Venezuela was once richest country in Latin America. It sits on the largest known oil reserves in the world. Through the 1960s and ‘70s, when its neighbors were suffering coups and rule by juntas, Venezuela’s democracy continued on. Yet today the average Venezuelan has lost 19 pounds on the “Maduro Diet,” named in honor of the crippling poverty Venezuela’s current President Nicolás Maduro has brought upon his citizens. Venezuela’s economy has contracted by over 30 percent. The nationwide murder rate is now higher than the most dangerous cities worldwide, and there are daily clashes in the streets between protesters and the government. We are watching a nation disintegrate.
In a democracy, the party in power would have been removed long before this point. But Venezuela is no longer a democracy—not even an illiberal one.
A survey by the Venezuelan polling firm Datanalisis showed Maduro has an approval rating of a little over 20 percent, and yet he remains in office consolidating power. An unofficial plebiscite registered 7 million votes against the creation of a new National Constituent Assembly, yet this body now occupies the Venezuelan legislative chambers and has the power to rewrite the constitution. It is impossible to reach any conclusion other than the country, the constitution, and the people answer only to Maduro.
While most people are pointing to the July 30 election of the Constituent Assembly, known locally as the Constituyente, as the watershed moment when democracy was lost, the process has been long in the making. Maduro’s new regime was not born July 31. Dictatorships are almost never born. What begins as a slow erosion of political norms suddenly starts to gain a momentum of its own. Maduro has capitalized on the groundwork laid by Chavez and the current economic crisis to overwhelm and sweep away all opposition.
The political base
The foundation of Maduro’s reign was laid by his predecessor, Hugo Chavez. To understand how Venezuela arrived at its current predicament, you have to go back to the very beginning of Chavez’s reign. Venezuela in the late 1990s had close ties to the U.S.—and extreme inequality. All of the oil wealth and power was consolidated in the hands of a wealthy and urban elite. Impoverished and rural Venezuelans saw themselves increasingly marginalized. Correctly identifying this populist resentment, in February 1992 a young Chavez, then a left-wing political organizer and lieutenant colonel in the paratroop regiment, attempted a coup d’etat. It failed and Chavez was imprisoned, but he gained national prominence.
Once released, Chavez continued critiquing the political elites and promised to tear down the system of corruption that excluded so many. In December 1998, with a voter turnout of only 35 percent, Chavez was elected president by a comfortable margin to execute what he billed as a socialist revolution. True to his word, Chavez set about issuing a series of referendums demanding Venezuelans to vote on whether they wanted changes to the Constitution.
Chavez was a master salesman, and he was omnipresent in the lives of Venezuelans. In a region famous for outsize political personalities, Chavez’s flair for the dramatic and flamboyance stood apart from the rest. He hosted Aló Presidente, a weekly six-hour talk show where he regularly sang and danced. He took on-air calls and promised to resolve their complaints, like repairing local streets. Nearly all his referendums passed with overwhelming support, and with each constitutional amendment Chavez was able to chip away at the checks on his power, particularly in the judiciary.
However, his administration also increased public spending on a massive scale, funding education, healthcare and other social services. He even provided fuel subsidies so generous that the price for a gallon of gasoline was $0.01. These programs had an impact, decreasing poverty throughout the country, improving equality and making education affordable for the first time for millions.
Then in 2002, two crises struck that would set the course to Venezuela’s current predicament. In April, in response to Chavez’s steady accumulation of power, the political opposition began to mobilize. Protests erupted into gunfights in the streets of Caracas with dozens dying. Chavez ordered the military to repress the demonstrators, but they refused to act on his orders and a small group of politically right-wing officers attempted a coup. It failed, and Chavez became even more of a hero to his supporters. Chavez used the abortive coup as an opportunity to purge the armed forces of dissidents, consolidating control over the institution. This coup is also the origin of the special animosity Chavez felt toward the United States. In the confused days right after the coup, U.S. officials made statements welcoming Chavez’s ouster. When Chavez reemerged, the U.S. government officially condemned the coup attempt, but Chavez never forgave Los Yanquis and alleged their collusion with the coup plotters.
