REESE ERLICH
Anti-government demonstrators blocked freeways in Caracas, and some youth threw Molotov cocktails at police. Photo by Reese Erlich.
Carmelinda Valera and her husband have a small farm perched on a steep hill with a breathtaking view of Caracas, Venezuela. As an early morning fog hugs the farmland, Valera shows me where they grow bananas, coffee, and other subsistence crops.
Venezuela’s two-year-old economic crisis has hit the couple hard. They can’t find cement to finish building another room for their two-bedroom, concrete block house. And they barely make a living from farming. Valera also works as a school janitor.
“Some months we make no money at all from the farm,” says Valera, as she dumps some dirt from a wheelbarrow. Despite her family’s hardships, Valera, like many of the country’s rural poor population, remains a staunch supporter of the socialist government of President Nicolás Maduro. The government has reduced poverty, she says, and despite the economic crisis, she doesn’t trust the opposition parties to solve the country’s problems.
Many other Venezuelans disagree. Since April, large numbers have protested in the streets against the government. Food is expensive and in short supply. Everything from medicine to toilet paper is hard to find. Inflation hit 176 percent for the first half of this year, according to the opposition. As the economy worsened and support for the opposition grew, the government took extraordinary steps to maintain power.
Opposition leaders and the Trump Administration claim Venezuela has become a leftist dictatorship that should be overthrown. In July, CIA Director Mike Pompeo hinted at agency involvement in Venezuela. In August, Trump threatened military action.
“We have many options for Venezuela, including a possible military option, if necessary,” Trump told a press conference. He strongly backs the opposition parties, who favor neo-liberal economic policies.
Trump’s threat angered Latin American leaders, including those firmly in the U.S. camp; they denounced any plans for U.S. military action. And the opposition’s close association with Trump may have turned the tide against them.
Trump would have the world believe that Venezuela represents a battle between democracy and dictatorship. But the reality is far more complicated.
The causes of the current crisis go back many years. Since the 1930s, when the Rockefeller family’s oil company dominated the country, Venezuela has had the equivalent of a one-crop economy. It produces oil and uses the proceeds to import food, medicine, and almost everything else.
Hugo Chávez, elected president in 1998, made some progress in promoting agriculture and other domestic industries. In 2013, Chávez died of cancer and Nicolás Maduro was elected president. This transition, along with plummeting international oil prices in 2015, led to serious problems. Venezuela’s foreign reserves have seen a severe drop, along with the value of its currency, the bolívar fuerte (Bs.F.).
So the government implemented multiple dollar-bolívar exchange rates in an effort to prioritize essential imports. Medical equipment, for example, can be imported at a more favorable rate than luxury cars. But corporations quickly figured out they could falsify the paperwork indicating they had imported such equipment or other goods, collect the dollars from the government, then exchange them on the black market.
The economic crisis fostered government and military corruption as some officials lined their own pockets through black market trading and currency speculation.
As of the time of writing, $1 could buy 9,100 Bs.F. at the official exchange rate for nonessential items. The black market rate was 17,560 Bs.F. for $1. So an unscrupulous capitalist could make about a 90 percent profit by currency manipulation, while the people suffer from a lack of medical supplies, contributing to social unrest.
The economic crisis fostered government and military corruption as some officials lined their own pockets through black market trading and currency speculation.
“The government made a lot of errors,” admits Rodulfo Pérez, a former minister of education in Maduro’s cabinet, sitting across from me in a Caracas coffee shop. “We should have invested our oil money in the domestic economy.” Wearing spectacles and sporting a mustache and goatee, Pérez looks every inch the academic he once was.
He says the country could have produced more food, personal hygiene, and cleaning products. “Such a policy would have strengthened the bolívar fuerte and reduced the need for imports.”
Opposition parties, which range from conservative Christians to social democrats, formed a coalition called the Democratic Unity Roundtable (Mesa de la Unidad Democrática or MUD). Backed mostly by middle-income and upper-class people, MUD mobilized tens of thousands to block major streets and highways this spring, and brought major cities to a standstill.
Opposition leaders publicly advocated nonviolent protest to restore democracy. In fact, from the onset, demonstrators hurled rocks and firebombs at the police and National Guard.
During the first week of protests in April, pro-opposition rioters vandalized and set fire to the administrative offices of the Supreme Court. As the protests became more violent, the opposition attacked police with homemade projectiles and explosive devices.
The government cracked down hard, using both legal and illegal methods. Security forces fired rubber bullets and tear gas at demonstrators. Armed government supporters attacked opposition headquarters and neighborhoods, killing dozens. More than 100 people have died as a result of government and opposition violence, with hundreds more injured.
Lost in the charges and countercharges about violence and repression, however, are the actual programmatic goals of the opposition.
Henrique Capriles, a state governor and a top opposition leader, meets me at a local politician’s frayed-at-the-seams office. The elevator doesn’t work, so I walk up four flights to meet Capriles, who is standing in front of a screen with his party’s logo used for TV interviews.
“We are defending the constitution and our country,” he proclaims. “Now we have a perfect storm that didn’t exist before.”
He predicts the rapid collapse of the government. “We are defending the constitution and our country,” he proclaims. “Now we have a perfect storm that didn’t exist before.”
In reality, the opposition favors democracy only if it brings their leaders to power. Some of the same leaders organizing highway blockages today supported a failed coup against democratically elected President Hugo Chávez in 2002. Opposition supporters talk openly about doing the same today.
