The tenuous situation in Venezuela just keeps getting worse. Rock bottom may be within sight but what that means for the Venezuelan people and neighboring countries has yet to be fully digested.
This must change.
How Venezuela got here is no secret. Sixteen years of self-inflicted damage from statist economic planning and corruption have saddled Caracas with 275 percent inflation last year, an expected 8 percent GDP contraction this year, exhausted foreign currency reserves, and spiraling debt. To pay the bills, and attempt to head off a potential default, it’s even had to dip into gold stock, selling about 20 percent of reserves to Switzerland this year.
Not surprisingly, President Nicolás Maduro is resorting to increasingly absurd measures. The nearly 3 million state employees were ordered to work four-day weeks in a misguided attempt to save electricity. Last week, in a further sign of the desperate situation, workers were told to temporarily come in only two days a week. Rolling blackouts make life even more miserable, with precious food spoiling in refrigerators. Grasping straws, Maduro will push forward the time zone half an hour in May.
What happens next in Venezuela is unlikely to remain contained within its borders.
People are leaving the country en masse, placing extraordinary strain on neighboring states. Crime is believed to be soaring in Colombian border towns, while international drug trafficking groups are thriving in the vacuum of governance. During Venezuela’s oil boom years, many neighboring markets developed a dependency on generous energy supplies and credit, which are soon going to disappear.
As Venezuela’s energy diplomacy recedes, an urgent realignment is needed throughout the Caribbean and Central America, as some nations have struggled to substitute supplies from Petrocaribe, an 11-year-old chavista oil financing project. A new Atlantic Council report, to be published May 3, warns of the economic and human consequences if a Venezuela debt default cuts off their credit, or if energy prices recover and force them deeper into dependence.
International support is critical to help those countries in the initial phases of conversion from high-carbon fuels to cleaner gas and renewables.
The US-Caribbean-Central America Energy Summit being convened by Vice President Joseph Biden on must do just that. With just over eight months remaining before the presidential transition, the Summit should chart a path forward to helping the region further move toward energy independence. That path must transcend US administrations.
Washington should also wake-up to how else it can be a partner with the Venezuelan people and its neighbors if the situation deteriorates to a point of no return.
For the past eight years, the administration has at least publicly followed a policy of strategic indifference. In an interview with Jeffrey Goldberg of The Atlantic, President Barack Obama explained the moments leading up to the famous handshake with Chávez at the 2009 Summit of the Americas: “We made a very strategic decision early on, which was, rather than blow him up as this 10-foot giant adversary, to right-size the problem and say, ‘We don’t like what’s going on in Venezuela, but it’s not a threat to the United States.’”
The policy of doing nothing worked for a period of time, but the problem now is that some in Congress appear content to take the “wait and see” approach instead of coming up with a plan. This is a mistake.
The answer is not extending the sanctions on Venezuelan officials, as Senator Marco RubioMarco Antonio RubioSenate GOP campaign arm outraises Democratic counterpart in September House passes bills to secure telecommunications infrastructure Senators call for answers from US firm over reported use of forced Uyghur labor in China MORE pushed forward this past week. This brings no relief to Venezuelans nor does it put the United States in position to play a constructive role in working toward a broader strategy. What sanctions do achieve is to rally people against the United States.
In its current state, it is highly unlikely that Venezuela will be able to fix itself. Despite winning a supermajority of the National Assembly this past December, which was stripped down to a simple majority a month later, most legislative bills passed by the opposition coalition have been thwarted by the courts, creating a constitutional crisis. A recall referendum is now underway but that too will face multiple roadblocks by the state apparatus.
US policy toward Venezuela must recognize this increasingly dire situation, including the humanitarian needs of the most vulnerable. Congressional leaders should put together a comprehensive humanitarian aid package ready to go into effect at a moment’s notice, which should be coordinated with other regional governments.
It’s time to try another approach, one that involves engagement and collaboration with other regional leaders to solve an important problem. President ObamaBarack Hussein ObamaEx-Saudi official says he was targeted by a hit team after fleeing to Canada Republican spin on Biden is off the mark Yellen expects inflation to return to normal levels next year MORE’s efforts to improve relations in the hemisphere have been profound steps in the right direction, but now it’s time for Congress to step up and show we are prepared for what is coming. That plan must provide energy alternatives for Petrocaribe members as well as support for the Venezuelan people.
Jason Marczak is Director of the Latin America Economic Growth Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.