Meeting

Stabilizing Venezuela: What Now?

Friday, November 8, 2019
Carlos Barria/Reuters
Speakers
Cynthia J. Arnson

Director, Latin American Program, Woodrow Wilson International Center for Scholars

William Brownfield

Former U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs; Former U.S. Ambassador to Venezuela (2004–2007)

Patrick Dennis Duddy

Director, Center for Latin American and Caribbean Studies, Duke University; Former U.S. Ambassador to Venezuela (2007–2008; 2009–2010)

Francisco Rodriguez

Economist and Director, Oil for Venezuela Foundation

Presider
Stephen C. Donehoo

Managing Partner, McLarty Associates

DONEHOO: Well, good afternoon and thank you for being here today. I’d like to start by just saying I’m Stephen Donehoo from McLarty Associates. And I’ll be presiding over today’s meeting. I think you’ve already gotten the announcements on the rules and the fact that this is on the record.

I’d like to introduce our panel. You’ve got their full, or at least partial, bios in your packets. But Cindy Arnson from the Wilson Center; Ambassador Brownfield, who has been ambassador in more countries than I can count, including—

BROWNFIELD: He can’t count very high, then. (Laughter.)

DONEHOO: Including Venezuela and Colombia. Ambassador Duddy, who also been ambassador in Venezuela and has had a long career in diplomacy.

BROWNFIELD: And almost become the first diplomat in U.S. history to be expelled from the same country twice—but didn’t quite make it. (Laughter.)

DUDDY: I tried.

DONEHOO: Well, he tried hard.

DUDDY: I tried.

DONEHOO: And then Francisco Rodriguez, who had a long career in economics. I’d like to just start by asking a general question and ask each of you, in the same order that I presented you, sort of your view of things. You know, Venezuela, the situation has deteriorated dramatically over the last five years and even longer. Where do you see the situation today? When might there be a transition? And what should we be doing to help Venezuela return to stability and growth? Cindy? And try to keep it in less than—in five minutes or less.

ARNSON: Really, in five minutes or less? OK.

I think Venezuela, which looked very hopeful at the beginning of the year with the emergence of Juan Guaidó, the spectacular levels of international acceptance, and endorsement that—and recognition that he’s received. A year—almost a year later, and looking into mid-2020, I find the situation extremely grim, both in political, and economic, and social, and humanitarian terms. The economy continues on its path of catastrophic collapse. The repression has not abated and, in fact, is now a lot more selective. And people are just exhausted. They’re not willing to go into the streets for mass demonstrations. We’ll see what happens on November 16th, when the opposition has again called for some elections.

International negotiations brokered by the Norwegian government broke down for a lot of reasons. We can get into that maybe in the—in the Q&A. I think that in these kinds of situations the opposition tends to fight with itself, so there are more divisions over the strategy going forward to get rid of Maduro. Another marker in 2019 that I think marked an important turning point was the call by Juan Guaidó at the end of April for an uprising against the government, and it didn’t materialize. And I think that served to underscore the extent to which the military remains behind him.

At the same time, because of the scarcity of food and medicine, the widespread deprivation and hunger, refugees continue to flood into Latin America. The most recent figure from the UNHCR is that there are now, as of November, about 4.6 million Venezuelans who have left the country, the vast majority since 2015. About 3.8 million of those are in Latin America and the Caribbean. And over and over again—I was in Colombia last week—over and over again you hear that people understand what’s going on in Venezuela, and the need in Venezuela, but we have problems too. And I think the level of—the capacity or, rather, the incapacity of regional governments to deal with the kind of flow, and also with the kind of needs, it’s just—it’s just overwhelming, the amount of international assistance to help countries in the region is nowhere where it needs to be. The U.N. has collected about 52 percent of the figures that it said it needed on a regional basis just this year. And they’re going to be asking probably for double that next year.

And I’ll just finish this opening comment by saying that there’s every expectation that Maduro will call for National Assembly elections in mid-2020. That would be taking place according to schedule. The last assembly that is dominated by the opposition won the election in 2015. And should that take place, it will probably divide the opposition over whether or not to participate in deeply unfair and unequal terms. But will result in the election of a new assembly that will replace the one from which Juan Guaidó emerged. And so it will no longer be the case that the opposition continues to control, you know, one of the main institutions of government in Venezuela. And Juan Guaidó therefore will not have a constitutional basis for being interim president. So I see the situation as extremely grim across every indicator that one can possibly think of.

DONEHOO: Ambassador Brownfield.

BROWNFIELD: Dr. D, twenty years ago I because a deputy assistant secretary of state for the Western Hemisphere. And my portfolio was known in those days as a death portfolio, because it guaranteed an annoyance for the United States Senate every single day that I was working. It included South America, the Caribbean, and Cuba. And on Cuba, at least four days a week someone would come to my office and say: What do you think about Fidel Castro? Do you think he’s about to go? Is he teetering? Is—you see that little mole on his face? Could that be the end? And I gave my response the same way during my two years in the job. Someday Fidel Castro will die. It probably will not be today.

And to a certain extent, that is the same wrong—I was wrong one day finally—that will be the same rule that I would propose to apply to Venezuela. Ladies and gentlemen, we’ve read this book before. We know how it ends. We know the Maduro-led Chavista system in Venezuela is not sustainable. Not because God came to me in a vision and told me that, but because for economic, social, political, public health, security, international reasons the system cannot sustain itself over the long term. When will it end? Someday it will end. I hazard a guess that that day will not be today. But as we ponder how to deal with this, let me offer you a strategic vision that is somewhat hardline. And you’ll sense it is certainly by the lady to my right and maybe the gentleman to my right beginning to wince, and scowl, and narrow their eyes as I speak.

