Colombia: Venezuela Depends On Cuban Economic Advisors


August 5, 2014: FARC is threatening to abandon the peace talks if the government does not provide more amnesty for FARC leaders and veteran fighters. But most Colombians insist that many FARC members answer for their crimes. A lot of the FARC members could be subject to prosecution and are not about to surrender and disarm to face that. FARC also wants the government to cease operations against FARC while the peace talks are going on. The government refuses to do that because in the past such arrangements enabled FARC to rebuild and then abandon the peace talks. This impasse could cause years of negotiations to be abandoned. Many rebels are willing to end the decades of violence and disarm, but not if they are subject to prosecution for the crimes (murder, rape, kidnapping and sundry acts of violence and theft) they have committed. The problem is that many of these criminal acts were committed or ordered by FARC and ELN members who are publically known. There are often still witnesses out there willing to testify. Many Colombians are willing to let the war (which the leftist rebels have been losing for the past decade) go on rather than let so many of the rebels “get away with murder.” The government says it can get some amnesty, but not as much as the rebels want.

Meanwhile FARC continues to fight hard in the southwest where it has been waging a terror campaign against the local population, especially in the port city of Tumaco. FARC also continues to derive most of its income from the drug trade as well as less lucrative crimes like extortion and theft. The government campaign against FARC continues and is particularly intense in the southwest and along the Venezuelan border. Venezuela has become a sanctuary for drug gangs and leftist rebels who can afford to pay what corrupt officials demand.

The growing corruption across the border is partly in reaction of the economic collapse in Venezuela. This has forced the government to do something and that has delayed widespread violence by a population that gets angrier each day because of the shortages. Venezuela imports 70 percent of its goods and years of price controls and rationing have corrupted the economy. The government has promised to announce solutions on August 15th and the situation could get ugly if the proposed solutions are not credible.

Inflation is running at 60 percent and while unemployment is under ten percent many people have low-paying government jobs that leave many with enough to eat (from government subsidized and rationed food) bur not much else. The government admits that there is a corruption problem and claims that 40 percent of goods (especially the heavily subsidized petroleum products) are illegally smuggled to neighboring countries (mainly Colombia) where they can be sold at a much higher price. This has made many Venezuelans rich and makes it possible for many poor Venezuelans to get by. There is a growing black market where goods are available, but at market rate prices most Venezuelans cannot afford. At the moment the government is deadlocked with pragmatists urging loosening of market controls to enable businesses to revive, survive and eliminate many of the shortages. But hardliners have blocked this so far, insisting that only enforcing communist style economic controls can cure the problem.  For months the socialist government has been criticized by its own far-left zealots who have long been core supporters.

The extreme left cannot accept any suggestion that the socialist policies of the government have caused the economic collapse and urge the imposition of even more centralized control of the economy. This is what many senior Venezuelan officials are coming to realize is what has caused the economic collapse. But the far left is composed of true-believers to whom economic issues are a matter of faith, not reality. The leftists have another problem in that they are depending on Cuban economic advisors. Cuba has been an economic basket case for decades and has been forced to allow more and more market economy activity to survive. Changes like this could help, but not cure Venezuela’s economic problems but would require a degree of state economic control similar to what Cuba has. This would do further damage to the Venezuelan economy. The Cuban economic advisors are also calling for less waste and corruption. China, which is a major customer Venezuelan oil and the main source of foreign loans urges a Chinese type economy (free market with a communist dictatorship.) But the Chinese model works mainly because the Chinese entrepreneurs have been far more productive than those in Venezuela have ever been. In large part that’s because of oil exports, which account for half the Venezuelan GDP and none of the Chinese GDP.  

There is one far-left criticism that is accurate; there is a growing problem with corruption. That is not likely to get fixed before it all collapses. While the far-left zealots may be pure, they are not effective enough as political operatives to control the government. Those who are in control are not willing to reduce the corruption because too many of the corrupt officials see that the socialist policies are not and cannot work and the money they are stealing will be a way out of this mess for themselves and their families. Unfortunately many of their less affluent followers are figuring this out as well and are becoming unruly about it. This is particularly troublesome when it happens with some of the armed militias the government has formed to provide protection against a popular uprising. Losing the support of the far-left and the armed militias means the ruling socialists are another corrupt dictatorship ripe for overthrow followed by a civil war. Unless there are some fundamental (and not very socialist, thus very unlikely) economic reforms the inflation (now over 60 percent), unemployment (officially low but most of it is low-paying make-work) and shortages (especially of essentials) will get worse and when the popular discontent turns to violence. This will be a problem for all of Venezuela’s neighbors, but particularly Colombia which will see lots more refugees and more years of Venezuela serving as a sanctuary for gangsters and Colombian rebels.

July 29, 2014: ELN set off four bombs in the capital. These caused some property damage but no casualties. These were apparently in protest against the president, who is to be inaugurated for his second term in nine days. Peace negotiations with ELN were recently agreed to.

July 28, 2014: In the Pacific coast port of Buenaventura (halfway between Ecuador and Panama) FARC destroyed electricity transmission towers cutting off power to most of the 400,000 people in the city. Repairs and restoration of power took nearly a week. FARC keeps making attacks like this to try and force the government to agree to a ceasfire during the peace talks.

July 27, 2014: The Dutch colony of Aruba changed its mind and released a former Venezuelan intelligence chief (Hugo Carvajal) and let him return to Venezuela. Aruba police had earlier arrested Carvajal at U.S. request on charges he was a major player in drug smuggling via Venezuela. Aruba says they let Carvajal go because Venezuela convinced them that Carvajal was travelling with a diplomatic passport and had diplomatic immunity. The U.S. called that absurd and accused Aruba of responding to Venezuelan threats to shut down a large Venezuelan owned refinery in Aruba if Carvajal was not released. The United States has long accused Venezuela of becoming a sanctuary for drug gangs and this was the clearest evidence so far of how far the corruption had gone.

July 24, 2014: The preliminary peace talks with ELN are stalled as the leftist rebels from ELN and FARC wait to see how far the government will (or can, because of popular opinion) go in granting amnesty.

July 23, 2014: In the east (Arauca province) the security forces caught up with an ELN group that had been terrorizing people living along the Venezuelan border and attacking economic targets inside Colombia. Police killed eight ELN members and arrested another eight. ELN has been attacking oil fields and pipelines seeking to extort “protection money” from the companies.

July 21, 2014: Chinese President Xi Jinping visited Venezuela and agreed to loan the country another $4 billion. Such Chinese financial commitments are now about $40 billion and most are loans repaid with Venezuelan oil. China currently imports 500,000 barrels a day of Venezuelan oil and half of that is to pay for loans. China buys about a third of Venezuelan oil exports.

July 11, 2014: In the east (Arauca province) FARC blew up a section of a major pipeline near the Venezuelan border. In 2013 there were over twenty attacks a month. Such attacks have increased a bit this year.






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