Shannon K. O’Neil, the vice president, deputy director of studies, and Nelson and David Rockefeller senior fellow for Latin America studies at the Council on Foreign Relations, discusses the humanitarian crisis in Venezuela, as part of CFR’s Religion and Foreign Policy Conference Call series. Dr. O'Neil also authored a CFR Contingency Planning Memorandum on the crisis.
FASKIANOS: Good afternoon from New York and welcome to the Council on Foreign Relations Religion and Foreign Policy Conference Call Series. I’m Irina Faskianos, vice president for the National Program and Outreach here at CFR.
As a reminder, today’s call is on the record. And the audio and transcript will be available on our website CFR.org and on our iTunes podcast channel, Religion and Foreign Policy.
We’re delighted to have Shannon O’Neil with us today to talk about the humanitarian crisis in Venezuela. Shannon O’Neil is the vice president, deputy director of studies, and the Nelson and David Rockefeller senior fellow for Latin America studies at CFR. She’s an expert on Latin America, U.S.-Mexico relations, global trade, corruption, democracy, and immigration. She’s a member of the board of directors of the Mexican company Rassini Sab de CV and the Tinker Foundation. She was a Fulbright scholar and a Justice, Welfare, and Economics fellow at Harvard University and has taught at Columbia University.
She is the author of the 2013 book Two Nations Indivisible: Mexico, the United States, and the Road Ahead and is a frequent commentator on national broadcast news outlets and radio programs, having written in various print and online publications and testified before Congress on Latin America.
As you probably saw, she has just written a contingency planning memorandum entitled “A Venezuelan Refugee Crisis.” We circulated that in advance of today’s discussion. Hopefully you’ve had a chance to see that as well as her opinion piece in Bloomberg.
So, Shannon, thank you very much for being with us today. It would be terrific if you could begin by talking about the humanitarian and refugee crisis that we are seeing unfold in Venezuela.
O’NEIL: OK, thank you, Irina.
And thank you all for joining us this afternoon. And thanks for the opportunity to talk about what is an incredibly serious, if somewhat disgusting issue that’s happening right here in the Western Hemisphere.
And so for any of you who have been following the news, you know that Venezuela’s economy is really in freefall and, well, we know that the numbers are just staggering today. So GDP, we’ve seen a third of GDP disappear over the last five years, which is something that never happened in a country in this hemisphere in sort of modern history and really has only happened in the most war-torn spots around the world. But it is happening and has happened in Venezuela.
We see inflation skyrocketing and to the point where with the devaluation of the currency there it’s almost worthless. And many exchanges that are happening on the streets, if you can find anything, are happening with a barter system or, especially in Caracas, the hard currency is increasingly eggs, chicken eggs, because it’s the one thing that actually is holding its value. That’s how bad the currency crisis is today.
And a recent survey, just to give you a bit of a sense of the depth of the devastation of the economy and how it’s affecting people, a survey that came out just in the last couple of weeks from three universities who have done this survey over several years, they found that the average person last year in Venezuela lost 24 pounds. And this was not on purpose, this was because they just couldn’t get basic food. So this crisis is becoming so devastating for the population that it is spurring this refugee movement.
I want to say a bit, too, about it’s not just food the people can’t get access to, it’s basic health care. And that also is a system in freefall. We have seen one in five doctors and health care professionals leave the country. Two out of five hospitals don’t even have running water, much less basic medicines. And one of the most telling statistics that I’ve seen is that last year 2 percent of newborns, so two out of every hundred newborns, died within the first four weeks of their life. And that was a change from .02 percent just three years ago. So this just testifies or illuminates how horrible the health care system. It has completely collapsed for those that are still living there.
So given the lack of food, given the lack of health care, given also the increasing repression by the government in Venezuela, many Venezuelans have chosen to leave. So already, 4 million Venezuelans have fled the country, that’s over 10 percent of the population, half of that just in the last couple of years, so we’ve seen an acceleration in the pace of people leaving. They are leaving mostly to nearby Caribbean islands—Curacao, Aruba, Trinidad and Tobago. They are leaving to Brazil which also borders Venezuela. And in particular, they’re going to Colombia, another bordering country. So over 600,000 Venezuelans are in Colombia or estimated to be in Colombia today. And they’re overwhelming some of the resources, the towns, the basic infrastructure of that nation.
Now, what’s driving this refugee crisis is the economic policies, the political policies, the social policies of the current Venezuelan government under Nicolas Maduro who is the president. And unfortunately, this looks like a regime that is unwilling to change. There have been calls from the United States, from the European Union, from Canada, from almost all of Latin America, the neighbors in Latin America, to open up, to become more democratic, to move away from this much stronger authoritarian regime to no avail.
We’ve seen instead a tightening of control over the political mechanisms, over the freedom of the press, over basic elections and how they’re held. And we’re increasingly seeing food, which is distributed by the military, being distributed in political ways and for political gain. And we also are seeing increasing repression of opposition political parties, activists, dissidents, others who disagree with this regime.
So even though we see economic and financial catastrophes happening there, even though we see this refugee crisis happening, it doesn’t seem that we will see much internal change or those within government, it seems, have a change of heart and reverse some of these very devastating policies.
