Why is the US So Passive Over Venezuela?

October 20, 2016

As the third week of anti-government protests in Venezuela starts an important question has been lingering: why has the international community been so passive in the face of violent repression against protesters in Venezuela? This, even as prominent international human rights organizations have condemned the government’s unchecked response against dissidents. Why have they not acted with the same resolve as in other similar recent cases in Honduras in 2009 or Paraguay in 2011? With the Honduran army’s coup d’état against former president Manuel Zelaya, the international community was quick to react. Honduras was temporarily suspended from the Organization of American States, and its interim government was not internationally recognized. In 2011 the Paraguayan Senate impeached former president Fernando Lugo in a hasty half-day proceeding. Following that event the Common Market of the South (MERCOSUR) suspended Paraguay’s membership.

In the Venezuelan case of 2014 however, violent repression by security forces against unarmed anti-government protestors has been countered with mild statements of condemnation by some governments, and more shockingly, by support of the Maduro government by others. Analyzing the region as a whole is not possible because there are clearly differing incentives for each government’s stance on the current Venezuelan issue. However, in the entire hemisphere only one country, the United States, can decisively influence the fate of the Venezuelan government, making the analysis of this country’s motives necessary. This is not due to any (ridiculous) conspiracy theory involving the capitalist superpower. It is due to the fact that the US purchases almost half of Venezuelan oil (and the only one along with India that pays each barrel of oil at the market price). Therefore, the US is the only nation that can effectively influence Venezuelan politics.

Venezuela is a textbook definition of a natural resource dependent rentier state. Oil revenues comprise 96% of its exports, or about 60% of its national budget, and about 30% of its gross domestic product. Petrodollars are the heart of the Venezuelan economy. It is the reason why several Venezuelan executive administrations have been able to show authoritarian tendencies and apply anti-market policies with little domestic challenges to its power (the Chavez 14-year reign being the prime but not sole example of this) because the government is financially independent from civil society. Thus, repressing private businesses and employing the armed forces to forcefully quell dissent does not harm the government’s hegemony over power. However, if the petrodollars stop flowing into the Venezuelan treasury the government would no longer be immune to the discontent of civil society. This is because it would not be able to finance its repressive apparatus or appease the population through highly subsidized goods and services. Oil revenues finance the carrots and sticks that keep the Bolivarian revolution going.

There are only two events that would stop the flow of petrodollars: the first is a dramatic bust of international oil prices, which is very unlikely in the short-term given the international economic scenario, the second is that the US decides to stop purchasing Venezuelan oil. It has been a mystery why the United States has not stopped, or at least reduced, the purchase of Venezuelan oil since it is no longer a significant supplier the massive American economy and since such action can decisively stop the Bolivarian revolution dead in its tracks. The recent statements to the press by the American commander of the US military’s southern command, Lt. Gen. John Kelly, suggest that although the American government may be very well aware that it holds the key to the demise of the Maduro administration regional stability could be compromised if the Chavista government were to fall.

If the current Chavista administration is brought down due to a lack of financial sustainability after the US decides to stop, or drastically reduce its purchase of Venezuelan black gold, oil subsidies to the rest of the Caribbean are very likely to come to an end. More than 10% of Venezuelan oil exports are shipped to several Caribbean countries at highly subsidized rates. Over 80,000 barrels of oil a day are destined for Cuba in exchange for several thousand Cuban doctors. As the American general points out, the Cuban economy is “at the breaking point” and is dependant on such free oil transfers from Venezuela. The Cuban government resells almost all of the 80,000 free barrels a day given to them by Venezuela. That is about $USD 2.7 billion U.S. dollars that the Cuban economy receives each year thanks to its political partnership with Venezuela. It may not seem much given that the Cuban yearly national budget is about $USD 50 billion, but it does have an impact on an economy that struggles due to population pressures and a low growth economy with an internationally worthless currency. In other words, $USD 2.7 billion petrodollars go a long way in Havana. Therefore, if the oil subsidies from Venezuela to Cuba end, the fall of the communist regime on the island will most likely be accelerated.

General Kelly expressed worry about a significant increase in immigration resulting from the end of communist control in Cuba. This fear is well founded since the approximate three million Cubans residing in the US create the inter-family connections necessary to make a Cuban exodus feasible, especially considering the geographical proximity. Therefore, it is worth considering the possibility that the American government might be choosing to sacrifice the protection of human rights in Venezuela in exchange for regional stability by purchasing Venezuelan oil and maintaining the status quo. Given the statements by America’s southern military command, the US might not be able to handle the repercussions of the end of the Bolivarian era, such as a likely immigration wave from the Caribbean. However, defending economic interests at the expense of political interests may not be possible if political violence in Venezuela worsens to the point that a humanitarian crisis erupts. This is likely to occur if the political unrest in the Caribbean nations is timed with the expected economic collapse. Such an event would force Washington to reconsider its current passivity towards the troubled oil rich country.

About Author(s)

Daniel Leon
Daniel S. Leon is a Ph.D. candidate at the University of Leipzig, Germany. His doctoral thesis deals with the political economy of violence in Venezuela. He holds a M.A. in Political Science from the American University in Cairo, and a B.A. in International Relations from Florida International University. Leon has also worked as a visiting lecturer of international relations at the University of Los Andes in Merida, Venezuela.