In late 2002, the opposition attempted to force Chavez to resign by organizing a massive general strike at the state-owned oil producer, PDVSA. This strike also revealed cleavages in Venezuelan society. While the workers who went on strike were mostly the upper- and middle-class managers and technicians, the working class mechanics largely rallied to Maduro’s call for them to return to work. With some additional support from some sympathetic foreign governments Chavez was able to eek out just enough oil to keep emergency services running. Chavez was able to weather the storm and once again, came out stronger than he was before, having complete control of the PDVSA after purging all the management that chose to strike.
After all the political tumult, international pressure from the Organization of American States (OAS) eventually persuaded Chavez to agree to a recall referendum in 2004. In preparation, Chavez increased social spending and created the misiones system, providing free health care, infrastructure, and support to overlooked, impoverished areas to whip up grassroots support. Chavez won the referendum handily, and while some accuse him of using electoral dark arts, the results were accepted by all sides. Chavez served another nine years as Venezuela’s president until he died in 2013.
By then, Chavez had solidified total control over the military, eroded many checks to presidential power, co-opted parts of the judiciary, and created an effective program to easily reach and mobilize his base. In other words, he’d gathered up the ingredients of a dictatorship. But Chavez, for whatever else he was, was a true populist. Votes kept him in power. In this way, a sliver of democracy survived as Chavez worked to deliver goods and services to his broad base of rural and impoverished Venezuelans.
The economic timebomb
In contrast to its politics, Venezuela’s economic situation is easy to sum up: its economy begins and ends with oil. Nearly every economic crisis the country has experienced can be traced back to low oil prices. But when oil prices rise, the country rakes in so much revenue that it’s cheaper to import goods than to develop local alternative industry, perpetuating the boom-bust cycle. In many ways, Venezuela is a gas station with a national anthem.
These economic shocks naturally stress the politics of Venezuela. The government was under strain during Chavez’s coup attempt in 1992 because of low oil prices. When Chavez won the presidency in 1998, the incumbent was struggling to provide basic government services due to low oil prices. When the opposition tried to force Chavez out in 2002, it is telling they went straight for the PDVSA.
Chavez’s solution to the 2002 strike is significant because it lit the fuse to the bomb that would obliterate Venezuela’s economy 12 years later. To keep the Venezuelan bolívar from depreciating, Chavez fixed the exchange rate of the bolívar to the U.S. dollar and required government approval to exchange Venezuelan bolivares for U.S. dollars. It was an effective solution to the problem; Venezuela rode out the strike without capital fleeing the country. Once oil production came back on, revenue began flowing back into Venezuela, and there was no fear of wild currency devaluation or collapse.
Yet Chavez never removed these currency controls. In fact, they’re still in place today. Once the government took control of the exchange rate, high-ranking officials had the authority to approve or reject any major transaction requiring dollars, allowing them to extract bribes for approving deals. What began as an emergency measure became another source of income for the Venezuelan elite.
Chavez could get away with this cronyism because during his time in office oil prices were extraordinarily high. The inflated oil prices of the mid-2000s led to a windfall for Venezuela–letting Chavez paper over his administration’s corruption and mismanagement. This is also how the Chavez government could afford the food and fuel subsidies, the misiones, and all his other social spending. High on its largesse, Venezuela was running a massive deficit and plugging the gap with loans from China, which Venezuela promised to pay back with oil.
When Chavez died, Venezuela was critically dependent on oil exports. They had no industry to speak of, were indebted to major world powers, and using a system of exchange rates that almost encouraged systemic corruption.