If the government refuses dialogue with the opposition, wrote opposition activist Hugo Prieto in The New York Times, “the alternative would be a military intervention to install a national unity government.”
Opposition leaders strongly criticize Maduro’s economic policies, but their alternatives sound strangely familiar. Freddy Guevara sits in the sumptuous office he occupies as first vice president of the National Assembly. At thirty-one, he’s the youngest person ever to hold that post and has become a major opposition leader. He admits that economic recovery will be difficult and require a lot of outside help.
“We need international investment—private, public, and multinational,” he says. “We will have to have international support.”
Guevara is working informally with economists at Harvard to develop a capitalist economy after the fall of the socialist government. Venezuela will need the kind of international assistance provided to Greece and Ukraine, according to Ricardo Hausmann, a Venezuelan minister of planning prior to the election of Chávez, who now teaches at Harvard.
In a commentary last year, he said the International Monetary Fund, World Bank, and other international institutions will have to provide large loans. Opposition leaders foresee the need to privatize government-run companies and reduce the size of the state.
Such privatization and dependence on foreign bank loans caused a massive economic crisis in Venezuela in the 1990s, leading to the election of socialist Hugo Chávez, according to Luis Salas, a former minister of economy under Maduro.
“That era only produced increased poverty and high inflation,” he says in an interview.
Over the past several years, as economic discontent grew, support for the government declined. Maduro turned to extra-constitutional means to maintain power. He postponed gubernatorial elections scheduled for last year. In late March, the pro-Maduro Supreme Court ruled that it could authorize signing of an international agreement between Venezuelan and Russian oil companies, a power previously allotted to the opposition-dominated National Assembly.
Top: Opposition leader Henrique Capriles predicts the government would fall soon. Bottom: Carmelinda Valera, a small farmer and school janitor, supports the Maduro government because she says it helps the poor.
Maduro quickly had the decision reversed, but the opposition argued that the government had abrogated all power to the executive and judicial branches.
On May 1, Maduro threw a Hail Mary pass and called for the election of a National Constituent Assembly (Asamblea Nacional Constituyente or ANC) to write a new constitution, which must be approved in a national referendum.
On July 17, the opposition parties held an unofficial vote and claimed seven million people opposed the creation of a new constitution. But there was no independent ballot count or means to determine if people voted more than once, or simply stuffed ballot boxes.
At the end of July, the government held an official election to vote for members of the ANC. Because the opposition boycotted, those elected came from the pro-government camp.
The government claimed 8.1 million people voted, although the British-based company that provides Venezuela’s voting machines said later that the government inflated the total by at least one million votes.
The opposition argued the ANC elections were fraudulent, a desperate attempt to stay in power. Maduro supporters say they were a democratic, political solution to resolve the violent conflict.
The ANC has the right to overrule any government institution, including the presidency. In practice, however, the ANC has become the country’s legislative branch, taking power away from the National Assembly.
Regardless of the legality of the ANC, the popular support for the elections, along with Trump’s threats of a military attack, slowed the opposition’s political momentum.
Some opposition leaders abandoned street protests to become candidates for the gubernatorial elections. The ANC scheduled elections for governors and state legislators for October. Presidential elections are expected next year.
Both Democratic and Republican administrations in the United States have opposed Venezuela’s socialist policies and thrown their support behind the opposition. Their bipartisan goal is to oust Maduro, who has allied with leftist governments in Cuba, Bolivia, and Ecuador to oppose U.S. domination in the region. Venezuela has also nationalized the local holdings of several U.S. and European corporations.
In March 2015, President Barack Obama signed an executive order declaring Venezuela an “unusual and extraordinary threat to the national security and foreign policy of the United States.” Within a few days of taking office, Trump indicated his support for the opposition by meeting with Lilian Tintori, wife of a major opposition leader jailed for organizing violent anti-government demonstrations in 2014.
Then in May, Trump imposed sanctions on the entire Supreme Court of Venezuela for its pro-Maduro judicial rulings, dropping all pretense that sanctions punish criminal activity. The United States also increased political pressure by pressing the Organization of American States to act against Venezuela.
Trump imposed new sanctions after Venezuelans elected the ANC. While U.S. politicians and spy agencies decry Russia’s interference in U.S. elections, they find no irony in openly interfering in Venezuela’s.
The loyalty of the armed forces, police, and National Guard is critical. The opposition hopes to win them over. However, former Minister of Education Pérez says the left still has strong support within the security forces.
But Pérez warns that some officers could change sides, especially if the United States interferes. In the 1970s, he notes, the U.S.-backed Chilean military overthrew the elected socialist government of Salvador Allende. “The Chile model is a danger for Venezuela.”
Editor's note: A percentage calculation has been corrected from the original and magazine versions of this story. A money currency gain from 9,100 Bs.F to a black market rate of 17,560 Bs.F represents about a 90 percent increase, not 190 percent as reported.
Sidebar: How the Mainstream Media Distorts News from Venezuela
Freelance foreign correspondent Reese Erlich regularly contributes to The Progressive. He has covered Latin America for more than thirty years and reported from Venezuela four times. Visit his website www.reeseerlich.com, follow him on Twitter @ReeseErlich, and friend him on Facebook, “Reese Erlich Foreign Correspondent.”