2019 Country Brief: Venezuela

Venezuela is amid a political and humanitarian crisis that arises out of years of hyperinflation, power cuts, and food and medicine shortages—with over 3 million Venezuelans having fled the country.

The country is also facing a leadership crisis. President Nicolás Maduro has largely maintained control over the state with the backing of Russia, China, and Cuba despite claims of election fraud while US-backed opposition leader Juan Guaidó declared himself the country’s legitimate leader on January 23, 2019. Maduro rose to power after the death of President Hugo Chávez, a leftist populist elected in 1998 who ruled until his death in 2013.¹ Chávez socialized the country’s economy, ultimately leaving the country in poverty with hyperinflation and a collapsing oil state industry.²

The Trump Administration has not articulated a clear strategy to end this crisis, leaving military intervention to remove Nicolas Maduro on the table. As policymakers consider responses they should realize that military action would entail between 100,000 and 150,000 troops.³ The country is twice the size of Iraq. An invasion of Venezuela would not be comparable to the 1989 invasion of Panama to overthrow Manual Noriega, which only involved 24,000 troops.⁴The Administration has also alienated the very allies America needs to help solidify a peaceful solution.

Further, Congress should take a number of actions to push for immediate, medium, and long-term goals in Venezuela:

1. Immediate goals: Congress should continue to support funding for humanitarian aid to Venezuela and practice its oversight role to depoliticize the use of this aid by separating it from political goals and ensure it reaches the people in need. Congress should also explore options to increase its assistance to Venezuelans who have fled the country, including the granting of Temporary Protected Status (TPS).  
2. Medium-term goals: The United States should continue to support diplomacy in Venezuela and call for new presidential elections in the country in coordination with our allies and partners. Congress should support assistance aimed at facilitating free and fair elections there, including the use of international election monitors.
3. Long-term goals: Venezuela was one of Latin America’s richest countries with massive oil reserves,⁵ but corruption and mismanagement of the economy have put the country in ruins. To ensure the stability of the country in the longer-term, Congress must support programs that aim to combat corruption in Venezuela and demilitarize its economy.

The crisis in Venezuela has been developing for decades, turning an oil-rich country into a country debt saddled unable to provide basic services for its citizens and straining US relations with the country.

The United States and Venezuela historically had close relations but deteriorated after the election of Hugo Chávez in 1998. Chávez’s socialist economic policies left the country in debt and financial ruins. Maduro made matters worse by continuing the same failed economic policies and then stole the 2013 presidential election leading to the current political crisis.

US-Venezuela relations trace their roots to 1835 after Venezuela achieved its independence from Spain.⁶ The two countries historically had close relations, with Venezuela having the largest proven oil reserves in the world⁷ it served as a major supplier of oil to the United States.⁸ However, the relationship deteriorated in 1998 after leftist populist leader Hugo Chávez was elected Venezuela’s president and was accused by the United States of not respecting separation of powers, human rights violations, corruption, and other criticisms. ⁹ Chávez used the revenue from the state oil company to fund his “Chavismo” agenda; spending over $716 billion on social programs between 1999 and 2014, issuing over $62 billion in bonds from the state oil company, and borrowing funds from China and Russia to supplement.¹⁰ Corruption also was and remains rampant with a reported over $300 billion in state oil revenue funds embezzled during the past decade.¹¹

Chávez died in 2013 and Nicolás Maduro, his vice president, was elected president.¹² Maduro inherited an economy of the verge of collapse with the final blow being the 2014 global drop in the price of oil.¹³ Venezuela is an oil dependent economy with oil accounting for 90% of the country’s exports and proceeds from oil sales making up much of the government budget.¹⁴