Let us remember, strategically there are three fundamental objectives at play. First, the departure of Nicolas Maduro and his inner circle from office. The strategic is not elections, or dialogue, or a forum with multiple parties. All of those are tactical issues that should, I hope, help get us, should we go down that route, to objective number one: Maduro must go. Maduro, as the great Cicero once said: Maduro delenda est. He used to say that about Carthage, but it applies as well under these circumstances. Objective number two is: Have something ready to go once Maduro and his team departs. Call it D-Day plus one, call it the transition to a sustainable Venezuela. There must be something out there so that once you reach strategic objective number one—(laughs)—you do not then have an absolutely hopeless cause in terms of picking up an unfixable mess.

And then, third strategic objective, linking the two to some extent, is the humanitarian crisis that is Venezuela today. In other words, it is strategic. It’s not a matter of tactics, although how we manage the issue can be a matter of tactics. Do we weaponize or not weaponize humanitarian assistance? Do you give it in some places but not other places? Who do you select as your implementers in country—if you can find implementers in country? All of these are tactical decisions to make which, I hope, would contribute to objective one and objective two, the removal and departure of Mr. Maduro and having some sort of preparatory work for a follow-on government or system in Venezuela. That is my opening expostulation, Dr. Donehoo.

DONEHOO: Thank you so much. (Laughter.) Ambassador Duddy. You don’t have to use any antics, just an explanation will be fine. (Laughter.)

DUDDY: Well, that’s a relief.

ARNSON: (Laughs.) You don’t have to quote Cicero.

DUDDY: Let me just touch on a couple of things that from, if you will, a fairly basic point of view. What is it that we know? We know that Maduro is still there. We know that sanctions haven’t worked, right? That’s what we know. We know that he continues to enjoy the support of the military and, notwithstanding the effective collapse of the economy, has had sources of income that are keeping him afloat. What else do we know? We know that there have been a series of efforts at dialogue, and those have not yielded any concrete results to speak of. Why not? Largely because the regime is prepared to talk about a good many things, but not regime change. They intend to stay there. And that talking to this point, at least, has been largely a matter of creating a diversion from the reality that the Maduro regime has done everything they can to consolidate power.

They have a number of allies—China, Russia, Cuba, notably. My own sense is that China, while important to them, is inclined to carefully calibrate Chinese interests. Their association with them is less ideological than commercial. I think it’s important to understand that the Russians are involved for a range of reasons—some economic, but some also geostrategic. They are interested in poking their fingers in our eyes, perhaps as a way to remind us that we have been active in the Black Sea, much to their annoyance.

What else do we know? We know that effectively Venezuela is now a failed state. It’s a failed state with an abusive, authoritarian government. And I think that from that we can safely infer a couple of things. The problems inside of Venezuela are not going to be contained by Venezuela’s frontier, right? The problems inside the country are already spilling over in the most evident—the most persuasive evidence of that is obviously this gargantuan diaspora. How gargantuan? It’s already the second largest in the world, after Syria, and may eclipse Syria in the next year or two if things don’t change.

Because of the nature of the government, what’s the other thing we can—we can, I think, safely conclude? It’s that the suffering of the masses will not convince Mr. Maduro to leave, from which I conclude that we need to think beyond sanctions or approach sanctions at least differently. We need to get as many partners involved as possible. I think we need to engage international organizations in a new and a more vigorous way. But I think at the same time—at the same time, we need to avoid the temptation of trying to find some sort of modus vivendi. The continuation in power of Maduro indefinitely, or his associates, will be bad for Venezuela, bad for the region, and bad for the United States.

DONEHOO: Dr. Rodriguez.

RODRIGUEZ: Venezuela’s undergoing the deepest economic contraction in Latin American history—at least recorded Latin American history, or the period that we have data for. If you actually go to the work that Venezuelan economic historians, like Asdrúbal Baptista have done with regards to the nineteenth century, the contraction that we’re seeing now is deeper than that suffered during the country’s federal war, that was its civil war in the nineteenth century. This is—if you look at data, for example, just from the twenty-first century, it is the second-deepest contraction initiated in the twentieth century in the world. Number one is Yemen. You do not see this type of economic contractions outside of wartime. To a certain extent, Venezuela presents the problems of a wartime economy, despite the fact that this is occurring in the midst of—in the midst of peacetime, or that here is no explicit armed conflict.

Now, it is clear to anybody who has looked at this data and analyzed this phenomenon that this crisis was set off by the incompetence and corruption of the Chavez and Maduro regimes. Nevertheless, that does not mean that you can deny that economic sanctions have aggravated this crisis. Even by the most conservative estimates, Venezuela has lost four hundred thousand barrels of oil production from the closure off of the economic market through economic sanctions imposed in January of this year. That is $8 billion of foregone oil revenue. Venezuela’s non-oil imports this year will be approximately $1 billion. So we’re talking about an amount of money that could make a huge difference to the lives of Venezuelans.

Now, it’s clear to me that the sanctions strategy was designed with the idea of promoting short-term regime change. And I think that the time has come to understand that that is not happening. Therefore, these policies need to be redesigned. Is this a plea for lifting sanctions? No, it isn’t, among other things because I do think that these sanctions do something very important. They take away the management of key resources from the Maduro regime. But also, I just think it would make no sense to have that discussion. That would be a non-starter. What I do think makes sense is for us to think through ways in which the sanctions regime can be redesigned.

Now, the international community faced this same exact question in the 1990s when it looked at the case of Iraq. And in effect, it came up with the Oil-for-Food Program. And you might say, wow, the Oil-for-Food Program was a very bad idea. Look at the corruption. And the guy ends up a fugitive from justice in Cyprus, and all of that. Yes, that’s true. But let’s also look at the evidence with respect to that program, for example, as we can find in the results of the Volcker Commission report, the commission that was appointed by the U.N. Security Council to analyze what had gone wrong, and also what the program had gotten right. Yes, there was a loss of a massive amount of resources—$1.7 billion—which were siphoned off into other accounts to the Hussein regime. It’s also the case that this is less than 3 percent of the resources that were managed by the system. It is also the case that if you look at the evidence on living standards, on consumption, on caloric intake, on health indicators, all of them improved remarkably after the Oil-for-Food Program.

