Venezuela as a ‘Failed State’

“Corruption, bad policies, poor governance, and lack of development that generate the threat in the first place” (Kilcullen 2009, p. 289) perfectly describes Venezuela’s current state; a country once rich and prosperous to one now riddled with corruption and violence. Its political and economic descent in the last century and its transition to a more socialist move has caused instability across the country, sparking years of protest and more recently, the emergence of Venezuela’s insurgent president, Juan Guaido. Venezuela’s ruthless history of corruption and social neglect, namely, the multiple coup attempts and the increasing figure of deaths and people in poverty have aligned with ‘failed state’ status. Though there are many systemic factors that need to be taken into consideration when explaining a ‘failed state’, the influence and contribution of its leaders and their successors needs to be analyzed, as well as the evolution of economic, political and global policies.

Venezuela has experienced tremendous amounts of change in their social, political, cultural and economic environment and would be myopic only to focus on its recent successors, its past century of history and evolution need to be analyzed to wholly understand the desires of its leaders and how the country has failed so tremendously.

Firstly, Venezuela saw its first dictator in 1908, Juan Vicente Gomez, who helped the country into wealth and prosperity as a result of his exportation of oil and his repression of the country. In this time, the first Venezuelan oil well was dug in 1914 and exports rose to record numbers in the following years. The tremendous growth in this time saw Venezuela’s debt paid off, and an increase in government spending in infrastructure, where he began his ‘road building’ program, as well as an increase in military armament. His hunger for power and personal economic benefit however resulted in two coup attempts in 1945 and 1948, evident of the country’s corrupt political system. Pérez Jiménez however took over Venezuela from 1950 – 1958, continuing Gomez’s dictatorship autocracy. During this time, Venezuela was at its height of prosperity, with its GDP reaching the fourth highest in the world as a result of his political repression and large export quantities, but saw its downfall in 1958 in a successful coup lead by Wolfgang Larrazabal, a socialist who briefly led the country until its next democratic election.

It was not until 1959 when Venezuela’s decline became apparent, subsequent to its democratic political system under presidency of Romulo Betancourt. Professor Sidney Kasfir describes the context of a country’s failure lies in ‘domestic anarchy’, which is derived from a state’s lack of controlling authority over its population, evident in the country’s socialist successors. Betancourt was an ex-communist who relinquished his Marxist ways to appeal to the gradual ascent into socialism. In 1961, he introduced a new constitution, dividing the government into three separate branches (executive, judicial, legislative) as a democratic response to the autocracy of Venezuela’s previous leaders. Under this rule, he implemented numerous social and economic reforms; rent controls were established, profit-sharing agreements were encouraged between employees and employers, but more notably, he implemented an agreement with foreign oil companies operating in Venezuela that they pay 50% of their profits to Venezuela. With the increased wages throughout the country and higher government budget, Betancourt invested into public infrastructure, such as more schools, houses, hospitals and roads. Additionally, his involvement in political reform saw the establishment of the peasant movement, which reformed previous agrarian laws on farming and cultivation and wrote a new constitution providing universal adult suffrage and democratic guarantees. Further, under the rule of Betancourt he established the Punto Fijo pact which consisted of an agreement between two opposing political parties, Acción Democratica (Democratic Action) and COPEI (Christian Democrats), which outlined the alternation of political power between the two parties, in the hope of more democratic stability, later witnessed as ‘domestic anarchy’.

In 1975 under Carlos Perez’s presidency, Venezuela’s oil was wholly nationalized and the Petroleos de Venezuela (PDVSA) an oil exporting company was created amidst the Middle East oil embargo of 1973. During this oil embargo, world oil prices quadrupled which saw a subsequent boom in revenue generated from oil in Venezuela during the 1970’s. During this time of tremendous revenue growth, Perez promised Venezuela that it would become a developed country within a few years and focused a large majority of revenue to industrialization and infrastructure in his project he called ‘La Gran Venezuela’. This tremendous revenue of Venezuela’s oil industry saw neglect in other industries which many economists describe as ‘Dutch disease’. It is whenever a commodity brings a sudden increase of income in one sector which is not matched by the increase of other sectors in the economy. This is clearly seen with the revenue raised from oil was followed by a corresponding decrease in revenue from agriculture. However, the massive revenue raised from oil and the spending of infrastructure and in Perez’s social spending program paradoxically brought about chronic inflation and put the country further in debt. There economic conditions were only magnified in the 1980’s when the price of oil began to plummet due to other major Organization of Petroleum Exporting Countries (OPEC) countries not meeting production quotas. During this time the price of oil reached an all-time low of $3.78 per barrel and Venezuela’s debt from 1970 to 1994 increased from 9% to 53%, experiencing one of their worst economic contractions. After Perez’s term in 1979, successor Luis Herrera Campins was elected who was left in a situation of unsustainable spending from Perez, and described how he was left with a ‘mortgaged country’. Acclaimed professor Van de Walle sees the underlying economic frailties and how countries respond to them, as the main issue and reasons for a country’s economic failure. Venezuela’s economic failure is witnessed in Herrera’s ironic response to the country’s debt by spending more and continuing more of Perez’s cronyism policies. As a result of this, Venezuela experienced devastating currency devaluation, experiencing its own ‘Black Friday’, marking the start of irresponsible fiscal policies and rising poverty rates.

This democratic utopia was then halted by the demagogue Hugo Chavez, a socialist leader who exploited the country for his political gain, appealing to the population’s desires rather than using rationality. Chavez’s promise rid the country of poverty and corruption and to reform the Venezuelan constitution was witnessed to have contradictory outcomes, seen in the 2002 coup which ousted Chavez for two days as president, calling for a need for social reconstruction.

