Mark Garten
World News /17 Oct 2019
10.17.19

Maduro is Isolating Venezuela from Economic Prosperity

Deeply partisan political discourse in the United States can complicate what are otherwise decent public and foreign policy initiatives. Indeed, opinions of the current administration should not blind us to the dire need for America to remain strong on Venezuela. We all must give Trump full credit for is his stance behind opposition leader Juan Guaidó – a position many other western leaders have taken.

For far too long, Nicolás Maduro has been tilting Venezuela away from the West and further into the Iran-Russia axis, creating a potential threat to America, and limiting Caracas’ once important connection to OPEC. This weakens ties vital allies in a misguided attempt to “protect” Venezuela’s oil riches – it only works to isolate Venezuela’s people and continues to bring down the hammer on the Venezuelan economy.

Isolationism Gone Extreme

Hugo Chavez seemed to recognize the importance of a wide base of trading partners even among his supposed enemies. Maduro has seemingly learned the wrong lessons from his predecessor, taking antagonism to new levels and effectively erecting a wall between Venezuela and most of the world. Maduro continues to lose global sympathy amid accusations of the torture and death of his own navy captain, in addition to his aggressive military actions against U.S. forces in the region. Under his regime, Venezuela has lost millions in aid and suffered under sanctions, heightening the country’s economic contraction and plunging the nation into a spiraling crisis.

In January 2019, the country’s inflation rate hit an absurd 2,688,670% which has since escalated past the 10,000,000%-mark according to UN data. The same UN report estimates that 7 million Venezuelans are in critical need of aid and that by the end of the year, the country will have produced over 5 million refugees seeking better opportunities elsewhere. Venezuela also reported a 69% increase in malaria cases between 2016 and 2017 (the largest such growth globally), and 8 out of 10 citizens interviewed in 2017 said they didn’t have enough food. Even worse, 85% of the population has no access to medicine.

Maduro’s isolationist policies do not extend to everyone, and Russia has managed to carve itself a new sphere of power in Latin America as a result. The country most recently sent a detachment of soldiers disguised as “advisors” along with military equipment to support the regime in power. Moscow and Caracas have had ties for decades, both in public and private spheres.

Russian state-owned oil company Rosneft has invested roughly $9 billion in projects in Venezuela since 2019, and it owns two offshore gas fields in the country. Earlier in the year, the Putin administration sent a shipment of humanitarian aid to Venezuela, delivering 300 tons of supplies. Iran has also stepped up its influence, publicly supporting the Maduro regime as its citizen’s revolt. In a sign of warming relations, the two countries recently reopened an air route between them.

While they may be painted as altruistic, these shows of support are largely about one major factor—Venezuela sits on the largest oil reserves in the world, with more than 300 million tons’ worth resting below the country. Ironically, though the country’s economy revolves almost entirely around oil, Maduro’s mismanagement of PDVSA, Venezuela’s state-owned oil company, and years of corruption have made it nearly impossible to extract profits from operations. Though he would like to, Maduro can’t place the blame for this on the U.S. After all, it remains Venezuela’s biggest trading partner.

PDVSA once acted as an economic liaison with the U.S. and the Arab world. There were endless lucrative prospects available in cooperating with OPEC partners like Saudi Arabia, the UAE, and Kuwait. Unfortunately, Caracas’ leadership squanders these golden eggs and instead has focused on fostering relationships with Russia and Iran, allowing their interests to supersede those of Venezuelans. PDVSA has been bleeding employees and executives as Maduro makes sweeping changes and installs loyalists who are often inept at managing such a large corporation. The employment situation has been so bad that oil fields and refineries must be staffed with soldiers who have no experience in oil production.

It would be easy to dismiss all this if the country’s people were still supportive of the socialist dictator, but the reality is quite the opposite. Maduro’s support today comes from extremist pockets of Venezuelan society—those still moved by anti-western or supposed anti-imperialist notions. These same groups also support the entry of Iran and Russia into Latin America. The situation is dire enough that even some Chavistas have aligned themselves behind Guaidó, seeing the true devastation Maduro has wrought.

Enough is Enough

Venezuela’s fall from a Latin American powerhouse to a broken state is the result of sacrificing true prosperity and economic growth for warped political views few in the country share. In his quest to keep power, Maduro has even aligned himself with Hezbollah. The worst part is that it should not be like this; the global oil economy is growing fast.

The U.S. oil industry recorded its most profitable year in half a decade in 2018 after two years of steady growth. Saudi Arabia’s Aramco became the world’s most profitable company this year, and the UAE recorded a government surplus last year due to improving oil revenues. Venezuela has seen its production cut by more than half in a decade, and it recorded its lowest export revenues in more than 10 years during 2018.

It is time for the Maduro era to end, both for the country’s citizens and for its economy. Venezuela’s current course keeps it walled off from its most valuable commercial and military partners—and the billions in revenues that could result from rekindling old relationships. By turning its back on Iran-Russia and realigning itself with OPEC and the U.S., Venezuela could take a first step towards revitalizing its oil industry, and ultimately, its existence.

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