Young Professionals Briefing: Venezuela in Crisis

Monday, October 12, 2020

Fellow for Latin America Studies, Council on Foreign Relations; @pol_ange

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

Assistant Professor, William J. Perry Center for Hemispheric Defense Studies


Executive Director, Americas, U.S. Chamber of Commerce

Young Professionals Briefing Series and Latin America Studies Program

Panelists discuss the situation in Venezuela, including the country’s domestic political, economic, and humanitarian situation, and the possible policy options for the United States.

The CFR Young Professionals Briefing Series provides an opportunity for those early in their careers to engage with CFR. The briefings feature remarks by experts on critical global issues and lessons learned in their careers. These events are intended for individuals who have completed their undergraduate studies and have not yet reached the age of thirty to be eligible for CFR term membership. Please note only U.S. citizens are eligible for CFR membership.

BODURTHA: Good evening. Welcome to the Council on Foreign Relations. Thank you all for joining us as we kick off the third season of the Council on Foreign Relations Young Professionals Briefing series. My name is Nancy Bodurtha, and I'm the vice president for meetings and membership here at the Council. It's a pleasure to have all of you with us. Before I turn the proceedings over to the panel that we've convened to discuss the ongoing crisis in Venezuela, and to consider the range of possible policy responses, I want to offer a quick bit of background about the Council—who we are and what we do.

Next year the Council will celebrate its 100th anniversary. The Council was founded in 1921 in the aftermath of World War I in the hopes that it would be an organization that could help counter isolationism. The Council was founded as an independent nonpartisan membership organization, think tank, and publisher. A century later, the Council remains all of these things and is dedicated to being a resource not just for our members, but also for government officials, business executives, journalists, educators and students, civic and religious leaders, and other interested citizens in order to help them all better understand the world and the foreign policy choices facing the United States. The Council today remains independent and nonpartisan, and importantly, the Council takes no institutional positions on matters of policy. The goal of the organization really is to be a resource to foster informed and rigorous discussion of foreign policy matters.

In terms of the Young Professionals Briefing series, a few years ago we realized that while we offer a lot of opportunities for students, and we have a five-year term membership program for individuals who are between the ages of thirty and thirty-six when they apply, we were missing an important group of younger people who had completed their undergraduate studies and who were just beginning to embark on their professional pursuits. So to remedy the situation, we began hosting several events a year in New York and in Washington and now virtually as a special outreach initiative to younger professionals. And our hope is that this series will provide those of you who are early in your careers with an opportunity to engage with the Council.

Beyond participating in Council events, another way that you can engage with us is through the wide array of content that the Council produces. And I encourage you to explore what's coming out of the Council, from our magazine Foreign Affairs, to the multitude of books and special reports and articles and blogs that are written by the Council's in house experts in our think tank, as well as the special digital interactive issue explainers and videos and podcasts that are created for the Council's award winning website An easy way to stay on top of the Council's content is to subscribe to our weekly e-newsletter, The World This Week. We're going to put a link in the Zoom chat box, so any of you who would like to subscribe, you'll be able to do that easily. This is a roundup of current content from the Council that will arrive in your email inbox every Friday without fail.

I mentioned the Council's term member program—I hope that you will keep that in your sights for when the time might be right to consider joining that program. But I'd also like to note that our moderator and a couple of the panelists this evening are current or former term members. So consider this an introduction to the expertise and talent of CFR's extraordinary community of young leaders. Again, thank you all so much for being here this evening. We look forward to welcoming you back again soon, and hopefully at some point in person. And now I'd like to turn the evening over to our moderator who's going to guide and facilitate this evening's conversation, Kendra Gaither. Kendra is an alumna of the term member program. She is currently with the U.S. Chamber of Commerce where she is the executive director for the Americas. Kendra, the virtual floor is all yours.

GAITHER: Thank you, Nancy. And I'd like to add my voice to the welcome that you've given for tonight's Council on Foreign Relations young professionals program on the crisis in Venezuela. As you noted, I'm the executive director for the Americas at the U.S. Chamber of Commerce where Venezuela is obviously a topic of key interest and concern for our members as well. So I'd like to help set the stage for this evening's conversation by asking a framing question of our distinguished panelists. I'll start first with Benjamin, but I'm going to go in turn to ask if you would help us frame this conversation by sharing with us one aspect of this crisis in Venezuela that you believe is important for members to keep in mind when trying to understand the situation and why it's persisted. So let's start with you, Benjamin.

GEDAN: Thanks so much, Kendra. Thanks to the Council for this invitation, for everyone participating in a discussion on, you know, a rather severe crisis that can be overlooked just given how prolonged it has been. I think that gets to the heart, Kendra, of your question. I'm going to frame it a bit in economic terms, and I think what's important to keep in mind is that things really are as bad as they seem in Venezuela. Arguably, they're worse than they seem. And I think it's sometimes easy to forget that because you've been hearing really alarming reports from this country [inaudible] for many years now.

You know, the oil sector, which is the principal source of foreign exchange for Venezuela has utterly collapsed. You know, you can just look at the fuel shortages, especially outside the capital of Caracas. As evidence of that, to give some data, the $90 billion a year from oil exports that Venezuela once enjoyed this year will probably have diminished to closer to 2 billion, maybe 2.3 billion. The production of oil right now, as a result of, you know, years of mismanagement and corruption, and to some extent U.S. sanctions, is now at the level of 1929. The, you know, latest data I've seen says only one drilling rig is operating in the country, a place where you used to have more than eighty exploring for oil as recently as 2014.

