As there is almost no economic activity taking place in Venezuela anymore beyond the export of some oil, Venezuela has become increasingly reliant on crime and criminal gangs to make money:
Venezuela has become a regional crime hub, with profound consequences for Latin America and beyond. And with another Nicolás Maduro term, the roots of organized crime in that country will spread further.
The Chavista regime is digging in. Politically, it survived the protests of 2017. The loyalty of the military ensured that President Maduro was able to bypass the opposition-controlled National Assembly, beat back protesters and stage a farcical presidential election in May, giving him six more years in office. The last fig leaf of democracy has fallen.
Mr. Maduro is now maintained by a regime with suspected deep criminal roots. He is surrounded by people involved in criminal activity, like Vice President Tareck El Aissami and Interior Minister Nestor Reverol, both the targets of United States sanctions. In May, Washington added Diosdado Cabello, president of the National Constituent Assembly and the strongman of the ruling United Socialist Party of Venezuela, to the sanctions list.
Cocaine is pouring into Venezuela from neighboring Colombia. Drug production has never been higher, and we estimate that Colombia is producing 921 tons of cocaine a year. In 2010, Venezuela was handling at least 200 tons of that. In the past, it was the Colombian cartels that ran this business, paying off Venezuelan officials. Now there is overwhelming evidence that the Venezuelans are directly participating. The 2016 conviction in the United States of two nephews of the Venezuelan first lady for cocaine trafficking is just the most obvious example of this.
Yet we found that drug trafficking was not the most lucrative illegal industry in Venezuela and that our targets had diverse criminal portfolios. Gasoline in Venezuela is the cheapest in the world. Smugglers who move it across the border into Colombia or Brazil can earn a greater markup than with a kilo of cocaine, and with minimal risk. Mr. Maduro closed the border with Colombia during stretches of 2015 and 2016 to “destroy the mafia.” This strengthened the Venezuelan military’s monopoly on fuel smuggling.
There is now little money left to steal from the state, yet the wheels of corruption still need to be greased. The military rank and file earn around the equivalent of less than $20 a month, while the minimum wage is around $1.50 a month. Because everyone has to be on the take to survive, Mr. Maduro has made every Venezuelan an unwilling participant in the criminal economy. If Venezuelans want food and medicine, they must resort to the black markets; they must feed the corruption that permeates every organ of the state and every aspect of their daily lives.
The military now oversees food and medicine distribution. This may keep it loyal for a while yet, but the model is not sustainable. Drug trafficking is the main growth industry in Venezuela, followed by illegal gold mining. Cocaine may well become the lubricant that keeps the wheels of corruption moving in Mr. Maduro’s Venezuela.
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