access to Venezuelan oil, the Chávez connection offered significant economic advantages. At its height in 2013, according to the Cuban-American economist Carmelo Mesa-Lago, Venezuela contributed about 15 percent of Cuba's GDP —more than the USSR did in the 1980s. About 40,000 Cubans, many of them doctors, were sent to Venezuela and assigned to attend to the poor, part of a widespread program of Chávez's to import Cuban educational and medical personnel into the country in exchange for oil subsidies.
Critics of this “mission” system pointed to the abandonment of established health institutions (hundreds of hospitals and thousands of mobile clinics), the cost for Venezuela ($6 billion in 2013 alone), and the political nature of the operation, since Chávez received obedience in return for his munificence. By now the missions barely exist, but the Cuban intelligence services remain fully entrenched in Venezuela. The government has ceded the management of the national identification system to Cuban functionaries, as well as the control of businesses, customs, and notary publics.
To become a political heir to Castro, Chávez aspired to transform himself into the leader of “twenty-first century socialism,” to become “everything.” He wanted to remain in power until 2030, when he would celebrate his seventy-sixth birthday and the two hundredth anniversary of the death of Bolívar. It was a wager Chávez would lose. Diagnosed with cancer, he died in Caracas on March 5, 2013, after undergoing long and somewhat mysterious treatments in Havana. In Patria o Muerte , a recent novel by Alberto Barrera Tyszka set during the Comandante's final agonies in Cuba, a poor woman explains to Madeleine, an American academic, why she feels grateful for Chávez:
He changed my way of thinking, of looking, of looking at myself. You ask what did he give me, concretely you say. As I have told you. It's that we had nothing, that we were nothing. Or better said, we felt that we were nothing, that we had no value, we did not matter. And that is what Chávez changed. That's what he gave us.
The Comandante was one of them. He spoke with them and for them. He appealed to the natural religiosity of a people drawn to faith, magic, and the folk religion of Santería. This appeal could be used to manipulate opinion and behavior. Chávez had always taken his identification with Bolívar to extremes, but in 2010 those extremes reached an especially morbid level: he opened Bolívar's sarcophagus, ordered the painting of a portrait supposedly based on DNA evidence, and presented Bolívar not as the creole he was (of pure Spanish descent) but as a mestizo like Chávez.
The man entrusted with the responsibility for Chávez's legacy has been Nicolás Maduro. He was called “The priest of Chavismo ” by the Venezuelan journalist Roger Santodomingo, the author of De verde a Maduro , a brief biography—more accurately a piece of reportage—published in 2013 and based on a pair of interviews done some years earlier. Maduro, who was born in 1962, recalled, in detail, scenes of “police brutality” he had witnessed as a child. As a young man he tried being a rock musician and a baseball player, but he also maintained connections with left-wing organizations, thanks to which, in 1986, he spent some months in Cuba studying Marxist-Leninism. He was for a time a bus driver and a union leader.
Although in 1993 he visited Chávez in prison, he did not belong to the inner circle and was barely noticed when in 2000 he was elected as a deputy to the National Assembly. His dizzying ascent to power began in 2006, when Chávez named him minister of foreign relations. Surrounded by older men from whom he sought independence and by military officers of his own age whom he distrusted, Chávez needed the loyalty and support of younger men and came to recognize Maduro as unconditionally devoted to him. During Maduro's time as a diplomat—in the years of the oil bonanza—he consolidated the regime's alliances with politically sympathetic Latin American countries. But it was his intimacy with Chávez during the Comandante's final illness that brought him the presidency.
Maduro had a messiah before Chávez, the famous Indian guru Sai Baba, accredited by his followers with magic powers. He and his wife spent some time at Sai Baba's ashram in India. The connection with Sai Baba explains his frequent wearing of orange tunics, his Indian-style greeting with closed hands raised before his face, and his superstitious conviction of being protected by some superior power. Revelations about Sai Baba's pedophilia and his closeness to the Ugandan dictator Idi Amin did not appear to disturb Maduro. Without renouncing his devotion to Sai Baba, Maduro transferred it to Chávez. During his tenure as minister of foreign relations he became Chávez's vice-president, spokesperson, and faithful apostle.
