Editor’s note: This is the second of a two-part series on the political and humanitarian crisis of epic proportions in Venezuela, featuring an interview aired on Liberty Nation Radio with Juan Carlos Hidalgo, Latin American policy analyst at Cato Institute. In part one, Mr. Hidalgo discussed how previously splintered opposition to Maduro has united, bringing the dictator to the brink of his demise and invalidating the corrupt election that led to this conflagration.
With the once-prosperous nation of Venezuela in a state of political and humanitarian free-fall after years of strong-armed Marxist dictatorship under Hugo Chavez and now Nicolas Maduro, President Trump and most U.S. allies have officially pulled the rug out from under Maduro, recognizing 35-year-old Venezuelan opposition leader Juan Guaido as the legitimate head of state. Maduro clings to power only because of the support of his military leaders.
Many questions arise: How important is this crisis to the United States? Why should we care? And is Venezuela on the brink of civil war? On Liberty Nation Radio, Juan Carlos Hidalgo, Latin American policy analyst at Cato Institute, addressed these issues.
Tim Donner: Venezuela is one of the countries from which the U.S. imports the most oil. Some of the others are Canada, Mexico, Saudi Arabia, Iraq, Nigeria. How important is the crude oil and petroleum we import from the petro state of Venezuela?
Juan Hidalgo: Not important. I was looking at the numbers the other day, and it’s less than 3% percent of daily oil consumption in the United States. Let’s remember that the shale revolution has made the U.S. a major producer of oil. Canada is the biggest foreign supplier of crude oil to the United States. And oil production in Venezuela has collapsed, given the mismanagement and corruption that besieges that regime. Right now, North Dakota is producing more oil than Venezuela, for example. So we’re talking about 500,000 barrels per day that Venezuela is exporting to the United States, and that’s a trickle compared to the daily consumption of the U.S. market.
Tim Donner: Let me put a question to you straight. Is Venezuela, do you think, headed for an inevitable civil war?
Juan Hidalgo: Well, the problem is just one side of the top of the equation is armed. In order to have a civil war, you need both sides armed; and in this case, the population is disarmed, and the one with the guns is the army that is backing the government. So if we had [been able to have] a civil war in Venezuela, we would have had it already. I mean, Venezuela has been in this state of chaos and unrest for over six years.
But the big question is, of course, what’s going to happen with the army? Let’s remember that this is an active dictatorship, and the army is steeply involved in crimes. We’re talking about massive corruption. And when we’re talking about corruption, we’re talking about hundreds of millions of dollars that have disappeared from the coffers of the Venezuelan state. So we’re talking about smuggling, drug trafficking. Several heads of the army have been named by the Treasury Department as drug kingpins.
This economic meltdown is all on socialist policies that have been building for 20 years.
So the incentives of these guys are, of course, to stick with Maduro, because they know that the alternative is facing justice, be that in the United States, or facing justice right now for crimes against humanity, for corruption, and so on.
The National Assembly is trying to offer them a carrot. They passed a bill recently granting them immunity for their crimes if they help this transition toward democracy. Nobody has bit, but the military might start cracking.
Tim Donner: To what extent is this whole upheaval in Venezuela a product of socialism itself, or Marxism, and to what extent do any special circumstances apply to Venezuela?
Juan Hidalgo: This economic meltdown is all on socialist policies that have been building for 20 years. Hugo Chavez came to power, in fact, 20 years in December last year. In 1998. And since he came to power, he began to implement a piecemeal but then more aggressive program on nationalizations, expropriations, economic controls, currency controls, price controls, and so on, massively increasing the government payroll, massively increasing subsidies. And this totally dilapidated the Venezuelan economy. The private sector has been dilapidated, has been decimated in Venezuela.
But all of this was masked for over a decade, because Venezuela received over a trillion dollars in oil revenue when the oil prices were about $100 per barrel. However, when oil prices collapsed in 2014, that’s when the sorry state of the Venezuelan economy became apparent, and that’s where we started having massive shortages of food, medicine. That’s when the government started printing money in order to pay the bills. And that’s when the hyperinflation took place, and now, according to a Cato scholar, inflation last year was 80,000%, and is now getting to be over 100,000% in the last year. So, we are witnessing a humanitarian crisis like we have never seen in the Western Hemisphere in modern times.
Tim Donner: A lot of analysts this week are comparing the situation to the Green Revolution in Iran several years ago, where there was an uprising like there is in Venezuela, but it went unsupported by President Obama, and the uprising was crushed. Do you see President Trump’s support of this young, new interim head of state as significant enough to enable the revolt, however unorganized it might be, to succeed?
Juan Hidalgo: In Venezuela, people claim, and most of the time rightly so, that U.S. intervention will be counterproductive, that U.S. intervention will make things worse. But it depends. I think it depends on the case. I think that sometimes these people who are in the streets fighting for their freedom, in many cases fighting for their lives, need encouragement from a foreign government. It’s not only the United States, but the international community at large. And right now in Venezuela they are looking for U.S. leadership, and they’re receiving words of encouragement from the White House. I don’t agree with many of President Trump’s policies, but when it comes to Venezuela, he has been very strong in supporting the opposition and attacking the Maduro regime. I think that that has to play a role, for sure, in emboldening the opposition and emboldening the population.