Tracing the Origins of Venezuela’s Crisis

By Allison Fedirka


Summary
Just over a month from now, on Jan. 10, Nicolas Maduro is scheduled to be sworn in again as president of Venezuela. The occasion won’t be without controversy – some 50 countries failed to recognize the elections in May that set Maduro up for another term in office – raising familiar questions about his government’s staying power. For the past year, Maduro’s administration has appeared to be hanging on by a thread, and Venezuela’s various crises show no sign of abating.
It is, by now, an all too familiar story, that of the country’s seemingly inexorable slide deeper and deeper into chaos. Low oil prices are the scapegoat most commonly assigned to the country’s recent decline. The narrative explains how the economy can now be on the brink of collapse after flourishing for years under high oil prices, but it fails to account for all of Venezuela’s problems. The price of oil does little to explain, for example, the degradation of the country’s institutions, the tenacity of its despotic leadership or the lack of a united opposition despite the public’s resounding rejection of the government. To understand these phenomena, one must first understand the structural design that has been in place since the earliest days of modern Venezuela’s existence. The centralized power, military presence, weak institutions and economic overreliance on commodities that characterize current government are not unique to it. Rather, they are rooted in Venezuela’s colonial past and early years of independence. This Deep Dive examines the interplay between these factors that has dictated the behaviors and actions of governments past and present.
 
A Strongman’s Game
Venezuela’s precedent for totalitarian rule long predates Maduro or his predecessor, Hugo Chavez. In fact, in its nearly two centuries of existence, Venezuela has functioned as a modern, Western-style democracy for only 40 years, from 1959-1999. (Though Chavez won power in democratic elections in 1998, his presidency brought a decisive end to the period of democracy.) More often, the country has operated under a strong central government led by a single individual empowered through a patronage network, an idea that traces back to the caudillo system in the colonial period.
Caudillos were affluent men who owned or oversaw production on land and rejected Spanish rule. Because they were too few in number to fight on their own, they used their elite social status to enlist the help of the lower classes, whom they organized and led as militias against Spanish troops. The tradition continued even after Venezuela won its war for independence. Without their Spanish overlords or a reliable national government to provide security, local landowners established patronage systems and local fighting forces, which they used to seize control of assets, such as customs houses, and territory. The most successful caudillos became generals in their militias and could project power beyond their region to compete on a national level.
The caudillo system reinforced the need for a strong centralized government in Venezuela and gave rise to the dozen or so revolutions in the country’s history. The constant jostling for ascendancy made the caudillos in power, and those aspiring to it, vulnerable to attack. At the same time, the system’s emphasis on regionalism made it difficult for leaders in one area to secure buy-in elsewhere in the country. Maintaining power required a firm hand. Still, schisms and shifts in allegiance were common, and when an opposition group wanted to challenge the government for power, a revolution broke out. Strongmen rulers rose and fell in this way, for much of the country’s history. (A push for decentralized power among the caudillos led to civil war in the mid-19th century, followed by a brief period of federalism in the 1860s.) Even Venezuela’s first attempts at democracy began with an uprising, known as the October Revolution of 1945. Chavez’s Bolivarian Revolution in 1999 built on this tradition – and today Maduro draws on that legacy through his rhetoric and invocations of the now-idolized late president.
 