The economy will probably contract by around 26–27 percent this year, and that will result in a 65 percent decline in economic activity between 2013 and 2020. I mean, the statistics, you know, are so terrifying and dramatic that, you know, it can be dulling to listen to them cited, you've heard about hyperinflation and the fall from grace of a country that had been the richest in Latin America. And we're now, you know, probably 80 percent of Venezuelans are living in poverty, one in three can't get enough to eat. I think, you know, if you just look at the fact that 5 million Venezuelans have fled, the fact that even despite extraordinary brutality from the government of repression, you still had in August 748 protests, you have polling that shows 93 percent of Venezuelans see the country in a negative light, and you know, less than 15 percent support the president. All that is to say that Venezuela again, is as bad or worse than you think it is. The fact that the country goes on and the leadership remains in control, I think shouldn't diminish from your appreciation of just how grave life has become in Venezuela.

So the question that I was meant to answer here goes, why does the crisis go on and on despite all of the challenges that I just laid out? And I think the answer is that the government has been surprisingly resilient and surprisingly brutal in its repression of Venezuela and dissent, and I'll very briefly sort of lay out both. The creativity, I think, has involved sanctions evasion, often with the help of the government of Iran and others who are skilled at evading U.S. sanctions. It's also creativity in generating funds outside the oil sector.

So I mentioned that that really has historically been the only source of foreign exchange for Venezuela, which it needs to import food and basically everything that it doesn't produce, which is everything but oil. Nowadays, it's actually generating something like 2.7 billion from illegal gold mining, a similar amount from the drug trade. Remittances, this is money sent to Venezuela from Venezuelans who have left, is now a lifeline in a country that didn't used to depend on it whatsoever, it's probably around $3.5 billion.

There's also a dollarization of the economy that has occurred, which is to say that a country that used to eschew foreign currency, now maybe 60 percent of all transactions in Venezuela take place in another currency. And I mentioned earlier the migration, the five million Venezuelans who would be there otherwise, pushing for social services, pushing for a decently functioning democracy are now out of the country, and that pressure valve, I think, also explains the persistence of a crisis. And in almost any other circumstance, you would have thought would long ago have collapsed a government that has lost legitimacy, as I mentioned, from the lack of support, has lost its ability to feed and clothe its people, to provide basic medicine, water, electricity, and now care during a public health emergency. So I think, you know, my final message is just to say that again, Venezuela truly has collapsed and yet the government is able to maintain a fragile but steady hold.

GAITHER: Thank you for setting the table for us and next I'm going to turn to Fabiana to ask her to answer the same, and we'll end with Paul.

PERERA: Thank you Kendra. When I heard the question I really focused on the persistent part, the crisis has persisted across a number of areas and has exacerbated as Benjamin described in the economic sense. But in my opinion, the reason it has continued for this long when you think about the background, again, which it is happening, has to do with lack of cohesion among the opposition. The opposition has shown that when they're able to work together in pursuit of a democratic objective, they have been successful. But to borrow a phrase from another region, the Venezuelan opposition never misses an opportunity to miss an opportunity. And we've seen this happen again and again. So briefly, they had success when they were able to coalesce behind one single candidate for the 2013 election to replace Hugo Chavez after his death.

Henrique Capriles came second to Nicolas Maduro, the current president by a very narrow margin, under 1 percent. Under most other electoral systems in Latin America that would trigger an automatic second round. Venezuela doesn't have and has never had a second round or a real process of recounting. So the victory, the success was in getting that close to Maduro. And then the missed opportunity came when the result was announced, the opposition split with half of the opposition led by Capriles, really espousing what he calls an institutional solution to the end of the regime that the end of the regime of transition to democracy would come through the electoral process, and really believing in those institutions, even if they had shown severe signs of decay.

The other half of the opposition believe that the right thing to do was to contest the results in the street, just that solution is called la calle in Spanish—"the street"—go out and protest until Maduro leaves. And at that point they missed that opportunity and not acting together, they split up. The regime knows that the opposition is likely to split and often brings up divisive issues to get them to break up. Every time we've seen a call for dialogue, the opposition splits those that believe in an institutional way out, support the dialogue, really encourage leaders to go participate in whoever's leading it, and those that believe in protests call for not violent, but visible opposition to the dialogue in the street.

So we've seen that again and again, most recently it just happened with elections scheduled for December in Venezuela. The opposition initially said they would not participate as a way of showing that they perceive these to be undemocratic elections, through which a transition is unlikely, and very recently Capriles, the same person that almost won the 2013 elections, announced that he would be running to represent an opposition to Madurismo. So, yes, pretty much, I would say that it persists because they keep missing opportunities.

GAITHER: Thank you for that, and we'll get a chance to get into some of the election scene setting that you just shared with us. But next, let's turn to and hear from Paul.

ANGELO: Thanks, Kendra. And thanks Ben and Fabiana for joining this panel. And I'd also like to extend a thanks to the both of you for participating in the advisory committee for my Council Special Report on The Day After in Venezuela. And just piggybacking off of something that Ben said, I'd like to address the interference of maligned actors in Venezuela is key to the entrenchment of the regime and the exacerbation events was political crisis. Russia, for one, treats the Caribbean Basin and especially Venezuela as our "near abroad" in the same way that it understands the Caucasus states to be its own "near abroad." And Russia loves nothing more than to be a thorn in the side of the United States as geographically close to the southern border of the United States as possible.

Most Venezuelan debt that was owed by Russia has been repaid to date, so any relationship that exists between Moscow and Caracas today is purely in the interests of geopolitics. We're seeing the Russians sending increased shipments of military hardware to Caracas, expanding its training opportunities, and fulfilling maintenance contracts with the armed forces of Venezuela. Anecdotally, we've also seen some Russian military people in Caracas wearing Venezuelan uniforms, and just after the 2019 uprising that was mentioned by Fabiana, by the opposition, we saw the arrival of two military jets from Moscow to Caracas, you know, it actually has real symbolic value of Russia's commitment to propping up the Maduro regime.

China for its part is largely focused on debt repayment. About $19 billion of debt is owed to China and is being repaid with oil shipments. But as Ben mentioned, Venezuela's oil export revenue this year only amount to about $2 billion. And so China and Venezuela have agreed to revisit debt repayment scheduling come December. But I think in terms of Chinese interests in Venezuela, the bottom line really is their debt repayment.