Hail to the thief
Illiberal democracies are inherently unstable. It is important to understand this concept when looking at the birth or death of a democracy. “Democracy” in the West is understood to be a liberal system of government where there is the rule of law, citizens have certain inalienable rights before the law and the government answers to the people in the form of elections. In reality, that is a liberal democracy. The only requirement to qualify as a democracy is that elections are held on a regular basis. Countries that hold elections but that have rampant corruption, or that do not have checks and balances on power, or where rule of law is not equally applied can be termed as “illiberal democracies.” Generally this is just a way station before either progressing into a full democracy or they backsliding into dictatorship.
The fact that Chavez was able to walk the tightrope so long in a functioning illiberal democracy is a testament to his charisma and his bottomless barrel of petro-dollars. Chavez had the good fortune to die while foreign funds were still pouring into Venezuela. We’ll never know how he would have responded to the current economic crisis. His death created a fork in the road for Venezuela. Whoever assumed office after would either have to begin the difficult and messy process of reforming Venezuela’s economic system or radicalize even further and seize power.
It was into this fraught situation that Maduro, first the foreign minister and then the vice president under Chavez, made his political entrance. Maduro was Chavez’s handpicked successor and had the full backing of the Socialist Party of Venezuela (PSUV), but his ascension was far from assured. Chavez, even with all his charisma, had encountered stiff opposition. Maduro meanwhile, has all the charm of a bus driver, which he once was. After a tense campaign, Maduro was elected to the presidency in 2013 by the slimmest of margins—50.6 percent—and took office amid nationwide protests.
The nation and the world did not have to wait long to see which path Maduro would choose. Despite his reputation as a technocrat, Maduro began almost immediately to jail political and military rivals. He used all the tools that Chavez had left him to consolidate power. In 2015, Maduro built upon Chavez’s control of the Supreme Tribunal of Justice (TSJ) and military by naming 13 new justices to the high court and over 1,800 new generals.
All of this played out during one of the worst economic meltdowns of modern times. In 2014, the price of oil halved in just six months. According to the International Monetary Fund, the Venezuelan government received $80 billion from oil sales in 2013. By 2016, its revenue barely reached $25 billion.
The currency controls now started to bite down on the population. Because Venezuela had no more foreign funds entering the country, imported foreign goods became unaffordable to everyone except the elites who had access to Venezuela’s preferential exchange rate. These elites could import goods on an exchange rate of roughly six bolívares to a dollar and then sell these goods on the black market where the exchange rate was roughly 900 bolivares to a dollar. And even with these exchange controls in place, foreign capital has been draining out of Caracas, with the government now holding less than $10 billion in foreign reserves. This will only further exacerbate Venezuela’s inability to pay off its debts and import vital foreign goods. Without foreign reserves to back it up, the bolivare will only further depreciate, adding to the pain of hyperinflation.
Maduro introduced price controls whose only effect was to kill off what little domestic industry had survived. Consumer prices have risen 741 percent, to the point where people speak of meals in terms of how many weeks of minimum wage they would cost. The Venezuelan economy has contracted more than the U.S. economy did during the Great Depression. In 2016, the military was placed in charge of food production and distribution, providing even more plunder for the allies of Maduro. Meanwhile, food and medicine are more or less inaccessible for the average Venezuelan, and 82 percent of the population now qualifies as impoverished.
At the end of 2015, the PSUV suffered crushing electoral defeats to the Democratic Unity Roundtable (MUD) in the parliamentary elections, to the point where the MUD had a supermajority. Just as the newly elected MUD officials were about to open their first session in March 2016, the TSJ stepped in and removed four MUD lawmakers from their seats, citing voting irregularities. The TSJ used these same alleged voting irregularities to rule that the National Assembly was in contempt and to strip it of its power, all the while granting further and further powers to Maduro. This naked attempt at disbanding an entire branch of government was reversed, but only after intense public outcry. It also foreshadowed Maduro’s plans for the Constituyente.
