- The Washington Times - Tuesday, March 19, 2019

Venezuela’s socialist regime used the nation’s state-run oil industry as a protection racket in a yearslong, systematic scheme to buy political loyalty across the hemisphere while shortchanging its own citizens, according to a major study that shines a fresh light on corrupt dealings in Caracas.

The sweeping report, a collaboration among numerous journalists, was released Tuesday by the Washington-based think tank Inter-American Dialogue as President Trump and allies across the region increase their diplomatic and economic pressure on Venezuelan President Nicolas Maduro’s regime. Mr. Trump told reporters once again Tuesday that “all options are open” to remove Mr. Maduro and install opposition leader Juan Guaido as the country’s rightful president, although he avoided a question about how long the U.S. government expects Mr. Maduro to hold out.

Mr. Trump also zeroed in on the Maduro government’s corruption, saying it is ruining what once was a thriving economy.

“What’s happening there is a disgrace,” Mr. Trump said at a news conference alongside visiting Brazilian President Jair Bolsonaro, another fierce opponent of the Maduro regime. “This was one of the wealthiest countries in the world, and now all of a sudden it’s grief-stricken, poverty-stricken, no food, no water, no air conditioning, no anything.”

Venezuela’s economic implosion, the report argues, stems largely from how the socialist government has handled its oil sector, including instances in which the Venezuelan regime traded with its neighbors in a purported oil-for-food system that often failed to deliver edible food for the country’s citizens.

Although corruption in the Venezuelan oil industry has been well-known for years, the study delves deeper into how Mr. Maduro — and his predecessor and political mentor, the late Hugo Chavez — used the nation’s vast energy wealth to shore up support among its neighbors and even attempt to install candidates who would be favorable to Caracas in countries such as Nicaragua, Haiti and the Dominican Republic.

The study quotes former officials who said Mr. Chavez and Mr. Maduro decided years ago that their oil supplies offered a unique tool to line the pockets of power brokers inside Venezuela and to buy the backing of other key players in the region.

“We turned around to our geopolitical natural space. We made a differentiated policy for countries that are very small, very small islands, but at the end, they are sovereign countries,” Rafael Ramirez, Venezuela’s former oil minister, told the study’s authors. “That gave us an extraordinary geopolitical presence. … And why not do it if every country does it? The United States do it, the British do it, the Mexicans do it in their own geopolitical spaces.”

Winning friends with oil

The system, known as Petrocaribe and instituted in 2005, was initially billed as a way to deliver affordable fuel to nations in the region. By 2014, 14 nations in Central and South America and the Caribbean owed Venezuela about $14 billion, though many nations ultimately negotiated down their debts and ended up paying back less than 50 percent of what they owed.

In many instances, the report says, the massive oil debts became a geopolitical shield for Caracas, with many nations unable or unwilling to buck the socialist government in Venezuela out of fear that they would be forced to repay their massive debts immediately or be cut off from future oil shipments.

“The strategy was … to ensure diplomatic support in international forums and to seek the regional expansion of Venezuelan Bolivarian socialism,” the report says. “It was found in different official documents that the Venezuelan Foreign Ministry described the bloc of beneficiaries of the oil credits as part of an international protection barrier.”

When nations were allowed to repay their oil credits with goods, such as food, the system fell apart and likely played a major role in the food shortages across the country today.

Venezuela lost millions of dollars for accepting overpriced goods in the exchange, and in many cases of food of very low quality,” the report reads. “The oil agreements have been presented internationally as models of fair trade, but were infringed with practices contrary to that spirit, and such practices helped to empty the table of Venezuelans.”

Meanwhile, the Trump administration continues to ramp up pressure on the Maduro regime.

The Treasury Department slapped sanctions Tuesday on Venezuela’s state-run gold mine and its president, accusing the operation of propping up the socialist government. The move comes on the heels of other U.S. sanctions on key sectors of the Venezuelan economy.

Mr. Trump said the U.S. has the capability to go much further.

“We can go a lot tougher if we need to do that,” the president said.

The administration also is pursuing a diplomatic path, urging governments that so far have refused to reject Mr. Maduro and recognize Mr. Guaido as the nation’s leader to change course.

Elliott Abrams, the administration’s special envoy to Venezuela, met with Russian Deputy Foreign Minister Sergei Ryabkov in Rome on Tuesday amid deep disagreements between the two nations over the situation in Caracas. Russia remains a key Maduro ally and supplier of the Venezuelan military, which has provided crucial support to Mr. Maduro in the Caracas showdown.

“We did not come to a meeting of the minds, but the talks were positive in the sense that I think both sides emerged with a better understanding of the other’s views,” Mr. Abrams said.

Mr. Ryabkov told Russian reporters that Mr. Trump’s belligerent talk and refusal to rule out military action were only fueling the crisis.

“We have warned the U.S. against that reckless approach,” Mr. Ryabkov told the RIA Novosti news agency.

The report on Venezuela’s oil corruption was a joint effort by the Inter-American Dialogue and CONNECTAS, the International Center for Journalists, the National Endowment for Democracy, and Transparency International.

Dave Boyer contributed to this report.

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