The failed coup: Venezuela’s Army Chief Padrino TRICKED Trump & Abrams

MAJOR: Inside How The Coup Was Foiled – Venezuela’s Army Chief Padrino TRICKED Trump & Abrams

By Vladimir Dobrynin

Fort Russ,

4 May, 2019

Editors note – Head of Venezuela’s armed forces, Padrino, entirely conned Abrams, and the April 30th event was supposed to be major with Padrino backing it. This explanation below uses all the facts, including official statements, and puts them all together. It also is based on highly reputable Spanish sources. Moreover this conforms to how CSS already understands regime-change operations to have been foiled in various places, and significantly as we have written before, in 2002 in Venezuela itself. That is why it is necessary for the military intelligence to work on coup operations, so that they can reverse them. This story explains several others factors, such as the sporadic and pre-planned violence we saw on April 30th, such as a few armored cars fighting each other, as well as a likely fake situation where protesters were run over. In that scenario, its likely that the coup-involved personnel themselves ran over their own opposition protesters. We’ve seen it many times before, with the use of snipers, so why not with an armored car? FRN earlier today ran two stories which this amazing story below refer to, one that Trump talked to Putin after the failed coup attempt where Putin got to be extra firm, and second that Trump expressed distrust in US intelligence on Venezuela. This explains, of course, why. – J. Flores

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By Vladimir Dobrynin – While Juan Guaido and Nicolas Maduro played cat and mouse on Wednesday in the streets of Caracas with protests caused by the first of the two politicians named, the Trump administration tried to find out why the impostor was abandoned by the country on Tuesday, April 30th, and gave up on the coup operation.

According to confidential information obtained by the Spanish edition of ABC, the regime change plan arose from an agreement between US National Security Advisor John Bolton and Venezuelan Defense Minister Vladimir Padrino , which was concluded during several telephone conversations held in recent months. Padrino, and along with him, some other ministers and generals had to sign onto the agreement with the U.S president-appointed President Juan Guaido of the plan drawn up by opponents of Nicolas Maduro.

These documents contained a “road map”, according to which a coup would end with the election of the head of Venezuela “30 days after the Chavista regime surrendered and recognized Guaido as the person legally acting as head of the Republic.”

In parallel, the Supreme Court of Venezuela represented by its chairman, Michel Moreno , was to declare illegal the Constituent Assembly (National Constitutional Assembly), the branch of the legislative power created and controlled by Nicolas Maduro. And “with the observance of the necessary legal procedures and formalities to the head of the National Guard, General Ivan Rafael Hernandez Dala was charged with the duty to inform Maduro that he had only two options in the current situation: either he would leave the country, fleeing to Cuba, or be arrested at the request of the court. After that, a “top secret document from the depths of American intelligence” was supposed to appear on the scene, that in Venezuela there are between 20 and 25 thousand armed Cuban mercenaries supporting Maduro and keeping the whole Bolivarian Republic in fear ” (the armed forces of which have 235 thousand active military and 200 thousand more – reservists – author’s note.) Thus, by joint efforts of the USA and the Venezuelan military “the country would have been spared by the U.S appointed president of the dictator Maduro and from his support by battalions of soldiers of fortune from Cuba” .

But something went wrong. Maduro did not flee to Cuba, Padrino suddenly changed his mind about becoming the “godfather of the Venezuelan revolution” (by the way, Padrino translated from Spanish means “godfather”), and the vast majority of Venezuelan generals did not get in touch at the time appointed by the Americans. (There is an interesting moment during Guaido’s call to arms, with the 14 soldiers behind him, when a cell-phone goes off and distracts him –  maybe that was the call, ‘it’s not happening’ – J. Flores)

Elliott Abrams, the special envoy of the US administration for Venezuela, complained that “he could not get through to anyone to give the right signal, as if by agreement, they turned off their mobile phones.”

ABC is a serious newspaper, not “jaundice” of any kind, operating with “phrases taken out of context and misinterpreted”. David Alandet , Lyudmila Vinogradoff and Imaru Rojas, three reporters of the publication, sharing information “received directly from a person at the US National Security Council”, never could be considered fans of Maduro (as is, incidentally, the leadership of Cuba and the Russian Federation), so to assert that their publication is fiction or fake, is baseless on those grounds.

“Agreements between representatives of the Washington administration and Venezuelan generals in the presence of Juan Guaido were to be signed on Tuesday (May 1) at the location of the La Carlota military base near Caracas. Together with the self-styled president, another opposition leader, Leopoldo Lopez , was supposed to put his signature on the document. But strangely, instead of La Carlota, Lopez entered the Spanish embassy in the Venezuelan capital and asked for political asylum there. (FRN previously, and in error, reported that he arrived at the Chilean embassy – now we are clear that Chilean consular vehicles escorted him to the Spanish embassy – J. Flores)

“High-ranking sources” indicate a complete lack of information about what exactly went wrong with the American scenario. They know only the final result: Nicolas Maduro did not leave the presidential palace Miraflores on Tuesday. Some other unnamed experts say that “Vladimir Padrino is to blame for everything, at the last moment he made a total reversal”.

Elliott, according to the authors, “expressed particular disappointment with the position of Vladimir Padrino, a key figure of both the Chavistas and the intended revolution, designed to overthrow it.”

“They talked a lot, but they way it all came down, it was for nothing,” the special representative of the White House for Venezuela stated with frustration. But it was all a con-job by the Venezuelan military intelligence against the U.S coup plan. Acting US Secretary of Defense Patrick Shanahan even surprised many and canceled his visit to Europe – according to the Pentagon spokesman, he wanted to “personally coordinate the actions of the National Security Council and the Department of Homeland Security, taking into account what is happening in Venezuela and on the border of the States with Mexico. ” It is possible that champagne, in order to “raise the glasses and toast them all at once,” was also purchased and were kept in the refrigerator for the celebration.