So I think that what we’re looking at here is a case of a program and an approach to this type of problems that has positive effects, but that also has problems. And let me put a parallel. There’s been a massive corruption scandal with Odebrecht in Latin America over the past few years. We do not use that to conclude that there should be no infrastructure in Latin America, that we should not build roads, that we should not build bridges. Well, the argument in favor of mechanisms that mitigate Venezuela’s humanitarian crisis for the Venezuelans who are living in Venezuela is much, much stronger than the argument for building a road or a bridge anywhere in the region. We are talking about a country that could very well be in the verge or, or even beginning to experience right now, a famine.

The work that I have been doing, and you can look at it in the website of our organization, oilforvenezuela.org, is precisely oriented at trying to understand how we could have a humanitarian oil agreement. And what I’m talking about here is about the fundamental idea that you are going to need—if you want to address the problems of Venezuelans today you have two solutions. You can either tell Venezuelans: You have to wait until Maduro leaves—and let me tell you that that message goes a lot better in Washington or in Miami than it does in Caracas or in Tucupita, because the Venezuelans who are suffering through this situation believe, demand, and have the right to demand answers that are not conditional on the solution to a political crisis that we do not know and cannot tell them when it will end. Venezuelans need solutions for the here and now.

The design that we’ve been working on is a proposal to start a debate. I would love it if specialists would look at it. It’s on our website. If they could find things that are wrong with it, because what we need to do is refocus the discussion on how we can help Venezuelans in the here and now, and how we can protect vulnerable Venezuelans from the collateral effect of the political crisis.

DONEHOO: Thank you.

Dr. Arnson, you’ve been monitoring human rights issues in the region for a while. How should a future interim Venezuelan government deal with the abuses of the Bolivarian regime, especially in light of the Bachelet report and the abuses that continue to occur in Venezuela?

ARNSON: Well, a very important question, given the scale of human rights abuses, the number of people imprisoned for what should been seen as legitimate political activity, the use of torture, the death of people in torture, the use of selective repression as well as massive arrests. And the main human rights organization that works with political prisons, Foro Penal, has documented the—sort of the cycles of this repression, beginning in 2014 when there were mass protests. And it’s very clear that this is part of a strategy by the government to discourage people from going into the streets and basically demobilize civil society.

Dealing with human rights abuses as part of a transition are probably the most difficult both moral and political issue of any kind of transition—whether it’s a transition from war to peace, as there was in Colombia, or a transition from authoritarianism to democracy, as in Chile, or Argentina, or Uruguay. A lot of what is desirable in a moral or an ethical sense is simply not possible given a particular constellation of power. For example, in Chile General Pinochet remained a senator for life and head of the armed forces during the period of the Democratic transition. And it was only decades later that through international mechanisms he began the process of being brought to justice.

So I think we have to think in our heads very coldly about what is desirable from an ethical and moral sense and what might be possible politically. And a lot of it will depend on how it is that the transition in Venezuela takes place, what the role is, say, of junior officers within the military in removing senior officials. And I think there’s also another important distinction between—and they’re related, but let’s try to at least keep some kind of clarity on this—a difference between those who have been responsible for an deeply involved in massive corruption, given the military’s control of virtually every key sector of the economy, whether it’s agriculture, or mining, or oil, transport, ports, whatever. The amount of corruption and the wealth that has been stolen from the Venezuelan people as a result of that, and the people who have actually designed and implemented the strategy of abuse against civilians. And those—that smaller category of people should be really the focus.

And there are a lots of models in the world. Lots of countries that have gone through transitions. South Africa had its model. Others have truth commissions and transitional justice courts. What it will look like in Venezuela I think will really be a product of the residual power of the armed forces during a process of transition.

DONEHOO: But given that, do you think there’s a case to be made for crimes against humanity for people like Maduro and his corps? And should responsibility for significant violations be a bargaining chip that we could use to get them to a transition?

ARMSON: Wow. I’m not sure—I’m not sure how easily one can claim that Maduro himself is responsible for crimes against humanity. I would put it more in terms of the director of intelligence services or of prisons that have overseen the torture and the death of civilians or have ordered troops in the street to open fire with live ammunition on unarmed demonstrators. There are a number of cases that have been brought before the international criminal court. I’m not sure that I see that as a useful bargaining chip, because if it’s—you know, the principle of accountability would suggest that you don’t bargain that away. And you can never guarantee that a case will not be brought, you know, before international judges. You cannot make them party to this kind of—this kind of transition. But you can definitely impact the way Venezuelan institutions would deal with the criminality of the regime in a post-transition era.

DONEHOO: Ambassador Brownfield, you were ambassador in both Venezuela and Colombia, where you saw firsthand the close relationship between the Bolivarians and the ELN and FARC, which are designated terrorist organizations. What recommendations would you have for the Venezuelan transitional government and for neighbors and friends of Colombia for dealing with these criminal and terrorist organizations?

BROWNFIELD: Well, the core and key country in this regard is Colombia, obviously, since that is the target of the entire ELN leadership and the reconstituted units of the—of the FARC. The Colombian government, in turn, is in an uncomfortable situation in that they do not want to be seen as responsible for military kind of provocation or challenge at the border, and yet the problem—or, at least the heart of the problem—lies ten or a hundred or several hundred kilometers inside Venezuelan territory, from which these organizations then mount operations into and directed against the government of Colombia and its constituent parts. It’s tricky.

