Venezuela’s de facto president continues to have cash, foreign allies and loyal security forces
About one year ago I published an article about ten things keeping Maduro in power. While I’ve written several articles during the year about the threats to Maduro’s stability and still believe he remains quite vulnerable to losing power in 2020, that article in December 2018 remains among my most accurate as Venezuela’s de facto president remains in power as 2019 closes. Many of the same factors that were keeping Maduro in power at the end of 2018 remain at the end of 2019. In spite of a major push by Juan Guaido and the international community, they haven’t managed to undermine these factors.
1) Legitimacy of the status quo – Maduro lacks democratic legitimacy and popular support. There is almost no chance he could win a free and fair election. Over 50 countries recognize a different president of Venezuela. But the fact that he started the year in charge remains the key reason he is able to remain in charge. Momentum and incumbent advantage are powerful forces in politics for both democracies and authoritarian regimes. The two decades of Chavista rule have included numerous institutional maneuvers that make change difficult.
2) Balance of power based on fear of the unknown – The vast majority of Venezuelans want Maduro gone. Rumors suggest that many in his own coalition want him removed. But there remains significant fear (and rightly so!) about what comes next. Many of the individuals who have the access and ability to remove Maduro from power are afraid that they would lose power, influence and wealth in the ensuing power struggle and they very well might be correct in that assumption.
3) The security forces – There were defections in 2019. Several thousand soldiers, sailors, airmen and national guardsmen left their posts and never returned. A few key generals including the head of Sebin defected as well. And yet, the vast majority of the leadership and the lower level forces remained with Maduro. That continued support from the security forces comes from a combination of duty, corruption, and fear as well as the knowledge that those who have tried to turn against Maduro so far have failed and faced severe consequences.
4) Repression, surveillance and counter-intelligence – The government continues to shoot, torture and illegally detain political opponents. The FAES raid poor neighborhoods and execute young men. Military counter-intelligence ensures the top generals and the rank and file feel a climate of fear and do not dare to actively plot a coup. Sanctions and threat of prosecution does not appear to have slowed the levels of repression. Though there were indications that some military and police units refused to engage in brutal tactics in 2019, others including FAES and DGCIM have more than filled the gap.
5) Cuba – The Diaz-Canel regime continues to support Maduro and neither the international community nor the Guaido coalition has given Cuba a good reason to stop doing so. Cuba provides political advice and intelligence personnel who help Maduro keep his own security forces in line and undermine plots to oust him.
6) China, Russia, Turkey, Iran – Of the four, Russia has been the most important for keeping Maduro in power during 2019. Russian military forces and security contractors have an active presence in Venezuela. Russian financial ties and Rosneft oil trades have been among the most critical factors in assisting Maduro in evading sanctions. The other three still matter in terms of providing support and financing, but Russia is the Black Knight who protects Maduro more than any other.
7) Lack of regional options and will – Most of the region supports Juan Guaido. The Lima Group publishes regular statements. The OAS has discussed Venezuela. TIAR has been invoked. Unfortunately, outside of strongly worded statements and some limited individual sanctions, very little has actually been done. This has gotten worse since the wave of protests and anti-incumbent sentiment hit the region starting in September. Macri lost his reelection. Chile, Colombia and Ecuador all experienced destabilizing protests. Bolsonaro has shown himself not eager to involve Brazil. There is little reason to believe the region will be more focused on Venezuela’s need for a transition in 2020 than they have been this past year.
8) Food as a political weapon – On one hand, compared to 2018, there is an increasing amount of dollars, importation of food has been smoothed out, and there are fewer shortages. If you have dollars, you can generally get what you want in Caracas. On the other hand, most Venezuelans don’t have dollars and don’t live in Caracas. That means a majority of Venezuelans in December 2019 still fail to eat three meals per day. Children go hungry and malnourishment remains a stark problem in the country. The government continues to use its leverage over food supplies and prices to manipulate the public.
9) Refugees – The exodus of people leaving Venezuela now numbers around five million. By encouraging people to flee the country, the government gets rid of a portion of the population that would otherwise stay and protest. The mass migration also increases the amount of remittances returning to the country.
10) Cash – Sanctions evasion, corruption, and the firesale of gold have given Maduro just enough cash to hold on. The full dollarization of the economy to take advantage of remittance money has extended his rule by a few more months, though it will exacerbate tensions with those still being paid in Bolivars including government workers and police. While Maduro and his inner circle have probably not had their best year in terms of personal finances, most of the Venezuelan population is suffering far more.
Analysis: Cash, Allies and Loyalty
Maduro’s removal is almost certainly contingent on a change of three factors:
his cash flow,
his international alliances,
and the views of his inner circle and the security forces.
Those three factors are interdependent. His international alliances are key to his cash flow and the money has a direct impact on the loyalty of those around him.
The regime is running out of gold and cannot mine more fast enough out of the Orinoco belt to replace what is being strip mined out of the Central Bank. The oil industry – while exports increased in November – provides far fewer cash-producing barrels than it did at the end of 2018. Russia helps the sanctions evasion and ships pallets of hard currency in exchange for gold and oil, but as I’ve argued previously, Russia is likely pulling more resources from Venezuela than it is providing Maduro.
None of the above ten points I’ve listed are dependent on Juan Guaido, others within the coalition of Maduro opponents, or the population at large. That’s not to say that opposition cohesiveness, infighting and strategy don’t matter. They certainly play a role in keeping pressure on Maduro both domestically and internationally. The opposition’s recent infighting helps keep Maduro in power, and the Maduro regime’s attempts to repress and break apart the Guaido coalition shows that the de facto president understands that his opponents matter.
The big shift, as of the end of 2019, is the dollarization of the economy. This reversal of a long-held Chavista policy of currency controls has provided relief to the top levels of the economic pyramid. This includes many who are among the sectors who led protests in 2007, 2014 and 2017. However, dollarization has increased inequality and made life more difficult for the poorest as well as government workers. If a protest wave hits Venezuela in 2020, it very well might be led by the sectors that have been left out by the dollarization of the economy rather than the traditional opposition. That would present a different public pressure threat than the Chavistas have faced in the past two decades. It could potentially shake the loyalty of those around Maduro.
Maduro wants new legislative elections and Guaido has long insisted that new presidential elections are necessary, but with Maduro leaving power as a precondition. Any new election process, whether or not the opposition participates, is a risk to Maduro and his hold on the legitimacy of the status quo. Elections are often a key moment of pressure, even for authoritarian regimes that manipulate and abuse the process.