But the hour did not come. Not as expected. Nicolas Maduro, who, according to the calculations of American strategists, was to be already hiding somewhere in the suburbs of Havana, suddenly appeared on May Day in the evening on the Republic’s television screens and said that “for betraying the interests of the state, aiding the self-proclaiming Guaido and American imperialism, SEBIN’s Venezuelan intelligence officer Manuel Christopher Figuera is removed from his post and arrested. ”

On Wednesday morning, a video clip went viral in social networks in which a group of Vladimir Padrino’s relatives, including his mother, appealed to the Minister of Defense with an appeal “to break with Maduro and make a courageous step towards the people.”

But Padrino did not heed the requests of relatives.

Guaido managed to raise his followers (in accordance with the plan) and organize crowds of protesters in as many as 14 areas in Caracas. The impostor arrived at one of them himself and delivered an inspired speech, from time to time choking on saliva and stating that “there is no way back, call everyone you know, we will win, the usurper will be removed from power, he has already lost”.

Maduro’s supporters had a different opinion on this matter, but it still didn’t come to a collision with the opposition: National Guard units intervened, initially separating the opposing sides, and then surrounding the military rebels (they counted about 300) at La Carlota.

John Bolton and Mike Pompeo called Padrino a traitor (to American interests, of course) and “a key figure guilty of Maduro remaining in power.” The Venezuelan defense minister was promised to “block the oxygen” by arresting all the assets and real estate he had in Canada and the United States if he did not give the order to the officers to take the army to the streets.

“They want to drown Venezuela in blood,” said Padrino, addressing the country’s population in a video broadcast on the Internet. – That is why I ordered all the military to remain in the barracks. And deal with the unrest with the National Guard”.

US President Donald Trump didn’t understand why the remarkably elaborated Elliott Abrams Plan for Venezuela didn’t work, it would seem, and on Friday called his Russian counterpart Vladimir Putin, and the Russian President reminded the American during the hour and a half that “interference from outside to internal affairs, attempts by forceful change of power in Caracas that undermine the prospects for a political settlement of the crisis would not be acceptable. ” Did Trump get it? We’ll find out later.

Vladimir Dobrynin, Madrid – translated by and for FRN – 

A reporter's diary from Venezuela

Reporter’s Diary from Venezuela

Reporter’s Diary from Venezuela.

Georgy Zotov (author of AIF weekly)

This is the personal view of the correspondent on today’s life of Caracas.

Translated by Scott

Day one…

Our Air France flight was grounded in Paris for 5 hours; no one wants to land in Venezuela in the middle of the night, due to the “dangerous criminal situation.” The airliner is half empty, the passengers, judging by nervous conversations, are only Venezuelans. A taxi driver, while leaving the airport, locks the doors, and sweetly warns that after dark, bandits scatter spikes on the roads and rob the stranded cars. “Oh, don’t worry, Amigo, I have an old car. They are not interested in old, cars.” That’s where you understand why Caracas is ranked first in the ranking of the most dangerous cities in the world. It’s too late for supper, but I at least want to exchange my US dollars for Venezuelan bolivars. I ask my cab driver. He violently shakes his head: “No, no, no. I do not mess with such things, it’s illegal!” “Whatever,” I laugh at him. “Tomorrow, someone will take the dollars, maybe even with my hands torn off.” I was wrong…

The following morning, no one at the hotel wants to look at my dollars. The hotel employee tells me to go to one of the official “exchange stores” but honestly adds: “only Americans, or complete jerks go there.”

In Venezuela, the official dollar exchange rate is 200 bolivars, and the “black market” exchange rate is 2,715. And if you exchange your currency in a bank, then according to this calculation, a bottle of ordinary water will cost 330 rubles, and a modest lunch in an inexpensive cafe—7,000 rubles per person. Judging by the stories on the Internet, in Venezuelan people should simply kill each other for dollars, but this is not the case. There is also other things different from perception. On western news, it is shown that demonstrators fight with police daily, tens killed, hundreds wounded, the sea of blood. But in Caracas, all is quiet. In an afternoon, people are sitting in cafes and idly sipping rum with ice, while maintenance crews sweep the streets. It turns out that the world ‘s leading TV new sources (including CNN and the BBC) show some fantasy film about Venezuela. “Demonstrations?” yawns Alejandro, a street vendor selling corn. “Well, Saturday there will be one, sort of. On one end of the city will be a rally of opposition supporters, and on the other, Maduro supporters. The police keep them separate to prevent fights.” Amazing. You browse the Internet, you turn on the TV, and you see the revolution, the people dying on streets to overthrow the “evil dictator Maduro.” And you come here, and nobody cares.

Then it got even better. Never in my life have I had so many adventures while trying to exchange one currency for another. The country has a problem with cash money, long queues waiting for the ATM, and even the street dealers of “currency” have no “efectivo,” as they call cash. I wander inside a jewelry store and ask if they want some “green.” The answer is “No.” Everyone acts like law-abiding citizens. I am told that police recently started arresting people for private exchange, that’s why people don’t want to associate. One owner of the jewelry store almost agrees. “What do you have? Dollars? No, I won’t take that.” “Why now?” “I take only the Euros …dollar, man, is the currency of the aggressor, they try to tell us how to live!”

Damn it! I have money in my pocket, and I can’t even buy lunch! Finally, a certain woman, nursing a baby in a workplace, very reluctantly agrees to exchange 2,200 bolivars for a “buck.” I want to curse her out, but I have to live somehow. Bolivars seem like a beautiful, unattainable currency, which hides all the benefits of the world, that’s why they are so hard to get. I’m nodding in agreement. The woman calls somewhere, and asks to wait. After 15 minutes she tells me that “there is a problem.” Of course, money is not to be found. Her man couldn’t withdraw them from the ATM, everywhere the ATMs are on a strict daily rate. “President Maduro is fighting for the strengthening of the national currency,” explained the nursing mother. “We all use our cards to pay for everything.” I don’t know how it works, but yesterday an exchange rate was 3,200 bolívars for 1 dollar, and today the “bucks” fell to 2,700. I have started to realize that in the very next few days I’ll starve to death with dollars in my pocket. A unique fate, perhaps, that has never happen in history.

