Venezuela’s current mess is a nice way to probe at existing high-low alliances, in addition to social and economic breakdown dynamics. Note I did not say political breakdown. Collapse in Venezuela has has emphatically not caused political change. The old Chavez crowd is still firmly in control. Drug and oil money prop up the regime of President Nicolas Maduro.
Hugo Chavez, president of Venezuela from 1999 to 2013, ruined the economy, but built a loyal following both high and low. He survived a coup attempt in 2002 and afterwards purged the military of questionably loyal officers. Chavez, being a military officer himself, knew how fragile loyalty could be, so he began a long process of taking care of the high and low, while simultaneously building a parallel security force. He looted every industry possible and handed out money to loyalists. Chavez was a socialist and strongman, rewarding the high elements who put him in power and reversed the coup attempt in 2002.
Despite large electoral victories, Chavez’s power was always insecure, not just at the ballot box, but also because of coups and other power blocs asserting control. South American history is littered with military coups when the elites say ‘ya basta’. For Chavez, the military and the oil industry were two critical blocs. If one wants to see how terribly misguided he directed the oil industry but secured his political power, look no further than Venezuelan oil production charts. Adjust that chart’s timescale to ‘max’. Look at oil production in the late 1990s. That is 3.5 million BPD when oil was below $20/barrel. Venezuela has always had a great oil industry, due to its reserves, location, and friendly government that realized the importance of oil. OPEC was formed partly by the determination of one Venezuelan official.
Chavez did not kill the golden goose but he cut back its rations. Look at that oil production chart again and focus on the 2000s. In the face of oil rising to as high as $140/barrel, Chavez created a situation where Venezuela’s oil production dropped. Despite huge reserves, the oil is in tougher to recover oil sands like in Canada. It requires investment, higher oil spot prices, and technical expertise. Despite incredibly high reserves, the Venezuela fields did not see the innovation, creativity, and investment that Canada witnessed. This was political, and the developmental economics are downstream from political decisions.
Chavez wrecked development by requiring oil workers to pledge a loyalty oath to him, and as such, Venezuela lost many technical workers. Similar to his handling of the military, Chavez realized the importance of the oil industry and how strikes or paralysis from that sector could doom him. The government takeover of foreign own assets did not help, either. It created an artificial cap on oil production. Revenues climbed due to oil skyrocketing in price, and this offset the doom Chavez had set into the industry. The revenues also bought off many in the low and funded the creation of colectivos for times of need.
While creating a negative situation for the oil industry (Mexico did this as well*), Chavez hardened support because what remained was loyal to him. This was replicated elsewhere as Chavez chased off the potential upper and middle class opposition to Miami, New York, and New Jersey. Chinese and Russian kleptocrats aren’t the only ones propping up urban housing markets. Venezuelans who could form and fund a power bloc opposite to Chavez’s crowd ran away to America as political refugees.
With this power bloc out of the picture, Chavez built community organizations of a purely political manner: colectivos, which were an organic outgrowth of moves Chavez made to route around existing civic institutions. These were originally just local organizations that were pro-Chavez. They originally were political campaign Bolivarian Circles and were state-sanctioned and funded political organizations capable of flying under the radar as legitimate political civic institutions to boost democratic reach in the nation. Colectivos often used motorcycles or dirt bikes provided by the Chavez regime. They just did nice things. That is all. Pay no attention to the accompanying violence in their neighborhoods or certain polling stations.
Chavez used far more tactics than street thugs or direct democracy actions to cement control. He founded the community councils in 2006 and subsequently formed a national militia in 2009. Chavez’s regime was able to direct billions to organizations loyal to him and firmly under his network’s control. The militia was a counterweight to any potential military coup. The community councils could be the eyes and ears on rising dissent within the nation. These organizations became a way for Chavez to use the federal budget, booming with oil revenue during the commodity 2000s boom, to direct money around normal political channels of questionable loyalty to his loyalists.
Pumped with federal money, these councils become a pipeline of talent for Chavez’s regime to develop and place loyalists around the country and within the government machinery. A proper takeover of a state requires enough personnel. Maduro has expanded on this, as 73% of the 2017 budget allocates spending for social services that includes these political councils. This is a significant increase just from 2016. For roughly a decade, these councils have developed political talent and networked across Venezuela for influence and control in Chavez’s hands. All of this money sloshes around, and the colectivos, militias, and councils all pledge loyalty not to Venezuela, but to the Chavez machine that Maduro now leads.
What are colectivos now in 2017? They are armed bands of thugs that shoot protesters, harass anyone, and restore order for the regime somewhat, but mostly their own local control. Their involvement in the drug trade has allowed them some autonomy, as they have an independent source of revenue. Their monopoly on private guns makes controlling the drug market or black market in goods easier. “Wait,” says the good progressive, “how are guns in private hands if the government confiscated them in 2012?” The Maduro crowd seized guns from everyone and now has turned around and armed the militia Chavez created. This militia can slide weapons to the colectivos and no one reports it. The regime then turns a blind eye towards all actions at the ground level by the militia and colectivos, so that they can enforce the government’s will.
Chavez was building summer camps to indoctrinate kids, created a cult of personality, and engaged in a variety of other political moves that would normally induce progressives to namedrop Hitler. Yet, they sidestepped the namedrop because they viewed Chavez as an ideological ally.
Chavez did indeed create a cult. Chavez did effectively build organizations on the low that would be easy to buy off as well as pay off his high masters. Chavez was simply duplicating the Castro and Soviet method of cementing control.
Unfortunately for all in Venezuela, Chavez created smaller bands that now assert dominance and local sovereignty. Look at the quote at the end of The New York Times piece. The woman says that although they are thuggish, they are restoring order. People will follow the strong horse. Venezuela voted for this over and over and over and over and over again. Venezuelans face their reckoning. The face of it just might be masked men armed with AKs on motorbikes terrorizing those crossing the street.
*Note that Mexico had to shut down the Cantarell field which was a mega-field. Part of it was natural exhaustion and part of it was Mexican mismanagement and lack of reinvestment.