Venezuela: The foreign players with the most at stake

Who really has skin in the Venezuela game? From China to the United States, Jean Daudelin lists the foreign governments that are closely watching events there, which result they may be hoping for and why.

By: /
February 11, 2019
Opposition supporters take part in a rally against Venezuelan President Nicolas Maduro's government in Caracas, Venezuela, February 2, 2019. REUTERS/Carlos Barria

The crisis in Venezuela obviously matters most for Venezuelans. On top of years of economic crisis, political repression, decaying infrastructure, withering education and social services, hollowed-out administrative capabilities, revolting corruption and stratospheric levels of criminality, they now confront the possibility of chaos and violence in an uncertain and likely drawn-out process of regime transition. At the same time, this very uncertainty holds the promise of a new economic beginning, with the prospect, dim but genuine, of a broadly legitimate political regime and of a rational economic policy.

Venezuela’s current troubles also have significant ripple effects. Canada’s media and commentators have mostly focused on the wisdom and implications of Ottawa’s recognition of Juan Guaidó, the president of Venezuela’s National Assembly, as interim president of the country, and of its call, along with Lima Group allies, for the Venezuelan military to switch allegiance and abandon the current head of state, Nicolás Maduro.

The reality, however, is that Canada has very little at stake in this crisis. It could enjoy a moment of glory at the vanguard of global democracy promotion, if Maduro resigns. But whether he does or not, Canada’s long-standing reputation as a diplomatic honest broker will suffer from its quick siding with Guaidó. The Trudeau government will also have to face an inevitable reckoning when it becomes clear that consistently applying this new “Freeland Doctrine” of forceful democracy promotion, in a world where dubious electoral processes and broad-based challenges of the governments they produce are common, is simply not possible (think of the Democratic Republic of the Congo, just last December). For Canada’s diplomacy and the credibility of its foreign policy, this is far from irrelevant, but a number of other countries have much more at stake than mere reputation or self-image.

Colombia

Colombia has suffered the brunt of the crisis, absorbing most of the three million or so refugees that have fled Venezuela’s economic and political collapse. The massive inflow of refugees has hit Colombia as it confronts a tricky stage of its peace process, with millions of internally displaced people to resettle, tens of thousands of coca farmers to bring back into the legal economy and thousands of former guerrillas to reintegrate into civilian life. While public opinion and the government have proven to be admirably open and generous towards Venezuelans, uncertainty and discontent are growing as the country continues to face severe public security challenges and still partial and unequal social service provisions.

The flip side is that regime change in Caracas could both stem the flow of refugees and restart an economy that has long been a natural partner of Colombia’s. In the short-term, the fall of Maduro would put an end to the use of Venezuela’s territory by the National Liberation Army, significantly weakening the last guerrilla group that still refuses to demobilize and that has claimed the recent bombing that killed 20 people in Bogotá. For Colombia’s president, Ivan Duque, Maduro’s fall would be a great help.

Cuba

Hugo Chávez, Venezuela’s former president, saw himself as an heir to Cuba’s Fidel Castro, and relations between the two countries have remained extremely close since Chávez’s death in 2013. Cuban advisors surround Maduro, as they did Chávez, Cuban doctors staff many of the regime’s “missions” among Venezuela’s poor, and Cuban military personnel support Venezuela’s security and intelligence apparatus.

In exchange, Venezuela took over from Russia the transfer to Cuba of large amounts of heavily subsidized oil, which helped Havana keep its economy afloat.

Crucially, in the face of the Trump administration’s aggressive stance towards the remaining “Leftist” governments of the Americas (Cuba, Nicaragua, Venezuela), and of the right turn of several previously sympathetic countries (Argentina, Brazil, Ecuador), Venezuela gave “strategic depth” to Cuba’s diplomatic and military defence arrangement. Losing both the oil — which admittedly had been diminishing quickly — and a key buffer would represent a major strategic setback for Havana. For Cuban President Miguel Diaz-Canel and the still-influential Raul Castro, Maduro’s fall would be a costly loss.

China

Until now, China has refused to recognize Guaidó and made it clear that it would block any US attempt to use the United Nations Security Council to pressure Venezuela, for instance by suspending its membership in the multilateral body. Beyond that, however, the Chinese government has remained largely quiet, its media defending a peaceful political settlement and giving pride of place to negotiation efforts by the UN Secretary-General. That moderation could well be related to the Venezuelan government’s debt to China, estimated at $13 billion. The idea has been floated that China — and Russia — could decide to jump in to defend Maduro and take control of what many refer to as the largest oil reserves in the world. Notwithstanding the fact that much of that oil is probably not recoverable, the global oil glut, the sorry state of Venezuela’s production infrastructure and the poor quality of its heavy, sour crude oil, such a bet would make little economic and even strategic sense. China has a lot of money currently sunk in what looks like a bottomless pit and internationally-supported guarantees of repayment by Guaidó could perhaps make Beijing reconsider its current position. Keeping a hard line, by contrast, could put its sizable investment in jeopardy.

Russia

Vladimir Putin’s Russia has also lent money to Venezuela, and Russia’s Rosneft oil company has a collateral claim to half of Venezuela’s US-based refinery, Citgo (the US government is now preventing Citgo from remitting its revenues to Maduro’s government). The amounts involved — $2 billion to $3 billion — are relatively small, but Russia does not have the financial leeway of China. Venezuela has also bought sizable amounts of weapons from Russia, though the extent to which they have already been paid for is unclear. Altogether, Moscow’s economic stakes nonetheless appear to be relatively limited. Venezuela probably matters more to Putin as a piece of the chicken game he is playing with at least part of the Trump administration. Maduro’s fall would be a loss, but Venezuela is not equal to Syria or Ukraine on Moscow’s strategic board, and the shock would have little strategic impact on Russia’s position.

The United States

The Trump administration was the first to recognize Guaidó. It has also undercut attempts by the Lima Group — and now Europe — to frame the international pressure as a peaceful initiative by insisting that military intervention remain an option. The fall of Maduro’s fragile regime would be a boon to an administration that boasts of machismo but has in fact been retreating globally in the face of Russia’s and China’s increasingly assertive policies beyond the Americas. Another easy win could be in the offing in Nicaragua — another member, along with Cuba, of what John Bolton has called Latin America’s “Troika of Tyranny” — where President Daniel Ortega also confronts massive popular opposition. The first domino, however, absolutely has to fall, and Washington really can’t afford to lose such an easy play.

Many other countries have dipped into the Venezuela stew: Brazil, most members of the EU, Mexico, Norway and Bolivia, among others. Like Canada, however, they have little at stake: they are to a large extent “disinterested.” This gives them freedom but also makes them less likely to remain engaged or to throw in significant political or economic capital. Hopefully, it should also make them wary of pushing for “solutions” whose consequences are immaterial for them but all too concrete for Venezuelans.