Venezuelan President Nicolás Maduro is fighting a losing battle to salvage his regime, and student demonstrations that will continue today are only one of his problems. As details of his government’s bankruptcy are made public, his political base will continue to splinter. And as he follows Cuban advice to use brute force against peaceful demonstrators, the nationalist military will find the growing violence intolerable. In short, Maduro’s condition is terminal.
According to a source in Venezuela’s Central Bank, the country’s international reserves have dwindled to $21 billion — less than half the reserves of Colombia, an economy of the same size. Worse yet, $12 billion of Venezuela’s dwindling reserves is in the form of gold that is claimed by China as security for more than $30 billion in loans made in the last two years. Because Venezuela is not keeping up with oil deliveries to service that Chinese debt, the gold cannot be touched.
Another $7.5 billion of the reserves is in the form of bonds issued by Argentina, Bolivia, Cuba, and Nicaragua, a source in the Central Bank told me. Apparently that amount used to be held in U.S. Treasury bonds, but the regime traded these for useless paper from some of the region’s most insolvent countries. These bonds cannot be liquidated for cash because they are worth less than their face value, making their sale illegal under Venezuelan law. Thus, what is left in the bank is less than a half-billion dollars, which would cover the cost of about two weeks worth of imports. So shortages of essential goods will worsen in the days ahead.
After nearly two decades of mismanagement and corruption, oil production is faltering and over-subscribed — committed to domestic consumption and China, and international giveaways to Cuba, the leftist party in El Salvador, and the Caribbean. Sources say that Rafael Ramirez, the president of the Venezuelan state energy company PDVSA, will have to terminate these giveaways. He also will continue to shortchange China in order to generate revenue by maximizing oil sales to the United States. However, this scramble for cash is both inadequate and unsustainable in meeting Venezuela’s needs.
So, history will record that a revolution dedicated to “Socialism of the 21st Century” disintegrated for lack of U.S. greenbacks.
The images of ill-trained national guardsmen and civilian thugs shooting, beating, and detaining student protesters has further alienated the bulk of the Army officer corps from Maduro and his cadre of corrupt generals.
Maduro’s second major crisis involves the loss of support within the country’s armed forces. Hugo Chávez commanded the respect or fear of uniformed services because he was a military veteran, and he cemented their loyalty by giving them lucrative posts and abetting their involvement in narcotrafficking and other corruption. Of course, some of the military — including respected retirees — steered clear of serious corruption but remained loyal to their commander-in-chief.
That military pillar of the regime has been crumbling since Chávez’s death last March. Maduro has earned little respect within their ranks. Those who have rallied around him are men he has coopted with new assignments and the very corrupt narcomilitares — notably National Assembly president Diosdado Cabello — who are hoping to hold on to their illicit fortunes by preserving the criminal and unaccountable regime.
A nationalist wing chafes at the heavy-handed role of the Cuban regime in Maduro’s administration. As one former Chávez confidante grumbled privately, “There is not a ‘chavista’ government in Venezuela today — it is a ‘Cuban’ government, instead.” The images of ill-trained national guardsmen and civilian thugs shooting, beating, and detaining student protesters has further alienated the bulk of the Army officer corps from Maduro and his cadre of corrupt generals. According to one leadership source, if Maduro were to order the Army to deploy heavy weapons and troops to quell protestors, it likely will be the last order of his unhappy tenure.
If demonstrations and casualties continue to grow, Latin American leaders who had no interest in crossing the willful Chávez will not keep silent as Maduro’s faltering regime unleashes gangs who empty pistols into peaceful crowds. The United States issued a timid statement calling upon the despotic regime to respect human rights and freedom of expression. On Sunday, Maduro expelled three diplomats in a vain attempt to blame “the Empire” — meaning the United States — for his woes; but this tactic only served to draw international attention to intensifying unrest and a regime that is fighting a losing battle for survival.
It appears that Hugo Chávez’s “Bolivarian revolution” will have outlived him by about a year — leaving behind a toxic mess. The international community can help the Venezuelan people by prosecuting Maduro and the narcomilitares for their crimes and returning their ill-gotten assets to support the reconstruction of a country that has been through hell and back.
Roger F. Noriega held senior positions in the State Department in the administration of President George W. Bush from 2001 to 2005 and is a visiting fellow at the American Enterprise Institute. His firm, Vision Americas, represents U.S. and foreign clients.
FURTHER READING: Noriega also writes “Latins Rally to Restore Human Rights Panel," "Post-Chávez Crisis an Opportunity for Venezuela,” “Chávez’s Dangerous Liaisons with Tehran,” and “U.S. Diplomats Clueless on Alleged Chávez Plot to Kill the President of Panama.”
Image by Dianna Ingram / Bergman Group
So, history will record that a revolution dedicated to “Socialism of the 21st Century” disintegrated for lack of U.S. greenbacks.