As Ben also mentioned Iran, Iran has become the sole supplier of gasoline for Venezuela in recent months. Just this past week, 815,000 barrels of gasoline—refined gasoline—was brought to import into Venezuela. And the Iranians are also helping with the maintenance on Venezuela's oil infrastructure. And there are rumors that Iranians may actually partake in a partial privatization of certain aspects of the Venezuelan oil industry in the months to come. That being said, the Iranians have also doubled down on their military cooperation and intelligence cooperation with the Maduro regime. And we have a confirmed presence of the Quds force in Venezuela working with the armed forces of Venezuela. And then I'd say [inaudible] Cuba finally, which is kind of the linchpin in all of this. Cuba has long been a place for Venezuela to offload its crude oil and get it into the international market because of the enduring ideological relationship between Cuba and Venezuela.

But in recent years, Cuba has provided the inner ring of Maduro security circle, and is engaging in massive counterintelligence, which is crucial to keeping the armed forces, firstly in the state of fear, but also in line. Despite the fact that members of the armed forces who have defected suggests that upwards of 90 percent of the people within the ranks of the armed forces rejects Maduro's rule, they're too afraid to actually engage in any meaningful defection because of the infiltration by Cuban military operatives. So sort of against that backdrop of great-power competition and the interference of U.S. adversaries who don't abide by the U.S. sanctions regime, I think that, more than anything, contributed to the exacerbation of political crisis in Venezuela.

GAITHER: Thank you, Paul. And thank you for mentioning your report. I'd like to commend it to the members if they haven't yet had a chance to take a look at it. And I actually want to stay there if I may and tease a little bit out from that report. So as you noted, the report looks at the day after, and in so doing you look at some of the inherent risks and opportunities inherent in a political transition in Venezuela. Would you tell us a little bit about some of the key takeaways, especially since anything, any transition is going to involve Maduro's political party itself?

ANGELO: Sure. Basically, since January 2019, when we entered this current constitutional crisis and political stalemate that we're confronting in Venezuela, U.S. policy has centered on removing Maduro and advocating for a transitional government to usher in a return to democracy. And that was formalized in a democratic transition plan that was issued by the State Department in March of this year. It's not clear that Maduro is planning to go anywhere anytime soon under what circumstances he may be forced from power. However, the U.S. government and its allies should be ready for that eventuality because if it does happen, it's likely to be sudden, it's likely to be chaotic and violent.

And in order to ensure that whatever transition that happens begets democracy, we need to have a plan in place. And the cornerstone of that plan will be the restoration of citizen security and the restoration of the rule of law. And so my hope in writing the CSR was to ensure that U.S. policy planners were actually thinking about how to restore these two elements that are so critical to any democratic transition. You know, empirically, we were caught off guard in places like Afghanistan, Iraq, Libya, we were caught by surprise when it came to the Arab Spring. And so it would behoove us to have a plan now, you know, in that vain, I center on three main recommendations for the day after in my report.

The first is that United States government and civil society have to help rebuild trust with the Venezuelans through major investments. And this, I think, our foot in the door is increasing our humanitarian assistance to Venezuelans, be they Venezuelans in Venezuela or the 5 million Venezuelans who have fled the country in the past five years and many of whom are living in surrounding countries. You know, the amount of assistance that the United States government has devoted to Venezuelan refugees and Venezuelan humanitarian causes over the past five years doesn't even reach $1 billion.

Yet, in the case of Syria, where you know, is it a refugee crisis that's just slightly larger than the refugee crisis we're confronting in Venezuela, the U.S. government led a global coalition that amassed more than $7 billion to help address the refugee and migrant crisis in places like Jordan and Turkey. And so I think that's, you know, taking seriously the plight of Venezuelan migrants and refugees is going to be critical to helping rebuild that trust, but also leveraging our relationships with the opposition and institutions controlled by the opposition during a transitional period as a ways of getting our foot in the door. And also looking for opportunities in institutions, and particularly security institutions that may not already have established relations with mind actors like Russia and Iran.

I'd say the second main recommendation of my report is that the United States is going to have to negotiate directly with its great-power competitors or near-peer competitors. And in doing so, it's going to have to make it costly or ill-advised for U.S. adversaries to support anything but the restoration of democracy in Venezuela. And the key to doing that is working through multilateral institutions, which gets to my third major recommendation is that multilateralism needs to underpin all of our efforts in Venezuela. We need to be working through the United Nations, which is seen as an unbiased, an impartial, or is respected by both sides of the Venezuelan crisis.

And we need to find ways or opportunities to increase the involvement of the OAS [Organization of American States], which has largely fallen out of favor with the Maduro regime and the socialist party in Venezuela. That being said, the OAS has a lot of experience in dealing with refugee and migrant flows, and also dealing with the reconstruction of the law enforcement and the justice sector. And the extent that the United States can work through the OAS and work with the opposition, assuming the opposition has a role to play in the transitional government, I think that we will all be better off and it will help set Venezuela on a course to recovery.

GAITHER: Thank you for that. I want to take an element of that—you touched on law enforcement, and earlier in Ben's comments, he touched a little bit on illegal activity, so that brings me to Fabiana. Fabiana, if I could ask you, one of the challenges of Venezuela's collapse is that the country has become an essence a place where there is illicit activity, be it illegal mining is as Ben mentioned, but also transnational crime, a home base for terrorist activity to neighboring Colombia, all of which maintains or has some tacit support of the security forces in Venezuela. Can you tell us how this same military which is seen as a key actor in any ultimate change in Venezuela can be a key constructive force in ending the crisis?

