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Four Things You Need to Know about Venezuela

Amid the many depredations of Hugo Chávez, it is easy to forget that Venezuela has turned into the most violent country in South America, and that Caracas has become a global murder capital. According to the independent Venezuelan Observatory of Violence, the annual number of homicides nationwide grew from 5,974 in 1999 (when Chávez took power) to 17,600 in 2010. Venezuela today is a haven for international terrorist groups (including the Colombian FARC, the Iranian-backed Hezbollah, and the Spanish ETA), and it is also a veritable gangster’s paradise of narco-trafficking, kidnapping, and armed robbery, with brutal crime syndicates running drugs, transforming prisons into battlefields, and driving up the body count. The recent kidnapping and rescue of Major League Baseball star Wilson Ramos highlighted these problems in spectacular fashion, thereby drawing global attention to a frequently overlooked aspect of the Chávez legacy.

Indeed, to truly appreciate what the Bolivarian socialist has done to a once-prosperous country awash in oil, we must go beyond his vitriolic anti-U.S. rants, his attacks on democracy, and his disastrous economic policies. Here are four things you must know to understand (a) how the Chávez regime has survived this long and (b) where Venezuela might be headed:

(1). The regime is financially dependent on China.

The combination of a ruined private economy and profligate government spending has utterly wrecked Venezuelan public finances. While the country still collects sizable oil revenues, Chávez has badly mismanaged Petróleos de Venezuela (PDVSA), the state-owned energy giant, which is slowly crumbling. “Hugo Chávez is putting on a clinic,” energy expert Robert Rapier wrote last year. “The theme is ‘How to Destroy a Domestic Oil Industry.’” Thanks to his calamitous oil policies and fiscal recklessness, Chávez needs generous outside support to continue funding his expensive social programs. In other words, he needs a foreign sugar daddy.

Enter China, which has been pouring money into the Venezuelan oil sector. Moreover, under various “oil for credit” deals signed with Beijing, Chávez has secured a whopping $32 billion of low-interest Chinese loans. According to a Wall Street Journal report last week, the Chinese government had loaned Venezuela $20.8 billion through mid-April, and daily Venezuelan oil shipments to China under the agreements now total roughly 400,000 barrels. “This is a win-win for China and the Chávez government, but not for Venezuela or PDVSA,” former PDVSA board member Pedro Burelli told the Journal. Earlier this year, BCP Securities analyst Walter Molano estimated that the oil-for-credit deals were causing Venezuela to lose “almost half of the oil revenue that was being generated to service its external debt obligations.” But as far as Chávez is concerned, the Chinese loans are enabling him to shower his constituents with politically popular goodies in advance of the 2012 Venezuelan presidential election. As the Journal put it, he is using the loans to fund projects “that are likely to help him at the ballot box.”

(2). The regime is run partly by Cubans.

In early 2010, several former Chávez loyalists published a letter denouncing the “incursion of outside elements” into key Venezuelan institutions, including the armed forces. As if to demonstrate their point, Cuban Gen. Ramiro Valdés, founder of the notorious G2 intelligence service, arrived in Venezuela to help Chávez consolidate his burgeoning autocracy. (Valdés was supposedly visiting the South American country as an energy consultant, but the real purpose of his trip was easy to discern.) The cash-strapped Castro government desperately needs Venezuelan oil subsidies, so it is desperate to keep Chávez in power. Hence the influx of Cuban “advisers” working to strengthen his Bolivarian revolution. Caracas is now persecuting retired Gen. Antonio Rivero for decrying the Cubanization of the Venezuelan military.

By giving Cuban officials such important roles in Venezuela’s security apparatus, Chávez has done two things: First, he has brought in trained Communists with a wealth of experience running a dictatorship. Second, he has given Havana significant influence over Venezuelan government operations — as long as he remains in power. A non-Chávez government, whether democratic or not, might well seek to reverse the process of Cubanization, which has inflamed nationalist passions and angered senior members of the Venezuelan armed forces, not to mention many other Venezuelan authorities. “In some ministries, such as health and agriculture, Cuban advisers appear to wield more power than Venezuelan officials,” The Economist reported last year. “The health ministry is often unable to provide statistics — on primary health-care or epidemiology for instance — because the information is sent back to Havana instead.”

(3). The regime’s senior military allies are complicit in the drug trade.

To date, the U.S. Treasury Department has sanctioned three top Venezuelan generals for having links to drug trafficking: Cliver Alcalá, a prominent army commander; Hugo Carvajal, the military intelligence chief; and Henry Rangel Silva, the defense minister. All three are devoted chavistas, whereas many other Venezuelan military officials have grown estranged from Chávez. When Alcalá was added to the Treasury blacklist a few months ago, Univision reporter Casto Ocando noted that he stood out as “one of the few military figures that still has the confidence of the Venezuelan president.”

Both Alcalá and Venezuelan intelligence official Ramón Isidro Madriz Moreno — along with two pro-Chávez legislators — were accused of collaborating with Colombian narco-terrorists belonging to the FARC. These charges came on the heels of explosive allegations by imprisoned cocaine kingpin Walid Makled, who has claimed that dozens of Venezuelan generals and government officials were involved in his lucrative drug business. The Chávez government is effectively a military regime, and the generals implicated by Makled and Treasury include some of the highest-ranking members of that regime.

(4). The regime has trained thousands of pro-government paramilitary fighters, who represent a serious long-term threat to domestic peace and stability.

Call them the Venezuelan Revolutionary Guards: Chávez has established a militia comparable to the famous Iranian outfit that is sworn to defend theocratic rule. Earlier this year, a presidential decree brought these Venezuelan paramilitary fighters under Chávez’s direct command; it also gave them officers who are independent of the army. According to an analysis of captured FARC computer files by the International Institute for Strategic Studies in London, the Venezuelan paramilitaries have received direct training from Colombia’s biggest terror group. “FARC communications also discussed providing training in urban terrorism methods for representatives of the Venezuelan Communist Party and several radical cells from 23 de Enero, a Caracas slum that has long been a hive of pro-Chávez activity,” as the New York Times has reported.

While the exact size of the pro-Chávez militia remains disputed, there is no question that it has grown disturbingly large. (There is also no question that Caracas has purchased massive amounts of sophisticated Russian weaponry.) The militia represents “a personal army, a Praetorian Guard,” retired Venezuelan Adm. Elias Buchszer told the Associated Press last year. Its true raison d’être, he said, is to perpetuate the Bolivarian revolution. If Chávez died of cancer, or if he were in real danger of losing the 2012 election, the militia could conceivably be called out to squash political unrest. That could lead to bloody street violence, and possibly something much worse.