The Crucial Role of the Military in the Venezuelan Crisis

By Dr
Diego Lopes da Silva and Dr Nan Tian*

STOCKHOLM, Sweden, Wednesday April 3,
2019
(IPS) – In January 2019 Venezuela’s
opposition-led National Assembly swore in Congressman Juan Guaidó as the
country’s interim president. Guaidó’s claim to power is a severe blow against
the already weakened government of Nicolás Maduro, whose re-election as president
in May 2018 was widely rejected by the international community and deemed
illegitimate by over 50 foreign governments.

Since January 2019,
about 65 countries—including the United States and countries in Western Europe
and most of South America—have given their support to Guaidó. The USA has also
imposed sanctions on the state oil company, Petróleos de Venezuela SA (PDVSA),
and several state-owned banks.

However, countries
such as China, Cuba and Russia continue to back Maduro and recognize him as the
legitimate president of Venezuela.

Although the
support of foreign states is an important factor in the current political
standoff between Maduro and Guaidó, it is the Venezuelan military that will
determine whether there is any shift in power. Historically, the armed forces
have played a decisive role in the country’s politics: the military oversaw
Venezuela’s transition to democracy in 1958 and has had a strong influence on
domestic politics ever since.

The 1958 Punto Fijo
Pact—the political agreement aimed at preserving democracy in Venezuela in the
post-authoritarian period—rested on a compromise with the military: in return
for transferring power to civilian hands, the military would have its equipment
modernized and its salaries revised.

The administration
of President Hugo Chávez (1999–2013) further strengthened the position of the
armed forces by populating the state bureaucracy with military officers and
implementing large-scale arms modernization programmes, which took Venezuelan
military spending to record levels.

This feature of
Venezuelan politics has not gone unnoticed by Guaidó, who has attempted to
garner support from the armed forces by offering amnesty to defectors. So far,
the bulk of the military has remained loyal to Maduro: in the wake of the
National Assembly’s appointment of Guaidó as interim president, the defence
minister, Vladimir Padrino, stated that Venezuela’s armed forces disavow any
president who is self-proclaimed.

Nevertheless,
despite Padrino’s assurances, cracks have formed in the military’s support for
the Maduro administration. Since February, about 560 soldiers, who recognized
Guaidó as the country’s interim president, have fled to Colombia.

Amid these
developments, the military is on the cusp of an important choice: preserve the
status quo or support a new leader. The final decision will largely depend on
the offers made by Maduro and Guaidó.

Military
incentives: power, money and arms

Since 1958, the
Venezuelan armed forces have traded military support for the government in
exchange for money, power and prestige. This bargaining process was reinforced
under the Chávez administration, which offered the military political power,
money and arms, and strengthened the development of a military–government
symbiosis.

One of Chávez’s
first and major accomplishments was to approve a new constitution in 1999,
creating the Bolivarian Republic of Venezuela, also known as the Fifth
Republic. This served as the foundation for the military’s rise to the higher
echelons of political power.

Article 328 of the
new constitution, for example, incorporated the armed forces into the
maintenance of social order and the formulation of Venezuela’s national development
plans.

Perhaps more
importantly, Article 236 granted Chávez the right to approve promotions of
colonels and generals—an instrument he used regularly to purge dissidents and
promote loyal officers.

As a result,
military officers took on key positions in state-owned companies, ministries
and funding agencies. According to Transparencia Venezuela, at least 60 of the
576 state-run companies are led by the military, including PDVSA.

The militarization
of the government has continued under Chávez’s successor, Maduro. As of January
2019, 9 of 32 government ministries were controlled by the military, including
the ministries of agriculture and energy.

As a consequence,
the military’s influence on and within government has grown to a level not seen
in Venezuela since the end of Marcos Pérez Jiménez’s dictatorship in 1948.

Off-budget
mechanisms

Venezuelan military
spending soared under the Chávez administration. In 2006 it surpassed that of
Brazil—which at that time had an economy over five times larger than Venezuela’s.

Chávez’s spending
was enabled by the unprecedented oil boom that started soon after he took
office, which allowed him to strengthen his grip on power by distributing money
to his supporters—a long-standing pattern in Venezuelan politics.

However, the total
amount of funding allocated to the armed forces since the establishment of the
Fifth Republic remains the subject of debate. The uncertain estimates are due
to the existence of off-budget mechanisms in military funding.

Off-budget military
funding is the allocation of funds for defence functions from outside the
regular state budget. This can include revenues from mineral extraction or from
military business activities.

Venezuela’s main
off-budget funding instrument is the National Development Fund (Fondo de
Desarrollo Nacional, FONDEN), funded primarily by the Central Bank of Venezuela
and PDVSA. Created in 2005, FONDEN was intended ostensibly to foster economic
growth and sustainable development in Venezuela.

However, because
the military has been constitutionally integrated into the Venezuelan
development strategy since 1999 (Article 328 of the constitution), its
activities are eligible for FONDEN’s support. The office of the president has
exclusive control over FONDEN, which exempts it from oversight by the National
Assembly.

SIPRI’s 2017 review
of Venezuelan military spending concluded that since 2005 a substantial amount
of the country’s oil revenue and state resources had been diverted to the
military using FONDEN. For example, between 2005 and 2015 FONDEN allocated
around $6.9 billion to the military to finance 39 projects.