In the next kiosk cash for gold place I am offered a plastic debit card loaded with local money, and then I would try my luck withdrawing bills from neighboring ATMs. “Or, maybe not, if you’re not lucky.” Well, of course. By the way, an attempt to buy a SIM card for the phone also fails. They don’t sell them to foreigners, you need a Venezuelan ID card. Yes, and I have nothing to pay for it. The feeling is that the dollar is a gift that no one wants. Sadly, I walk by stores. People come out of there with packages of eggs, bread, packs of butter. The range is not like in Moscow, of course, but again, if you believe the news on TV, Venezuela is suffering from a terrible famine, supermarkets are empty, and people are fighting each other for food. Nothing like that. There are queues, but not kilometers long. In general, television stations in the United States and Europe (and ours too) created their own Venezuela, drawn like a terrible cartoon. I walk into a cafe at random. “Will you accept dollars for lunch?” I ask hopelessly. “Yes, at the rate of “black market” they whispered to me. “But the change will also be in dollars…sorry, no bolivars at all…we’ve been hunting for them ourselves for weeks.”

My first day in Venezuela is over. How unusual. I’ve been here for 24 hours, and I’ve not held a Bolivian bill in my hand. Oh, but there will be more…

Day two…

60 liters of gasoline here cost five cents, and a basket of basic food products — 50 rubles (about 90 cents).

“The gas station,” my driver reaches into his purse and takes out a banknote of 2 Bolivar. The exchange rate of the Venezuelan currency changes every day, and today it is 2 580 bolivars per one dollar. In Russian money, that is 10 cents. “We must now fill a full tank,” says the taxi driver. 60 liters of gasoline cost 1 bolívar, but we give the 2 bolivars bill, because there is no 1 bolivar bill. I can’t believe that is a full tank of fuel costs FIVE CENTS? “And how much can you even fill at this price?” “Once a day for every citizen. And it’s enough for me.” All the way to the center city, the driver scolds President Maduro, and tells me how much he loves America, and how it will be good when the “guy with mustache” is finally overthrow by the Americans. I start to think that I don’t feel sorry for Maduro at all. He really corrupted en entire country with such generous handouts. And they are willingly take, but no one says “thank you,” just that they want more and more.

On the street there is a long line into a “social supermarket,” a place you can buy 400 types of goods at the solid low prices. These shops were established by the late President Hugo Chavez “to fight inflation and protect the poor.” The stores are funded by the Venezuelan government. The buyer comes with a passport, gets a number, and waits in line until they are allowed to enter and buy a certain set of products. The selection isn’t very impressive, only the essentials: chicken, bananas, pineapples, sausages, milk. A box of these food items costs of equivalent of 50 rubles. CNN and the BBC show videos of Venezuelans wrapped in rolls of toilet paper and sadly wandering across the border with Colombia. The toilet paper is found in absolutely every store, and without any problems. I am once again simply amazed: Western TV news is something from Hollywood, they are not reporting but making fantasy blockbusters. On the BBC website I read that hungry Venezuelan children after school go to take a look at the street vendors cooking meat. I’ve been all over the town. Restaurants, cafes, eateries, during the lunch hour are crowded, and people look well-dressed. The mass hunger, the Western media paints for us, doesn’t exist in reality.

I take a few pictures inside the supermarket, and I am immediately approached by the workers or “Maduro followers.” “It’s forbidden to take pictures here.” “Is this a military facility?” “Leave or we’ll call the police.” “Listen, everywhere on TV they tell us that there is hunger in Venezuela. I want to prove that the reality is different.” “We are not interested, we just work here: leave immediately!” I started to understand perfectly well why Nicolas Maduro lost the information war. Hugo Chavez was often praised even in private conversations, but even Chavez supporters find little positive to say about Maduro.  When people protested against Hugo’s endless nominations as the head of state, he used to meet them with the open arms, smiling and saying : “Guys, what’s the problem? I’m your President, I love you, let’s sit down and talk!” Maduro doesn’t have this image of being one of the guys. He is not able to communicate with the public, and his assistants, like the employees of the social store, can only push and ban and threaten with the police.

On the streets, provincial farmers sell fruits and vegetables: mango, tomatoes, cucumbers. All about the same price of 25 rubles per kilogram. Here, a dozen eggs from street vendors is 4,800 bolivars or about 130 rubles, and that is not cheap. During the peak of oil prices, when a barrel of oil was sold for $150, Venezuela lived on the principle of a rich fool. To develop domestic production? No, what is that nonsense? We can buy every triviality abroad. Even the managers of the oil production weren’t local, they hired specialists from Europe, and paid them a lot of money. Food imports into the country reached 95 percent. And now the situation is not too different. When I order my meal in a cafe (incidentally, still paying in dollars, all attempts to change dollars to bolivars failed), I get excellent pork. “Where is it from?” “From Colombia.” “And chicken?” “From Brazil, that’s why it’s so expensive.” Even flour for bread comes from neighboring Guyana. Chavez and his successor Maduro wanted to be “people’s presidents,” handing out money left and right. But then oil prices collapsed, food shortages began, and people rebelled. People demand as before: cheap food in supermarkets, gasoline for nothing, and they don’t want to hear anything more or less.

In the TV world, Maduro is portrayed as a dictator and executioner, although in Venezuela, he is openly scolded for being meek; they draw cartoon of him, and insult him as much as they can. But who cares about the truth? Much more colorful to show the suffering for the toilet paper.

