Who Really Controls Venezuela?

Some Venezuelan military figures have accumulated fortunes through their involvement in the drug trade. Indeed, jailed cocaine trafficker Walid Makled has alleged that dozens of Venezuelan generals were part of his operation. (“All my business associates are generals,” Makled said after being captured.) In addition, Mexican drug lord Sergio Villarreal Barragán -- who was extradited to the United States last year -- has reportedly linked Venezuelan generals to drug flights that brought cocaine from Venezuela to Mexico.

Certain generals -- including Cliver Alcalá (a prominent regional commander), Hugo Carvajal (a deputy interior minister), Henry Rangel Silva (a former defense minister who now governs the Venezuelan state of Trujillo), and Ramón Rodríguez Chacín (a former interior minister who now governs the state of Guárico) -- have been designated as “kingpins” by the U.S. Treasury Department for their connections to Colombian narco-guerrillas. Their illegal activities highlight the endemic corruption of the Chávez regime. Such corruption has turned Venezuela into a nerve center of the global cocaine business: It has been estimated that, in 2010, nearly one-quarter of all outbound South American cocaine traveled through Venezuela.

Just last week, the Venezuelan National Guard interdicted upwards of 2.6 tons of cocaine in Maracaibo, a port city near the Colombian border. As InSight Crime analyst James Bargent noted, cocaine trafficking in this region of Venezuela “is often facilitated” by the National Guard. “Cases like this one, in which the National Guard acted on a tip-off, could suggest that the traffickers failed to cut the right members of the security forces in on the deal.”

Drug trafficking has contributed to growing unrest within the Venezuelan armed forces. But the narco-generals are tremendously powerful, and they have a close ally in Diosdado Cabello, the National Assembly leader, who is a former military officer. It is therefore unlikely that Maduro is willing or able to confront them.

Another source of friction within the military is Cuba -- more specifically, the presence of untold numbers of Cuban “advisers,” who now play a key role in the management of Venezuela’s public institutions, including the armed forces and the secret police. (Back in February 2010, the Economist reported that Cubans were “helping to run Venezuela’s ports, telecommunications, police training, the issuing of identity documents, and the business registry.”) It was no surprise that Maduro traveled to Cuba last weekend: He has long been a sycophantic admirer of Fidel Castro, and Havana wanted assurances that Venezuela -- a country with runaway inflation and chronic shortages -- will continue to fortify the Cuban economy through massive oil subsidies.

Not only will Maduro have to manage Venezuela’s costly economic aid to Cuba, he will also have to manage its curious relationship with China. In recent years, the Asian giant has loaned Venezuela approximately $36 billion, making China “the single biggest foreign source of funding for the country’s socialist government,” according to Reuters. Venezuela is now repaying those loans with oil shipments totaling hundreds of thousands of barrels per day. The oil-for-loans arrangement helped Chávez boost social spending prior to Venezuela’s October 2012 presidential election, but it has damaged the state petroleum company and has given Beijing significant leverage over Venezuelan energy policy, especially regarding the development of the oil-rich Orinoco Belt.

What does China do with all its Venezuelan oil? In 2010, writes Carnegie Endowment scholar Kevin Tu, Venezuela reported sending China 400,000 to 500,000 barrels each day. And yet, “customs data shows that only 150,000 barrels of Venezuelan oil arrived at Chinese ports in 2010. This wide discrepancy suggests Chinese [national oil companies] sell most of their Venezuela-sourced oil in the open market in order to avoid the high logistic costs associated with long-haul shipping to China.”

Beijing has a big financial stake in maintaining its oil deals with Caracas. That means China will be yet another important player in post-Chávez Venezuela -- and it means Nicolás Maduro will face yet another major challenge.