“I am Chávez,” Maduro said shortly before his leader died. But although he spoke like Chávez, he was certainly not Chávez. After his death, Maduro declared publicly that “Chávez appeared to me in the form of a little bird.” Although some writers still treat Maduro as an astute leader and a pure revolutionary who has met with hard times, the regime is now very close to a full dictatorship. It has lost its quasi-religious aura. Maduro's government has been forcing Venezuelans into submission or exile (an estimated 500,000 have fled in the last two years) while it counts on a rise in the price of oil. But not even that miracle would compensate for PDVSA 's decline in production, down to 1.7 million barrels per day, half of what it produced when Chávez was elected in 1998. Maduro nonetheless intends to continue his rule. Presidential elections are set for the end of April, with himself as the prime candidate. Few expect them to be free or fair. Key figures in the opposition have been banned from running, imprisoned, or forced into exile.
Maduro's presidency has given rise to one of the most impressive defenses of democracy in the twenty-first century. Between April and July 2017, hundreds of thousands took to the streets to protest the decision of the Venezuelan Supreme Court—which Maduro controls—to dissolve the National Assembly, the only independent power that still existed in Venezuela, in which a two-thirds majority opposed the government. The demonstrators' confrontations with the Bolivarian National Guard led to over 120 deaths, thousands of injuries, and the imprisonment and torture of hundreds. 5 On July 16, almost seven and a half million people—a quarter of the population and more than a third of the electorate—voted in an unofficial referendum held by the opposition to defend the National Assembly and reject the call by the Electoral Authority (also controlled by Maduro) to elect a new and illegal Constituent Assembly. Most of the candidates for the Constituent Assembly had been chosen by municipal governments and organizations loyal to Maduro.
The effort came to nothing. After an election that was clearly fraudulent (according to Smartmatic, the company that provided the software for it), the spurious Constituent Assembly was established. With the opposition divided, weakened, and discouraged, Maduro now has immense power, which he has been using to severely limit freedom of expression. After the protests it became dangerous to post images of the poverty and desperation to which much of the country has been brought. The Constituent Assembly—many of whose members have incited hate for twenty years—has approved a law that can impose up to twenty years of prison time on anyone who “foments, promotes, or incites hate.”
According to the public health activist Feliciano Reyna, much of the blame for Venezuela's present crisis lies with Maduro. “What is happening is deliberate,” Reyna argues, pointing to the president's refusal to accept an offer from thirteen countries to send food and medicine through national and international NGO s and the UN. The powerful politician Diosdado Cabello has said that Venezuela won't accept the help because doing so would open the doors for an imperialist invasion. In his public appearances (during which, on occasion, he dances the salsa), Maduro has suggested that hunger could be alleviated by the breeding of rabbits.
One of his solutions to the crisis involved an especially ingenious combination of feeding people and manipulating them politically. About a third of Venezuela's population depends on receiving imported boxes of food marked with CLAP , the initials of the local Committee for Supplies and Production, which carries out this distribution according to a system of identity cards. (A typical CLAP package, which is supposed to arrive every three weeks, contains small portions of pasta, rice, powdered milk, and canned tuna.) In the referendum on the new Constituent Assembly, the government came up with the idea of forcing recipients to renew these cards at polling booths, intimidating them with the prospect of losing their food cards, and even their homes, if they didn't vote for the official candidates.
Instead of reversing the stubborn statism of Chávez's Bolivarian Revolution, Maduro has concentrated on paying the external debt. To do so he has choked off imports of goods and services, which have dropped by 75 percent between 2012 and 2016. Most of this contraction has been in manufacturing, commerce, construction, and transport, but there has been pervasive damage to the private sector in general. Between 1998 and 2016, the number of private enterprises fell from 13,000 to 4,000. At the same time, Maduro has been printing more currency, leading to dramatic inflation. People now often have to choose between food and medicine.