Without oil revenue, Maduro instead began to print more money in 2014 to close the budget deficit—leading to inflation.¹⁵ Traditionally, the government imported goods such as food and medicine and subsidized the cost to make them affordable.¹⁶ Now, the government does not have the funds to purchase goods, making food and medicine scarce. The current humanitarian crisis is rooted in decades of policy failures by the Chavez and Maduro governments and exacerbated by US sanctions. An estimated more than 94 percent of the population lived in poverty in 2018,¹⁷ with the population unable to afford food¹⁸ and prices for basic goods continuing to rise.¹⁹ The crumbling of Venezuela’s economy is now the single largest economic collapse of a country outside of those caused by war in at least 45 years.²⁰

The humanitarian crisis has led to a regional migration crisis. Venezuelans have chosen to flee the country rather than face a deteriorating situation of violence, food and medicine shortages, and little employment prospects. In March 2019, the United Nations estimated over 3 million Venezuelans (one in ten) have left the country with many moving to other countries in Latin America and the Caribbean.²¹ Over half of Venezuelan migrants are in Colombia and close to 12 percent have come to the United States.²² Colombia and other regional countries are strained for resources, complicating their ability to provide for the migrants.²³ As the situation in Venezuela continues to escalate, there are estimates that the number of migrants could reach over 5.3 million by the end of 2019.²⁴

While Venezuela is grappling with a growing humanitarian situation, there is a separate but interconnected political crisis. First elected in 2013, Maduro has used the presidency to consolidate power and crack down on any opposition.²⁵ In the May 2018 presidential election, Maduro won reelection with 68% of the vote.²⁶ The election was boycotted by many, with turnout at 46% in contrast to the 80% turnout in 2013 because many did not view the elections as an free and fair election.²⁷ Many opposition party politicians had been unable to run in the election with opposition leader Leopoldo Lopez under house arrest and Henrique Capriles barred from running for office.²⁸The Maduro government preyed on a starving population by placing food distribution centers next to polling locations, with many concerned that if they did not support the government they would not receive food.²⁹ These actions caused the United States, Canada, and a group of key Latin American countries referred to as the Lima Group, which includes Brazil, Argentina, and Colombia, to refuse to recognize Maduro as president.³⁰

Clashes between the Maduro government and opposition groups preceded Maduro’s second inauguration on January 10, 2019³¹ and continued after with tens of thousands taking to the street to protest and called for Maduro to resign.³² In January 23, 2019, newly elected president of the National Assembly Juan Guaidó declared himself the legitimate leader of Venezuela and interim president. As interim president he called for free elections³³ and cited a constitutional provision that allows for the president of the National Assembly to serve as interim president when the president-elect is absent before taking office. Guaidó argues that Maduro usurpation of the presidency has left the office vacant, thus allowing for Guaidó’s appointment. His rise is also in part because at the time opposition leader Leopoldo Lopez was under house arrest, and he helped Guaidó ascend to the top of the opposition party.³⁴

The United States and 53 other countries, including most of the European Union and Latin America, recognize Guaidó as interim president,³⁵ while China, Cuba, Russia, and other Venezuela allied countries continue to support Maduro. 

Guaidó has orchestrated two high profile events to put pressure on Maduro to leave power. The first was on February 23, 2019, when Guaidó’s supporters tried to bring emergency supplies into the country and were blocked by Maduro’s security forces, leaving several dead.³⁶ On April 30, 2019, Guaidó called for his supporters and the Venezuelan armed forces to take to the streets, but Maduro was able to subdue the protestors.³⁷ Thus far, Guaidó has been unable to win significant support from Venezuela’s military leadership, which would be critical to remove Maduro from power.

To apply direct pressure on Maduro, the Trump Administration has employed targeted sanctions to punish numerous government officials and their families and is blocking their access to the US financial system, preventing them from using revenue from the state oil company.³⁸ Trump has also turned his attention to Venezuela’s ally Cuba, announcing new sanctions on the country in April 2019. He also suspended Title III of the Helms-Burton Act, allowing US citizens who fled Cuba under Fidel Castro to file lawsuits against foreign companies who have used property seized in the 1959 revolution, which the Cuban government has long opposed.³⁹

The Trump Administration has not articulated a clear strategy to end the political stalemate in Venezuela, leaving military intervention on the table and isolating critical allies needed to end the crisis.