I, for one—basically because I’m comfortable, I’m retired now, throwing out ideas that cause some people a degree of concern—have been heard to say even publicly a number of times: You know, what surprises me right now is not that people are talking about some sort of military component to a solution here, but rather that such a component has not already started when one calculates the, my number is now, about five million Venezuelans who have fled their country and now have refugee status, the overwhelming majority of whom are in South America, and probably an absolute majority of whom are in particularly the two immediately neighboring countries of Venezuela, Colombia and Brazil.

And of that number of five million, drop it down now to 2 ½ million, perhaps 10 percent have some sort of military or security force experience in Venezuela before they fled as refugees. Are there not several thousand who have scores to settle? Are there not several thousand who come from border cities and towns? What surprises me, quite frankly, is that this hasn’t already happened, and people are not already sliding back into Venezuela, if nothing else, to settle old scores and old accounts.

And finally, since I’ve launched the missile, let me suggest that it has a variety of different warheads. And the military option does not necessarily mean in 2019 what it would have meant, say, in 1919. It’s not ten thousand Marines landing at the beach in Maiquetía and starting to march up to Miraflores Palace in Caracas. A military option could, for example, be a determination to establish a humanitarian DMZ in a zone, say, two kilometers by two kilometers at one or more border checkpoints. Cúcuta, San Antonio del Táchira? I don’t know. Somewhere further up north in northwestern Zulia state? Maybe. Or even someplace like the Puerto Maiquetía.

Now, that’s a military option because you basically are saying an international force will guarantee that Venezuelan armed and security forces that respond to the leadership and orders of Nicolas Maduro will not enter this zone. And inside this zone, IDPs will be left alone. International humanitarian organizations can move their product and their supplies so that medicine, health care, food, some form of shelter can be provided. That’s a military option. And I do wish to suggest, as we’re talking about military organizations, the FARC, the ELN, if I’m allowed to range a little bit wider than that the Iranian Revolutionary Guard Corps or Hezbollah elements in Venezuela, these are military forces of some nature. And the truth is, to certain extent the military option is already in play.

DONEHOO: Ambassador Duddy, when you were ambassador in Venezuela, you saw the challenges of dealing with a divided opposition. Right now they’re more or less united. What are the chances and what should we be doing to try to keep it that way once there is a transition and we have a call for elections nine months or a year out?

DUDDY: Well, in point—in point of fact, the divisions within the opposition, it seemed to me when I was there, were significant, if only because the opposition was made up in large part by parties which had been competing with one another for decades. The remarkable thing about the emergence of Juan Guaidó is that his position has been so widely recognized by both the international community and the traditional political parties, as well as several of the newer parties that have emerged since 1998, when Chavez was elected. I think that insofar as he represents what is now widely recognized as legitimate authority, then making sure that he enjoys some of the resources that might otherwise have gone to the government that are abroad and that we can—we and others can effect will be very, very important.

I wanted to come back to one part of the question you asked Cynthia, though, as well. And this has to do with the military. You know, when called for an uprising on the 30th, that call fell flat. That effort ran aground. And I think it’s important to understand why. Over the years, first Chavez and subsequently Maduro, brought military people into many of the functions of government, including critical economic functions, making them complicit both in the failures of the regime, but also in its corruption. And I think going forward, one of the dilemmas that we, and any—certainly in trying to establish, you know, a humanitarian DMZ or safe spaces for the delivery of humanitarian assistance, we need to understand that in addition to profoundly corrupt elements of the military, and I don’t think it’s everyone. But elements of the military.

You have these other players, including the Cubans, for whom the survival of the Maduro regime may well be viewed as an existential matter, right? They are still getting a very significant amount of effectively free oil from Venezuela, to this day. And so as we contemplate alternatives in the near term—and I think we need to understand that just sanctions are not going to change the situation on the ground—we also need to understand that there are going to be those inside of Venezuela who will be very, very determined to resist change and to defend the regime.

DONEHOO: One of the things that—one of the lessons that we think we’ve learned from Iraq is to avoid the de-Baathification of the armed forces. How do you manage that in the context of what you just said, when you do have profoundly corrupt, in many cases with criminal organizations, drug running organizations, that compose large parts at least of the leadership of the Venezuelan military?

DUDDY: That is both a legitimate question and an important matter to be decided. Something I’ve argued in the past is that even as we proceed with the application of certain categories of sanctions, and mount efforts to provide humanitarian relief, I think we at least have to contemplate the construction of a kind of off-ramp for certain elements of the regime. This will not be satisfactory for many people, because it means virtually by definition that some people are going to get away with some of their crimes. You know, what that will look like and who would be included is another matter. But what we do know is that so long as the regime continues to have the support of the military and key people within the regime think that if they lose power they go to jail, they’re going to be pretty determined to hang onto the reins of government.

DONEHOO: Francisco, you’ve been doing economic and development work most of your adult life. And you’ve seen, as you’ve described, the tremendous downfall of the Venezuelan economy—mismanagement and all. What are the top three things the interim government should do to convince international financial institutions to open up their vaults to significant funding? Similarly, how do you advise multinational corporations about what the elements are that they need to be seeing before they make significant investment in rebuilding their previous assets and positions in Venezuela?

RODRIGUEZ: Well, it’s a complex question because the question, I think, cannot be made independent of a model of transition. Transition can occur in many different ways. We can have a very messy transition. We can have a negotiated transition. We can have a regime collapse. I mean, maybe one day Maduro and Maikel Moreno, and Cilia, and Yosado (ph), and everybody with him gets in one plane—or, they’ll need more than one plane—two, or three, or four, or ten—and they leave. And then you do have the space for rebuilding Venezuela with less constraints.

But it is also perfectly plausible that with all the international pressure that we have the government is backed into accepting a presidential election that Maduro loses, but within the framework of an agreement where you will have to deal with the existing supreme court until the twelve-year terms of those justices run out. That is a different model. I mean, you can frame all the economic policy that you want, but you’re going to have to deal with constitutional issues as interpreted by the current Venezuelan constitutional chamber of the supreme court.

