National Security

Revolution in Venezuela, But What Comes Next?

I predicted a year ago that Venezuela would be the site of the next revolution. It took a little longer than I anticipated, but the country is very close with two presidents vying for control of the military and hearts and minds of the people. As I wrote back then, despite rather generous oil wealth, Nicolás Maduro has nationalized the industry, leading to production issues. Price controls and subsidies in Venezuelan currency have led to runaway inflation.The descent into a socialist paradise has resulted in black markets, massive immigration, and increasing crime. This undermines neighboring countries, and makes it likely that people will turn their weapons on the government.

There is so much happening from domestic political maneuvering, U.S. sanctions, to possible armed intervention, that it is tough to keep track of the day-to-day story. But the self-imposed socialist crisis is coming to an end soon and that leads to the question: How does a million-percent inflation, hunger among people, and a gutted oil industry get repaired?

This is a very important question. The path to ruining the country is an old playbook that takes the form of government authority over the major industries, massive social spending, and centralized control. The unification of Germany and the mixing of a socialist economy with a much more prosperous Democratic half is still affecting Germany 30 years later, and Russia is also feeling the effects of chaotic privatization.

But there are steps that a country can take to avoid those perils. The first thing to do when a person is wounded is stop the bleeding. This means the initial step would be to immediately assess the humanitarian crisis that has produced chronic malnourishment and maybe even starvation.

In consultation with the International Monetary Fund (IMF), the beleaguered country could then produce a plan to stabilize the currency and allow foreign aid to help rebuild critical infrastructure such as hospitals. To help stabilize currency and restructure debt, the IMF has done similar things in Greece recently. Presuming Maduro is removed from power there would have to be a new election and the new government would have to disarm the many pro- Maduro militias across the country.

The new government would gradually loosen price controls on goods and allow the free market to dictate the prices of goods as well as their supply to the people. Investment in short-term crops and livestock that have been devastated, such as poultry, will yield dividends within six months, but it will take long-term investment and good management to fully recover.

From the top to the bottom, the oil companies in Venezuela have been stripped of their talent for over 20 years. Much of the oil industry’s profits went to support massive spending on food and gas subsidies, and wasn’t used to invest in new technology and, most important, new wells needed to keep up with production. It will take a major infusion of investment funds to rebuild the talent of the local oil company; foreign investment will allow them to profit from their major export in the short term.

Venezuela has a long way to go. It has transformed from the most prosperous country in South America in 1960 to being a failed state with economic factors worse than America’s Great Depression. But there is hope, and the power of a well-managed and free economy can help the people recover.

The opinions expressed here by contributors are their own and are not the view of OpsLens which seeks to provide a platform for experience-driven commentary on today's trending headlines in the U.S. and around the world. Have a different opinion or something more to add on this topic? Contact us for guidelines on submitting your own experience-driven commentary.
Morgan Deane

Morgan Deane is a former U.S. Marine Corps infantry rifleman. Deane also served in the National Guard as an Intelligence Analyst. He is the author of the forthcoming book Decisive Battles in Chinese history, as well as Bleached Bones and Wicked Serpents: Ancient Warfare in the Book of Mormon.

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