PERERA: Thank you. So I think the same military can have a role in ending the crisis. The military is a pillar of support for the regime as it is now. The military is in turn supported by or their support is premised on the economic support that they receive from the regime. It's not an ideologically committed military. These are not people who really espouse the values of Chavismo or Madurismo, whatever those might be. These are people, and not just individuals, but an institution, an entire institution that were given access to plenty of economic power. They were handed the reins of businesses that are not traditionally associated with the armed forces. The armed forces in Venezuela control everything or have controlled at one point, everything from hotels to food distribution.

So once this economic support that they received through the regime arose, they might be in a position to support not just the opposition, but a transition to democracy. In a democracy, in the report that Paul authored touches on this, it wouldn't be the same armed forces that we see today, there would be a very important need for security sector reform in Venezuela following a transition to democracy. The armed forces today have the trust of under 20 percent of Venezuelan citizens. This is an institution that, before Chavez came to power, was seen as very trustworthy by the majority of Venezuelans. That has almost exactly flipped, and now the majority of Venezuela see it as not at all trustworthy. So there would need to be a rebuilding of the institution taking into account the lessons we have learned from security sector reform in other contexts, such as, Paul mentioned Iraq, among others, but also in the region, and what might security forces and defense forces look like in Venezuela.

Perhaps it's not going to be a separate armed forces/security forces model like they have now. Perhaps the right answer is something pared down armed forces like they have in Argentina—Benjamin would know more about that—or a completely different hybrid as they have in Panama. So there will need to be a rethinking, and then these new security forces, once they have regained the trust of the Venezuelan people would be in a position to participate in activities like distributing humanitarian aid like Paul talked about. That's normally something that would be tasked to armed forces, but that under current conditions, they wouldn't be the best actors. Hopefully, after a transition in their rebuilding, they could use that as an opportunity to rebuild trust.

GAITHER: Thank you, and it sounds like it will require the first step that Paul outlined, which was negotiating with the other great powers that are there in country to even get to that point. While we're talking about the international context of the crisis in Venezuela, I do want to turn to Ben for another question before we open up to member questions. Obviously, as you alluded to earlier, and has been discussed, on December 6 Venezuela will have National Assembly elections.

And with the opposition somewhat undecided and divided around how they want to participate in the contest, and the Lima Group, which is the international community of sixty countries that are very vested in change in Venezuela have laid out some very key criteria for what they would like to see for a contest to proceed. Can you tell us a little bit about what the options are that the international community has to address the political crisis at the heart of Venezuela's deterioration?

GEDAN: Unfortunately, the answer is very few options. This is not the Venezuela of late 2015, where the opposition under difficult circumstances did participate in a unified way and was able to win a two-thirds majority of the National Assembly. And for that reason, it remains the only legitimate democratic organ in Venezuela for now until its term runs out. I think it's clear that the Lima Group, the United States, the international community of democracies at least will not recognize the results. But where that will leave us is essentially where we are today, or maybe in an even worse place because we will now have not only disputed presidency, but a disputed congress in Venezuela.

And I think, you know, the lesson we've learned over the last year is that you simply cannot will into existence the government you wish was governing a country. And I think that's what the United States and its allies attempted to do—there was great reason to reject Nicolas Maduro's reelection just as there will be plenty of reasons to declare this as an illegitimate legislative election. But the reality is that non-recognition doesn't move you closer to a political transition.

And so all that's left is recognizing the importance of negotiations. I think Paul, Fabiana, and others have talked about the importance of negotiating with external actors and that's, you know, clearly vital, but there's also the need to negotiate with the government of Venezuela. And here, I refer to the government that controls the military, all of the territory and maintains, despite its isolation, some key international relationships that again, allow it to maintain itself in power. And I would just conclude by saying that although, you know, these kinds of negotiations are always unsavory, and it's a kind of hold-your-nose exercise, they're always necessary to dislodge a regime. We've seen it in Latin America in the Pinochet regime, we've seen it elsewhere, where, you know, absent the kinds of military interventions that will not and should not occur, in this case the only way out is through using the extraordinary leverage the United States has built up through economic sanctions, you know, ultimately, through criminal indictments that could be brought to bear and to urge, you know, some sort of negotiation between the United States, the Venezuelan opposition, and the Venezuelan regime.

And so I think, you know, the answer to your question directly is, you know, the election will likely take place, it will not be legitimate, there will be questions as to, you know, who is the actual, you know, congressional branch in Venezuela, but we will not be materially different than we are today.

GAITHER: Thank you for that, that scene setter, if you will, and for all the answers that you all have given thus far. It's now time to invite our members to join in the conversation with their questions. And before we do that, I'd like to remind everyone that this meeting is on the record, and our operator will now talk us through what it would take to join the conversation in terms of asking your question.

STAFF: (Gives queuing instructions.)

Our first question will come from Peter Ansour.

Q: Hello, I'm Peter Ansour from the University of Rochester and the Young Professionals program. So again, thank you for having me. My question is one of the things I find specifically very concerning about the Venezuelan crisis, which is the collapse of the healthcare system in general, right, we see massive reductions in both the per capita and percent of GDP expenditures. Now, this is leading to a whole bunch of very bad things, you know, increase in infant mortality, a resurgence of these rare diseases, so what can we do before these have a lot of very, very bad negative effects long term? So what can we do now?

GAITHER: Thank you for the question, Peter. Do you have a particular expert to whom you'd like to direct it? Or why don't we start with Paul and see if our colleagues have other insights to add.

ANGELO: Thank you, Peter, for the question and you're absolutely right. So you know, Venezuela is confronting a humanitarian crisis inside a political crisis inside an economic crisis and the humanitarian situation is getting more dire by the day. Malaria is now endemic in the country and ironically in 1964 Venezuela was the first country in the world have declared malaria-free. 30 percent of the children in Venezuela suffer from chronic malnutrition, as Benjamin said, you know, 33 percent of the population is food insecure. And six out of every ten hospitals in the country, and this is prior to the COVID-19 pandemic, were found not to have had consistent water or electricity services. And in a recent study, Venezuela was named the most vulnerable country in the world to COVID-19 because of the deterioration of its health services and infrastructure.