The Maduro government and its supporters maintain that the crisis is the result of an economic war waged by the American Empire against the people of Venezuela. But the United States has always been the principal customer for Venezuelan oil—it has bought $477 billion worth since 1998—and has now become one of the few to pay in cash. The full responsibility lies with the Chávez and Maduro regimes themselves, which for fifteen years had a windfall of petroleum resources comparable only to those of the major Middle Eastern producers yet wasted that income recklessly. Maduro's government is not an unfortunate heir of chavismo but its natural conclusion, the hangover after the fiesta. But it is also, in the words of Feliciano Reyna, “a militaristic project, aiming to control power, exorbitantly corrupt and inflicting extensive damage on the Venezuelan population.”
Throughout Venezuela's history, which has been full of civil wars and long periods of tyranny, the armed forces have often intervened and made radical changes. It happened in 1945, when the military gave power to civilians and cleared the way for a brief experiment with democracy (1945–1948). This prefigured the democratic regime that came to power in 1958, lasted forty years, and led to more social, economic, and cultural achievements than mistakes before its collapse.
Now even a military intervention seems improbable. Miguel Henrique Otero, the editor of El Nacional , an independent newspaper with a long history that today only precariously survives, told me:
The military is divided into various groups. Many of them—on active duty or retired—manage public companies. Recently, an officer of the Guardia Nacional Boliviana, who was active in repressing the protests of 2017, has been named director of PDVSA . Others have connections with the narcos, and some hold governmental positions. In 2002 there were seventy generals in Venezuela, now there are 1,200. The common soldiers have gained little and are a reservoir of violence and desertion. The army does not at present seem to be showing signs of rebellion, and, if such sentiments do exist in the middle ranks of officers, those who harbor them live in fear of Cuban espionage.
Although the regime now appears to have everything under control, it may still end up defeated by the human and material cost of its failures. “If the economy remains as it is, we will die,” Ricardo Hausmann affirms. He is not exaggerating. Even if oil prices start rising again, as long as Venezuelan oil production does not recover the country will be doomed. It is already well on its way to hyperinflation, which almost no regime has survived. The Maduro government may well continue applying the Cuban method of control through scarcity, but it cannot rule out the possibility that the population's increasing hunger and illness will lead to a social eruption of enormous proportions.
Is there an exit strategy? According to Hausmann, the regime needs to immediately allow food and medicine into Venezuela, negotiate a substantial reduction in the country's huge debt, arrange for an adequate delay in paying off the rest, and with the remaining resources open the gates to imports that might revive the economy. Such an economic shift would have to be accompanied by equally dramatic political changes. Maduro's government would have to guarantee free and fair elections, liberate political prisoners, and recognize the National Assembly as the only legitimate parliamentary body.
Maduro is bound to oppose such reforms. But Venezuela has fallen into so deep an abyss that positive moves along these lines would meet with almost universal support from democratic countries around the world. The United States might in the past have favored such solutions, but under Donald Trump it has fallen into its own sort of chavismo . And although supporters in Europe and Latin America have expressed solidarity with the opposition, Venezuelans, in effect, remain alone. In one of the country's hellish hospitals, a woman told a reporter for El Nacional : “So rich a country. We had everything and they destroyed it. And the future.”
—February 8, 2018; translated from the Spanish by Hank Heifetz
1. “Venezuela's Unprecedented Collapse,” Project Syndicate , July 31, 2017, a brief résumé of the internal report Background and Recent Economic Trends (Harvard Center for International Development, 2017).
Enrique Krauze is the author of Redeemers: Ideas and Power in Latin America and Editor-in-Chief of the magazine Letras Libres, published in Mexico City. Hank Heifetz is a poet, novelist, and translator from Spanish, Sanskrit, and Tamil. (February 2018) . Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by The New York Review of Books, on March 8 , 2018. Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Petroleumworld and its owners.
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