Podcast: Fallout from a Fake Democracy

TRANSCRIPT: Fallout from a Fake Democracy

Moises Naim:

If you are a opposition leader in Venezuela and you are popular, your leadership qualities are evident, you are either legally disqualified by the government, your party is not allowed to run in elections, you are in jail, or you are in exile.

Ian Bremmer:

Hi, I'm Ian Bremmer and welcome to the GZERO World Podcast. I'm host of the weekly show "GZERO World" on Facebook Watch, and in this podcast, we share extended versions of the big interviews from that show. This week I sit down with Moises Naim, an internationally syndicated columnist and distinguished fellow at the Carnegie Endowment for International Peace. Moises is a leading expert on international economics, global politics, and especially Venezuela, where he served as minister of development in the '90s. Today I'll ask him about Venezuela's escalating crisis and the outlook for Nicolas Maduro. Let's get to it.

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Ian Bremmer:

I have with me in Washington, DC here, Moises Naim, distinguished fellow of the Carnegie Endowment for International Peace. He's written 12 books on geopolitics, for over a decade, he was editor in chief of Foreign Policy magazine and back in the '90s, he was minister of development for Venezuela. Moises, wonderful to be with you.

Moises Naim:

Great to be here, Ian. Thanks for inviting me.

Ian Bremmer:

So I hate to say I didn't bring your last book down with me to DC, I have it in New York, but I did have here in Washington, I have "The Future of Power" by Joe Nye, and I have "The End of Free Market" by me, which together you get "The End of Power," which is your last book, my favorite, and was also, if I can say this, Mark Zuckerberg's first ever recommended book out there, popped as a consequence in a pretty big way.

Moises Naim:

There is a proliferation of people looking at what's happening to power. My own take, which is "The End of Power," it's not that power is ending, power is there, it's that what's happening is that power in the 21st century has become easier to acquire, harder to use, and easier to lose.

Ian Bremmer:

You were in government in Venezuela in the '90s. Chavez comes, now we have Maduro. How did we get to this disastrous point?

Moises Naim:

It is very important to remember that when President Chavez was in power and oil was at more than $100 per barrel, Venezuela had already very damaging shortages of everything. There was already a crisis brewing. The revenues were there, but what was happening was that production, the number of barrels of oil produced per day was declining because of corruption, because of mismanagement, because of lack of investment, because of not running the oil company, the nationalized oil company effectively. So Maduro did nothing. President Chavez died and Maduro, he was anointed. Maduro was anointed by Chavez. Of course, there was an election to legitimize Maduro and Maduro won, surprise, surprise. And then Maduro essentially has done nothing to change the policies that were initially launched by Hugo Chavez. So what we are seeing today is more a Chavez-made crisis than a Maduro-made crisis.

Ian Bremmer:

What's the world missing about Venezuela today?

Moises Naim:

The world is missing the extent of the crisis and the nature of the crisis which is quite unique. In the last year, three out of four Venezuelans lost 22 pounds in weight because of hunger. Venezuela has the highest inflation in the world. It has hyperinflation according to the IMF, in 2018 it's going to be 13000%. And that is very hard, even to imagine. It has the one of the highest murder rates in the world. It is a failed state.

Ian Bremmer:

Under Chavez, Venezuela was democratic. The average Venezuelan would've supported his election. Under Maduro, you can't say that anymore.

Moises Naim:

The genius part of Chavez is that he made people, highly sophisticated people, believe that there was a democracy. He was the first. He was a pioneer in being an autocrat disguised as a democrat.

Ian Bremmer:

What needs to happen for the regime to start to actually crack? Because from the outside, at least, it doesn't appear that that's happening so far.

Moises Naim:

Countries never hit rock button. The notion that there is a floor, that countries decline and the problems become almost unbearable, and that therefore there is a tipping point. Well, no, you are a follower of geopolitics and politics around the world. You have seen many countries where you have said, "Wow, this cannot be sustained," and yet it continues to decline. And so it's very hard. Normally, what happens in these kind of regimes is that they start cracking when there is intra-elite conflict, where people that are running there, it's not that there's a election and the opposition takes over and a more democratic opposition more open to the world takes over. No, that almost never happens. What typically happens is that the clique, the elite, the oligarchy that is in power starts fighting with each other. Either for the spoils or trying to control power or grab power from one another. And so that is when eventually things starts to fall apart for the elites.

