It’s been a quite a turnaround for Venezuela. The one-time magnet for world vacationers is now to the top source of U.S. asylum requests.
Left unaddressed, the crisis in Caracas will only worsen, leaving ordinary Venezuelans even worse off and increasingly affecting the United States.
The regime of President Nicolas Maduro is the world’s youngest dictatorship, yet already one of the most corrupt. Criminals masquerading as politicians rule with an iron fist and have transformed Venezuela into an international drug trafficking hub.
Dozens of current and former senior Venezuelan government officials have been sanctioned by the U.S. government for drug trafficking, rampant violence against anti-government demonstrators, corruption, and undermining of democracy. Those sanctioned include the president, the vice president, the former attorney general, the former secretary of homeland security, and the director of national intelligence.
The same group that turned the oil-rich nation into a narco-dictatorship also set the economy on a crash course. Hugo Chavez used the surplus petrodollars from last decade’s commodities boom to amass a personal fortune, pay off party loyalists, and expand the welfare state. His socialist economic policies and multibillion-dollar corruption sank Venezuela’s economic freedom rankings. In 1995, Venezuela’s score was 59.8 on a scale of 100. Today it is a paltry 27, ranking worse than Cuba and better than only one other nation: North Korea.
Venezuela’s on-hand cash reserves have now dipped below $10 billion and are drying out. For perspective, consider that Bill Gates is worth eight times more than the amount of money the world’s most oil-rich nation was able to save.
Oil production, the economic backbone of the country, has declined to unprecedented lows. Petroleos de Venezuela, or PDVSA, the state-owned petroleum and natural gas company, theoretically has the ability to produce over 3 million barrels of oil per day. Yet it is producing barely 1.9 million bpd and is receiving payment on less than 1 million of that. The rest of production goes mostly to pay off outstanding debts to China, Russia, and other investors, although some is also given to the regime’s leftist allies in the region.
The regime’s mismanagement has produced one thing in vast quantities: human misery. Venezuelans are fleeing the country in droves into neighboring Colombia and Brazil. For the first time in history, Venezuelans have topped the list of U.S. asylum seekers, thanks to a 160 percent increase from 2015. Another doubling of applicants is expected this year.
The government-created economic crisis has manifested itself in widespread food shortages. It is now commonplace to see Venezuelans faint as they wait in bread lines. Also heartrendingly familiar are images of children scrounging in garbage bags for their next meal.
Venezuela’s healthcare system, once the pride of Hugo Chavez, has now collapsed. Basic medical care is unattainable, and crucial medicines such as antibiotics are unavailable. Venezuela’s national drugstore trade group placed medicine shortages at 85 percent in 2016, and matters are not improving.
Not all Venezuelans are living in misery. Earlier this year, U.S. President Donald Trump designated Vice President Tareck el Aissami as a drug trafficking kingpin and ordered U.S. authorities to seize his ill-gotten property in the United States. They uncovered illicit property and assets valued at $500 million dollars. Hugo Chavez’s daughter, a darling of her father’s socialist movement, is believed to be the richest person in Venezuela, with a fortune valued at over $4 billion.
Hundreds more in the Venezuelan government continue to bleed their country dry. Following U.S. Vice President Mike Pence’s recent visit to Latin America, the Trump administration announced a robust series of sanctions aimed at the profiteers of misery. The U.S. is banning trade in new bonds issued by the Venezuelan government and by PDVSA. There will also be limitations on dividend payments for the Venezuelan government.
Rather than a full economic or oil embargo, this strategy brilliantly protects the Venezuelan people from further economic hardship while penalizing the corrupt government officials who are holders of the bonds. It should also serve the dual purpose of peeling away Maduro’s loyalists and enablers.
The socialist paradise of Chavez and Maduro, in reality a criminal-kleptocrat syndicate, is circling the drain. Unfortunately, innocent Venezuelans are paying the heaviest price for their leaders’ failures. The impacts of this debacle are being and will be felt beyond the country’s borders. The Trump administration’s sanctions are a well-calculated exercise in damage control.
This piece originally appeared in RealClearWorld