And so, you know, in terms of what can be done at this stage of the game to ameliorate that situation, frankly, because the international community has so little leverage in Venezuela, I think our options are quite limited. Last year, the United Nations engaged in a series of negotiations with the Maduro regime and with the opposition coalition to allow for the increased presence of the international community and multilateral organizations to help address the humanitarian crisis in the country. But to date, we still do not have the presence of the Pan American Health Organization, excuse me, the World Food Program in Venezuela.

And I think, for the United Nations, the EU, and the sort of international actors that are supporting the opposition coalition to push for a broader opening through negotiations with the sole and explicit focus on the humanitarian situation, I think, firstly our best option for helping address the humanitarian crisis. But it also might create some breathing room for all the actors involved to engage on the resolution of the political stalemate.

GAITHER: Fabiana did you have something to add?

PERERA: I would, I agree with what Paul said, and I would also add that we can work with our partners to support the health of Venezuelan migrants that they have received. I think Benjamin mentioned about 5 million Venezuelans have fled. The Venezuelan immediate neighbors are not in an economic wealth position to be able to take care of all the needs of these migrants. So supporting the migrants there in the event that they do return, they're not coming with the same problems again, and also it helps ameliorate any xenophobia that might occur in these countries as a result of the influx of migrants.

There's also a small number of organizations that continue to have a ground presence in Venezuela—NGOs—so supporting those so that they can deliver in a politically agnostic way aid to those who most needed because life is the most precious. I don't think that that will result in a big-scale change to these malnutrition rates that Paul was talking about, but it is an immediate step we can take.

STAFF: Our next question will come from Sophia Ramirez.

Q: Hi, good evening. Thank you so much to all our panelists. My name is Sophia Ramirez and I am currently at the Princeton School of Public and International Affairs. And my question centers around potential mediation and negotiations. It seems to me right now that the conflict may not be, as they call it ripe for mediation, so I was wondering what we have to see to make it, you know, right that the Maduro government willingly enters into a process of mediation? You know, what does he have to lose? It seems he has a lot of leverage and he's getting a lot of economic support from other basically resources besides oil. So what deterioration do we have to see in order for this conflict to be right for mediation? Thank you.

GAITHER: Thank you, Sofia. I'm going to start with you, Ben, if you don't mind, and then we'll open it up to the rest of your colleagues.

GEDAN: Sure. I mean, in a sense the regime has been consolidating its hold on Venezuela and it’s, you know, has few incentives to leave Venezuela, particularly if it doesn't feel like it's losing its grip on the country. On the other hand, I think, you know, there is leverage in the international community, particularly in the United States. And I think we just haven't deployed that leverage. And so I think people maybe don't fully realize that, you know, our inability to dislodge the regime doesn't mean we have no ability to influence it. And the sanctions at this point are extreme and though Venezuela has found a way to survive, and is far from thriving, still suffering from, as we've discussed, malnutrition, gasoline shortages, electricity and water shortages—a humanitarian nightmare in a failed state.

And when negotiations have occurred, and though they've never, you know, obviously resulted in a transition, the sanctions have very much been the priority of the regime. And so that's your signal that if the United States were truly willing, as the State Department is indicated it is, to trade sanctions and in my view, maybe even a more complex process of trading criminal indictments and pardons in return for a genuine transition to democracy, you might be surprised that the regime is willing to engage in that kind of discussion. I agree with you, Sofia. I think it wouldn't be easy, I mean, absent a serious and persistent mobilization by the Venezuelan people, you will not see the government feel the kind of existential threat to its, you know, life and good fortune that it might want to sit and negotiate in good faith. Fabiana has mentioned correctly that it's often manipulated negotiations in the past in order to minimize pressure from international community in order to divide the opposition in order to show itself as open to a democratic transition of some sort.

So there are risks to negotiations. I think, however, so far, the United States has erred on the side of reluctance. Just one example, recently, the European Union was discussing with the Venezuelan regime what it would mean to have a free and fair election, and the United States reacted very negatively toward that accusing the EU of engaging in cowboy diplomacy. I think fundamentally it was a useful conversation to have—the regime ultimately objected to and rejected all the standards. And so it's clear that the regime is not attempting to have a free and fair election, but we shouldn't respond negatively by reflex and any effort by the Europeans or others to engage the regime and talks. In fact, that's the only way to solve this crisis.

GAITHER: Thank you, Ben. Paul, did you want to jump in as well?

ANGELO: Sure, and the only thing I would add to Ben, I agree with everything he said, is that I think that the United States and the international community can be a bit more explicit in working with the opposition coalition to communicate exactly what transitional justice looks like, as basically a bartering chip in trying to get the regime to sit down to the negotiating table and take it very seriously. To date we've seen in the opposition coalition's plans for a post-Maduro Venezuela, known as Plan Pais [Plan for the Country], we've seen that the opposition coalition is willing to extend blanket amnesty to particularly to the military, but to other regime operatives and in exchange for their cooperation and support for democratic transition.

But I think the reality is, and this is something that Maduro and his lieutenants know very well, even if they're guaranteed by Venezuela's own justice system, a degree of impunity or amnesty, it's not to say that they will be protected internationally. And we've seen, you know, we saw that exactly in the case of Chile with Pinochet, who was pursued by a Spanish court. And so I think we really need to have a frank and honest and open conversation about what transitional justice can look like in the Venezuela case, which is, you know, a section of my Council Special Report. And again, you're going to have to make some very difficult choices when it comes to justice. There's going to be pressure to sacrifice retribution for peace and order, just as there was in other transitions like in Chile and Argentina where we didn't see justice come until decades later.

But I think what we can look to more modern examples, and I would call it Colombia in this regard, that have attempted to engage in transitional justice through a process of restorative justice, which means providing reduced sentences in exchange for cooperation and honest participation in a truth commission. And, you know, so I would recommend in the case of Venezuela, that the international community start talking about a truth commission, start talking about what a transitional justice tribunal would look like, what would be covered under it, what kind of punishments or sanctions might be expected under a transitional justice tribunal.