Ian Bremmer:

This is already starting to affect countries around Venezuela going beyond the borders, we see refugees in Colombia and in Peru and in Chile and in Brazil. Could we potentially see an equivalent to what we've seen out of Syria in the Middle East and in Europe?

Moises Naim:

Yes, without the chemical weapons and the bombings and the barrel bombs and the genocide-

Ian Bremmer:

Sure. But the refugee situation.

Moises Naim:

But in sheer terms of the numbers, the numbers of people of Venezuelans that have emigrated, the numbers are more or less the same. It's about 4 million Venezuelans that are now sought refuge elsewhere.

Ian Bremmer:

What does it mean for countries around Venezuela?

Moises Naim:

They feel overwhelmed as Jordan and Iraq and others and Lebanon have felt overwhelmed by the inflow of Syrian refugees. In this case it's Colombia, big time, Brazil, big time. But even the tiny islands around Venezuela, Aruba, Bonaire, Curacao, people are taking rafts and very rickety boats and just going to these islands that are very, very small.

Ian Bremmer:

And the big demonstrations we see, is that just grassroots?

Moises Naim:

Those were student driven protests. There were one of these new kind, Arab Spring kind of pro street marches in which they are spontaneous, there is no clear leadership, there is no structure, organization, there's not hierarchies. These are students, young people fed up, taken to the streets and confronting the riot police.

Ian Bremmer:

Now, the United States has imposed some sanctions. There's been talk about energy sanctions. Maybe Trump very briefly said, "Maybe we could do the military option." He backed away from that. Is there anything credible the United States could do that would truly make a difference in Venezuela right now?

Moises Naim:

Well, Trump said that the military option was on the table, and that created in Venezuela a huge expectation, which was irresponsible. If you talk to the people at the Pentagon and General Mattis has been very clear that he's very busy trying to organize for other potential military conflicts that are in the cards that are more directly related to the national interests of the United States and their present dangers.

Ian Bremmer:

Military is irresponsible, not going to happen. There's nothing you can do on the energy side. Is there anything left for the United States?

Moises Naim:

Yes. Go after the money that they have stolen. We are talking about oligarchs that are Russia sized. We're talking about government officials that have stolen and have accumulated fortunes that rank among the highest in the world. So I have-

Ian Bremmer:

Who have assets outside of Venezuela.

Moises Naim:

Who are hiding the assets around, including in the United States paradoxically.

Ian Bremmer:

And one country we haven't talked about in this constellation is China, which historically had provided an awful lot of credit for Venezuela. They're clearly getting less interested in doing so going forward. Are they a relevant player today in Venezuela?

Moises Naim:

They are but much less than in the past. In the past, they were very effective and active funding the Venezuelan government. And Hugo Chavez was very persuasive and he sold them oil. So there is a big part of oil committed to the Chinese because the Chinese bought it in advance and paid in advance. They have a huge problem with collecting their debts. I think they wrote off a significant part of the debts, but China was essentially the best clients for Venezuelan oil and then a very important financier. That's no longer the case. The other big player that is becoming more and more important to everybody's surprise is Russia. Who would have said, right?

Moises Naim:

So during the Chavez regime, Russia was a very important supplier of arms. So Venezuela was essentially a client that bought their weapon systems. Then they had to pay for those, and then Russia started funding that and started creating financial mechanisms to get paid. That did not work perfectly and there was a problem. So the government of Venezuela offered them to go and operate some of the oil fields that were not working well. And the Russian companies have tried to start operating some of the Venezuelan fields, but with no success. And now, the Russians see an opportunity to create a Syria-like intervention.

Ian Bremmer:

Do you see the potential for a military base?

Moises Naim:

No, but why not having more Russian navy vessels going to Venezuela to refuel and have a presence.

Ian Bremmer:

Such a pleasure to take a tour around the region with you. Moises Naim, the GZERO World. Good to see you, my friend.

Moises Naim:

Thank you.

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The GZERO World is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company. Imagine a bank without teller lines, where your banker knows your name and its most prized currency is extraordinary client service. Hear directly from First Republic's clients by visiting firstrepublic.com.