Finally, the TSJ’s politically motivated ruling created one of the only divisions within the PSUV to surface under Maduro’s reign. Normally the party gives its unconditional support to Maduro, but after the TSJ ’s ruling, state prosecutor and PSUV party member Luisa Ortega Díaz spoke out against what she saw as a shameless power grab.
When the TSJ operated so brazenly on behalf of the President, it became clear that the National Assembly was the only branch that would offer any resistance to Maduro. As a result, few were surprised when Maduro found a way to eliminate them as well. On May 1, Maduro announced that elections would be held to elect a new National Constituent Assembly, a special legislative body who would replace the National Assembly and whose goal would be to write a new Venezuelan constitution. Chavez had invented the tradition of editing the constitution at will, but Maduro did something not even Chavez had attempted: Maduro skipped the referendum on whether the new constitution was necessary. In effect, Maduro had unilaterally announced that the current constitution was void.
He then went further. Since writing a constitution is hard work, the Constituyente was announced to have at least two-year term, which conveniently coincides with the 2018 presidential election. This has led some critics to speculate about whether Maduro would use the election writing process as a to suspend an election he would almost certainly lose were it open and fair. Moreover, candidacy for the 545-seat Constituyente would not be open to anyone, but rather selected from social organizations by Maduro. The process would hardly be less subtle if the Maduro regime simply mailed everyone of voting age an already completed ballot.
In the run-up to the Constituyente elections, the Venezuelan opposition held an unofficial plebiscite on whether Venezuelans actually wanted a new Constitution. According to monitors, over 7 million Venezuelans turned out for the symbolic vote and overwhelmingly rejected the new constitution. Polling by Datanalisis showed 85 percent of Venezuelans were against creating a new constitution. Maduro ignored these results, and elections went ahead on schedule.
These political machinations are hard to resist when people are literally dying in the streets. Venezuelans have begun fleeing their country, some to escape persecution, others to find jobs to send currency with actual value home to support their families. Those that have the strength have been participating in near daily protests that have only grown larger and more violent. Venezuelans are desperate. Meanwhile, Maduro continues to espouse the benefits of Chavismo and socialism, having the temerity to claim that “In Venezuela, the people govern.”
While the government claims more than 8 million people voted, experts estimate turnout was far lower, somewhere around 3.7 million. They even qualify this number, pointing out that everyone with a government position was required to vote and to bring 10 people with them to the ballot or they would lose their job. There were also reports of government officials coercing people to vote by threatening to withhold their subsidized food. Opposition leaders in the legislature urged voters to boycott, calling the election illegal.
On Aug. 4, the Constituyente was officially sworn in. It is almost exclusively composed of PSUV members and Maduro loyalists. They convened their first session in the north wing of the Federal Legislative Palace, taking over the room once used by the National Assembly. One of the Constituyente’s first acts was to dismiss state attorney Ortega Díaz, who has since fled the country.
After initially being denied access to their Legislative Palace, the National Assembly has continued to meet, even though it technically has no power. They now meet in the south wing.
While Chavez handed Maduro all the tools necessary to consolidate power, Maduro was also forced to operate in an semi-functioning democracy from the start. A more united and forward looking opposition early on could have defeated Chavez in an election. Even with all their squabbling, they still nearly defeated Maduro in 2013. Yet at each step, the opposition made crucial mistakes and allowed themselves to be charmed by Chavez and divided by Maduro. Numerous tactical mistakes, from supporting the failed coup against Chavez in 2002 to boycotting the Constituyente election this year have further ensured that the opposition has remained much weaker than its popularity warrants.
This lack of strategic foresight reflects the fractious nature of the opposition. The PSUV has had decades in power to streamline their organization, while MUD was formed in 2010 and comprises everyone from socialists disillusioned by Maduro to neoliberal marketeers to hardline conservatives. It has been difficult to organize a unified front across so broad a spectrum.