And then, you know, I think it would be important as well, that the international community continue to pressure and support the operation of a transitional justice mechanism as we negotiate the transition. Trying to take a lesson from Colombia, which we've seen that the Special Jurisdiction for Peace, which was the transitional justice mechanism set up in the 2016 FARC peace accord, has been incessantly politicized since the beginning of its operation. And I think part of that is due to the fact that the international community has sort of taken its eye off the ball. And the fact that it's a completely organic and Colombian-owned, Colombian-run institution, I think is what led to its politicization. And in the case of Venezuela, that's an area that we might want to avoid.

GAITHER: Thank you for that Paul. I'm ready to turn to our next question. And if I could ask our members to direct their question, we're going to try and take one and turn so that we can get as many as possible.

STAFF: Our next question will come from Harrison Burke.

Q: Hi, my name is Harry Burke, I work at the USC Center for the Political Future in Los Angeles. My real question, I guess I can direct this to Paul. First off, I did read your report, and it was it was great and thank you for writing it. I also read a piece in Foreign Affairs a couple days ago that was written by Francisco Rodriguez, and basically, he was arguing about the idea that economic sanctions have not worked as effectively as we would like to dislodge the Maduro regime and, you know, he goes into more detail about that.

But I was really curious about what your thought was on his potential solution to—maybe specifically the humanitarian crisis in Venezuela—and I don't know if you read the article, but what he basically suggests that the international community goes into talks with the Venezuelan government about lifting specifically sanctions on the oil markets with the express condition that would be overseen by the international community, international organizations where the oil revenues would go to humanitarian aid in Venezuela. And guess I'm just curious, do you think that's a good idea? Bad idea? Would that be a way to maybe start these negotiations that we kind of alluded to, to solve the crisis or to, I mean I don't know if it could be extended to, you know, like, you talked about co-opting the FANB [National Bolivarian Armed Forces of Venezuela] through sanction relief and things like that?

GAITHER: Thank you, Harry. Paul over to you.

ANGELO: Yes, thank you very much for the question. And, you know, I think what you may be referring to is something that we saw in Iraq in the 1990s and the early 2000s was the Oil-for-Food Program and setting up something similar in Venezuela. And you know, in the case of Iraq, you know, it was a program that was mired in corruption and politicization and such, it was imperfect by every regard. But I think, you know, the lessons learned are applicable in the case of Venezuela. And one of the other points that was made by Rodriguez in that article is that, you know, sanctions are a blunt tool. And in fact, sanctions have led to the entrenchment of the Maduro regime.

Firstly, because they haven't been applied multilaterally. Our European partners have been very slow to join the sanctions regime imposed by the United States. And in fact, we've even got more recently reports that countries like Italy, India, Spain—our democratic partners across the globe—are actively involved in an exchange of Venezuelan oil for refined diesel, which is, you know, in effect extending a lifeline to the regime. Likewise, many of our European partners have been reluctant to impose targeted sanctions on members of the regime and their family members who are living in Europe, particularly in countries like Spain and Portugal.

And so, I think, if anything needs to happen, it needs to be a coordination of policy between the United States and the EU. And again, these diplomatic fissures and the differences in approach between the Trump administration and EU authorities over the past year with regards to Venezuela have created fissures or created opportunities that Maduro has easily exploited. And you know, I think, we need to redouble our efforts to synchronize with Europe so that, you know, this is a multilateral effort that can help provide humanitarian relief to Venezuelan migrants. And we need to be cautious about alienating our Venezuelan partners and opposition coalition all while doing so. So I think the multilateral approach is going to create the most space for us to be able to address both the political and humanitarian crisis in country.

STAFF: Our next question will come from Maggie Feldman-Piltch.

Q: Great. Thanks. So my question is for Dr. Perera. You do a lot of really interesting work on transnational criminal networks and security cooperation, and I know we've talked a little bit about the role of Europe and the EU here, but I'm curious if you can really kind of underscore for us what is happening with transnational criminal networks, cryptocurrencies, cryptocurrency exchanges in Venezuela and the role of countries that are not in Europe, particularly maybe Mexico and Cuba and dealing with Venezuela.

PERERA: Thank you, Maggie. So yes, Venezuela, when I've come to questions a while ago, it really highlighted has become almost a failed state and allowed for the incursion of all of these non-state actors and terrorist organizations and [inaudible] actors through a range of ways including cryptocurrency. At one point, some of you might recall, the Venezuelan government itself, which wasn't necessarily a benign actor at the time, also tried to engage in cryptocurrency when it floated the petro—its idea for a crypto coin that was going to be backed by oil resources. Nothing came of that.

So in Venezuela, just in cryptocurrencies in general, there's going to be two big things to sort out now in a post transition. One is how much criminal organizations have been able to take advantage of what Venezuela provides, which is the facade of a state, the trappings of a state, a flag, and passports and non-extradition, and the use of that or the haven that transnational organizations have found from that. On the other side, there's a whole other benign crypto situation taking place in Venezuela tied to the economic crisis that Benjamin was talking about. Not only is there no money in Excel sheets in Venezuela, there's no physical money to circulate in the country either.

And this has taken a lot of people, both well intentioned, regular citizens and actors from the regime to gain a presence in online currencies just to go around their day-to-day lives. And a big task of a post-transition situation is going to be trying to figure out, how do you clean that up and how do you get real money back into the hands of people that need it and separate that out from criminal organizations. I think one task that people are working on now trying to map, first understanding what these criminal actors are and what they're doing and the extent to which they're engaged in Venezuela so that hopefully in a post transition, Venezuelans can begin the process of reclaiming their state for themselves and moving away from having other organizations use it as facade. Thank you.