Institutional Deficiencies
With this kind of turnover in the government, Venezuela has struggled to build firm and enduring institutions. Many dictators have managed it during their tenures, but usually by exerting strong influence over government institutions, which, as a result, were not accountable to the public. Furthermore, these institutions typically have lasted only as long as the government that put them in place. It became the norm in Venezuela that a revolution or major political transition would usher in a new constitution engineered by the new administration to suit its aims. Since independence, the country has had 27 different constitutions, the most recent of which came about in 1999, under Chavez. What institutions have emerged in Venezuela have rarely had a chance to take root, much less flourish.
Part of the challenge is the patronage system that has underpinned nearly all of Venezuela’s rulers, from the caudillos to Maduro. Throughout Venezuela’s history, leaders have incentivized loyalty among their constituents and officials by offering them various rewards. The practice has made corruption a rampant problem in the country. It has also made organizing political movements around issues difficult, since people are accustomed to looking not for the candidates who best represent their beliefs or concerns but for those who can give them the best deals. In the latter half of the 20th century, those deals centered on agrarian reform, public works in poor urban neighborhoods and military funding. Maduro has adapted to Venezuela’s current economic difficulties by offering followers preferential access to food and U.S. dollars and by allowing pro-government armed groups to operate in the country. The trouble, of course, is that if government revenue drops off and the country’s leaders don’t have enough money to subsidize their supporters, their fortunes can quickly turn.
 
Hooked on Commodities
And in Venezuela, government income depends largely on commodities prices – its economy has centered on commodities exports from the very start. Colonies like Venezuela served two purposes for the Spanish crown: to provide raw materials to feed nascent industry back home and to buy up Spain’s finished goods. To ensure that its needs were served, Spain restricted colonial trade, first limiting the colonies to trade with only Spain and then permitting them to trade with one another as well. So it was that coffee, cacao, sugar, tobacco and leather became the mainstays of Venezuela’s economy.
The pattern continued even after Venezuela won its independence, only with new trade partners. The United Kingdom and other European powers, eager to hasten the Spanish Empire’s decline, had funded Venezuela’s efforts against Spain, offered it flexible financing to promote economic recovery in the conflict’s aftermath, and opened trade with Venezuela. But the basis of their trade was the same exchange of raw materials for finished goods that Venezuela had had with Spain. In addition, the foreign financial assistance put Venezuela into debt, which continued to grow because of servicing costs and rollovers, along with the country’s attempts to modernize its agricultural sector. When commodity prices dropped – particularly for coffee as Brazil increased production – they set off Venezuela’s first major debt crisis in 1903. The discovery of oil reserves in the country a decade or so later alleviated its debt problem and gave Caracas a robust new source of revenue. In other words, the government found a new commodity to hitch the economy to.
Commodity price fluctuations have plagued Venezuela ever since, causing recurring debt crises. When oil prices are low, the government borrows to cover its costs; then in more prosperous times, it devotes much of its revenue to paying down its debts and fortifying its pillars of support. (During an oil boom in the 1970s, for example, Caracas focused its public spending on educational programs related to the oil industry.) This leaves the government with little money to invest in developing other areas of the economy, thereby perpetuating the cycle.
The combination of low commodity prices and mounting debt has been the downfall of numerous administrations over the years. Commodity dependence makes any government vulnerable to market forces beyond its control. But that goes double for the Venezuelan government, since it derives much of its legitimacy from the patronage system. A crash in coffee prices in the 1830s and 1840s brought down the administration of President Jose Antonio Paez, a hero of Venezuela’s war for independence. A similar fate befell President Rafael Caldera in the 1990s, when lower oil prices and higher debt levels sapped the popular support that had won him a second term in office, paving the way for Chavez’s rise to power. And today, Maduro – who assumed the presidency in 2013, just a year before global oil prices tanked – finds himself in the same position. Languishing oil prices, coupled with high debt, will eventually be his undoing.