Day three…

“I got robbed by a COP for my phone. I’m talking on the cell phone outside, he walks over to me, pokes in my side with his gun. “Give me your mobile.”I don’t understand immediately, and automatically continue the conversation. He cocks his gun, and says, “Kill.” I give him my phone. It’s still good, I love being robbed by cops. They are not bandits from the “Barrios,” the poor neighborhoods in the mountains, who can shoot you first and then rummage your corpse’s pockets. I’m lucky, I’ve lived in Venezuela for 27 years and this was the first time I was “hop-stopped.” A lot of people get robbed every year.

I am talking to Mikhail, a citizen of Russia living in Venezuela since the beginning of the nineties. He helps me move around Caracas and instructs me on how to visit the local slums. “You don’t have protection? Oh, who would doubt that. Then leave your watch, phone, and camera at the hotel. Take some money for a taxi, you also have to have some cash in case you get ambushed, otherwise they might get offended and kill you. Sometimes, people get shot in an arm and a leg, that survivable.” After such a nice story, I still go to the “Barrios.” It is there that the supporters of President Nicolas Maduro mainly live. According to CNN and BBC, impoverished people in Venezuela are revolting against the government. Nothing can be further from the truth; it’s a wealthy middle class that goes to demonstrate. Maduro is applauded in poor neighborhoods, because the President gives their residents free food sets enough for a month and gives free (!) apartments. Formally, they belong to the state, but people live in them for generations.

“I will cut a throat for the President,” a heavily-tattooed man smiles menacingly, and introduces himself as Emilio. “Who else would give me food and a ‘roof ‘ for free? He is our father and benefactor.” Maduro deliberately does not touch such people, which is why crime in Caracas gushes over the edge. I am advised not to stop on the street to look at anything, but just to keep going, otherwise bandits will have time to look closely at me. That’s why they have constant robberies on the streets, plus the police and the national guard can easily take away your favorite things. No one can be happy about all these. “I love Russians,” told me the businessman Carlos while conversing over coffee near the Plaza de Bolivar. “But you’d better send Maduro economic advisers. Teach him a lesson! He doesn’t know anything about economy. He has one recipe for everything, to give more money to the poor, more free apartments, free food, free gasoline, to build a full communism here. But with this, sorry, any state would collapse.”

The opposition rally in the Western part of Caracas is huge, at least 100 thousand people gathered. The protesters are friendly to me, Russia here is respected. It is not considered an enemy. Zero aggression at all… and then I wonder about what I see on CNN, videos of the opposition being rolled into a pancake by tanks. The police keep the neutrality, it disappears from the streets, to not give a cause to provocateurs. People are happily waving flying in the sky military helicopter. Many-in t-shirts with the American flag, a man passes by, holding a hand-written poster with the altered slogan of Donald Trump -“Make Venezuela great again.” “Do you love the U.S.?” “Yes, adore it!” “I remember you already had a pro-American President in 1993, Carlos Andrés Pérez. He sharply raised the price of gasoline, 80% of the goods were imported, he drove the republic into billions of IMF debts. People went to demonstrations, and Pérez drowned them in blood, killing 2,000 people…then he fled to America.”

The man freezes, with his mouth open. Finally, he gets the gift of speech back. “I hope this time the pro-American President will be different.” “Are you sure?” “Sorry, I have nothing to say.” Asking the girl from the opposition how she feels about the US: “The US is our neighbor, let them change the power here.” “In countries where the US changed power like Iraq, Libya, Afghanistan, hundreds of thousands people were killed. Are you ready for this?”

Again, she pauses and sighs. “No, no, no. We are not Africa or Asia. All will go peacefully. Venezuelans will not kill each other.” Where the opinions splits is the question of whether the free gasoline and free food packages will remain with an American-instilled government. Many are sincerely sure that the “freebies” will remain under a new president. How else? The minority that recognizes that state gifts will be canceled say that they at least “we will be free.” As I said, the protesters are mostly well-dressed, well-off people. By the way, the leader of the opposition, Juan Guido, also has no real economic program promising to “quadruple the oil production.” No one thinks that after that price will fall four times. In short, I get a feeling that neither the President, nor the opposition, know anything about the economy in Venezuela.

The demonstrations in support of Maduro take place at the other end of the city, to prevent the opponents from fighting. “You Americans are insolent!” screamed an old woman in a red t-shirt rushing towards me. “Bastards! You should be handed on a first tree! Cheers to socialism!” “I’m Russian, grandma.” The old lady recoils.  “Sorry, please.” “Don’t get that upset, senora.” Many people gathered here are joyful, dancing and singing.

A soldier stands in front of me and doesn’t allow me to take any pictures. Not just me, but also other passers-by. “You can’t take pictures here.” “Says who?” “President Maduro.” No, Maduro is definitely doing everything he can to be disliked. Those gathering here are poor, blue-collared workers and farmers from the suburbs. I am interested , honestly, were you brought here on the busses? “Yes, he did!” says one grandfather, proudly displaying a portrait of Che Guevara. “But I would walk here for Maduro! It’s a lie that we were paid to be here.” Other people applaud him happily. I shake hands. “Russians are welcome! Venezuela loves you, you’re home.”

The day of rallies is over. The maintenance crews came to the sidewalk, strewn with plastic bottles, crumpled packs of cigarettes, and other debris left after by a cloud. At the entrance of an old house, old people drink coffee. “They say that today some general has defected to the side of the opposition,” says one of them. “Some significant person.” “What’s this guy’s name?” “Who knows?” Venezuela is split in half. And the situation there may change at any moment.

Much-needed context on Venezuela

Venezuela’s collapse is a window into how the Oil Age will unravel

By Nafeez Ahmed

Medium,

31 January, 2019

For some, the crisis in Venezuela is all about the endemic corruption of Nicolás Maduro, continuing the broken legacy of Chavez’s ideological experiment in socialism under the mounting insidious influence of Putin. For others, it’s all about the ongoing counter-democratic meddling of the United States, which has for years wanted to bring Venezuela — with its huge oil reserves — back into the orbit of American power, and is now interfering again to undermine a democratically elected leader in Latin America.