So that—and I would say a little bit about what that leaves the international community. And then we can talk more about it in the discussion that follow. But to me, that really leaves the international community needing to prepare and to help deal with and diminish the cost of this growing refugee crisis. I think it’s very hard for the United States, Latin America, Europe, or others to change what’s happening in Venezuela today, given the intransigence of the current regime to leave. But we can help these people who are leaving, 4 million and counting.
Right now, the United States has not taken the lead that they would have taken in the past. The United States in many cases in the past in Latin America when there have been hurricanes, when there have been earthquakes, when there have been other political issues have often welcomed refugees at various moments in our history. But unfortunately, this doesn’t seem to be one of them. And so I would argue that while I hope the United States will come and will participate in this because this is an incredibly important issue for not just Venezuela, not just its neighbors, but for the stability of the Western Hemisphere, where we all live, that it’s the other countries that are going to have to take the lead.
We have started to see those neighbors where Venezuelans are showing up begin to do so. They’re setting up refugee camps. Colombia even went to Turkey to look at the way Syrian camps have been set up to learn best practices today and the like. But all of them today are doing it in isolation; every country is forming their own policies. And so I do think the challenge for the international community in general—the United States hopefully is part of that—can come together and help, one, bring resources directly to these people where they are, but also help those first-receiver countries, those where they initially, the Venezuelans, come, help them move Venezuelans or help them find places in other countries, whether throughout the hemisphere or more broadly in the world.
So let me open it up to questions. Obviously, I’m talking about Venezuela here, but refugee crises are a challenge all over our world today in Europe and in Asia and other places. There’s challenges all over. But this is distinctive in many ways because we have not seen one in the Western Hemisphere in many decades.
So with that, let me turn it over to questions.
FASKIANOS: Shannon, thanks so much.
Let’s open it up to the group for questions and comments.
OPERATOR: Our first question comes from Bruce Knotts with Unitarian Universalist United Nations Office.
KNOTTS: Hello. Thank you for this really very comprehensive and disturbing presentation.
As I work at the United Nations, the United Nations is gearing up for a summit on refugees and migration in September, I’m wondering if there’s anything that UNHCR is doing or anything the OAS is doing about this regional refugee crisis. Is there any sort of mechanisms for burden sharing? I believe, as a former refugee officer for the U.S. government, that there is an international obligation to take care of refugees in situations such as you describe in Venezuela. Over to you.
O’NEIL: Great. Thank you very much, Bruce. And I think that is a good question. So far, both the OAS, the Organization of American States, and the U.N., much of the discussion around Venezuela has focused on basically on regime change, on bringing democracy back to Venezuela, condemning the current regime as they are and then trying to change its behavior, to force change in some way, shape or form.
The OAS is a body that operates on consensus votes, so it has been unable to do much. It does have a democratic charter that was signed actually in 2001. It was signed right, interestingly, on the—on the day that—on 9/11 in 2001 in Peru. But it—the ideals within that have not been upheld. And as we’ve seen Venezuela sort of fall into an authoritarian regime, the nations in the hemisphere, many have, but not enough, to condemn Venezuela and make it change. But overall, they’re very much focused on—the OAS is focused on changing what’s happening in Venezuela.
And the United Nations, too, we have seen the U.S. ambassador there as well as others bring up the issues of what’s going on there, the human rights abuses, the corruption, some of the other issues, but mostly it’s been focused internally on Venezuela. And I would argue that it’s actually time to shift. It’s not that you stop the pressure on the current government and some of the abuses, human rights and other abuses that they’re committing, but I think it’s time to look at the more immediate tragedy that’s happening outside of the borders.
And so, I mean, as you say, I think September is—it should start now, but September is a good goal to really bring this and put it on the agenda, but so far I have not seen countries leading on this aspect of it. I suspect that that will change, in part because the countries are becoming overwhelmed, particularly Colombia. Some of the islands are overwhelmed because they’re just so small and, you know, 30,000 people showing up on an island of a little over, you know, a hundred thousand people is just—there’s not the capacity to absorb that many people.
But Colombia in particular is vulnerable given that they have a very long border. There are roads and networks to get to that border. Brazil has a very long border, but it’s hard to get there because there just isn’t the connections through the Amazon. But this is one if people wanted to leave it’s a way to leave, there’s transportation there.
The other interesting thing is that Venezuela, there are over 5 million Venezuelans who are of Colombian origins. And so many of them came to Venezuela during the 1980s and 1990s, times when Colombia had incredible violence with drug-trafficking groups, Pablo Escobar and that time period in Colombia, as well as with the FARC and other guerilla groups, so many Colombians fled to Venezuela for safety. It was a democracy and it was a more open economy and policy at the time. But given their ties back to Colombia, it would be very hard for Colombia to close the borders and not let them back in.
So that’s a long way of saying I could imagine, Colombia, Brazil, some of these islands being the ones that might bring the issue to the U.N. or to the OAS. But so far I haven’t seen yet the turn in the mobilization within these multilateral bodies. So far it’s still very focused on how do you change what’s happening in Venezuela rather than how do you ameliorate the consequences for those that are leaving.