Maduro has also sidelined any charismatic leaders that the opposing parties could rally around. The list of challengers Maduro has dispatched grows longer by the day. Henrique Capriles Radonski, a moderate leader from one of the wealthiest families in Venezuela, lost the 2012 presidential election to Chavez and has governed the state of Miranda since 2008. But just this year, after allegations from a state prosecutor that he misused public funds, he was banned from holding public office for 15 years. Julio Borges is the president of the National Assembly and was the head of the party that organized the constitutional plebiscite. Now that the National Assembly has been stripped of its power, it is unclear what he will do next. Leopoldo López, a charismatic party leader cut from more radical cloth, was sentenced to 13 years in prison on trumped up charges in 2015. After being released under house arrest, two days after the Constituyente elections he was suddenly spirited back to prison in the dead of night.
Until someone can give direction to the MUD coalition, it is unlikely to mount a serious challenge to Maduro, especially now that many legitimate venues of contesting power have now been eradicated.
Unlike Chavez, Maduro’s route to dictatorship has bypassed the vast majority of the population and focused on winning the support of a key elite. Through the permanent arbitrage of fixed exchange rates and control of the food supply, Maduro has provided his inner circle with access to wealth and power previously unimaginable. After nearly 20 years of Chavismo, the socialist revolution that began with Chavez saying he would tear down the class structure and sweep corruption out of the government, Venezuela is more stratified and corrupt than ever before.
However, because of their narrow power base, traditional dictatorships can be quite brittle. If Maduro loses any traction among his elite supporters, it could precipitate a swift collapse into further chaos for Venezuela.
There have already been cracks. On Aug. 7, a small contingent of 20 armed men (as reported by the Venezuelan government) attacked Fort Paramacay outside Valencia, the nation’s third-largest city, two hours west of Caracas. Two of the rebels were killed, eight were arrested and the rest made off into the countryside with weapons stolen from the base. Among the eight arrested, three were military officers, suggesting at least marginal military support. A video they released shows several men in military uniforms, faces blackened with paint, announcing a rebellion to restore constitutional order. At the time of writing, there has been no follow-up from the rebels.
Maduro learned from Chavez how to avoid censure from the OAS. By liberally supplying oil at sharply discounted rates to many of the small Caribbean nations, Maduro garnered enough support to defeat a motion condemning the Constituyente.
The United States’ history of CIA meddling in the region and repeated public conflicts with Chavez makes any intervention politically risky, though Donald Trump has hinted at a “military option.” Interference resulting from American imperialism might be the only force that could rally sympathy to Maduro’s side, both internationally and domestically. The current U.S. sanctions against Maduro and his political allies are the best option, considering the constraints.
Complicating matters are all the loans Venezuela took from China during the oil-boom years. China is afraid of losing out on the repayment of the over $63 billion it lent. What’s more, because Venezuela agreed to pay its debts in oil with China, Venezuela has to ship double the amount to meet its obligations. In short, China is getting too good a deal and is in too deep to let Maduro step down. The first thing any new government would likely do is to ask for assistance or debt restructuring or simply default. As long as Maduro keeps making payments, he’ll find Chinese support.
Another powerful creditor is also in Maduro’s corner. In June, when the Maduro regime failed to make payments on its bilateral loans from Russia, Moscow’s Accounts Chamber revised its projected revenue for the year by $1 billion. Russia seems to be working with Venezuela to restructure its debt, likely looking for a friend in the Americas to replace its old presence in Cuba. However, if the Maduro regime loses credibility in the finance market, it could lead to surprising support from China. China has already stated that it thought Venezuela’s election for the Constituent Assembly “went smoothly” and criticized the sanctions the U.S. put in place against Maduro.
In all of these cases, there is no relief coming soon. Every day Maduro stays in office is another day of the “Maduro Diet” for Venezuelans, another day of violence in the streets and another day of democratic institutions being torn down. This is how a dictatorship is built.