Neither side truly understands the real driving force behind the collapse of Venezuela: we have moved into the twilight of the Age of Oil.

So how does a country like Venezuela with the largest reserves of crude oil in the world end up incapable of developing them? While various elements of socialism, corruption and neoliberal capitalism are all implicated in various ways, what no one’s talking about — especially the global oil industry — is that over the last decade, we’ve shifted into a new era. The world has moved from largely extracting cheap, easy crude, to becoming increasingly dependent on unconventional forms of oil and gas that are much more difficult and expensive to produce.

Oil isn’t running out, in fact, it’s everywhere — we’ve more than enough to fry the planet. But as the easy, cheap stuff has plateaued, production costs have soared. And as a consequence the most expensive oil to produce has become increasingly unprofitable.

In a country like Venezuela, emerging from a history of US interference, plagued by internal economic mismanagement, combined with external intensifying pressure from US sanctions, this decline in profitability became fatal.

Since Hugo Chavez’s election in 1999, the US has continued to explore numerous ways to interfere in and undermine his socialist government. This is consistent with the track record of US overt and covert interventionism across Latin America, which has sought to overthrow democratically elected governments which undermine US interests in the region, supported right-wing autocratic regimes, and funded, trained and armed far-right death squads complicit in wantonly massacring hundreds of thousands of people.

For all the triumphant moralising in parts of the Western media about the failures of Venezuela’s socialist experiment, there has been little reflection on the role of this horrific counter-democratic US foreign policy in paving the way for a populist hunger for nationalist and independent alternatives to US-backed cronyism.

Before Chavez

Venezuela used to be a dream US ally, model free-market economy, and a major oil producer. With the largest reserves of crude oil in the world, the conventional narrative is that its current implosion can only be due to colossal mismanagement of its domestic resources.

Described back in 1990 by the New York Times as “one of Latin America’s oldest and most stable democracies”, the newspaper of record predicted that, thanks to the geopolitical volatility of the Middle East, Venezuela “is poised to play a newly prominent role in the United States energy scene well into the 1990's”. At the time, Venezuelan oil production was helping to “offset the shortage caused by the embargo of oil from Iraq and Kuwait” amidst higher oil prices triggered by the simmering conflict.

But the NYT had camouflaged a deepening economic crisis. As noted by leading expert on Latin America, Javier Corrales, in ReVista: Harvard Review of Latin America, Venezuela had never recovered from currency and debt crises it had experienced in the 1980s. Economic chaos continued well into the 1990s, just as the Times had celebrated the market economy’s friendship with the US, explained Corrales: “Inflation remained indomitable and among the highest in the region, economic growth continued to be volatile and oil-dependent, growth per capita stagnated, unemployment rates surged, and public sector deficits endured despite continuous spending cutbacks.”

Prior to the ascension of Chavez, the entrenched party-political system so applauded by the US, and courted by international institutions like the IMF, was essentially crumbling. “According to a recent report by Data Information Resources to the Venezuelan-American Chamber of Commerce, in the last 25 years the share of household income spent on food has shot up to 72 percent, from 28 percent,” lamented the New York Times in 1996. “The middle class has shrunk by a third. An estimated 53 percent of jobs are now classified as ‘informal’ — in the underground economy — as compared with 33 percent in the late 1970's”.

The NYT piece cynically put all the blame for the deepening crisis on “government largesse” and interventionism in the economy. But even here, within the subtext the paper acknowledged a historical backdrop of consistent IMF-backed austerity measures. According to the NYT, even the ostensibly anti-austerity president Rafael Caldera — who had promised more “state-financed populism” as an antidote to years of IMF-wrought austerity — ended up “negotiating for a $3 billion loan from the IMF” along with “a second loan of undisclosed size to ease the social impact of any hardships imposed by an IMF agreement.”

So it is convenient that today’s loud and self-righteous moral denunciations of Maduro ignore the instrumental role played by US efforts to impose market fundamentalism in wreaking economic and social havoc across Venezuelan society. Of course, outside the fanatical echo chambers of the Trump White House and the likes of the New York Times, the devastating impact of US-backed World Bank and IMF austerity measures is well-documented among serious economists.

In a paper for the London School of Economics, development economist Professor Jonathan DiJohn of the UN Research Institute for Social Development found that US-backed economic “liberalisation not only failed to revive private investment and economic growth, but also contributed to a worsening of the factorial distribution of income, which contributed to growing polarisation of politics.”

Neoliberal reforms further compounded already existing centralised nepotistic political structures vulnerable to corruption. Far from strengthening the state, they led to a collapse in the state’s regulative power. Analysts who hark back to a Venezuelan free market golden age ignore the fact that far from reducing corruption, “financial deregulation, large-scale privatisations, and private monopolies create[d] large rents, and thus rent-seeking/corruption opportunities.”

Instead of leading to meaningful economic reforms, neoliberalisation stymied genuine reform and entrenched elite power. And this is precisely how the West helped create the Chavez it loves to hate. In the words of Corrales in the Harvard Review:

“… economic collapse and party system collapse — are intimately related. Venezuela’s repeated failure to reform its economy made existing politicians increasingly unpopular, who in turn responded by privileging populist policies over real reforms. The result was a vicious cycle of economic and political party decay, ultimately paving the way for the rise of Chavez.”

Dead oil

While it is now fashionable to blame the collapse of the Venezuelan oil industry solely on Chavez’s socialism, Caldera’s privatisation of the oil sector was unable to forestall the decline in oil production, which peaked in 1997 at around 3.5 million barrels a day. By 1999, Chavez’s first actual year in office, production had already dropped dramatically by around 30 percent.