Just to give one example of the type of difficulties. Venezuela’s collapse has been engineered by people not for good reasons, for very bad reasons. For corruption and for mismanagement. But it is essentially a problem of incompetence. It’s a problem of corruption. And it’s a problem of a political conflict that has spilled over into the economic arena. The good news about that is that means that it can be solved. Venezuela is sitting on three hundred billion barrels of oil reserves. Fortunately, Chavismo was not able to steal those three hundred billion barrels. They managed to steal everything that they got out from under the ground, but still the stuff, I think, is there.

So what that means is that you have a huge potential for recovery here, because what you need to do—the first point where I would start, is you need to run this oil industry well. Now, there’s been a lot of talk about resources and these numbers keep getting bigger and bigger. So we started at 30 billion, then 60 billion, then 80 billion, I’ve heard 200 billion (dollars). And I think that it’s wrong conceptually to be thinking about money Venezuela needs because a lot of what should happen in Venezuela, if Venezuela is well-run, should be done by markets. If the oil industry needs $200 billion, that is either as a result of the fact that it is profitable to extract that oil from under the ground, and therefore markets and private investors will provide it. Or, it is not profitable in which case the oil would be better left in the ground, if that were the case. Now, I think a very strong case can be made that it is profitable.

So what we need to do is not necessarily—and I agree that the country is going to have very significant financing needs. I’m definitely not denying it. But I don’t think that that should be the focus of attention. The focus of attention is how do we reform property rights as to give the adequate guarantees to investors that will give them the confidence to invest in Venezuela, to invest in its oil sector, to invest in its retail sector, to invest in its mining, to allow this economy to unlock the potential productive capacity of Venezuelans. Venezuelans are tremendously entrepreneurial people. We see it right now in the experience of migrant communities all around the world. What Venezuelans need is a government that protects their right to maintain what they earn with their effort. This is exactly the opposite of what Chavismo has done. And that was the way in which Chavismo destroyed the Venezuelan economy.

The Venezuelan economy can be rebuilt if we understand that the starting point for the rebuilding of Venezuela is to create a transparent and inclusive market economy. If you do that, then the rest will be easy, including getting financing from international capital markets and the multilaterals. If you don’t do that, if you believe that property rights are not important or not relevant, if you want to have a state that is intervening discretionarily and deciding who it is that is going to get such-and-such contract, because that’s an executive decision, or who it is that is going to get paid such-and-such a debt, if you have nontransparent roles then nobody is going to want to invest in this country, and you can end up having a lot of money from multilaterals end up being wasted. So we have to focus on the basics. Building a transparent and inclusive market economy.

DONEHOO: One of the challenges, though to do that is to recover the brain drain that the country has seen, and not just with the intellectual class, with the professional class, but also the engineer that knows where the keys work to turn the pipes to make the water flow in the right direction at different types of day, or whatever. How do you—how do you entice that part of the diaspora that has gone on and reestablished, as you said, their new entrepreneurial business in Lima, or in Bogota, or—you know, if you go to Bogota now you see that entrepreneurship with the Rappi drivers that are delivering everything all over the place in Mexico City, wherever. How do you convince them to come back until you are past that period of transition that is very, very—going to be very difficult to pull off?

RODRIGUEZ: I think it has several components. I mean, definitely legal security and if you have these entrepreneurs outside and you want them to bring back their entrepreneurial talents inside the country, again, you have to protect their property rights. They have to have a state that does not act arbitrarily and does not decide to favor some and favor others, but that acts according to transparent rules. Now, I also think that there is a case for policies designed to attract returned migrants. You can have—definitely you can have tax exemptions, you can have subsidies, you can have—there are even some very basic things such as, for example, the recognition of studies abroad in terms of being able to carry out a certain type of profession in Venezuela.

Now, I do believe that there’s a lot of careful microlevel thinking that can be done in terms of fostering this return of migration, the return of the brain drain. But I would again emphasize that what these people will need in order to be enticed to return will be a well-functioning and stable democracy, which means a well-functioning market economy, but it also means security. It means personal security. And it means a stable system in which a credible governance arrangement has been reached among the parts that are relevant for it. And what that means is that we really have to think about what is going to make Venezuela stable. And this is going to be very tricky in a transition because in a transition there are going to be many factors.

You’re going to have to deal with the military. You’re going to have to deal with the former Chavistas. There are 300 mayors that were elected in the last elections—in the last municipal elections in 2018. But you also have seventeen governors, most of which—and I’m talking just about the Chavistas—that were elected back in 2017. They are a political reality. And it’s a reality that you have to contend with. And what I think that we have to understand is that if we don’t deal with that reality by creating an inclusive democracy that calls out these Chavistas and finds a way that they can be incorporated into a contemporary Venezuelan society, this is not going to be a stable country. And it’s a country that would very well run the risk, actually, of even returning to Chavismo.

Now, I’m not necessarily going to be the bearer of good news when I tell you that today, to my regret, the most popular politician in Venezuela is not Juan Guaidó. The most popular politician in Venezuela, according to all opinion surveys, is Hugo Chavez. If you do not build a model for transition that takes into account, if you believe that you can deny the reality that millions of Venezuelans felt represented by Chavez—and I’m speaking as a critic of Chavista economic policies and speaking as a person who wrote an article in 2008 in Foreign Affairs called An Empty Revolution. It is nevertheless the case that there is a political reality. And if you do not incorporate them into the building of a new society, you are going to be facing worse problems than what are being faced now by some countries in the region, that now have to tackle with the issue of, wow, the populists are back.

DONEHOO: Thank you.