FASKIANOS: Thank you.
KNOTTS: Thank you.
FASKIANOS: Next question.
OPERATOR: Thank you. Our next question comes from Sedaca Bibbins with Georgetown University.
BIBBINS SEDACA: Hi. This is Nicole Bibbins Sedaca at Georgetown.
I would be interested in hearing your thoughts on which regional partners, which countries in the region would have the most impact in bringing both, as you’re saying, the immediate humanitarian, but some of the longer-term changes. Which one has the influence both either with Maduro directly or with other leaders in the country to exercise that influence?
O’NEIL: Sure. And that is a good question because as we’ve seen, the United States has some very blunt tools, they have sanctions and there’s also talk of ramping up those sanctions in the coming weeks or months, but the power of persuasion, there’s a question there because other tools sometimes are blunt and either ineffective or take a very long time to work.
I would say the country that actually has the most influence today over Venezuela is Cuba. There is a longstanding relationship between the Cuban leadership and the Venezuelan leadership. There is very close ties between Hugo Chavez, the predecessor of Maduro, and Fidel Castro, and then there has been continued ties between Nicolas Maduro, the current president of Venezuela, and Raul Castro, who at least now he’s supposedly stepping down next month, but is also the president of Cuba.
We’ve also seen over the last almost 20 years since Hugo Chavez came into power a deepening of institutional ties between Cuba and Venezuela. So Venezuela has sent millions of barrels of oil over this time to Cuba at cut-rate prices or for free, which has benefited the Cuban economy tremendously, which is oil poor. But Cuba has sent thousands and thousands of nurses and health care professionals and doctors and others to help take care of Venezuelans, which has a low percentage of people in this industry.
It has also sent many people from Cuban military intelligence to help reorganize the military and also to help the government maintain greater control of its armed forces, of its bureaucracy, and its people, so setting up, in many ways, the system that is in Cuba in terms of local people (on blocks ?) reporting on others for dissident activity and the like. It’s not as extensive as it is in Cuba, but it is—there is some of that, particularly within the armed forces and other places to take control or have an eye into what is happening at the middle ranks so you don’t get what you had in 1992, which was a lieutenant colonel named Hugo Chavez that attempt a coup against the government, that you would head that sort of thing off.
So Cuba, I would say, has the most influence over this government if they—and probably the most power persuasion to move or make changes. And Cuba could offer a respite for those that might have to leave Venezuela or the country, a place where they could go and live out the rest of their days perhaps in peace and quiet rather than in a U.S. or Venezuela jail. So that’s one country that has significant influence.
The other two countries that have significant influence right now over Venezuela are its benefactors which are China and Russia. China has many agreements giving them money for oil and other natural resources. They actually have joint ventures with their companies, with the state-owned enterprises, so China has a pretty significant commercial leverage and economic leverage over Venezuela, if they so choose, and then Russia, too, particularly as Venezuela has had much less ability and capacity to borrow money on international markets, to work through free markets and open markets, given their behaviors and also given, you know, the propensity to default on their debt as well as now U.S. sanctions, financial sanctions.
Russia has often stepped in and lent it money, but it’s not just lending money. Basically what it has done is given money in exchange for assets. So through Rosneft, the state-owned energy company in Russia, they have been buying up Venezuelan oil and other energy assets at very cheap prices, but providing cash today to the Venezuelan government.
So those two financiers have significant leverage over the government, as does Cuba on a more ideological and sort of local level. Of the neighbors, there is some influence over the government, but it’s—but it’s much less. And most—almost every big country in the region—Brazil, Argentina, Colombia, Mexico, Chile, and others—they have turned against Venezuela and it hasn’t done—it hasn’t done a whole lot because they have had financing and then some of this military and other support from Cuba.
FASKIANOS: Thank you. Next question.
OPERATOR: Thank you. Our next question comes from Camille Grippon with Bon Secours Health System, Inc.
GRIPPON: Thank you.
Within Colombia, besides the government of Colombia, are other groups leading the humanitarian aid effort to refugees, especially in Cucuta? And what is the role, if any, that the Catholic Church is playing in Colombia?
O’NEIL: Right now, those are—those are—that’s a great question. The Colombian government is setting things—is setting up various camps, is building infrastructure and the like, but it really is a lot of civil society, NGOs, church-related, and some multilateral organizations that are doing a lot of the work and helping those that have come. And I think there is a large role for those organizations and particularly for the church to play. I think there’s a role for the church to play in many of these countries, and Colombia included. The church has the infrastructure, they have the networks and the physical infrastructure, the churches and the other, places to sleep, places to come have food, places to have water and the like.
And then they also have an affinity with at least a large segment of the population. And it’s not just the Catholic Church. You also see in some of the border towns and border states or more broadly in Latin America I think a role for evangelical churches, which have grown significantly in terms of their reach and membership. So I think this is an important role that they can—that they can play and then they can fill.