STAFF: Our next question will be from Andrew Hanna.

Q: Hi, I'm Andrew Hanna, with the U.S. Institute of Peace. I wanted to ask about the Iran-Venezuela nexus. For Ben, you talk about how Iran is helping with sanctions evasions and what the purpose of these fuel shipments are, and for Paul, you mentioned the potential for partial privatization of the oil sector. What role would Iran play in that?

GEDAN: Sure, be happy to very briefly and I think the Iranians are arguably not the key international actor in terms of financing the Venezuelan regime. That historically has been the Chinese earlier, the Russians though, as Paul noted, the financial relationship between Russia and Venezuela has diminished, though Russia continues to [inaudible] enough to be a key player in the Venezuelan oil sector, though now under a different brand name. When it comes to the Iranians, the Iranians are very skilled in sanctions evasion, and they are already quite separate as you could imagine from the United States financial system and so have less to lose including their own companies and the government itself from running afoul of U.S. secondary sanctions.

And for that reason, they've been able to refine oil for the Venezuelans and provide at least in the capital, Caracas, some salvation from the recent gasoline shortages, which again, are causing very long lines and social protests in the interior, but less so in the capital thanks to Iran. So I think there's various things they've been able to do, also involving the elicit gold that is produced and mined as well and sold for hard currency. So the Iranians, through sanctions evasion, know how through refining Venezuelan oil and through helping to find a home for Venezuelan gold. The Turks, the Caribbean also play a role in the processing and export of Venezuelan gold as well. I would say those are the key factors for Iran. Again, it hasn't been the country that has the wherewithal or desire to bail out Venezuela, but you know, given Venezuela as beggar status right now, that aid that it is providing is quite critical.

STAFF: Our next question will come from Rebecca Howe.

Q: Hi, good evening, everyone. Thank you so much, this has been such a fascinating discussion. My affiliation is with the British government in the Cabinet Office. And my question is for Paul, I was really interested in your recommendation on negotiating directly with the great powers involved in Venezuela’s situation. And my question is, how do you do that whilst not excluding crucial partners and Venezuela in civil society and in opposition groups?

ANGELO: Thank you for a really simple question, Rebecca. And, you know, I think it's a very difficult balance to strike. But you have to forever involve the Venezuelan civil society and the democratic opposition to ensure that the kinds of negotiations that we're making don't necessarily, you know, contravene their ultimate ambition of achieving power through democratic means and through a democratic process.

That being said, I think that there were some missed opportunities over the past couple of years in terms of actually going to direct negotiations with these maligned actors in Venezuela. And for one, I would say that while the United States was engaged in a trade war and trade negotiations with the Chinese, to the best of my knowledge, the issue of Venezuela and China's enduring support for the Maduro regime was never touched in those negotiations. And I think it was a really—it was a missed opportunity. And it was certainly something that I think that the Venezuelan opposition, democratic opposition, and civil society could have gotten behind.

But again, you know, it just wasn't part of the calculation for the Trump administration. It certainly wasn't thinking multi-dimensionally in that regard. And as I mentioned, I think, you know, Russia's entrenchment in certain institutions in Venezuela is already a reality, particularly for the army, the air force, the national guard. And so the United States needs to find institutions in the country, if we find ourselves in a transitio that do not have those kinds of allegiances, those deep relationships with Moscow. And I think the opposition and civil society are going to be best suited to help us identify those institutions and to help us create the kinds of leverage that we need in order to shape them in a more democratic way.

STAFF: We'll take our next question from Michael Weiner.

Q: Hi, everyone, my name is Michael Weiner with Albright Stonebridge Group, as well as Johns Hopkins SAIS. Thank you so much for your insights on this really important topic. This question to be addressed by any of the panelists. I suppose I can direct it to Paul, given your emphasis that you already touched upon on how multilateralism really needs to be the underpinning of the international community's approach to this crisis, and from specifically a United States perspective, given that the Trump administration, generally speaking, has been broadly skeptical of that sort of approach over the course of his term.

And obviously with an election coming up very soon, where do you see the sort of, I would say, I guess, greatest opportunities to re-engage on that front for a new administration in the U.S., whether that be Trump's second term or a Biden administration, given that, you know, that you've touched upon various international bodies that may have a role to play in getting negotiations going, whether that be the OAS, the EU, the UN, the Lima Group. I guess where would the sort of lowest hanging fruit be on day one of a new U.S. administration for new engagement? Thank you.

ANGELO: Yes, thanks, Michael. I'd say that U.S. policy is constrained by the circumstances on the ground. And regardless of who wins the U.S. elections in November, U.S. options are going to be limited in Venezuela for all the reasons that we've already outlined. I mean, the security forces and top regime officials have remained loyal to Maduro despite years of sanctions, especially targeted sanctions against members of the regime. And Maduro has been able to access cash reserves through gold sales, money laundering, drug trafficking, etcetera. Maduro is also poised to take control the National Assembly in December, which means that the opposition may be completely sidelined.

We may find ourselves in January with an opposition in exile, given that the perception of a democratic mandate has expired. With that, we will also see Maduro consolidating control over all five branches of government. And that will inevitably make the opposition coalition more vulnerable to persecution. And then as Fabiana mentioned, we had fissures in the opposition coalition to begin with. Henrique Capriles is actually increasing his own protagonism within the opposition coalition, which may see a complete reconfiguration in terms of the leadership and the strategy on part of the opposition coalition.

So I think it just, you know time will tell, but regardless of what administration takes office on January 20, U.S. policy options will be very limited. And, you know, the president is going to have to decide whether or not we continue to back Guaido, even if his mandate is questionable, whether or not we sustain or lift sanctions to secure concessions, either humanitarian or political from the Maduro regime. Or, you know, whether we tried to increase incentives for regime insiders to defect by, like I said, talking about transitional justice or providing, you know, attractive terms of defection for them.