A deeper look reveals that the causes of Venezuela’s oil problems are slightly more complicated than the ‘Chávez killed it’ meme. Since peaking around 1997, Venezuelan oil production has declined over the last two decades, but in recent years has experienced a precipitous fall. There can be little doubt that serious mismanagement in the oil industry has played a role in this decline. However, there is a fundamental driver other than mismanagement which the press has consistently ignored in reporting on Venezuala’s current crisis: the increasingly fraught economics of oil.

The vast bulk of Venezuela’s oil is not conventional crude, but unconventional “heavy oil”, a highly viscous liquid that requires unconventional techniques to extract and flow, often with heat from steam, and/or mixing it with lighter forms of crude in the refining process. Heavy oil thus has a higher cost of extraction than normal crude, and a lower market price due to the refining difficulties. In theory, heavy oil can be produced at below break-even prices to a profit, but greater investment is still needed to get to that point.

The higher costs of extraction and refining have played a key role in making Venezuela’s oil production efforts increasingly unprofitable and unsustainable. When oil prices were at their height between 2005 and 2008, Venezuela was able to weather the inefficiencies and mismanagement in its oil industry due to much higher profits thanks to prices between $100 and $150 a barrel. Global oil prices were spiking as global conventional crude oil production began to plateau, causing an increasing shift to unconventional sources.

That global shift did not mean that oil was running out, but that we were moving deeper into dependence on more difficult and expensive forms of unconventional oil and gas. The shift can be best understood through the concept of Energy Return on Investment (EROI), pioneered principally by the State University of New York environmental scientist Professor Charles Hall, a ratio which measures how much energy is used to extract a particular quantity of energy from any resource. Hall has shown that as we are consuming ever larger quantities of energy, we are using more and more energy to do so, leaving less ‘surplus energy’ at the end to underpin social and economic activity.

This creates a counter-intuitive dynamic — even as production soars, the quality of the energy we are producing declines, its costs are higher, industry profits are squeezed, and the surplus available to sustain continued economic growth dwindles. As the surplus energy available to sustain economic growth is squeezed, in real terms the biophysical capacity of the economy to continue buying the very oil being produced reduces. Economic recession (partly induced by the previous era of oil price spikes) interacts with the lack of affordability of oil, leading the market price to collapse.

That in turn renders the most expensive unconventional oil and gas projects potentially unprofitable, unless they can find ways to cover their losses through external subsidies of some kind, such as government grants or extended lines of credit. And this is the key difference between Venezuela and countries like the US and Canada, where extremely low EROI levels for production have been sustained largely through massive multi-billion dollar loans — fuelling an energy boom that is likely to come to a catastrophic endwhen the debt-turkey comes home to roost.

“It’s all a bit reminiscent of the dot-com bubble of the late 1990s, when internet companies were valued on the number of eyeballs they attracted, not on the profits they were likely to make,” wrote Bethany McLean recently (once again in the New York Times), a US journalist well-known for her work on the Enron collapse. “As long as investors were willing to believe that profits were coming, it all worked — until it didn’t.”

A number of scientists have previously estimated the EROI of heavy oil production to amount to around 9:1 (with room for variation up or down depending on how inputs are accounted for and calculated; the unfashionable but probably more accurate approach would be downwards, closer to 6:1 when both direct and indirect energy costs are considered). Compare this to the EROI of about 20:1 for conventional crude prior to 2000, which gives an indication of the challenge Venezuela faced — which unlike the US and Canada, had emerged into the Chavez era from a history of neoliberal devastation and debt-expansion that already made further investments or subsidies to Venezuela’s oil industry a difficult ask.

Venezuela, in that sense, was ill-prepared to adapt to the post-2014 oil price collapse, compared to its wealthier, Western competitors in other forms of unconventional oil and gas. To be sure, then, the collapse of Venezuela’s oil industry cannot be reduced to geological factors, though there can be little doubt that those factors and their economic ramifications tend to be underplayed in conventional explanations. Above-ground factors were clearly a major problem in terms of chronic inadequacy of investment and the resulting degradation of production infrastructure. A balanced picture thus has to acknowledge both that Venezuela’s vast reserves are far more expensive and difficult to bring to market than standard conventional oil; and that Venezuala’s very specific economic circumstances in the wake of decades of failed IMF-austerity put the country in an extremely weak position to keep its oil show on the road.

Since 2008, oil production has declined by more than 350,000 barrels per day, and more than 800,000 per day since its peak level in 1997. This has driven the collapse of net exports by over 1.1 million barrels per day since 1998. Meanwhile, to sustain refining of heavy oil, Venezuela has increasingly imported light oil to blend with heavy oil as well as for domestic consumption. Currently, only extra-heavy oil production in the Orinoco Oil Belt has been able to increase, while conventional oil production continues to rapidly decline. Despite significant proved conventional reserves, these still require more expensive enhanced recovery techniques and infrastructure investments — which are unavailable. But profit margins from exports of extra-heavy crude are much smaller due to the higher costs of blending, upgrading and transportation, and the heavy discounts in international refining markets. In summary, oil industry expert Professor Francisco Monaldi at the Center for Energy and the Environment at IESA in Venezuela concludes:

“…. oil production in Venezuela is comprised of increasingly heavier oil and thus less profitable, PDVSA’s operated production is falling more rapidly, and the production that generates cash-flow is almost half of the total production. These trends were problematic enough at peak oil prices, but with prices falling they become much more acute.”

The folly of endless growth

Unfortunately, much like his predecessors, Chavez didn’t appreciate the complexities, let alone the biophysical economics, of the oil industry. Rather, he saw it simplistically through the short-term lens of his own ideological socialist experiment.

From 1998 until his death in 2013, Chavez’s application of what he called ‘socialism’ to the oil industry succeeded in reducing poverty from 55 to 34 percent, helped 1.5 million adults become literate, and delivered healthcare to 70 percent of the population with Cuban doctors. All this apparent progress was enabled by oil revenues. But it was an unsustainable pipe-dream.