And then also, when the United States or European countries or Canadian or others help with refugee crises, when they bring in funds, it’s often not—they don’t go on the ground. You wouldn’t see—you wouldn’t see many people from the U.S. government and others, right? They outsource to other organizations. And often, it is NGOs or other civil society organizations, including churches, that can provide—that can use the money efficiently and effectively very quickly to provide for those on the ground because they’re already there, they already understand the area, they’ve been there for many years and the like. So I think that, too, will be important if and when other governments from around the world decide to invest and help these—help those that are there and sort of help build networks. They just—they would tap into the things that are already there.
So there are others. Mercy Corps has long been in Colombia. And Colombia as well, many of the areas on the border are very sparsely populated and actually don’t have a lot of the infrastructure. Some of the places in fact were places were guerilla groups had been and partly because the state didn’t reach there.
We also see, because of the challenges Colombia has had for many decades, Colombia itself has had millions and millions of either internally displaced people—IDPs they call them—or people who fled to other countries, like the ones I was talking about to Venezuela, there’s also many that went to Ecuador. So Colombia has—unfortunately, Colombia has a long history of dealing with refugees internally or externally. So some of that infrastructure is there, but it—but you do need not just the government, you also are going to need civil society and others, including the church, to step in.
And Colombia’s at this very delicate point because, one, they have elections coming up, so this is becoming, at least in local areas, in particular areas, an electoral issue. But they are also trying to implement a fairly complicated peace process with the FARC guerilla groups. So they’re trying to end a, you know, several-decades-long war between government and these guerilla groups that involves integrating several thousand people back into Colombian society, building infrastructure to make sure that these parts of Colombia that had been left alone and really outside of the state without sewage, without electricity, without town halls and the like, to try to integrate all of this into Colombia. And it’s happening, at least in some places, right when the pressure, they’re being overwhelmed by all these new people coming in. So I think this is a real challenge for Colombia overall and they’re going to need all the help they can get and particularly from the kind of organizations that you mentioned, those that are not from states, either the Colombian state or others around the world, but are part of this larger, local, or international NGO and nonprofit community.
FASKIANOS: Great. Next question.
OPERATOR: Thank you. Our next question comes from William Persell with Episcopal Diocese of Ohio.
PERSELL: I’m wondering, what, in your opinion, is keeping the United States government from helping with the refugee situation? And how could we most respond or do—what do we need to do to build some greater understanding of this situation and support from our government?
O’NEIL: Thank you, William. And I’m originally from Ohio, so nice to be talking to you here.
You know, I—if I had to characterize, I think this is an administration that is globally suspicious of refugees and immigrants more broadly. We have seen that in many of the edicts and proclamations and presidential orders that have come out over this last year, you know, the Muslim bans and the others. The government has also—the U.S. government has a number of asylum cases that it will accept from previous governments. So overall, there is a suspicion of those coming into our country.
I’m not exactly sure how you—how you change that mentality overall. But I do think it is very important for those who care about these issues, and U.S. citizens and taxpayers and voters, to make sure that they’re heard that this—that this issue matters and that it is not—that not everyone agrees that cutting back on, you know, openness to those seeking asylum, that there is something in U.S. culture, in our various religions, in the way we think about things that we actually are open. Right? That we go back to this idea of being a nation of immigrants.
Now, how receptive this administration will be to that I don’t know. They did—recently, they just rewrote the Homeland Security, the Customs, you know, form and the way we describe ourselves in our Immigration Services, taking out the idea that historically we are a nation of immigrants. That was pulled out of the actual text. So it suggests to me that this is a more systematic way of rethinking the way the United States is.
But, you know, this is why we go out and vote. If you believe that we are—if one of our strengths is the mix of people who have come from all over the world or their parents or grandparents or even before have come, then I think it’s something for people to raise their voice about. And I think actually churches, religious establishments, and institutions, given the kinds of—you know, that is a place to begin and actually probably one of the strongest voices that can be raised.
On a more, you know, kind of tactical level, I mean, this means, you know, sort of mobilizing at the local level. It means, you know, writing and calling and all these sorts of things. But I think it is something that can be changed. And, you know, we often focus on the executive branch, and that makes a lot of sense, but Congress matters. Congress matters in our day-to-day decision-making. Congress matters in whether or not the agencies in the State Department that work with refugees or USAID that works with refugees, if they get funding. So the Trump administration when they sent their budget, they zeroed out all financing or all money for the parts of the State Department that would have dealt with refugees from any part of the world, but including Venezuela, but Congress has not taken that guidance or that suggestion.
So I do think, as you or others want to influence the types of things that we spend money on here in the United States, don’t overlook the importance of your congressional representatives because they actually are the ones who are going to make the decisions on some of these things. People can go out there and speak to the media or communicate through social media and Twitter and the like, but the money that would go to help these people in Venezuela or other people all around the world, if you care about migration and refugees, that really comes down to congressional decisions on the budget.
PERSELL: Thank you.
FASKIANOS: Thank you. Next question.
OPERATOR: Our next question comes from Thomas Uthup with Friends of the United Nations Alliance of Civilizations.
UTHUP: Hi. Thank you very much for the talk.
