Could Venezuela's Crisis Spill Over into Colombia?
February 12, 2015
On January 26, former Colombian president Andrés Pastrana called for change in Venezuela, warning of an imminent human rights crisis under the government of President Nicolás Maduro. In response, Maduro’s administration sidestepped the human rights issues, hinting that Pastrana’s remarks could endanger the two countries’ long and complicated bilateral relationship.
Meanwhile, tensions are mounting in Venezuela. Just last week, a former bodyguard to Venezuelan National Assembly leader Diosdado Cabello fled to the United States, alleging that Cabello was involved in drug-trafficking activities. And the past two years have seen Venezuelan economic and political stability deteriorating—a reality with the potential to impact stability, prosperity, and security well beyond Venezuela’s borders (and especially in neighboring Colombia).
So what’s going on in Venezuela, and what could it mean for Colombia and the rest of the region?
Q1: What is the current situation in Venezuela?
A1: In simplest terms, Venezuela’s political and economic well-being are teetering on the brink of collapse.
Even before the collapse of global oil prices, oil made up 95 percent of Venezuela’s export earnings—and to balance the national budget, Caracas depends on selling fuel at or above US$140 per barrel. The steep drop in oil prices in late 2014 hit Venezuela hard: the International Monetary Fund (IMF) even estimates that the Venezuelan economy could contract by as much as 7 percent by the end of 2015.
As the economy grinds to a halt, inflation is through the roof, with current estimates putting it around 64 percent. Increasingly, major international corporations are closing up shop in Venezuela, and the mass exodus of (particularly U.S.) companies seems more likely every day.
That kind of flight would only exacerbate perhaps the harshest aspect of Venezuela’s economic contraction: widespread scarcity of even the most basic goods. Food, medicine, and common household items are already hard to come by, and long-term food security and access to adequate health care appear increasingly at risk.
In light of this deepening crisis, President Maduro has few remaining options. His best bet for conserving resources in the cash-strapped economy could be to curtail heavily subsidized oil at home: the government’s existing program keeps gasoline prices as low as 6 cents per gallon for Venezuelan citizens—at a cost of some US$15 billion for the government each year.
But such a move would create waves that his administration may not be ready to take on. Already deeply mired in political crisis and struggling to quiet the opposition since widespread protests took hold last year, Maduro can hardly afford a further crisis in confidence. With his approval currently at 22 percent, an unpopular move could be a death knell to his leadership.
This threat is particularly relevant in light of the protests that began in early 2014. The anti-Maduro movement and ensuing government-opposition violence left over 40 dead, hundreds injured, and still more jailed. With high-profile prisoners like opposition leader Leopoldo Lopez still behind bars, Maduro’s credibility (and his administration’s hold on power) appear to be weakening.
Q2: How could Venezuela’s troubles impact other countries in the region?
A2: As political and economic tensions have risen in Venezuela, countries throughout the Western Hemisphere are likely to feel the effects—and some already have.
Current and former leaders in the region—including Pastrana, former Chilean president Sebastián Piñera, and former Mexican president Felipe Calderón—have all weighed in, criticizing Maduro and demanding the release of Leopoldo Lopez, among other political prisoners.
Tensions between the United States and Venezuela are climbing, as well. As the human rights situation has continued to deteriorate, Washington has enacted sanctions against Caracas. And Maduro’s administration has frequently attempted to shift blame to the United States, accusing the White House of conspiring with foreign governments and conservative elements within Venezuela in an attempt to overthrow President Maduro.
Meanwhile, Venezuela’s waning stability could carry serious implications for energy security in the region—particularly in Central America and the Caribbean.
Through Petrocaribe, Venezuela has provided oil to Caribbean and Central American nations under generous financial terms in exchange for support in international fora. But recently, these financial terms are in question.
As Venezuela seeks resources to fund its sizeable social programs and to pay its own debt, Caracas is in a bind. The participants in the regional oil alliance collectively owe some US$14 billion for the past decade of oil shipments—and they’re coming up short. As Venezuela’s traditional friends in the region struggle to come up with the resources to secure their own access to Venezuelan oil, their economies are increasingly in jeopardy.
Q3: What could all of this mean for Colombia?
A3: Perhaps the country with the most to lose from Venezuela’s unraveling is neighboring Colombia.
In many ways, Colombia is at a crossroads, benefiting jointly from rapid economic growth and from unprecedented advances in achieving peace and stability within its own borders.
Much of this progress is thanks to the historic negotiations underway between the government of Colombia and the Revolutionary Armed Forces of Colombia (FARC), which aim to end Colombia’s half-century-long internal conflict. The conflict has claimed countless lives, internally displaced nearly 6 million people, and stunted economic growth and development through much of the country. And the negotiations could put an end to all of that.
So all of that progress and potential hangs in the balance—and Venezuela has the potential to spoil the pot.
A longstanding ally of the FARC, Venezuela has thus far played an instrumental role in bringing the FARC to the negotiating table. But as tensions mounts between Caracas and Bogotá, some fear that Venezuela could use its sway over the FARC to slow (or even derail) the sensitive peace talks.
And the potential for backsliding doesn’t end with the negotiations.
Colombia and Venezuela share a long and crime-ridden border, as corrupt government elements cross paths with gangs, guerilla fighters, and transnational criminal groups, serving as an extended nexus for illegal drug and arms trafficking.
Further deterioration of Venezuela-Colombia ties (and the collateral impact on the peace process) could, when paired with growing economic and political instability on the Venezuelan side, spark a humanitarian crisis along the border—an outcome that neither government is well equipped to handle.
And all of this could also mean significant losses in the thus-far successful Plan Colombia, the joint U.S.-Colombian security initiative largely credited with establishing the framework for gains in governability, security, and peace within Colombian borders.
With analysts increasingly pairing Colombia with Mexico as Latin America’s most promising emerging economies and nearer than ever to an end to the conflict with the FARC, Bogota has everything to lose.
Conclusion: Venezuela’s decline has the potential to wreak havoc on its neighbors’ stability and prosperity—nowhere more than in Colombia. At this point, it is impossible to know how everything will play out in Venezuela, but this much is clear: the country is spiraling downward, and the remaining lifelines are feeble, at best.
As President Maduro scrambles to maintain stability and consolidate his own power, Venezuelans are increasingly calling for change. But will that change come in time to minimize collateral damage?
Carl Meacham is director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Conor Lane and Juan Osuna, intern scholars with the CSIS Americas Program, provided research assistance.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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