As if in response to my question yesterday, Michaela Frai and Alex Entz have an article at the Weekly Standard on what should be done about Venezuela. As with so many of the genre it does a much, much better job of stating the problem than of devising a solution. Let’s skip straight to the solutions:
To start, a consortium should be arranged between the United States and like-minded OAS countries with the general principle of isolating Maduro as much as possible. The formation of such a consortium lends broader regional legitimacy to what would otherwise be perceived as unilateral U.S. actions.
The consortium could direct relief to Venezuelan refugees and provide any support possible to the International Criminal Court’s nascent investigation into the regime. Additionally, the consortium should create and publicize a roadmap detailing an off-ramp for the Maduro regime. This plan could promise relief in exchange for concrete steps toward re-establishing democracy and allowing international aid organizations into the country. This would provide a credible commitment that may tilt Venezuelan domestic politics, turned increasingly desperate by economic ills, toward engagement with the outside world. In this vein, the United States and its allies should support the Venezuelan opposition’s ongoing attempts to bring democracy and humanitarian aid to their country.
Hyperinflation and a sovereign debt crisis will squeeze Maduro’s legitimacy and endanger his reign. The country’s oil production is its lowest since the 1980s, and is set to fall further; the country’s foreign reserves are at a 15-year low, and also are expected to fall. To quell hyperinflation, Venezuela slashed three zeros from its banknotes by executive fiat, as Zimbabwe once did, but Maduro has no serious, credible plan for fiscal stabilization or monetary restraint. (His only opponent in the next election has suggested adopting the U.S. dollar). In light of such weaknesses, the consortium should apply more economic pressure. For example, members could pool intelligence resources to help identify foreign bank accounts maintained by senior officials under false names, which could then be frozen. A unified stance against corrupt Venezuelan officials would lessen the odds of illicit financing for the regime.
Lastly, defaults by the Venezuelan government and by its national oil company, PDVSA, have opened the door for unpaid creditors to seize assets. ConocoPhillips recently seized a PDVSA facility in the Caribbean, and a Canadian firm is angling for a similar judgment on CITGO, a PDVSA subsidiary based in the United States. The Trump administration should support the claims of creditors while ensuring that no assets in the United States end up controlled by a hostile foreign power. Venezuela is clearly worried about losing desperately needed capital via asset seizures; this month alone, PDVSA redirected nine shipments of crude oil to avoid seizure.
Do you believe that all of those measures, implemented with perfect efficiency and timing, would have much effect at all on the situation in Venezuela? Me, neither. I don’t even think they’d protect the U. S. from the run-on effects of collapse of the Maduro government.
And that doesn’t even include their highly problematic desire to insulate American companies from the adverse effects of their own bad choices.
I think Zimbabwe is the parallel Venezuala is following. In other words plan for Maduro to stay in power for another 10 years.
I think the situations are quite different. For one thing Zimbabwe’s neighbors (with the exception of Botswana) are much better able to absorb refugees from Zimbabwe than Venezuela’s neighbors are able to absorb refugees from Venezuela.