And I want to focus a little bit more on a previous question about the role of the Catholic Church. And I’m wondering if politically there’s a difference between the way in which the Catholic hierarchy, as in the bishops, are reacting to the regime as opposed to the priests and the nuns who are out there, you know, with the people. Thank you.
O’NEIL: Sure. You know, it’s interesting. The Catholic Church actually and Pope Francis at one point several months ago actually tried to broker—I don’t want to say broker a deal, tried to bring together the various sides within Venezuela, the opposition and the government, to see if some sort of compromise could be reached to lead a transition government and the like, and unfortunately that failed. And you’ve seen within Venezuela there was an effort for the church to bring this compromise.
And since that has failed and the church has sort of left that, being that arbitrator or being that space, you have seen bishops and others within the—within the hierarchy speak out more forcefully for human rights, for those that are being oppressed or repressed by the government. So within Venezuela, I do think the church overall is starting to take a more vocal oppositional role and particularly at the local level, as you say. I think that role has been, in some places, been much more active, the opposition, for much longer. But the hierarchy, the sort of leadership, is now more critical of the government than they have been in the past.
The challenge for in Venezuela, at least for the church and for everyone else, is just basic daily subsistence. It’s hard to sustain a, you know, an ongoing opposition or organization when, you know, everyone, including the local priests and nuns, are waiting in line for eight hours a day just to try to put one meal together. And so I think that is a real challenge for things happening within Venezuela.
Now, looking outside and to the rest of the region, I mean, it’s interesting—interesting isn’t quite the right word—that this this crisis is unfolding at a time when the pope is, you know—his origins are from the region and from Argentina and also ideologically or sort of—or in a perspective from a leftist-type perspective. And you have seen his views of Venezuela, I would say, shift or transform frankly from early days when, you know, Venezuela—I mean, when Chavez came into power in 1999, you know, part of the reason that he was democratically elected with a pretty strong majority was that while this is—Venezuela was a country with the biggest oil reserves in the world, half of its population lived in poverty. And that was who he appealed to. And in those first years, oil prices went up in the early 2000s and there was lots of money to spend and he spent it. And poverty went down and people had health clinics for the first time and schools were built in neighborhoods that had never been there. But lots of money, probably to the tune of $80 billion, went out the backdoor and into bank accounts in tax havens.
And in none of these—the government didn’t set up any of these programs in ways that were sustainable. And so now that oil prices have fallen and production has fallen and the politicization has sort of taken hold, there’s no money left. Those who had been taking money out the back door just kept taking more and there was none left for the people. So while at the start poverty rates were 50 percent, then they went down to maybe 30 percent, now they’re back up to near 90 percent, everyone is poor there now.
And this is the tragedy—to talk politics for a second—this is the tragedy of populism, whether leftist populism or rightist populism, or however you want to define it, is sort of these booms and busts that leave especially the poor worse off.
So bringing it back to the church a bit here, I do think there was some empathy for the way the original mission was laid out in the campaigns and the like to appeal to these people who, even though you’re in this incredibly—this nation with incredible resources, you aren’t benefiting. But I think there’s also a recognition at the leadership at the top that this is not the way to get there, this is not the economic model in this case, particularly it’s not the political or social model that’s very based on authoritarian, repressive, violence, and others that doesn’t allow people, whether believers or not, to sort of have their free expression or even be safe in their homes.
So I think you—you’re not—there have been divides in the church between sort of those on the—in the communities and those up at the national or international level. But I—my sense is the church more broadly in Venezuela and in the neighboring countries, the whole church is moving to condemnation of what’s happening there and then—and then beginning to think about how can we help those who are fleeing this situation.
FASKIANOS: Thank you. Next question.
OPERATOR: Our next question comes from Carol Van Cleef with Luminous.
VAN CLEEF: Thank you. I had a unique opportunity to visit Venezuela right before the Christmas holiday. I was invited down there to participate in a conference regarding the possible issuance of a cryptocurrency, which subsequently has taken a life—a different path than what the folks who had invited me down there to speak on. But it did give me a very interesting perspective into a number of situations they are facing there. And I appreciate very much the comments that have been made today and would offer a couple of observations and like your opinion on if you’ve had an opportunity to think about the potential paradigm shift that’s occurring and what the implications might be of putting an infrastructure in place involving cryptocurrencies that might in fact actually, instead of strengthening the government hand, might offer opportunities for outside relief efforts. It’s a fascinating issue to give thought to.
I’d also like to add that having been down there I’m somewhat frustrated with U.S. government efforts because it’s clear that the Venezuelans very much prefer the U.S. to the Russian and Chinese influence that seems to be predominant there.
And on the point of the cryptocurrencies, the Russians have in fact been able to take over that project, which whether it’s Russians as individuals or Russian government-led effort, it’s not entirely clear.
O’NEIL: Yes. So the cryptocurrency issue is an interesting one. And there’s some history there in Venezuela. One is—one part of the dystopia of Venezuela is, because it’s an oil-producing country, energy is incredibly cheap. So if you—everybody drives gas-guzzling cars because a liter of gasoline, a gallon of gasoline costs nothing. And electricity costs nothing. So you’ve actually seen the springing up of datamining for Bitcoin and other things because electricity is free and is about the only business that people can run.
