As Venezuela declines, so does its Latin American influence

A document circulating in Peru, part of a broad political corruption investigation, stands as a quaint piece of Hugo Chávez memorabilia. It’s a 2006 letter allegedly penned by the late socialist Venezuelan president to one of his regional comrades, Peruvian presidential candidate Ollanta Humala. It suggests Chávez gave Humala’s campaign $2 million in what the letter calls “revolutionary aid.”

Humala, who became Peru’s president in 2011 and left office last year, denies taking cash from Chávez. But the letter recalls something larger: a time when Venezuela wielded clout. A decade ago, as crude prices soared above $100 a barrel, the South American nation with the world’s largest oil reserves was a petro sugar daddy. The firebrand Chávez cast his largesse from the Bahamas to Buenos Aires, buying influence for his left-wing, anti-U.S. revolution.

Chávez has since died (in 2013, of cancer) and oil prices have imploded. His revolución today looks as toxic as the tear gas at antigovernment protests in Caracas—and the idea of Venezuela swaying neighbors’ elections is now laughable. When Venezuelan President Nicolás Maduro sent food aid to Peru’s flood victims in March, he was globally ridiculed because his country’s shortages are so deep the average Venezuelan adult lost 19 pounds last year.

Thanks to Maduro’s gross mismanagement, Venezuela is suffering one of the worst economic collapses in modern Latin American history. Its economy shrank 19 percent last year, according to its central bank, while its annual inflation rate hit hyperspace at 800 percent. A socialist revolution that came to power in 1999 vowing to raise up the forgotten poor and bring down the corrupt elite has driven the poverty rate to 82 percent of the population and has itself looted billions of dollars.

“I have never seen a country going down so fast,” Luis Almagro, secretary general of the Washington-based Organization of American States (OAS), recently told the Miami Herald/WLRN News. “At every level: politically, economically, socially.” Almagro, Uruguay’s former foreign minister, is a self-described leftist but is arguably Maduro’s harshest antagonist outside Venezuela. In April he persuaded the OAS’s Permanent Council to issue a resolution essentially declaring Venezuela’s democracy dead. The reason: A desperate Maduro, his approval rating down to 20 percent, has neutered the legislative and judicial branches, called off elections, muzzled independent media, and locked up more than 100 opposition figures.

The OAS resolution was an unusual sign that the rest of Latin America—for once—isn’t shamelessly apologizing for a disastrous and dictatorial left-wing regime. The region has a long and hypocritical history of decrying U.S. imperialismo while defending repressive socialismo. Communist Cuba is Exhibit A, but that country retains a romantic symbolism—standing up to U.S. hegemony and social inequality—that much of Latin America still wants to cling to. Venezuela no longer does, if it ever did, so it’s not getting the usual pass.

That’s partly explained by the rightward shift much of Latin America has taken since Chávez’s heyday. Consider Peru, the country Chávez apparently thought he could turn “revolutionary.” Centrist President Pedro Pablo Kuczynski has said Venezuela’s regime is “unsustainable and has to go.” Maduro called Kuczynski a “dog” and a “coward,” hoping Peru’s sizable leftist cohort would chime along.

It didn’t. Nor has the Left in Brazil, which has its own problems right now, such as crawling back from last year’s impeachment and ouster of socialist President Dilma Rousseff. She was a staunch defender of the Venezuelan regime. Her replacement, Michel Temer, has expressed support for Venezuela’s opposition.

The same scenario is playing out in other major South American countries such as Argentina, where left-wing President Cristina Fernández de Kirchner has been succeeded by the more conservative Mauricio Macri. Even next-door neighbor Colombia, where centrist President Juan Manuel Santos has needed Maduro’s help negotiating peace with Marxist guerrillas, recently signed a letter with 13 other OAS nations demanding that Venezuela restore democracy.

Perhaps the most glaring snub came in December, when the South American trade bloc Mercosur suspended Venezuela for failing to comply with the group’s democratic principles. Shortly after, Venezuelan Foreign Minister Delcy Rodríguez—whose Stalinist bent frightens even die-hard leftists in her country—was barred from entering a Mercosur meeting in Buenos Aires. Maduro, in Havana at the time, shouted “nothing or nobody will make us leave Mercosur because it belongs to the people!”

But that’s precisely the problem for the Maduro regime, known as los Chavistas: the seeming indifference if not censure of Latin American people, both working- and middle-class, toward Venezuela’s revolution. In years past even conservative Latin American governments balked at criticizing abusive leftist leaders. They feared offending large swaths of voters at home who admire Che and Fidel and all the other red-beret radicals.

Now with Venezuela, the politicos don’t appear to feel the same constraint. That’s likely because their citizens have heard food is so scarce there that a fifth of the country’s children are malnourished. Or that Venezuelans are dying for want of antibiotics. Or that protesters have been shot and killed by pro-Maduro motorcycle goon squads known as colectivos. “I think even most liberal Latin Americans have decided the Chavistas don’t share their set of values,” says one South American ambassador to the U.S. who asked not to be named because of diplomatic sensitivities. “That makes it easier for us to speak out.”

They’re speaking out even as the Trump administration is levying sanctions against Venezuelan officials such as Vice President Tareck El Aissami for alleged drug trafficking, the kind of gringo “intervention” most Latin American governments don’t want to be seen as endorsing.

Many smaller countries in Latin America, especially in the Caribbean, still feel grateful for Venezuela’s munificence—and fear the revolution’s demise could harm them. That’s particularly true among beneficiaries of Petrocaribe, the regional fuel assistance program Chávez started in 2005. At its peak five years ago, Petrocaribe sent more than 200,000 barrels of Venezuelan oil per day to such energy-starved countries as Honduras, Jamaica, and especially Cuba, which gets about half the program’s exports. The recipients pay less than half the price upfront and finance the remaining cost at low interest. In 2013, Haiti depended on Petrocaribe imports for 93 percent of its fuel. For Cuba, it was 59 percent.

But Venezuela’s crisis has turned the spigot down significantly. Jamaica once received 23,000 Petrocaribe barrels per day; this year its allotment has been slashed to 1,300. Cuba’s quota has dropped by more than half, from 110,000 bpd to 53,500. That’s a big reason President Raúl Castro has reduced the island’s fuel consumption by a third—and why its economy shrank in 2016 for the first time in 20 years.

The Petrocaribe cutback is largely a result of the deterioration of Venezuela’s state-run oil monopoly, Petróleos de Venezuela (PDVSA). Because the price of Venezuelan crude remains below $50 per barrel—and because Maduro’s government has a knack for scaring away investors—PDVSA production is expected to fall in 2017 for the fourth straight year. Meanwhile, Petrocaribe countries still owe Venezuela some $20 billion.

That’s scary news for an economy that relies on oil for 96 percent of its export earnings. And scarier still when Maduro keeps doubling down on his insistence that Venezuela’s humanitarian catastrophe is the result of a U.S.-led “economic war” against him. He made another counterattack in April by seizing General Motors Co.’s Venezuelan assembly plant over a legal dispute, causing the company to stop operations there.

Maduro, a former union leader whom Chávez anointed as his successor, isn’t entirely isolated. Authoritarian regimes such as China and Russia speak up for him (and lend him cash). He gets moral support, too, from the few regional allies Venezuela has left: Bolivia, Ecuador, and Nicaragua.

But those neighbors can’t offer Venezuela the “revolutionary aid” it once lavished on them. Which is why its revolution—and perhaps the idea of revolución in Latin America—may be going up in clouds of Caracas tear gas.

Bloomberg | Tim Padget