We’ll open up to the audience now. I’d like to invite the members to ask their questions and remind you that this is on the record. Please wait for the microphone and speak directly into it. Stand, state your name, and your affiliation. And this is for questions, so please keep your questions concise so that we don’t have to go—I don’t have to pull out the hook. Yes, sir.

Q: Hi. I’m Jackson Diehl of the Washington Post.

Cynthia, you talked about the possibility of National Assembly elections next year as a way in which the regime would simply consolidate its control and manage to sideline Guaidó. And so I’d like to ask you and the other members of the panel, do you see no way in which that could be a route for a solution to this crisis? Is there no way in which negotiations could lead to a fair National Assembly election that the opposition would win? Some members of the opposition seem to think that they can make that happen.

ARNSON: I am skeptical that there’s that route, but it’s not impossible. The decision early in the 2000s of the opposition not to participate in elections had disastrous effects. And so I think that there are solid grounds for people in favor of participation to talk to people in the opposition who are not interested in participating under the restrictive conditions that will be established, you know, to actually go ahead. I think it’s not impossible that they could win those elections. I am not sure that I could look into my crystal ball and even say. There’s actually a—sort of after the collapse of the negotiations brokered by Norway there’s an ongoing what they call a mesita, a little table of negotiations with a small number of opposition parties with a former Chavista member of the military, Henri Falcón. They may also, you know, be able to get the government to do certain things.

But without fundamental reform of the electoral council, without international observation, I mean, these elections are still going to be very restrictive. And what happened in 2018 with the presidential election I think is likely to be intensified, which is that the stations for renewing your CLAP card, the card that allows you to obtain the food subsidies, were right next to the polling booths. And it sent, you know, a not-so-subtle message that your subsequent welfare depends on how you vote. And since it’s an electronic voting system there could be even wider skepticism that the vote is secret.

So I’m not saying it’s impossible. If the opposition remained united and put forth credible candidates, it very well could—it could win. I predict it won’t because I think that the lesson that Maduro and others in the regime learned from 2015 is that you can never allow that to happen. The elections were used as a way of legitimizing. I mean, they were held over and over again under both Chavez, referenda, and this, that and the other as a way of kind of affirming loyalty to the Chavista project. And once the opposition started winning, all of a sudden, you know, the rules got much more difficult. So not impossible, but unlikely is the way I would see it.

DONEHOO: Yes, ma’am.

Q: Haleh Esfandiari from the Wilson Center.

My question is about the presence of the Revolutionary Guard in Venezuela, because—the Iranian Revolutionary Guard. And I want to see what is their involvement? Are they involved in the economy? Are they involved in training the military?

DONEHOO: Did you say Iran?

BROWNFIELD: The Iranian Revolutionary Guard.

Q: The Revolutionary Guard, because I believe one of the speaker mentioned Hezbollah, Revolutionary Guard. I’m more interested in the Revolutionary Guard. To see what their role is, and do they have such a big presence? Are they involved in helping smuggle the oil out of Venezuela to be able to sell it on the open market—what they are doing in Iran under the current sanctions?

DONEHOO: Ambassador Brownfield.

BROWNFIELD: Stephen, since I started it by bringing up the issue, why don’t I at least take a crack at an initial response? By the way, the straightforward answer to the question is, we don’t know. And by the way, this includes everyone in this room, we don’t know, because there’s been absolutely zero transparency on this issue in Venezuela since at least I think it’s August of 2004. That’s when I arrived in Caracas as the United States Ambassador. But that’s a useful point for me to note one set of hard data. When I arrived in mid-2004 in Caracas, the Iranian embassy to Venezuela had eight people listed on the diplomatic list as the embassy of Iran. When I departed three years later, there were forty-nine names on that list. What’s that, about a 500 percent increase in the size of the embassy.

Now, presumably they’re doing something. Among the somethings that I think they are doing is obviously serving as intelligence liaison and security liaison between the government of Iran and the Maduro government of Venezuela, and its security and intelligence services. They apparently, I have been informed, have a permanent presence in several locations outside of Caracas. Maracaibo, Venezuela being one of them in the far west. And I have been led to believe that they have a presence somewhere in the Orinoco Basin. I have been informed that just as—there is little know about what the IRGC is doing. There’s even less known about precisely what the Hezbollah component is doing in Venezuela. But pretty clear evidence of connection between those two institutions, to the extent that they are doing anything at all.

Are they providing some sort of security and intelligence support to the Nicolas Maduro regime in Venezuela? I assume so. Are they expanding or exporting whatever model or whatever programs they are trying to support outside of Venezuela? I do not know. It would not be inconceivable. Certainly I would suggest—I no longer work for the United States government—but I would certainly suggest to anyone that does and is focused on this region that we be paying some attention to this. Not as the most important threat to the United States and the entire world, but a threat that is somewhat close to home, built into an infrastructure that has, for 150 years, had fairly fluent—fluid and easy movement between the region and the United States of America. That’s the best answer I can give to you at this point right now.

DUDDY: Stephen, if I can just add, I think there was a moment, particularly as oil began to spike and as President Chavez looked to consolidate his position, in which he courted Iran, and they courted him, under the general rubric of creating a kind of front to—in a sense, to disperse the challenge to the United States, of making it broader and not just sort of restricted to a couple of countries. I think as we attempted through sanctions, you know, to—you know, to affect Iran, there was some speculation, I don’t know that it was ever demonstrated, that they were working together to help Iran avoid the consequences of those sanctions. Is that—is that true? I’m frankly not sure. But as the Venezuelan economy has effectively disintegrated, the utility of that relationship, the economic part of it at least, it seems to me, has probably also receded.

DONEHOO: Gentleman in the back table, and then Dr. Negroponte.

Q: Hi. Christopher Woody from Business Insider.