There is no clear US policy strategy for Venezuela to end the political stalemate between Maduro and Guaidó. President Trump instead has left military intervention as a possible solution, which would be a disastrous in terms of loss of life and alienating our allies

Despite its declaration that Juan Guaidó is the legitimate leader of Venezuela on January 23, 2019, the Trump Administration has not articulated a viable strategy to end the political stalemate in Venezuela and separately address the humanitarian crisis. Trump instead has hinted to the possible use of military force to remove Maduro from power without congressional authority, saying military intervention in Venezuela is “an option.”⁴⁰ Military intervention would be a disastrous policy decision. According to testimony by Rebecca Bill Chavez, a former Deputy Assistant Secretary of Defense for Western Hemisphere Affairs, it would require between 100,000 to 150,000 US troops and they would encounter a Venezuelan force of 350,000 strong.⁴¹ Venezuela is twice the size of Iraq, and the number of casualties on both sides would be immense. The United States would likely face a severe backlash from the international community, especially from our Latin American allies and it could make more countries sympathetic to the Maduro regime.

Absent clear congressional authorization, Congress must take steps to constrain President Trump’s ability to use military forces. Bills have been introduced to constrain the president, but none have been signed into law.⁴²

The Trump Administration’s efforts to politicize the use of humanitarian aid in the country has also been unhelpful in addressing the humanitarian needs in Venezuela. This occurred when, the Administration’s allowed Guaidó to deliver US humanitarian assistance during his February 23^rd effort to oust Maduro.⁴³ This backfired when Maduro blocked the aid convoy because he viewed the assistance as a political tool. The US is now is delivering aid through international aid organizations, but Maduro is now blocking a significant portion of it from entering the country, forcing aid to be distributed in Colombia instead.⁴⁴

The Trump Administration’s actions have also alienated the very allies the United States needs to help end the political stalemate and address the humanitarian crisis in Venezuela. For example, the European Union has strongly opposed the Administration’s actions on the Helms-Burton Act because it will allow for a flood of lawsuits against European companies.⁴⁵ The Lima Group and Mexico are important actors in the political crisis, calling for Maduro to leave office and calling for the Venezuelan military to support Guaidó.⁴⁶ Yet, President Trump has sent mixed signals and seems to believe that Russia, a strong supporter of Maduro, has removed most of their forces in the country.⁴⁷

Congress should take a number of actions to achieve specific immediate, medium, and long-term goals in Venezuela.

Congress has an important oversight role over the Trump Administration’s actions regarding Venezuela. Its first action should be to pass legislation to constrain President Trump’s ability to unilaterally use military forces in Venezuela without congressional legislation. Further, Congress should take a number of actions to achieve a number of specific immediate, medium, and long-term goals in Venezuela.

1. Immediate goal: Address the Venezuelan humanitarian crisis.

Through the annual appropriations process, Congress should continue to support funding for humanitarian aid to the Venezuelan people and practice its oversight role to depoliticize the use of this aid by separating it from political goals. The United States has committed to provide more than $213 million in humanitarian assistance since Fiscal Year (FY) 2017 for Venezuelans who have fled to other countries and positioned emergency assistance for Venezuelans in the country on the borders.⁴⁸ The United Nations estimates that relief efforts will cost roughly $738 million.⁴⁹ Therefore, it is important that Congress continue to support humanitarian assistance and support allies such as Colombia, hosting close to 900,000 migrants, that continue to be strained for resources. This requires adequate funding to the US Agency for International Development (USAID), which the Trump Administration proposed to cut the budget of in the FY 2020 budget request by 24 percent.⁵⁰ Several bills have also been introduced in the Senate and House to authorize additional increases in humanitarian support for Venezuela that deserve consideration.⁵¹