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The violent protests and riots in Caracas or more commonly known as the ‘Caracazo incident’ in 1989 was partly responsible for Chavez’s election as he took advantage of Venezuela’s political chaos and formed a rebel coup group, the ‘Bolivarian Movement-200’. The failed coup attempt resulted in the imprisonment of Chavez in 1992 but pardoned in 1994 and then elected in 1998, Chavez promised “social revolution” to especially those living in poverty, who made up more than 50% of Venezuela’s population. The previous decade to Chavez’s election, many of the country’s major states saw failed land reform and wealth distribution policies, and with a growing population of people in poverty created an opportunity for Chavez to take advantage of. His promise of ‘social revolution’ did exactly that, he appealed significantly to these impoverished people by signing the decree on land reform and wealth distribution, promising to relinquish the country’s poverty. This political, demagogic act is described by Rotberg as a signal of state failure; subverting democratic norms and coercing the legislature into subservience seen in its policies that target the impoverished.

Subsequent to Chavez’s death in 2013 and the appointment of Maduro as president, the Venezuelan economy and political framework had become disastrous, sparking global conflict, protests, and eventually called for a political insurgence. With Maduro’s naivety of Venezuela’s current economic framework, the country saw inflation rates rise by 50% in 2013’s first quarter, oil production has almost halved and with political discontent, there has been an increase in crime, murder and treason. The growing discontent of Maduro’s handling led to street protests that later spread to Caracas and other major cities, with government groups reacting in violent means, leaving many people dead in the process. The massively unstable economy has had a subsequent increase in other factors indicating corruption.

When inflation rates rose and common resources became scarce it led to mass protest which Maduro responded violently to, forcing the US impose sanctions that specifically target human rights violations. UN human rights expert Idriss Jazairy expresses his concern for the safety of the Venezuelan’s, identified as an issue effecting the international community, “I call upon the international community to engage in constructive dialogue with Venezuela to find solutions to the very real challenges being faced”. With no evident decrease in murder rates nor economic stabilization, in 2017 Donald Trump imposed a trade sanction on the country and a sweeping sanction on the PDVSA. US National Security Advisor John Bolton said the new measures would, “help prevent further diversion of Venezuela's assets by Maduro, and will preserve these assets for the people of Venezuela where they belong”.

Some scholars have proposed a policy of simply seizing political control of failed states for some period of time in order to restore stability. To take one example, political scientists James Fearon and David Laitin propose a policy of “neo trusteeship, or more provocatively, postmodern imperialism” as the solution to the corruption of weak and failed states. On the 31st of January 2019, Juan Guaido seized political control of Venezuela, declaring himself as their ‘interim’ president as a result of Maduro’s inability to sustain the country’s economy, with the goal to foster a healthy political and economic construct. The political tug-of-war of Venezuela between Russia and the US have incidentally caused chaos within the country, magnifying the countries corruption seen in the attempted assassination plots and the widespread power outages.

With thousands of protesters urging Maduro to step down as president, other global forces like Russia and China recognize Maduro as president while countries like the US and Australia back Guaido. Though with Russia’s support, Maduro refuses to step down causing many political tensions between the opposing parties, sparking conflict and many violent protests that has spread to many of Venezuela’s states. Russia has been such a strong supporter of Maduro because since 1999, Russia has been lending Venezuela billions of dollars ($17B) but still owes them close to $3.5B agreed to be paid back by 2017. It is in Russia’s best interest to keep Maduro in presidency as debts could be paid off, and their healthy, symbiotic relationship can be maintained. Though, with 80% of the country in favor of Guaido who has promising economic policies, Venezuela is experiencing more social and political corruption than ever. The political tug-of-war of the US who recognizes Guaido as president, has put heavy sanctions on the Maduro government designed to cut off his access to foreign investment, placing even more economic pressures on the country. The US government also applied a sanction to Venezuela’s major oil producing company PDVSA, cutting off Maduro’s ability to repay Russia and causing them a projected $11B loss in revenue the following year. The political tug-of-war between warring countries have caused political tensions within Venezuela, leading to internal social corruption, clarifying its ‘failed state’ characteristics.

As a result, Venezuela has seen tremendous amounts of social and political anarchy specific to the nation-wide power outage and the arrest of Robert Marrero, raising tensions within a country already riddled with ongoing political turmoil. On the 8th and 26th of March 2019, Venezuela experienced a nation-wide power outage, shutting down major factories, workplaces and hospitals in 22 out of their 23 states. President Maduro blames his opposition Guaido for these ‘attacks’, claiming that “he [Guaido] wants to plunge the population into profound unease”. These blackouts were described by Orlando Roa as “the fault of the government and its decrying administration” and was backed by US secretary of State Mike Pompeo on Twitter. The two parties have also seen corruption through the arrest of Guaido’s right-hand man Roberto Marrero the 22nd of March who was plotting to assassinate Maduro, forcing him out of legitimate power, which would have consequences within Venezuela but also consequences that are extended to other global forces like Russia and the US.

To conclude, the crisis in Venezuela has been evident for the past century, sparking years of social, political and economic turmoil. Its historic evolution and political change to a democratic government saw its first noticeable decline which Sidney Kasfir describes as “domestic anarchy”. With economic conditions plummeting, murder rates rose, delving the country further into corruption, with the globalized tug-of-war between the US and Russia magnifying these effects. Overall, it is clear that poor policy-making and economic naivety is why Venezuela is in the position it’s in, exemplifying its ‘failed state’ characteristics.