One of the first foreign crises President-elect Donald Trump could confront might be closer to home than expected. While North Korea, Iran and ISIS will likely remain top priorities in Mr. Trump’s White House, the situation in Venezuela could be a more imminent problem for the incoming President.
Venezuela’s upheaval has been well documented over the past two years, but the situation has escalated in recent months, particularly as the opposition-led presidential recall referendum has been stopped, and the Vatican-sponsored dialogue between President Nicolás Maduro’s government and the opposition has essentially frozen. The economy is in a deep recession as oil prices remain low (although the recent decision by OPEC to cut output might help). At the same time, the Venezuelan currency has dropped 60% in November (in the black market) and the nation’s credit card system temporarily stopped working on December 2 hinting at both the collapse of monetary demand and of hyperinflation levels not seen in Latin America since the debt crisis of the 1980s. Furthermore, PDVSA, Venezuela’s state-owned oil and gas company, has millions of dollars in debts and interest to pay off. The government’s financial troubles have even made it harder to pay the Venezuelan diplomatic corp.
These aforementioned factors have driven Venezuelans to leave the country in droves. While Venezuela’s first mass exodus came from the upper and middle classes in the 2000s following Hugo Chavez’s rise to power, a second wave is starting to take shape as Venezuelans continue to leave to other Latin American countries. This burden is being felt mainly by the country’s neighbors – Colombia, Brazil and the Dutch islands of Curacao, Bonaire and Aruba – and not by the US or Europe.
As a result, Venezuela’s collapse could have a notable impact on the US, albeit indirectly at first. While the two countries are separated by the Caribbean Sea, the problem remains that the Venezuelan crisis will largely affect countries in the Caribbean and Central America. Many of these countries receive large amounts of energy products from Venezuela at a discounted rate, with Caracas sending over US$50 billion in oil to these nations since 2005. Although the amounts have been decreasing, these energy subsidies make it easier for these local economies to operate. Venezuela’s implosion could lead to a cut in such provisions, causing economic upheaval in these already vulnerable countries, which could increase migration towards Mexico and the US, a dangerous path that many have already taken.
Furthermore, Mr. Trump would not be able to rely on regional neighbors to handle the crisis. Brazil and Argentina, the two South American giants, are embroiled in economic malaise and reforms of their own, while both countries (together with Paraguay and Uruguay), have distanced themselves from Venezuela by suspending it from the South-American regional bloc Mercosur. Similarly, Colombia and the Dutch islands have increased their entry requirements for Venezuelans, with Aruba requiring Venezuelan travelers to have around US$1,000 in cash prior to entering the island. Colombia is also focused on implementing the recently approved peace deal with the FARC, and therefore will not have the appetite or capability to step into a leading role on this issue.
With the main South American nations occupied with internal affairs, the President-elect (or his Secretary of State) will most likely need to take the lead in rallying the hemisphere to action if Venezuela’s crisis were to escalate significantly. Mr. Trump would need to coordinate with his counterparts throughout the region for a common response, and potentially call on the UN, the Red Cross, the Organization of American States, and other organizations to help, particularly since the Venezuelan government is likely to refuse any type of intervention if Washington is the only one calling for action. A regional response will be required to show the Venezuelan government that any breakdown that would harm US and hemispheric stability will not be tolerated, particularly as it would affect US allies and partners throughout the hemisphere. The president-elect would also need to consider involving China, as the Asian giant has it not only recently provided US$2.2 billion to Caracas, but has also invested US$65 billion in Venezuela since 2007. These investments have given Beijing tremendous influence within the Venezuelan government.
When Mr. Trump takes the oath of office on January 20, 2017, he will have multiple flashpoints throughout the world that will need handling. The western hemisphere has a tendency to be a low priority for most presidencies, and as retired General John Kelly, former supervisor of US Southern Command and Trump’s nominee to head the Department of Homeland Security, said last year in a testimony to Congress, our partners in the region “are frustrated by what they perceive as the low prioritization of Latin America on our national security and foreign policy agendas”. Thus, while Venezuela may not be considered as newsworthy as many of the flashpoints in other parts of the world, Venezuela could be more critical as it could spark a wildfire across the United States’ own hemisphere.
Luis Ferreira Alvarez is an Analyst specializing in Latin America energy policy, with research and analytical experience on trade, as well as social and security policies in the Western Hemisphere. Luis worked for the Council on Foreign Relations, an independent, non-partisan policy think tank. He also worked for the Inter-American Dialogue, a policy think tank that focuses on US-Latin American relations. Luis holds a MPA from Cornell University, and a BA in Political Science from the University of California, Berkeley. His Twitter is @