Congress must also work to prevent the Trump Administration from politicizing the delivery of humanitarian assistance by ensuring it remains separated from the political crisis. It must work to ensure any assistance is provided to groups and communities in a neutral and impartial manner to ensure that it reaches those most in need. The US military, in coordination with the State Department and USAID, should continue to support our Latin American partners in delivering humanitarian assistance.⁵²

Congress should also consider expanding Temporary Protected Status (TPS) to Venezuelans currently residing in the United States.⁵³ This would allow many of the over 300,000 Venezuelans in the United States to stay in the country and work without fear of deportation.⁵⁴ Bills have been introduced to grant TPS to these Venezuelans. For example, Senators Bob Menendez (D-NJ) and Marco Rubio (R-FL) have introduced the “VERDAD Act” (S. 1025), which has been approved by the Senate Foreign Relations Committee, to:

• Support Interim President Guaidó and seeks a peaceful resolution to the crisis;
• Authorize $400 million in humanitarian assistance;
• Support reconstruction efforts in Venezuela; and
• Continue sanctions on Maduro and members of his regime.⁵⁵

2. Medium-term goal: Support a plan for free and fair elections.

As it provides humanitarian aid, the United States should call for new presidential elections in the country in coordination with our allies and partners. The United States should continue to work with the Lima Group and other allies to call for new internationally monitored elections and support a process for such an election. Maduro and Guaidó have reportedly indicated at least a willingness to negotiate to reach a political agreement between the two sides and exploratory talks have been facilitated by the Norwegian government.⁵⁶ Some have argued defeating Maduro at the ballot box, rather than forced removal would be a sharper signal of legitimacy for the new government. However, the Trump Administration has conditioned any negotiations as working toward the goal of removing Maduro from power.⁵⁷Congress should support assistance aimed at facilitating free and fair elections in Venezuela, including the use of international election monitors. It should also continue supporting programs aimed at supporting democracy in the country. Thus far, in FY 2019 Congress has provided $17.5 million in funding for democracy and rule of law programs in Venezuela.⁵⁸ These programs are critical to ensure Venezuela is able to hold free and fair elections in the future and deserve further support. 

3. Long-term goal: Secure economic stability and root out corruption.

Venezuela has the largest proven oil reserves in the world,⁵⁹ but corruption and mismanagement have put the country’s economy in ruins. This has left the majority of the country in poverty and forced millions to migrate to countries on Venezuela’s borders, which do not have the resources to support them. Some Venezuelans instead have sought refuge in the United States.

The Venezuelan economy is in economic ruins in large part because of the combination of corruption, decline in oil prices, and collapse of oil production—at one time 90% of the government’s budget came from oil sales.⁶⁰ The Venezuelan military continues to support Maduro because they benefit from the current status quo, controlling everything from arms purchases, steel production, the oil industry, and food distribution.⁶¹ The military is also reportedly involved in drug tracking, illegal gold mining, and smuggling.⁶² To ensure the stability of the country in the longer-term, Congress must continue to support programs that aim to combat corruption in Venezuela and demilitarize its economy. The US should also continue to support international organizations like the United States, World Bank, and others doing programming to help stabilize Venezuela. 

Conclusion

Venezuela is experiencing interconnected humanitarian and political crises, as a result of over two decades of failed economic policies, corruption, human rights abuses, and a failure to separate powers on the part of the Venezuelan government. The humanitarian crisis in Venezuela, which the Venezuelan government is directly responsible for, has led to the overwhelming majority of Venezuelans living in poverty and mass migration. The Trump Administration has failed to articulate a strategy to achieve solutions to these crises, refused to take military intervention off the table, and has alienated the very allies America needs to do so. Instead, Congress should work to support the immediate-term goal of addressing the regional humanitarian crisis caused by this conflict, medium-term goal of addressing the political stalemate and supporting new elections, and long-term goal of stabilizing the country’s economy. While Congress works to address these issues, it must also work to constrain President Trump’s ability to use military force to remove Maduro from power, which would be disastrous.