Then, of course, the government goes out and looks for these hot spots where people are using a lot of electricity to shut them down. So there’s a bit of a cat-and-a-mouse game there where Venezuelans are able to hook into the international economy through Bitcoin and mining of Bitcoin in order to make some money. So there’s sort of the interesting aspect in the civil society part of cryptocurrency providing an economic, financial avenue for at least a few families, some families, in ways that are quite interesting.
You know, this cryptocurrency that the Maduro government wants is—it’s not a true cryptocurrency is the thing.
And I don’t know, Carol, I would be interested in your discussions when you were down there what—how they worked.
But the currency that has been set up is one that is controlled by the government, so it’s not a decentralized, market-based currency the way Bitcoin or others are. It is controlled by the government and it supposedly, the way it’s written, is one where it is based on the value of some sort of mix of oil or minerals or other commodities that are in the ground and at some date would be delivered to you.
So, you know, it’s—now, this is like a—this is a bond, right? This is a collateralized bond basically, right? You buy this now for some price and down the road someday it is backed by oil and other things. So there’s a few problems with that. One is it’s very hard to say what a barrel of oil that’s still in the ground is worth. And two, with U.S. financial sanctions, this is actually—this is a line of credit or a bond. It is a financial transaction. And with U.S. sanctions in place, you cannot enter or someone who doesn’t want to violate U.S. sanctions, you cannot enter any financial agreement where you’re not paid back within 30 days for the sovereign, so for the Venezuelan state, and then 60 days for the state-owned enterprise. And these are admitted by the state, so you have 30 days to get that barrel of oil back or else you are actually entering into a financial transaction with the Venezuela government; that would have you in violation of U.S. sanctions. So that’s a very long way of saying that I don’t think this cryptocurrency is going anywhere.
And it’s not, in my understanding, a cryptocurrency like the cryptocurrencies that we’re thinking about more broadly. This is really—they’re using the language of cryptocurrencies, but basically what it is an innovative alternative financial line of credit/bond that the government’s creating. And that is why—and for those that actually—I know someone who tried to enter just to sign up to see what it would be like—because why wouldn’t you—and the whole system crashed and he couldn’t even sign up for it the first day. So not only is it not really a cryptocurrency, which has its problems, but there’s also some incapacity in the form of the Venezuelan government and/or those that they hired to put this, you know, thing in place. So I’m skeptical that it goes anywhere further.
What Venezuela has been doing, which is not really cryptocurrency, but it’s taking the barter system—and it’s developed as goods have become scarce—and manipulating it in a political way. They have admitted these “cards of the fatherland” is basically what the translation would be, so they’re little cards. And if you have this card, you can go then get a basic basket of goods in a periodic way. And the military is now the one that distributes food around the country. And particularly as food gets scarcer, access to food is all-important, and so you have this card and you can then go get at least some food, waiting in lines and showing your card.
They have begun to say if you want to go vote you need to bring your card or at least encouraged that. So it’s beginning to tie together access to food with politics. And there, there is some electronic aspect to it. So it’s not a cryptocurrency, but there is some trade. But there’s a—there’s an implicit right now and maybe will become explicit expectation and demand that you vote the way the government wants you to vote in order to get your rations, basically, and this card. So that’s slightly on this cryptocurrency, but I’m pretty skeptical that Venezuela has the ability to launch a currency, even one that would be—that would be used internally.
And then finally the last thing I’ll say, the Venezuelan government has been unable to keep up with hyperinflation and they can’t even print new bills because the paper that these new bills come on has to come from abroad and they can’t pay the companies. So you have this challenge of just the lack of currency. And so in some places, eggs have become the currency. And in other places, it’s other things. But there are actually neighborhoods that are creating their own currencies. And, you know, you get paid in it because you work in a particular neighborhood and then you can go to the stores and you can use it, so you’re also starting to see other kinds of currencies. These are not crypto or electronic or anything by any means, but you’re starting to see these other means of trying to create trade so that people can actually get the basic goods, can work and then go get the basic goods that they need and keep some sort of economic functions happening.
FASKIANOS: Thank you. Next question.
OPERATOR: Thank you. Our next question comes from Susan Henry-Crowe with General Board of Church and Society of the United Methodist Church.
HENRY-CROWE: Thank you so much. I really appreciate the opportunity to talk about this more.
I was in Colombia early in February with the World Council of Churches and we had a number of conversations. But one of the things that I’d like for you to reflect a little bit more on is, with the upcoming election in Colombia and the fragility, the present fragility of the peace process, what impact do you think the upcoming election may have on the relationship with those migrating into Venezuela?
O'NEIL: Yeah, thank you. I’m worried, maybe not at the national level in Colombia, but I am worried at some of the local levels in the communities and states and regions where you’re seeing an overlapping set of—you know, flow of Venezuelans coming in, desperate people, because many of these places are fairly desperate without the Venezuelans coming in and some real challenges in terms of poverty and job opportunity and the like and long histories of violence and lawlessness.
