Venezuela’s descent into anarchy fuels Maduro’s despair
Venezuela’s descent into anarchy fuels Maduro’s despair
After more than 15 years of US sanctions that brought about the collapse of Venezuela’s only powerful oil industry, the troubled Latin American state now appears to be on the verge of failure. More than two decades of autocratic socialist rule, which began with Chavez’s Bolivarian revolution in 1999, emptied what was once the most stable democracy and richest country in South America. Venezuela is at the end of what is described as the worst modern-day economic decline outside of war.
In 2020 alone, the International Monetary Fund valued that Venezuela’s economy has contracted a devastating 30% and will contract again this year by at least 10%. The extent of the economic crisis is underlined by the emergence of hyperinflation on a scale comparable to that of Weimar Germany in the 1920s, forcing the unofficial dollarization of the Venezuelan economy. These events sparked a staggering humanitarian crisis that has forced nearly six million Venezuelans to flee their besieged homeland since 2015. None of these developments, including the devastating humanitarian fallout precipitated by the Chavez crisis failed socialist experiment, persuaded Washington to relax the sanctions.
The immense severity of the crisis now hitting Venezuela has recently seen autocratic President Maduro call on Biden to open diplomatic relations with his government and to lift US sanctions. These openings, despite the many olive branches extended by Caracas in recent months, were rejected by the White House. The Biden administration refuses to negotiate with Maduro until his regime accepts transformative changes, including engaging with Juan Guaido, Washington’s recognized interim president, restoring political freedoms, and establishing a timetable for fair and democratic elections. Related: New Mexico’s Oil Production Returns to Pre-Pandemic Levels
It is difficult to assess whether Maduro will accept or even have the means to accept key elements of Washington’s stipulations. he can having foiled its political rivals in Venezuela, but the country’s socialist leadership remains under extreme pressure. This highlights why Maduro over the past few months has significantly moderated his unique hardline stance towards Washington. This included unilateral goodwill gestures aimed at building political capital with the Biden administration and pushing to relax sanctions. The most notable of these measures were the appointment of a new National Electoral Council comprising two opposition figures, the transfer of six Citgo executives from prison to house arrest and the approval of a food program. United Nations Global. There are also indications that Caracas is attempted deletion illegal armed groups on Venezuelan territory, including those designated by Washington as foreign terrorist groups.
by Maduro despair is easy to understand. Although he has defied harsh US sanctions to strengthen his grip on power at the national level by defeating his opponents and taking control of the National Assembly, his position is increasingly vulnerable due to the impending implosion. of the Venezuelan state. The oil-rich nation is on the verge of bankruptcy. This is not only because of the US sanctions and the collapse of the oil industry, but also because the Maduro regime has regularly plundered Venezuela’s gold and currency reserves to support the shattered economy and meet foreign debt obligations.
The dire economic fallout is magnified by rampant corruption, with regime loyalists routinely looting government coffers for their own benefit. Even lenders of last resort like the Kremlin, Beijing and Tehran have done little to prevent the erosion of Venezuela’s very large financial reserves or the country’s economy. The rapid decline in Caracas’ tax fortunes forced Maduro’s regime to restructure Venezuela’s sovereign debt after a default in November 2017. While the regime reached an agreement Along with individual creditors, it remains to be seen whether Caracas has sufficient resources to meet Venezuela’s sovereign debt obligations, unless it can access international financial and energy markets. As long as the current US sanctions remain in place, this will not happen due to the inability to borrow from international lenders. This amplifies the complexity of the extreme economic and humanitarian crises that Caracas is forced to resolve.
When you consider that Venezuela’s oil reserves are the largest in the world at over 300 billion barrels, the country’s deep economic crisis is hard to understand. With the substantial rise in crude oil prices since the end of 2020, extracting these vast oil reserves would at first glance offer an urgent solution. To generate interest and attract vital investment, Maduro earlier this year said Venezuela was open for business and seeking investment from foreign energy companies to exploit its vast oil reserves. Maduro even pitched the idea that private energy companies could control oil projects in Venezuela, which has not happened since Chavez seized private oil assets between 2007 and 2010.
While this interest has sparked the interest of many small foreign energy companies, it failed to attract the substantial investment required, estimated at between $ 58 billion and $ 200 billion, to rebuild Venezuela’s crumbling oil sector. This will not happen until Washington relaxes sanctions and allows Western energy majors, which are the only oil companies with the necessary resources and technology to operate profitably in Venezuela. The crisis in Venezuela broken oil industry is evidenced by the fact that it pumps only an average of 535,000 barrels per day in May 2021, which is 5% less than a year earlier and about one sixth of the 3.1 million barrels produced daily in 1998 before Chavez took the presidency and launched his Bolivarian socialist regime. revolution.
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The desperation of the Maduro regime increases more and more as it loses control significant chunks of territory to Venezuelan and Colombian non-state armed groups. This fuels considerable fear in the presidential palace in Miraflores that even Maduro’s iron grip on power may be insufficient to prevent Venezuela from collapsing, leaving the president and his supporters vulnerable in the United States. arrest warrants or worse. Caracas’ inability to control much of Venezuela’s topography is due to its inability to finance basic public infrastructure and social goods combined with dilapidated armed forces.
The Venezuelan army, deprived of funds for nearly a decade, is only a shadow of what it was when Chavez democratically won the presidency in 1998. Recent events in the western state of Apure highlight this with security forces fighting to defeat the 10th Colombian Front, a battle-hardened dissident. Colombian guerrillas, who refused to demobilize in accordance with the 2016 peace agreement with the Colombian national government in Bogota, have long sought refuge in the lawless border zone with Venezuela.
There they took control of lucrative smuggling routes, drug trafficking and extortion, while occupying Venezuelan territory with the tacit approval of Caracas. The guerrillas, battle-hardened after decades of fighting against the Colombian military, have successfully used hit-and-run tactics, including ambushes and improvised explosive devices. In many cases, they have overwhelmed the ill-trained and ill-equipped Venezuelan military, which is also struggling with the effects of declining morale caused by their country’s deep economic malaise. FARC dissident guerrillas from last month capture eight Venezuelan soldiers after an operation (Spanish) in La Capilla went awry, resulting in the deaths of 16 soldiers. The captive soldiers were finally freed by the guerrillas earlier this month after the Venezuelan authorities were unable to rescue them.
It is not only the border region where Caracas is unable to control Venezuelan territory. Regional analysts and human rights groups say Colombian guerrillas, including FARC groups and the National Liberation Army (ELN – Spanish initials) operate in up to 70% of Venezuela’s national territory . Venezuelan paramilitary groups, known as colectivos, are estimated to control 10% of the country’s cities and operate in at least 16 of its states.
The government’s inability to control its territory threatens even large cities including Caracas, who were once firmly under the administration of the Maduro regime. The rapid influx and expansion of multiple armed non-state actors could cause a fatally injured Venezuelan state to implode, explaining Maduros’ desperate call to Washington to ease sanctions so the autocratic socialist regime can begin to rebuild the country before it’s too late.
By Matthew Smith for Oil Octobers
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