The largest of
those was an allocation of $2.2 billion for the purchase of 24 Su-30 combat
aircraft from Russia. On average, off-budget allocations from FONDEN increased
Venezuela’s annual military spending by 26 per cent for the period 2005–15.

As FONDEN is funded
primarily by oil revenues, its level of contribution to Venezuelan military
spending each year reflects the annual fluctuations in oil prices. Between 2005
and 2015 its contribution to military spending ranged from 42 per cent in 2015,
which coincided with rising oil prices, to as little as 1 per cent in 2009 and
2014, when the price of oil fell sharply.

In comparison with
its allocations to other funding recipients between 2005 and 2015, FONDEN’s
allocations to the military were substantial. The $6.9 billion given to the
military dwarfed the $2.6 billion allocated to education and health,
demonstrating a clear shift in the purpose of the fund towards militarization
as opposed to development.

Through FONDEN, the
armed forces have gained direct access to Venezuela’s substantial oil revenues.
These funds were used in a variety of ways: for instance, $5.1 million was paid
to fund the education of 40 Venezuelan cadets in Belarus in 2010, while $106
million was allocated to the general category ‘Complementary Agreement on State
Security and Defence’ (Acuerdos Complementarios de Seguridad y Defensa de
Estado).

However, the bulk
of FONDEN’s allocations to the military was used to boost Venezuela’s ambitious
military modernization programme. Chávez saw the build-up of arms as a
fundamental step in sustaining his revolutionary regime: “When I talk about
armed revolution, I am not speaking metaphorically; armed means rifles, tanks,
planes, and thousands of men ready to defend the revolution.”

Oil revenues became
the chief contributor to Chávez increasing the power of the presidency and the
military force of Venezuela. Venezuelan arms imports grew significantly in the
2000s and early 2010s. The vast majority of these imports came from Russia and
China.

The military
maintains its strength, despite the economic downturn

Maduro became
president of Venezuela after Chavez’s death in 2013 and inherited his carefully
constructed militarized state apparatus. However, unlike his predecessor,
Maduro came to power in a harsh economic environment. Oil prices plunged in
2014, which exacerbated the country’s economic downturn.

Venezuela has found
itself embroiled in the biggest economic and social crisis of its recent
history. Salaries have been negatively impacted by hyperinflation, while basic
goods have become extremely scarce.

Violence has also
spiked. Severe living conditions have led more than three million Venezuelans
to flee the country, while millions of those who remain are calling for change.

As a reaction to a
rapidly shrinking economy and falling oil production and oil revenue, Maduro
turned towards the country’s food supply as a source of patronage, a commodity
that went from subsidized to scarce. By exploiting a complex currency system,
members of the military were able to import food at an advantageous rate of
exchange and then sell it on the black market for hundreds of times the
government set price.

While these
privileges appear to have swayed the military to support the Maduro
administration for the time being, they are mainly aimed at officers, and many
lower-ranking soldiers face the same hardships as ordinary Venezuelan citizens.

In addition to its
role in the exploitation of the food supply, the military occupies a position
of privilege during the allocation of the state budget. Official military
spending is prioritized over vital social needs such as education, housing and
food.

In 2017, Maduro used
his presidential prerogative to bypass the opposition-led National Assembly and
approve a new budget that benefited his allies. As the rate of inflation soared
into thousands of per cents in 2018, additional funding was needed for all
government sectors.

Not only was the
military one of the first to receive the additional resources, but it was also
among the sectors that received the highest allocations of the new funding.
This is not the first time the military’s budget has been protected from
significant cuts—far from it. In 1962, while total public spending was cut by
12 per cent, the military budget was reduced by only 4 per cent.

The discrepancy was
even greater in 1979: despite a 15 per cent reduction in total public spending,
the military budget was cut by only 0.4 per cent. Thus by giving the military
control of the country’s food supply and prioritizing the military in state
budgets, Maduro has continued the long tradition in Venezuela of trading
resources for political support in a bid to retain power.

The military’s role
in shaping Venezuela’s future

The protected
status of the military budget and the off-budget funding allocated to the armed
forces from FONDEN are clear examples of the military’s privileged position in
Venezuela, granting the armed forces a key role in shaping the country’s
future.

By giving the
military money, power and prestige, Maduro has—at least for the time
being—‘bought’ the political backing of the armed forces. The challenge faced
by Guaidó is arduous: he must somehow win over the support of a military that
owes its strength to the current regime.

So far, Guaidó has
offered amnesty to defectors. He has also appealed to the military’s sense of
nationalism, arguing that his claim to the presidency is a people’s demand to which
the armed forces should heed.

Considering the set
of benefits from the current patronage system, such as the billions of dollars
on offer from off-budget sources and the positions of privilege in key
government posts, Guaidó might need to offer the military the same, if not
better, incentives than those it has received under Chávez and Maduro.

Yet, therein lies
the conundrum: if Guaidó courts the military into backing his plea by offering
material incentives, he will empower the military further and be complicit in
replicating one of the main weaknesses of Venezuela’s democracy.

Dr Diego Lopes da Silva is a Researcher with the Arms and Military Expenditure Programme at the Stockholm International Peace Research Institute (SIPRI). Dr Nan Tian is a Researcher with the SIPRI Arms and Military Expenditure Programme.

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