Drilling Deeper into the Issues Shaping Venezuela’s Future

By Stephen V. Arbogast

It is an era of unprecedented events in U.S. foreign policy, from the bombing of Iran’s nuclear facilities through the snatching of Venezuelan dictator Nicholas Maduro to the public pushing and shoving with NATO allies over Greenland.  With so much happening there is an intensified need for penetrating, objective journalism.  Unfortunately, that is especially challenging to practice today with the result being that essential problems created by recent events too often are left unexamined.

Recent Venezuelan events provide a ripe example of this problem.  Drilling down into the Venezuela intervention, one can see the critical issues left unexamined by today’s journalism.  In its January 10^th edition, the Economist newspaper invited Ricardo Hausmann to comment at length on the US raid which captured Maduro.  Hausmann, a former Venezuelan planning minister now situated at Harvard, advanced a theme of “Peace and prosperity in Venezuela will come from democracy, not oil.”  The following series of quotes gives an accurate sense of his arguments:

“In Caracas and Maracaibo, in Miami and Madrid, Venezuelans allowed themselves to imagine a future full of hope, dignity and a return to normal life…But then, concern: just hours after the raid President Donald Trump declared that he would now “run” Venezuela. He talked much about oil but not at all about democracy other than to dismiss Maria Corina Machado…leader of the democratic opposition…Instead, Mr. Trump made clear, America would work with the dictator’s own vice-president…”

 “When Mr. Maduro came to power in 2013, Venezuelans were four times richer than they are today.  A disaster followed: the largest economic contraction ever recorded in peacetime, triggering the departure of 8m Venezuelans…At its heart was a systematic dismantling of rights: property rights, independent courts, and free elections…”

 “Gradually but relentlessly, the Chavista project, which began in 1999, chipped away at checks and balances, individual freedoms, and democracy itself.  We must follow the process in reverse.  There is no shortcut to restoring rights and the rule of law (emphasis added)...Crucially, Venezuelans have already done the hardest bit…In 2023, they rallied overwhelmingly behind Ms. Machado…In 2024 they delivered a landslide win for her colleague, Edmundo Gonzales Urrutia…”

 “Venezuela needs a civilian government constrained by law, respectful of individual freedoms, accountable to voters and capable of rebuilding institutions…Venezuela needs the same liberal formula of peace, justice, democracy and rights.  It needs citizens’ intense desire for democracy to be harnessed, not sidelined.  Otherwise, the seeds of future conflict will grow, especially if national aspirations collide with American priorities.”

 It is a nice wish list. It may also be correct that in the long run Venezuela’s reconstruction should target these goals. Unfortunately, Hausmann takes an airbrush to several inconvenient facts. Some are historical, some current, but these facts condition what is possible as Venezuela tries to move forward.

The first inconvenient fact is that power inside today’s Venezuela resides with those who have the guns rather than the votes.  They, unfortunately, are the military, the Cuban praetorian guard that long protected the Maduro regime, and the armed gangs (colectivos) that enforce the regime’s rule in the barrios. These forces did not disappear with Maduro’s extraction. Perhaps the US administration could have chosen better words, but when they described Ms. Maria Corina Machado as lacking ‘respect’ inside the country, they meant she has no control over these elements. The Maduro regime’s ugly residue has its own interests. Their goals are not the same goals as Machado’s, and the bad guys still have considerable power to insist on theirs.

Which leads to the second and third inconvenient facts – not only are democratic elections not an immediate ‘cure all’ for Venezuela’s ills – they never were. Unmentioned in Hausmann’s piece is the inconvenient fact that Chavez came to power though a presidential election.  Despite leading a failed coup attempt in the early 1990s, he was allowed to run, and win, in 1998.  How he won involves the third fact – Chavez was elected because he depicted Venezuela’s democracy as largely benefitting a small elite while the vast majority saw little benefit from the country’s oil wealth.  In making this case Chavez was helped by the fact that a majority of voters thought this to be true.

The history of the Chavez period underscores the fourth fact – that violence rather than the rule of law characterized Venezuela’s politics after Chavez came to power legally. Chavez faced multiple attempts to drive him from office.  There was a 2002 coup attempt during which Chavez was taken prisoner and sequestered on an offshore island. The coup collapsed due to divisions in the military and Chavez returns to Caracas in triumph. A PdVSA union strike followed in 2023. Chavez broke the strike and drove most of the company leadership into exile.  Considerable technical expertise went with them.  Venezuela’s descent into declining oil production has its origin in these events. Concerned about his enemies’ attempts to drive him from office, Chavez sought other means to secure him from threats. The installation of Cuban military and intelligence figures plus creation of the local ‘colectivos’ then followed.

This is the gnarly landscape facing the Trump administration as it confronts the ‘What Now?’ question. Venezuela today is far from the dreamland Hausmann invokes when he calls for an immediate democratic restoration that can set about reestablishing rights and the rule of law. After more than three decades of Chavismo, the social divide is deep, insecurity rampant. Three weeks on from Maduro’s capture, what can be said about the US administration’s gameplan for transitioning Venezuela?  Is it any more realistic than Hausmann’s?