Regarding the issue of military intervention, the U.S. military hasn’t said much about what it’s been asked to do, but one thing the head of SOUTHCOM has said a couple times is that they’re planning for the day after and what they would be called on to do in that situation. I wanted to ask, in that scenario, when a transition has started and Maduro is gone, what role would you—do you think the U.S. military could play? And what, perhaps as important, do you think the U.S. military should not be asked to do in that situation?

DONEHOO: Who was that question for?

Q: The panel.

BROWNFIELD: You want the hawk to start, Stephen, and then turn it over to anyone else? That’s obviously—it’s very much a future question, but it is a question that someday, and it’s not likely to be today, but someday we and the international community will have to—will have to answer. First, let us—let us remember that there is in fact today an individual and a group of people that that individual has appointed to positions that have the recognition of, I believe the number is fifty-five governments around the world as the legitimate constitutional interim transitional government or president of the Republic—of the Bolivarian Republic of Venezuela, in accordance with the Venezuelan constitution, written and promulgated by Saint Hugo Chavez Frias himself in the years 1999-2000, which stated that should the office of the president become vacant then the president of the National Assembly shall assume that office until such time as new elections can be scheduled.

The National Assembly did declare that the office was vacant. They did elect Mr. Juan Guaidó as the president of the National Assembly. QED, therefore, we have to a certain extent the obligation to recognize that that fundamental decision must be made, or at least endorsed, by that individual himself or whoever might be the interim president at that point in time. Second, I do acknowledge that the likelihood—and depending upon how—as Francisco was saying—how the actual transition comes to pass. If it is a negotiated and consensual transition, then perhaps there is less requirement for some sort of international security or stabilization force in country to literally provide basic law and order for the shortest period of time possible, until such time as perhaps first a reduced international force that looks much more regional and much less global, and then finally Venezuelans themselves can provide that service.

If it is a completely—it’s a complete collapse, complete disorder, a tremendous amount of violence on the streets, then the whatever sort of force would have to be somewhat more muscular and would have presumably a different set—a different mission set and a different set of rules of engagement. SOUTHCOM which, in fact, is a very intelligent organization and is very good at these sorts of things—because unlike virtually all—not virtually. Unlike all of the other specified geographic military commands, this is largely what they have been doing during the, whatever, seventy-five years of their existence. They don’t do big wars like CENTCOM does. They don’t prepare for massive global confrontation like EUCOM does in Europe. They don’t try to manage half of the countries in the world, such as the Pacific Command has to do. What they do in a very limited area is the sort of minimum military engagement possible in order to accomplish whatever the mission may be.

I don’t know how this is going to play out. I do say Admiral Faller would probably be guilty of professional negligence if he were not doing some advanced planning in this regard. And my hope would be that the guidance he has given to his people is: Let’s plan on something that has the minimum military footprint possible to accomplish the mission as the set of scenarios would suggest that the mission will be. That would be my hope, but I am not the commander of the U.S. Southern Command at this time, nor do I expect to be.

DONEHOO: Cindy.

ARNSON: Yeah. I’d like to sort of put it in a slightly different context.

BROWNFIELD: Because you’re not a warmongering hawk.

ARNSON: Right. But I’m to your right—but I’m to your right. (Laughter.)

I don’t doubt that there’s a lot of speculation going on in the military as to a role to play after transition, but I would prefer not to get into sort of, like, all the different theoretical scenarios. I think one principle that would be very important in Latin America is that it not be a U.S. force, that it be a multilateral force. There are ample examples of the kinds of stabilization missions that have been in El Salvador, and Haiti, whatever. These are multilateral troops, regardless of whether or not the United States has a—has a significant role. But the—but to sort of back up, a lot—as we know, just—a lot of the discourse in Washington has focused on this phrase of all options being on the table. And I think it’s a way of trying to sort of say to the military—you know, keep them off balance—I mean, say to the Venezuelan regime, we might intervene.

And the real question is, you know, what sorts of military options are under discussion, and I have every reason to believe that they are under active discussion, in order to bring about a regime transition? I don’t think there’s anybody that’s contemplating an invasion. You know, massive numbers of boots on the ground. There are rumors that there is planning for a naval blockade, for surgical strikes to take out Maduro or other members of the high command. And the reason question that I have about that, as I do about sanctions—and I believe with most of what Francisco said, but not everything. The question is, what is the political strategy that comes the day after you do those military things? Because the logic up until how has been you just squeeze, and squeeze, and squeeze, and press, and press, and press and the whole thing collapses like a house of cards. And if anything, I think the opposite has been true, that it has created greater coherence and a greater sense of common threat.

So I don’t deny that there is planning for military options. I think the most benign is the one that Ambassador Brownfield has mentioned, that would have enormous consequences. You know, would give enormous relief to the countries neighboring Venezuela that are just being overwhelmed, you know, by the number of migrants, to treat people, you know, and give them survival—the possibility for survival within Venezuela. But then my question is, you know, even if that seems simply, how is the ELN, how is the Colombian guerrilla force likely to respond to that? They are all over Venezuela. And most accounts are that they are in control of the gold mining and the gold trade. They are in border regions, involved in every aspect of the criminal economy along the border. Some elements of the un-demobilized FARC are there.

I mean, are people just going to sort of sit back and allow U.S. troops to sort of carve out a safe zone in Venezuela without responding, and without responding within Colombia? You know, in major cities, putting more bombs like the kind that we saw, you know, in January, when the ELN staged this terrorist attack against the police academy, killing, I don’t remember how many people, almost a hundred cadets. So, you know, these cannot be considered in a vacuum. And I just caution against thinking too easily about military solutions.

DONEHOO: Patrick.