And so I am worried that, one, it will just influence what’s going on on the ground. And as you mentioned, the peace process, some of these places overlap. And so you have, you know, some 6(,000), 7,000 FARC members who are working to reintegrate into society after being outside for so long. You have other groups, the ELN and others, that have yet to make an agreement, that are watching closely how the peace integration process goes to see if it’s a good deal or not and would they want to come to the table and go through that themselves or is it—or is it just a big lie, right?
So I do think when you add in the pressure of thousands and thousands of other people that need basic resources as well and a government that, you know—the Colombian economy is stable, but it’s not—it’s not a powerhouse. So how do you absorb such a large number?
And I do—you have seen—and I’m sure if you went there perhaps you saw or people talked about this—you know, there’s unfortunate flareups in some of these places of xenophobia and hostility towards those that are coming and undermining, you know, many would say labor markets, you know, people who are willing to do things much more cheaply or the like, and understandably.
You also have in these areas the other sort of potential is you have the remnants of organized crime and others that are there. And you have this incredibly vulnerable population that’s coming up, so vulnerable either to be recruited by organized crime or to be trafficked by organized crime. And the anecdotal numbers that I’ve seen so far—I haven’t seen anything systematic—is that, like other refugee crises—about half of those that are leaving Venezuela are children, are minors. So I think this is another huge challenge is that you have very vulnerable populations overall and then vulnerable children and others within these populations into areas that have not been known for their stability and strength of rule of law and the like. And so I think it’s a—it’s a combustible mix.
And, you know, I hope that the, you know, the better side of the Colombians come out in this election and that it is about—it’s a very complicated election. There’s lots of candidates running. There are people on the far right who reject the peace process who are in the mix and coming together behind a candidate. There are people from the FARC, former FARC members that are running as well, so you have a very far left. You have some in the center.
Colombia is a system that has a runoff. So you have many candidates the first round, the two leaders get into the second round and then there’s a runoff between those two, so I think it’s a real question of who makes it to that runoff. You get people in the center, you get people from the extremes or what have you.
But I do think the refugee crisis that’s happening will play into these elections, maybe not at the national level, but definitely at the local level you’re already starting to see some candidates, particularly on the border, beginning to talk about it because it is what’s affecting their voters’ day-to-day lives. So I think that is sort of an added element and challenge.
And in terms of back to one of the earlier questions about overall the region and who might lead in the region on this issue, one of the challenges in finding a leader is so many of Latin America’s nations are in electoral season and they are in electoral season when there are no incumbents, so this is a wide-open race. So actually this year, 2018, two out of every three Latin Americans are going to go to the polls and vote for a new president, and in part it’s because the big countries or the more populous countries all are having elections. Mexico has elections, Colombia has elections, Brazil has elections. Chile just had elections. Costa Rica is in the middle of their elections, and a couple of other countries.
So as in our country, other countries as well, when you’re in the electoral season, you know often you’re focused on your own—your own issues, your own debates, the things that are happening in your country, and so you’re much less likely to take on a big, difficult foreign policy issue like this one.
FASKIANOS: Shannon, can you talk a little bit about the opposition moment in Venezuela? Do they have a—have they articulated a plan? And Javier Bertucci has been out there talking a lot. Can you talk about his effect on the political and social landscape?
O’NEIL: Sure. You know, this is the—this is the challenge for Venezuela. And a lot of people give the opposition in Venezuela a very hard time and there are a lot of personalities and divisions and fragmentation that perhaps—that do make it much more difficult to oppose the regime. But these are also people who have been working and living and being activists in a country that at least for a decade has been incredibly difficult to operate in, that where their basic rights have been at times taken away, where some of them have ended up in prison for, you know, political persecution, and they live in fear day to day of bad things happening to them and their families.
So I, you know, I tend, as we talk about the fragmentation and the opposition—and I wish, you know, everybody wishes they could get together and find one candidate and put their own ambitions and things to the side, I think we have to remember the difficulty of living—you and your families and those you care about—in a place with so much uncertainty, so much violence, so much sort of hatred and repression frankly by the government.
And also, once—and they have tried—the opposition, too, time after time have tried to use every single constitutional mechanism available to them, so the democrats have available to them, to try to get the government to change. And each time the government undercut them, either changed the rules along the way or just boldly said no, that’s not going to happen.
So I have a lot of empathy for that fight day in and day out, trying to make things happen, and what that must do in terms of your—of uniting and abilities to sort of come up with a coherent strategy to bring all disparate groups together.
The opposition—so as the government has tightened control and really cut out all these different aspects, they still need or want some sort of legitimacy and particularly electoral legitimacy. That has remained a bit of a refrain. And so they are planning on holding elections. They actually just this morning moved them. They were supposed to hold them in April, it looks like now they’re going to hold them in May. And in part, I think because they had been in negotiations with the opposition in the Dominican Republic for some basic changes, the government would not give anything, so the opposition refused to sign the document and announced in this last week that they would boycott the elections. And the government I think felt that was—they need an opposition to run, to legitimize their rule.
