Venezuela has the largest known oil reserves in the world, yet is running out of money. Years of gross negligence and endemic corruption have resulted in economic disaster, with $141 billion in debt to international bondholders and creditors like the Russian and Chinese governments as well as numerous oil service providers.
It gets worse. The Venezuelan bolivar weakened over 97 percent in relation to the U.S. dollar while inflation has soared to 4,115 percent. President Nicolas Maduro continues to blame other countries for the crisis, leaving fewer willing to help. Just in the past week, both Canada and Brazil, formerly attentive to Caracas’ humanitarian needs, withdrew top diplomatic officials in response to antagonistic claims made by Maduro and his cronies.
These are the same generals who for years colluded with the drug cartels to turn Venezuela into a narco-state. Large swaths of the military moonlight as the Cartel of the Suns, a drug trafficking network within the military’s own ranks. Maduro’s vice president, Tareck el-Aissami, was sanctioned early last year for drug trafficking and ties to terrorism. Maduro’s family was implicated in drug trafficking by the recent U.S. conviction of his wife’s nephews on drug charges. U.S. court records revealed they relied on the help of government and military officials.
While the top brass gets rich with racketeering basic commodities and trafficking drugs, Venezuelans starve. Nothing better illustrates this than Maduro’s populist grandstanding about holiday meals for poor families. The regime announced it would provide pork dinners, a traditional staple of Venezuelans for Christmas, for its poorest citizens, only to quickly rescind its promises when it failed to pay for their delivery. With less than $10 billion in reserves, pork was not on Venezuela’s menu. The country already owed a Portuguese pork distributor 40 million euros for holiday meals ordered in 2016, and to avoid another loss the seller this time delayed shipments until receipt of payment. It never happened.
As he has done before, Maduro resorted to his familiar rhetoric of blaming U.S. and international sabotage as the reason why the government could not distribute meals to the poor.
But as bad as 2017 was for Venezuelans, 2018 is looking equally corrupt.
Just recently, 69 oil managers and officials were arrested in a massive corruption investigation targeting political rivals. The probe is led by the country’s new Attorney General and Maduro ally, Tarek William Saab, the same senior official whom U.S. policy makers sanctioned last year on corruption grounds, alongside others in Maduro’s despotic regime. These farcical corruption investigations are designed to scapegoat lower ranking members and have grown exponentially. Venezuela’s United Nations Representative Rafael Ramirez, alongside other high ranking officials operating or living abroad, has been subject to arrest warrants.
One of the most remarkable incidents may be the arrest warrant for the head of BANESCO, Venezuela’s largest bank headquartered in Madrid. Diosdado Cabello, Maduro’s second in command, has repeatedly threatened to nationalize the bank. Its president, Juan Carlos Escotet, has been accused of setting up accounts in Panama, the Dominican Republic, and Spain using the money of Venezuelan citizens.
BANESCO’s dubious future should rightly worry investors awaiting missed interest payments. Until now, many have been hesitant to initiate asset forfeiture litigation in international courts as a means of forced repayment of loans. But threatening to nationalize BANESCO may trigger a series of legal cases by bondholders and creditors demanding assets to compensate for the millions in outstanding debts. In such a precarious position, Venezuela is at risk of complete default.
Maduro’s plans to save the economy may leave the country worse off in 2018. Last month, El Aissami was put in charge of the Petro, Venezuela’s new digital currency, which is supposedly backed by 5.3 billion barrels of oil worth $267 billion. According to government officials the Petro will be released at the start of the year, despite the complete absence of any technical details about the currency. All signs point to another populist stunt: The Petro, says communication minister Jorge Rodriguez, will be used to “overcome any financial blockade.”
Despite all of this, Maduro may still avoid being held accountable. With presidential elections scheduled later in 2018, he is demolishing the last vestiges of constitutional government to transition to a full-fledged dictatorship. He has already used his power to disqualify opposition leaders. And even with the recent release of 80 political prisoners in an end-of-year act of good will, hundreds of political prisoners remain in Venezuelan prisons.
The United States has led international efforts to curb the growing threat of Venezuela’s despotism. With the help of regional allies, the U.S. should continue to investigate these crimes and bring those accused of corruption, human rights abuses, terrorism, and drug trafficking to justice through international and American courts. The U.S. has already begun seizing assets denominated in dollars and using its extensive extradition network to bring those threatening international security to justice.
The United States has targeted its sanctions in support of the human rights of Venezuelan citizens suffering under Maduro’s despotism. The U.S. must continue this effort, working with international organizations providing humanitarian aid while holding accountable those committing egregious crimes in the Venezuelan government.
This two-fold approach is the only way to ensure that Venezuelans are saved from their poverty, starvation and disease that has plagued them into 2018 while keeping the criminals running the state accountable for their deplorable actions.