DUDDY: Yeah, let me emphasize though, Venezuela has become over the last twenty years an increasingly violent place, right? According to some measures, Caracas has the highest homicide rate of any capital city in the world. And there are multiple elements aligned with the government which are armed and engaged in criminal activity, and prone to violence. Obviously the armed forces continues to support the government. To some degree the national guard is really a separate entity. And then there are groups called collectivos, which are essentially gangs of vigilante-like organizations which support the government politically through intimidation and sometimes violence directed at the opposition, but are also engaged in other criminal activities. And this is in addition to whatever surviving elements of the FARC, the ELN, the Cuban, et al, are deployed or disseminated across the country.

So it is at least reasonable to assume that in—both in the process of transition and following the transition—that there is going to be a problematical level of violence in the country. People are not going to simply surrender their weapons. Collectivos are not going to line up to be prosecuted, right? What will the role of the U.S. military be there or in surrounding countries where there are large concentrations of Venezuelans with differing backgrounds remains to be seen. But like Bill, I hope that they’re thinking carefully about how they’re going to manage all of this because at a minimum, to come back to something to which I alluded a little earlier, this may feel very much like a failed state situation. And there are going to be little fiefdoms and violent groups in different parts of the country. And getting—and restoring the rule of law is going to be a major challenge and may, in fact, be the key necessary precondition to bringing in investment and rebuilding the economy.

DONEHOO: Dr. Negroponte.

Q: Diana Negroponte at the Woodrow Wilson Center.

My question is for Mr. Rodriguez. How should we compare the policies of the Chinese and the Russian governments in their policies towards Venezuela?

DONEHOO: How should we compare them?

RODRIGUEZ: Well, first of all, I think it’s important to put them in their proper dimension. While it is true that there has been a substantial amount of lending from China, primarily, to Venezuela, much less by Russia, some by Rosneft but still much less than that of China’s, the outstanding amount of those loans are actually not all that large. They are, of course, relevant magnitudes. In the case of Chinese debt, it’s around $15 billion. In the case of Russia and Rosneft debt, you would have another $8 billion, at most. But you’re talking about a country that has $170 billion in debt. So most of its debt is actually with bondholders, with banks, and with other creditors.

So the role that is played from an economic standpoint right now by Russia and China is actually limited. And partly it’s limited because there has been—it was a broad-ranging discussion in which they didn’t really feel that there were the conditions for them to go into the country in greater scale. I think that the Chinese would have been willing if Maduro at some moment had decided to open up more broadly the oil sector to them, but they’re—or to give them the—(Sidetur ?), the steelmaker. But those deals that at some moment were very difficult to reach. And right now are essentially impossible to implement.

Now I do think that at the level of foreign policy there is a difference between two approaches. And this was already pointed out. I do believe that there is a strictly economic interest of the Chinese. And I think that that actually means that the Chinese have a lot to gain from transition. The Chinese have a lot to gain from having a more well-managed oil industry. They have a lot to gain from having a country that’s not sanctioned, where they can come in and try to take advantage of the opportunities that there are for the extraction of mineral resources. And we find countries all over the region that are reaching agreements with the Chinese. For example, Lenin Moreno in Ecuador recently signed agreements with the Chinese. So I think that the Chinese are definitely going to part of the picture or feel that they can be part of the picture, and therefore it’s easier to get them into this discussion.

Now in the case of Russia, I do think that there is a foreign policy component, and there is also a component, I would almost say, of antagonization of Rosneft. I mean, there is a very specific issue with Rosneft where Rosneft wants to help Maduro, and they see themselves as very strong allies because, remember, Rosneft is also exposed to partial U.S. sanctions. So there is a complex geopolitical map. But I would, again, say that I don’t think that the problem here is that they have a huge amount of economic influence. What their role is very important in is in allowing Maduro currently to continue to export oil. After the August 5 executive order—which effectively—what it did was that it consolidated into the regulations the threat of secondary sanctions. What you saw immediately at that moment is that the China National Petroleum company said: No. We’re not going to be exposed to U.S. sanctions.

And therefore, we’re going to stop buying Venezuelan oil. And in effect, you see that in August and September Venezuelan storage facilities were filled because they couldn’t find clients. China didn’t want to buy from them. India, there were—there were also issues, although of a different nature. And they couldn’t find tankers to carry their oil. Now, what’s happened in the past couple of months, oil production has increased. Some of those storage backlogs have been cleared, mostly through the help of Rosneft. Rosneft is working together with China in a way that’s actually designed to skirt the threat of U.S. secondary sanctions because CNPC, which is a multinational firm, the China National Petroleum Company, they are concerned about secondary sanctions. So what have they done? They are no longer buying oil from Venezuela. The oil is being bought directly from Chinese refiners, who have less of a risk to run because they have no involvement in the U.S. They are buying it directly from Rosneft.

So there is—there is a sense in which—and I think it’s very important to understand that when this happens, if one has to hazard a prediction as to what’s going to occur in the future—I think—and what I want to emphasize is, the problem is not so much the involvement of the Chinese and Russians, up until 2018. It is the role that they are going to start to play now, because if they are Maduro’s only lifeline to international oil markets, then Maduro is going to rely on them, and they are going to want to have that connection. It’s going to work in a certain sense for both types of actors. I mean, this is even—going back to the question about Iran, I think that the most important way in which Iran is having an influence right now in Venezuela is by showing Venezuela, the Maduro regime, concretely what it needs to do to evade sanctions. Going even to very simple things such as turning off the transponders on the tankers so they can’t be detected.

So I do—what I think that we need to prepare for is that if we map out this scenario in the next one, two, three years, and the political status quo continues, I would expect that Maduro, with the help of the Chinese and Russians, is going to increasingly learn to live with sanctions. So therefore, a continuation of this approach may eventually end up even—(inaudible)—for another reason, because at the end it doesn’t matter that much to Maduro.

DONEHOO: Well, unfortunately that ends our time. I’d ask you please to thank our guests. And thank you for being here as well. (Applause.)

(END)

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