Now, if the opposition runs, they are sure to pull out every trick in the book to increase their chances that they win, so the playing field will not be level. They’ve already disqualified all of the or almost all of the popular leaders from the opposition so they wouldn’t be able to run. The people who are well-known are disqualified in various ways—many of them making no sense—from running.
But I think that, you know, if the opposition was able to come together to—except for one person in one group—to boycott these elections that were being held, these presidential elections. So I think they are muddling through and working to form some sort of unity under just incredibly difficult circumstances.
And then the last thing I would just say there is, one of the challenges in Venezuela is you have an opposition, you look at the polls and, you know, 70, 75, depending on the poll, percent of the population or more, you know, want this government out, they want something else, but they don’t have the guns. And there is this element. And as you take away the ballot box and you take away the referendums and these other avenues the opposition tried to use, there’s really nothing left there besides acquiescing or some sort of civil war, I guess, or some sort of—you know, or the third choice is exiting. Right?
I don’t know if any of you read the old Albert Hirschman Exit, Voice, and Loyalty. These are your choices: You can—you can raise your voice, which I think the opposition has tried to do; you can be loyal and gain that way or at least acquiesce; or you can leave and that’s where we come back to this issue of the refugees. And you have 4 million people and more every day choosing to exit the country.
FASKIANOS: Shannon, in your contingency planning memorandum that we sent out, you write that Pope Francis supported a 2016 initiative by regional leaders to end the crisis. What were its terms and why did the Vatican endorse it and where is it now?
O’NEIL: So that, unfortunately, that whole effort failed. And the idea there was, at the time, the opposition was pushing very hard for a referendum, which was allowed under the constitution, but which ended up being scuttled by the government in illegal ways. But the idea was, could we come—could we—could Venezuela come to some sort of coalitional government or allowing these other views that are opposition views into the overall governing structure? And I think the hope of the pope and the others who worked with him, several former presidents of various countries—Spain and Dominican Republic and elsewhere—were there to negotiate some way that we could find a way out of the crisis that Venezuela is in today. And even then, there were humanitarian challenges, but not the catastrophe we see now, you know, almost two years later.
But that has failed, and I would say in large part because the Maduro government the Venezuelan regime has been unwilling to compromise. They used that to stall for time. They used it to sort of run out the clock on being able to hold a referendum or remove him from power because there was a timing issue there. If you held it before a certain date, it would remove him from power; if you held it after a certain date, it would just make his vice president the new president, but it wouldn’t change the overall structure of the government until new elections were called.
So overall, I think that was done in very good faith by the Catholic Church, by the pope and others to sponsor that. But in the end, it failed, I would say, because of the intransigence and lack of interest in change for this ruling cabal.
FASKIANOS: Wonderful. And my final question is, you know, we have many on the call, many members of the faith community, including ordained clergy. You talked about the role, you know, the role of Congress and don’t underestimate the pressure that they can exert. What else can religious groups be doing to help alleviate the humanitarian crisis in Venezuela?
O’NEIL: So, you know, even from the—from the comments and Carol and Susan and others who have been in Venezuela or been in Colombia and other places, I do think the religious community, all religious communities, and there are many throughout Latin America, this is an issue that they actually have been very involved in. They’ve been involved in Central America, at times more natural disasters and the like. They’ve been involved in Colombia through many years of difficulties. And so many of your sister or brother organizations or those that you might be affiliated with are the ones that actually have people on the ground that know the region and could the most quickly get aid and support to these people who are fleeing, and have networks where it just doesn’t have to be right along the border, it can be people who come to the border and then they end up relocating in Chile or Ecuador or Argentina or other countries throughout the region searching for economic opportunities, for jobs.
So I think there will be a huge role for religious communities as well as others in civil society to help these people, to take a dozen here or a dozen there, to move them between countries, to help them set up, re-set up a life in other places, always with the hope that they could go back home. But unfortunately, I hope I am wrong, but unfortunately, I don’t see some of the reasons for this tragedy in Venezuela ending any time soon.
But I—but in that, yes, I hope the U.S. government and other governments stand up and take a stand, but also invest in these people who are leaving. But I think the most rapid responders and the most effective often are those that are run by religious communities. So I think there, there is a huge role to step up and help these individuals who are leaving.
FASKIANOS: Wonderful. Thank you, Shannon O’Neil, for being with us today. We really appreciate your valuable insights and all the work that you’ve done over the years.
Those of you who have not yet read Shannon’s CPM—shorthand for contingency planning memo—I hope that you will. And we appreciate all your comments and questions today, so thank you very much.
O’NEIL: Thank you for joining me everyone.
FASKIANOS: You can follow Shannon O’Neil on Twitter at @ShannonKONeil. We also encourage you to follow CFR’s Religion and Foreign Policy Program at @CFR_Religion for announcements about upcoming events and information about the latest CFR resources.
And our next religion conference call will be on Tuesday, March 6, at noon Eastern time with Daisy Khan, founder and executive director of the Women’s Islamic Initiative for Spirituality and Equality. And we will be commemorating International Women’s Day by talking about women in faith-based activism. The invitation will go out after we get off this call, so please look for it and we hope you can join us.
So thank you all again.