Defending the Government
In the meantime, Maduro is drawing on his ties with the military to maintain his grip on power – a time-honored tradition among Venezuela’s leaders. The bond between the country’s government and military, like its commodity dependency, also goes back to colonial times. Having conquered local forces and rival powers for control of Venezuela, Spain crafted a military-centric administrative structure for the territory to defend it and its resources against the many foreign competitors in the surrounding area. High-ranking generals took control of the territory in 1777, when Venezuela gained autonomy as a captaincy, and, after independence, the military continued to play a prominent role in the country. Most caudillos had at one time been commanding officers in the armed forces. Since then, plenty of leaders have turned to the military to help keep or restore order. Gen. Juan Vicente Gomez Chacon, for instance, depended on security forces to suppress the roughly 20 armed domestic rebellions he faced while in power. President Romulo Betancourt, likewise, had to rely on the military to repel attacks from leftist guerrilla groups even during Venezuela’s democratic phase. And Chavez came to power after a career in the military.
Though Maduro never served in the military, he has aligned himself with it and stayed close to it. He selected Vladimir Padrino Lopez, an officer loyal to Chavez, as his defense minister on taking office and has made sure to share the spoils of power with the security forces to ensure its support for his government. Over the course of his administration, Maduro has extended the military’s reach by giving it prominent roles in areas such as the energy sector and food distribution programs. He also has turned a blind eye to its illicit activities, including drug trafficking. In return, Maduro has used the military’s intelligence branch to imprison opposition leaders and suspected dissidents among the security forces. If the president’s favor hasn’t been enough to eliminate dissent in the armed forces, it has at least kept the military largely invested in the Maduro administration’s survival.
 
What Comes Next
Even so, the end of Maduro’s tenure is inevitable. Geopolitics tells us that, based on the forces and realities the president is up against, his days are numbered – at this point, even a sudden spike in oil prices wouldn’t necessarily save him. When and how his government meets its end is harder to say, but history may serve as a guide. Venezuela’s past is replete with examples of fallen governments and the many causes of their demise.
 
Civilian-military coups have spurred government transitions on multiple occasions. Indeed, in 2017, brewing dissent in the security forces prompted the government to crack down on military personnel who broke rank. But Venezuela’s opposition is too divided to overthrow the government, despite its efforts to unify, thanks to infighting and institutional defeats. Each party in the opposition, like any other coalition, has its own views on the government’s ideal end state and is reluctant to subjugate them to those of another group. The daylight between conservative and liberal factions in the opposition has led to power vacuums and political chaos in the wake of even successful coups, such as the ouster of the Monagas brothers in 1858. The opposition in contemporary Venezuela, moreover, has struggled to wrest power from Maduro under better circumstances – like when it won a majority in the National Assembly in late 2015. (Parliament, after all, is only one of five branches of Venezuela’s government, and the rest are still firmly under the president’s control.) Having run itself ragged with public protests and fruitless dialogue with Maduro and his supporters, the opposition took a break over the past year to regroup. It’s expected to resume its protests in January, and if it pulls together, it may yet be able to push for a democratic transition.

Otherwise, any number of contingencies could bring Maduro down. Someone could seize power while he’s out of the country, for example, though the president’s several recent trips abroad suggest he’s not sweating that possibility. Direct foreign intervention also seems unlikely. And while Colombia and the United States will continue to increase pressure on the Venezuelan government through sanctions, doing so probably won’t be enough to cause its collapse, unless they take direct aim at state oil company Petroleos de Venezuela. Instead, the eventual power transition in Caracas is liable to be a domestically driven affair. There is even the possibility that the current administration eventually comes around to orchestrate its exit and set the stage for a new government, as longtime Spanish dictator Francisco Franco did before his death and as the Brazilian military junta did before ceding power in 1986.

When a new government does take over in Venezuela, it will have its work cut out. The next administration will need to rebuild from the ground up, a task that may prove an opportunity to break the patterns that have shaped Venezuela’s government for most of its history. That it spent four decades as a democracy – the result of various political factions uniting to overthrow an authoritarian government and to rule instead by coalition – suggests Venezuela is not predestined for dictatorship. Breaking old habits and establishing new ones isn’t easy, but neither is it impossible, as countries such as South Korea, which managed to industrialize its economy decades after major Western countries had done so, can attest.

Institutions wax and wane over time. Even those that seemed infallible at one point in history, like the English monarchy or the Argentine military, invariably give way to others. These processes take time and effort, of course, and just as many countries fail at them as succeed. Nevertheless, these are the big pictures issues that will help determine Venezuela’s future.

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