Instead of investing oil revenues back into production, Chavez spent them away on his social programmes during the heyday of the oil price spikes, with no thought to the industry he was drawing from — and in the mistaken belief that prices would stay high. By the time prices collapsed due to the global shift to difficult oil described earlier — reducing Venezuala’s state revenues (96 percent of which come from oil) — Chavez had no currency reserves to fall back on.

Chavez had thus dramatically compounded the legacy of problems he had been left with. He had mimicked the same mistake made by the West before 2008, pursuing a path of ‘progress’ based on an unsustainable consumption of resources, fuelled by debt, and bound to come crashing down.

So when he ran out of oil money, he did what governments effectively did worldwide after the 2008 financial crash through quantitative easing: he simply printed money.

The immediate impact was to drive up inflation. He simultaneously fixed the exchange rate to dollars, hiked up the minimum wage, while forcing prices of staple goods like bread to stay low. This of course turned businesses selling such staple goods or involved at every chain in their production into unprofitable enterprises, which could no longer afford to pay their own employees due to haemorrhaging income levels. Meanwhile, he slashed subsidies to farmers and other industries, while imposing quotas on them to maintain production. Instead of producing the desired result, many businesses ended up selling their goods on the black market in an attempt to make a profit.

As the economic crisis escalated, and as oil production declined, Chavez pinned his hopes on the potential transformation that could be ushered in by massive state investment in a new type of economy based on nationalised, self or cooperatively managed industries. Those investments, too, had little results. Dr Asa Cusack, an expert on Venezuela at the London School of Economics, points out that “even though the number of cooperatives exploded, in practice they were often as inefficient, corrupt, nepotistic, and exploitative as the private sector that they were supposed to displace.”

Meanwhile, with its currency reserves depleted, the government has had to slash imports by over 65 percent since 2012, while simultaneously reducing social spending to even lower than it was under IMF austerity reforms in the 1990s. Chavistan crisis-driven ‘socialism’ began with unsustainable social spending and has now switched to catastrophic levels of austerity that make neoliberalism look timid.

In this context, the rise of the black market and organised crime, exploited by both the government and the opposition, became a way of life while the economy, food production, health-care and basic infrastructure collapsed with frightening speed and ferocity.

Climate wild cards

Amidst this perfect storm, the wild card of climate impacts pushed Venezuela over the edge, accelerating an already dizzying spiral of crises. In March 2018, on the back of hyperinflation and recession, the government enforced electricity rationing across six western states. In one state, San Cristobal, residents reported 14-hour stretches without power after water levels in reservoirs used for hydroelectric plants were reduced due to drought. A similar crisis had erupted two years earlier when water levels behind the Guri Dam, which provides well over half the country’s electricity, hit record lows.

Venezuela generates around 65 percent of its electricity from hydropower, with a view to leave as much oil available as possible for export. But this has made electricity supplies increasingly vulnerable to droughts induced by climate change impacts.

It is well known that the El-Nino Southern Oscillation, the biggest fluctuation in the earth’s climate system comprising a cycle of warm and cold temperatures sea-surface temperatures in the tropical Pacific Ocean, is increasing in frequency and intensity due to climate change. A new study on the impact of climate change in Venezuela finds that between 1950 and 2004, 12 out of 15 El-Nino events coincided with years in which “mean annual flow” of water in the Caroni River basin, affecting the Guri reservoir and hydroelectric power, was “smaller than the historical mean.”

From 2013 to 2016, an intensified El-Nino cycle meant that there was little rain in Venezuela, culminating in a crippling deficit in 2015. It was the worst drought in almost half a century in the country, severely straining the country’s aging and poorly managed energy grid, resulting in rolling blackouts.

According to Professor Juan Carlos Sanchez, a co-recipient of the 2007 Nobel Peace Prize for his work with Intergovernmental Panel on Climate Change (IPCC), these trends will dramatically deteriorate under a business as usual scenario. Large areas of Venezuelan states which are already water scarce, such as Falcon, Sucre, Lara and Zulia, including the north of the Guajira peninsula, will undergo desertification. Land degradation and decreased rainfall would devastate production of corn, black beans and plantains across much of the country. Sanchez predicts that some regions of the country will receive 25 percent less water than today. And that means even less electricity. By mid-century, climate models indicate an overall 18 percent decrease in rainfall in the Caroni River basin that leads to the Guri Dam.

Unfortunately, no Venezuelan government has ever taken seriously its climate pledges, preferring to escalate as much as possible its oil production, and even intensifying the CO2 intensive practice of gas flaring. Meanwhile, escalating climate change is set to exacerbate Venezuela’s electricity blackouts, infrastructure collapse and agricultural crisis.

Economic war

The crisis convergence unfolding in Venezuela gives us a window into what can happen when a post-oil future is foisted upon you. As domestic energy supplies dwindle, the state’s capacity to function recedes in unprecedented ways, opening the way for state-failure. As the state collapses, new smaller centres of power emerge, competing for control of diminishing resources.

In this context, reports of food-trafficking as a mechanism of ‘economic war’ are real, but they are not exclusive to either political side. All sides have become incentivised to horde products and sell them on the black market as a direct result of the collapsing economy, retrograde government price controls and wildly speculative prices.

Venezuelan state-owned media have pinpointed cases where private companies engaged in hoarding have close ties to the opposition. In response, the government has appropriated vast assets, farmland, bakeries, other businesses — but has failed to lift production.

On the other hand, Katiuska Rodriguez, a journalist investigating shortages at El Nacional, a pro-opposition newspaper, said that there is little clear evidence of hoarding being a result of an ‘economic war’ by capitalist business elites against the government. Although real, she explained, hoarding is driven largely by commercial interests in survival.