And really, the only path forward that I see, you know, and I'll end on this is that the U.S. needs to do a better job of coordinating with Europe. We accomplish nothing if we're working as isolationists, as it has been seen in the ineffectiveness, relative ineffectiveness of sanctions to remove Maduro. And so we need to redouble our efforts to synchronize policy with Europe.

GAITHER: Thank you for that, Paul. And we're actually approaching our last question. So I'm going to ask each of our panelists to give a go with this final question. Hopefully it matches your expertise. And in so doing, give some final wrap up thoughts.

STAFF: Our last question will be from Michael Abonyi.

Q: Hi, there. My name is Michael Abonyi. I'm affiliated with the University of Cambridge. First and foremost, Paul, your publication was great. So thank you so much. I really encourage everyone to read that if they haven't. This question is in regard to something that's been touched on a few times. And I do believe that all the panelists will have something to say. But one of the biggest failures, I think, that came out of the coalition invasion of Iraq was the disenfranchisement that came from the military institution being dismantled. And so though this has been touched on, I was hoping that the panelists can elaborate a bit—is the social segmentation that exists in Venezuela similar to that of Iraq? And would that make this particularly hard to address and also, given the presence of Cuban and also Russian influence within the military and security infrastructures, as has been spoken about, how can a transitional government go on and address this when there are additionally third party and outside influences on this?

GAITHER: Thank you, Michael. I'm going start with Fabiana. Then go to Ben and close with Paul.

PERERA: So there was a lot in this question, I will try my best. I would say there is social segmentation in Venezuela. It's similar to that of other Latin American countries, but very different from what we see outside the region. On [inaudible] in Venezuela and most of Latin America is mostly socio-economic, it's very hard for people to climb from a lower socio-economic status to a higher one. It's not something that is based on—it's not an inherent identity. It's not tied to tribal or ancestral in any way, it's imposed by structural conditions. So in that sense, I wouldn't draw parallels, which is why I think when we think about rebuilding the security sector, it's important to consider the lessons we learned in Iraq, Afghanistan, etcetera, but also lessons that the region itself has learned because a new government of Venezuela is likely to be, maybe even offended, but definitely to think Iraq is irrelevant to that.

Even asked from a U.S. foreign policy perspective, that's been our formative experience. That's what the people who would be in a position to make policy at the time, that's the experience that they're going to be, the last of which they're going to be seeing this even as evidenced by your question itself. Then when we consider outside influences, I got locked in part of that question, but they're going to have to be included in any kind of mediation, which brings me to the last point that I wanted to make that are about previous questions. One about the effect of [inaudible], and then about the effect of U.S. elections, which is to say that, if we were to have a transition, an alternation in power from the parties, that would potentially create a moment of opportunity in Venezuela, as Venezuelan, both opposition and regime people, are likely to view that as somebody who might be favorable to them, or might be amenable to negotiations, whereas the existing party has already shown their hand. So a new party in power would create an opportunity in Venezuela.

We saw this when Obama was first elected, and it created a window of opportunity to send an ambassador to Caracas, when previously the position had been empty. That window of opportunity and role of the U.S. also brings me to the very last thing I like to say, which is if we were going to have negotiations in Venezuela, which is the way most Latin American dictatorships have ended, has been through negotiation, a key question that would have to be answered is who could lead those negotiations? In the many, many years that the regime has been in power, Venezuela has run through all the obvious answers for a good faith negotiator, including the Catholic Church, which was badly burned in this. So a key thing to address Sofia's question from earlier is to think about who could be perceived as a good faith actor, but faith mediator by both sides.

GEDAN: Sure. So I think unlike Iraq, Venezuela benefits from, you know, demographic homogeneity, that would allow for a potential, you know, social cohesion and some kind of political transition, as long as it was recognizing that, you know, Chavismo, the ideology of the late Hugo Chavez, still has a stronghold on as many as a third of Venezuelans, even if you know, far fewer, maybe half or less support the current government. So I think there is certainly a possibility where you won't see that kind of fragmentation. What you will see is this extraordinarily fragmented security environment, where you have the presence of Colombian guerrillas, militias known as colectivos.

And for that reason, you know, a functioning armed forces and security services will be needed on day one, you know, Paul's research as demonstrated this, as well. And so for that purpose, you can have any kind of de-Baathification process, and I think that's widely acknowledged internationally, and the opposition of Venezuela also has made clear that if amnesty is necessary, it would be offered so that the armed forces and security services can continue to function. So I think that would be the greater challenge then, the kind of social cohesion that you needed to build and you have still not been able to in the context of Iraq and other places where you've seen much violence following a democratic transition.

GAITHER: And Paul.

ANGELO: I would just add to everything that has previously been said that the United States, international partners, and the democratic opposition in Venezuela are all going to have to act or respect a transitional scenario that is less than perfect, and going to have to accept working with and turning a blind eye to, in some cases, acts of corruption that have been committed by members of the regime who would likely to be part of a transitional government. And so I think, you know, it's looking beyond Iraq, which yes, I think the lessons of de-Baathification are important and relevant to Venezuela.

I would also point to the transition that happened in Nicaragua in the late 1980s, and into early 1990s, which you saw members of the Sandinista party who had committed acts of corruption, and in some cases, egregious abuses of human rights, but the democratic government of Violeta Chamorro looked either way in order to exact the compliance of the security forces. And I think that's something similar, is ultimately what we're going to see happen in Venezuela if we ever get to a point at which we're looking at a post-Maduro country.

GAITHER: Thank you. And I think I can speak for all of our members when I say this has been an incredibly rich discussion and the fact that we have several questions still pending indicates that it is a topic that is of great interest and one where we have all grown greatly. So I will ask you all to join me in thanking our distinguished speakers tonight, our panelists—Benjamin Gedan, Fabiana Perera, and Paul Angelo. And I would like to remind you all that there will be a video and transcript of today's conversation available on the CFR website. So with that, thank you and good day to all.

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