An outline of that plan is visible, and it is different than previous US attempts at nation building.  Here are the key elements of its ‘carrot and sticks’ approach:

• First, cut off the money flows to all players who supported the Maduro regime. Without money to lubricate these disparate groups and incentivize loyalty, divisions should open up. By seizing control of Venezuelan air and marine space, the US cuts off the oil exports and drug shipments which funded the Maduro loyalists. When the US talks of controlling Venezuela’s oil, they are really talking about controlling disposition of the money the regime uses to keep itself in power.
• Second, promote divisions within the Maduro groups by ‘anointing’ some over others. Evidence is surfacing of early contacts between the US administration and elements within Maduro’s government.  Mary Anastasia O’Grady, writing in the WSJ on January 26, noted that there were contacts with Vice-President Delcy Rodriguez in October of last year.  O’Grady also commented that Rodriquez’ faction is at odds with that of thuggish Interior Minister Diosdado Cabello.  Fostering this split while also controlling the regime’s money gives the US considerable leverage over Venezuela’s internal events.
• Third, convey to Rodriguez’ faction that there can be more money in the future if they play ball with the US now. This involves the administration’s roundup of US oil companies to consider how to rebuild the Venezuelan oil industry. The continued presence of SLB in the country and Halliburton’s willingness to re-enter quickly lends substance to the idea that some production recovery is possible fairly soon.  Much of Venezuela’s production decline was the result of maintenance that was deferred due to cash shortages and sanctions.
• Fourth, demonstrate to the regime that they cannot hope for support from any other direction. Continued attacks on drug boats, naval blockade, and pressures on Cuba for regime change all reinforce the message to Rodriguez and Cabello that their only immediate options are to play ball with the US.
• Finally, use US control over Venezuela’s oil export revenues to reward cooperation and promote a longer-range transition plan. The near-term oil recovery involves Venezuela’s better crude grades and is more a function of doing workovers and paying bills than committing large sums of capital. By controlling the disposition of these export revenues, the US can reward cooperative actors and deny resources to hardened opponents. A serious conversation about transition can then begin with these ‘allies.’  They can be repositioned as agents of ‘national reconstruction and reconciliation’, given de-facto amnesty, and permitted to participate in the democratic political process. The more hardened opponents can be encouraged to leave under threat of prosecution by a future government.

This is a serious game plan, one very different from that which the US applied in Iraq.  But, since the thugs with the guns still hold power, executing this type of plan from outside the country presents clear challenges. The obvious question becomes, ‘how exactly do we go from here to there?’  Drilling down into this question should now be the work of serious journalism.

To that end we would post the following matters as essential to understanding the US administration’s plans and its chances of succeeding:

2. What would constitute the tactical details of a multi-step transition process to a democratic restoration in Venezuela? Would the tactical script look like the following?
   1. Expel the remaining Cubans.
   2. Recruit a faction of the military to support Rodriguez in expelling Cabello and disarming the colectivos.
   3. Adopt Venezuelan laws and offshore US procedures to pay Oil Field service companies for future and some past services – allowing them to address oil field maintenance issues and boost production quickly.
   4. Improve food and essential imports, restoring supplies and services to neighborhoods.
   5. Declare an amnesty for political prisoners and for returning exiles.
   6. Rewrite tax and other laws to incentivize longer term foreign investment in petroleum, mining and agriculture.
   7. Announce a transitional process to elect a new Congress and President.
3. If something like this is the go-forward plan, how can a. and b. be accomplished without the US intervening ‘on the ground’? What opposition tactics should be anticipated?
4. How much production can be restored by just the service companies going back to work? The neglect of basic equipment is extensive, with many critical parts essentially stripped. Is a quick production recovery possible given the security and extent of the deferred maintenance?
5. How should US control over the physical disposition of Venezuelan exports and of the resulting revenue be distributed among the regime, funds for rebuilding the oil industry, and goods/services to flow to the population?
6. Are US rights to control these cash flows legally insulated from challenges? Will the amount of cash generated be enough to accomplish reconstruction, given the nature of the forces ‘on the ground’ and their penchant for theft?  How will the US enforce its intended distributions?
7. What benchmarks should be achieved before a formal transition to elections can be launched?

The point of this list is not to suggest this is the exact plan for ‘where we go from here’ in Venezuela.  Rather, it is to move the journalistic inquiry forward to focus on the questions which will determine whether this plan, or something similar, can achieve its goals.

In a sense, Hausmann was not wrong in targeting an establishment of rights, laws, and democratic process as a hoped-for destination for Venezuela.  It is Hausmann treating this as a restoration that is misleading. It would be more accurate if Hausmann depicted the current moment as an opportunity to break decisively from the past – one best characterized as a facade of democracy, an ‘oil curse’ system with a high degree of economic inequality and a confiscatory approach towards foreign investors.

For that hope to be realized, however, there will need to be focus and skill applied to the very bumpy road of getting from ‘here to there.’  A good public airing of the issues, possibilities and difficulties can help in that process.