And yet, there is mounting evidence that the Maduro government is complicit in not just hoarding, but mass embezzlement of public funds. Sociologist Chris Carlson of the City University of New York Graduate Center points outthat a number of former senior Chavista government officials have come on record to confirm how powerful elites within the government have exploited the crisis to extract huge profits for themselves. “A gang was created that was only interested in getting their hands on the oil revenue,” said Hector Navarro, former Chavista minister and socialist party leader. Similarly, Chavez’s former finance minister, Jorge Giordani, estimated that some $300 billion was embezzled in this way.

And yet, the real economic war is not really going on inside Venezuela. It has been conducted by the US against Venezuela, through a draconian sanctions regime which has exacerbated the arc of collapse. Francisco Rodriguez, Chief Economist at Torino Economics in New York, points out that a major drop in Venezuela’s production numbers occurred precisely “at the time at which the United States decided to impose financial sanctions on Venezuela.”

He argues that: “Advocates of sanctions on Venezuela claim that these target the Maduro regime but do not affect the Venezuelan people. If the sanctions regime can be linked to the deterioration of the country’s export capacity and to its consequent import and growth collapse, then this claim is clearly wrong.” Rodriguez marshals a range of evidence suggesting this might well be the case.

Others with direct expertise have gone further. Former UN special rapporteur to Venezuela, Alfred de Zayas, who finished his term at the UN in March 2018, criticised the US for engaging in “economic warfare” against Venezuela. On his fact-finding mission to the country in late 2017, he confirmed the role of overdependence on oil, poor governance and corruption, but blamed the US, EU and Canadian sanctions for worsening the economic crisis and “killing” Venezuelans.

US goals are fairly transparent. In an interview with FOX News that has been completely ignored by the press, Trump’s National Security Advisor John Bolton explained the focus of US attention: “We’re looking at the oil assets. That’s the single most important income stream to the government of Venezuela. We’re looking at what to do to that.” He continued:

“… we’re in conversation with major American companies now… I think we’re trying to get to the same end result here… It will make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela.”

The coming oil crisis

It is not entirely surprising that Bolton is particularly eager at this time to extend US energy companies into Venezuela.

North American exploration and production companies have seen their net debt balloon from $50 billion in 2005 to nearly $200 billion by 2015. “[The fracking] industry doesn’t make money…. It’s on much shakier financial footing than most people realize,” said McLean, who has just authored the book, Saudi America: The Truth About Fracking and How It’s Changing the World. Indeed, there is serious gulf between oil industry claims about opportunities for profit, and what is actually happening in those companies:

“When you look at oil companies’ presentations, there’s something that doesn’t make sense because they show their investors these beautiful investor decks with gorgeous slides indicating that they will produce an 80% or 60% internal rate of return. And then you go to the corporate level and you see that the company isn’t making money, and you wonder what happened between point A and point B.”

In short, cheap debt-money has permitted the industry to grow — but how long that can continue is an open question. “Part of the point in writing my book was just to make people aware that as we trump at American energy independence, let’s think about some of the foundation of this [industry] and how insecure it actually is, so that we’re also planning for the future in different ways”, adds McLean.

Indeed, US shale oil and gas production is forecast to peak in around a decade — or in as little as four years. It’s not just the US. Europe as a continent is already well into the post-peak phase, and Russian oil ministry officials privately anticipate an imminent peak within the next few years. As China, India and other Asian powers experience further demand growth, everyone will be looking increasingly for a viable energy supply, whether from the Middle East or Latin America. But it won’t come cheap, or easy. And it won’t be healthy for the planet.

Whatever their ultimate causes, the horrifying collapse of Venezuela heralds insights into a possible future for today’s major oil producers — including the United States. The US is enjoying a revival in its oil industry but how long it will last and how sustainable it is are awkward questions that few pundits dare to ask — except a brave few, such as McLean.

This does not necessarily mean oil production will simply slowly grind to a halt. As production limits are reached using current techniques, new techniques might be brought into play to try to mine vast reserves of more difficult resources. However, whatever technological innovations emerge they are unlikely to be able to avert the trajectory of increasing costs of extraction, refining and processing before getting fossil fuels to market. And this means that the surplus energy available to devote to the delivery of public goods familiar to modern industrial consumerist societies will become smaller and smaller.

Meanwhile, the environmental consequences of fossil fuel dependency are making investors re-think the financial viability of these industries, creating a growing risk that they become stranded assets. In this emerging future, the trajectory of endless economic growth as we know it cannot continue. Either way, the warnings signs are unmistakeable. As we shift into a post-carbon era, we will have to adapt new economic thinking, and restructure our ways of life from the ground up.

Right now the Venezuelan people find themselves locked into a vicious cycle of ill-conceived human systems collapsing into violent in-fighting, in the face of the earth system crisis erupting beneath them. It is not yet too late for the rest of the world to learn a lesson. We can either be dragged into a world after oil kicking and screaming, or we can roll up our sleeves and walk there in a manner of our own choosing. It really is up to us. Venezuela should function as a warning sign as to what can happen when we bury our heads in the (oil) sands.

Dr. Nafeez Ahmed is the founding editor of INSURGE intelligence. His latest book is Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence (Springer, 2017). He is a 18-year investigative journalist, formerly of The Guardian where he reported on the geopolitics of social, economic and environmental crises. Nafeez reports on ‘global system change’ for VICE’s Motherboard. He has bylines in The Independent on Sunday, The Independent, The Scotsman, Sydney Morning Herald, The Age, Foreign Policy, The Atlantic, Quartz, New York Observer, The New Statesman, Prospect, Le Monde diplomatique, among other places. He has twice won the Project Censored Award for his investigative reporting; twice been featured in the Evening Standard’s top 1,000 list of most influential Londoners; and won the Naples Prize, Italy’s most prestigious literary award created by the President of the Republic. Nafeez is also a widely-published and cited interdisciplinary academic applying complex systems analysis to ecological and political violence. He is a Research Fellow at the Schumacher Institute.vene