A Friend and Foe Teach Us How Not to Handle Venezuela

Imagine going to the doctor’s office and receiving a diagnosis of a critical condition that required surgery. As you go to schedule the surgery the nurse hands you a list of supplies you will need to bring for the surgery. You will need to provide gloves, mask, scalpels, stitches, and bandages because the hospital cannot. As you go home from the hospital already at a loss for how you will pay that bill, you realize you need to pick up groceries. The sticker shock all but causes physical pain as everyday goods have doubled in price in the last month. How can you start thinking about buying medical supplies when you can barely feed your family?

Such is the current situation in Venezuela, a borderline failed state suffering from rampant inflation and shortages stemming from decades of economic mismanagement. Over the last decade, the situation has become increasingly dire. An estimated 94% of the Venezuelan population lives in poverty with 2.8 million in need of healthcare. Almost three and a half million people (about the population of Oklahoma) have already fled the country, many into Colombia which only recently settled its own internal conflict with the FARC rebels. Prospects for a domestic solution seem pretty bleak, as the president’s past plans alleviating hunger have involved telling citizens to start raising rabbits for food. As of 2018, citizens had lost an average of 24 pounds and some had resorted to breaking into zoos for food.

First, we must examine how Venezuela got here and then examine humanitarian options through two existing American relationships: one a friend, the other a foe.

After a pardon for an attempted coup, Hugo Chavez won the presidency of Venezuela in 1999. From there he converted Venezuela into a petro-state, relying on oil export revenues to maintain power at a level that would make even a gulf state blush. During his presidency and until his death in 2013, all other exports besides oil collapsed to essentially zero. Instead of using any of this newfound wealth to build infrastructure, establish alternative industries, or even develop a sovereign wealth fund, Chavez instead focused on electorally popular projects, even going as far as to provide free appliances and homes.

After Chavez passed in 2013, Venezuela narrowly elected current president Nicolas Maduro, who essentially continued the existing policies; however, by then the economic conditions had already soured. A combination of rampant inflation and falling oil prices revealed the house of cards that was the Chavez economy. After a resounding defeat in parliamentary elections, Maduro’s allies in the National Assembly packed the highest court to prevent the newly elected opposition from taking their seats. The resulting constitutional crisis led to a national assembly entirely made up of Maduro cronies and a shadow assembly in exile led by opposition leader Juan Guaido.

The current humanitarian crisis has three main branches: runaway inflation causing scarcity in food and basic medicine, extrajudicial killings of perceived enemies, and a failure for self-determination. The intensity of the current contraction in the Venezuelan economy parallels only Zimbabwe in the late ‘90s in terms of GDP. As of 2019, domestic prices increased at a rate of over 275% month over month. Years of mismanagement and deferred maintenance limited oil output, a critical industry given that the country imports three-quarters of all goods sold. Additionally, Maduro’s special forces extrajudicially killed over 7,000 people during an 18 month span between 2018 and 2019. This mix of failed state, high levels of poverty, and state-sponsored violence has no end in sight, and options for intervention have long since run out.

Venezuela in its current state poses a predicament for American foreign policy. Should America treat it as a petro-state in a strategically important location, such as Saudi Arabia, or as a socialist government that uses the American government as a convenient foil, like that of Cuba? We already have foreign policies tailor-made for just these two situations. Now we just need to figure out which to apply.

When it comes to American allies, we are well practiced dealing with a petro-state with questionable humanitarian records: Saudi Arabia. The parallels between the two countries seem almost too numerous to discount. Both Venezuela and Saudi Arabia are located in critical regions where the United States has existing interests. For Venezuela, the drug war and the FARC; for Saudi Arabia, oil and Middle Eastern peace. Oil dominates both countries’ domestic and export economies, and both countries import the vast majority of goods. Both ruling factions maintain order by using oil revenue to provide the selectorate with services, subsidies, and material goods to keep the peace. Both demonstrate arbitrary applications of the rule of law, including detention of high-profile political opponents and extra-judicial killings.

Naturally, there are some critical differences. Saudi Arabia does not even pretend to have elections, their neighbors are a bit more rambunctious, and they have, to this point, managed to keep their population fed. What Venezuela lacks in stability and politically volatile neighbors it makes up for in proximity to the United States. While Saudi Arabia has acted as a point of critical stability in the Middle East, geographically Venezuela sits well within the purview of the Monroe Doctrine and has at least nodded toward democracy in previous years. Despite these differences, functionally the two countries should have a relatively similar relationship with the United States. One cannot help but wonder why we do not ship weapons across the Caribbean in exchange for oil and turn a blind eye to the humanitarian crisis as long as they deliver on their side of the bargain. Particularly since the invasion of Ukraine, Venezuela has the opportunity to fill in the global supply gap in crude oil production. Venezuela does not import forced labor, disregard women’s rights, or finance terrorism. Oh, and as an added bonus, Venezuelans are predominantly Christian.

Perhaps oil is not the biggest factor in defining the relationship between the United States and Venezuela, but rather Venezuela’s self-professed socialism and general antagonism to capitalism. We can look not to a friend but instead a foe for a model here: Cuba. The American trade embargo against Cuba has stretched off and on for six decades since the Castro regime took power. The Cuban people are currently experiencing their own economic crisis, making food and medical supplies hard to come by. As another at least nominally socialist country with leaders long opposed to the United States, Cuba has had to essentially bypass the traditional banking system and rely on tourism from a growing group of allies to generate revenue. The shambolic “Operation Gideon” even has a resemblance to an even more incompetent Bay of Pigs Invasion.  The U.S. policy of regime change in Cuba has failed to yield progress for decades, and the ongoing failure of the policy recognizing Juan Guaido as president appears to be making just as much difference. Treating Cuba as a pariah has also reduced the United States’ credibility among hemispheric allies as well caused friction with several allies as politics in South America move leftward.

Obviously, the American approach to both countries and their respective humanitarian crises leaves a great deal to be desired, but perhaps we can use the lessons from these quagmires in dealing with Venezuela’s current crisis. With Cuba, indefinite isolation has not led to regime change. Saudi Arabia conversely manages to continue to commit human rights abuses regardless of the arms we sell them. So perhaps we must finally come to terms with the fact that neither complete isolation nor intentional ignorance of abuses leads to improvement. Though socialism may be a dirty word in American politics, we cannot let millions starve to death in a neighboring country due to domestic political considerations, namely electoral considerations in Florida and other Latin-immigrant heavy districts. Instead, we can aim to leverage Venezuela’s needs for foreign investment to act as a carrot to spur economic growth. The history of nationalization makes an unattractive environment for foreign investors, but conditional investments in restarting the oil industry as well as diversifying the domestic economy create a ladder out of the current predicament. In the short term, we must facilitate humanitarian aid access to show that the U.S. cares about the survival of the Venezuelan people, eventually restoring trust. Many Americans may dismiss Venezuela as a peripheral problem, but an improved relationship with the country could lead to a diversified supply of oil and other critical resources that Venezuela has in abundance as well as improving our reputation around Latin America after decades of malignant interference. An incentive-driven humanitarian policy can avoid the purgatories that are our existing relationships with Cuba and Saudi Arabia.

Perhaps introduce the idea of using one model or the other, or neither, since your eventual conclusion is not follow either model perfectly