Our article on investing in post-Maduro Venezuela hinges on a key question: what comes next?Here are five possible outcomes and a handy infographic based on my subjective and unscientific take.
- Democracy
- Right-wing dictator
- Friendly chavismo
- Nothing new / more of the same
- Armed conflict / civil war
Democracy is more desirable for the long-term health of the country, but it wouldn’t be best in the short-term. It will be messy and maybe indistinguishable from armed conflict because it goes against the interests of so many people in power with guns. That is what makes it so unlikely in the short-term.
A right-wing dictator, while the best outcome for investing in Venezuela, is almost as unlikely if not more so because this Venezuelan Pinochet would somehow have to mount and tame the Chavista government and security apparatus. It’s hard to even imagine how that plays out.
Friendly chavismo is what Trump is trying to implement, and it has held for a few weeks. But it’s unlikely to sustain long term. Reading “Feast of the Goat” illustrates the need for a dictatorship to have some support, maybe as high as a third of the population. No less than a quarter of Venezuelans are strident PSUV socialists: true believers even after everything that has happened. They won’t be thrilled when Los Rodriguez dismantle Hugo Chavez’s legacy to become a U.S. concubine. Whether they demand Venezuela resist Uncle Sam, or their eroding support precipitates a fall, I don’t think friendly chavismo is viable.
Nothing new, or a continuation of what Maduro presided over, has the highest probability, but I wouldn’t necessarily call it likely. The scenario least difficult to imagine is that Delcy plays along for as long as possible until shit inevitably hits the fan. Whether it’s a new wave of protests, a coup or armed conflict in the interior, things get unpopular in America and Trump loses interest, cuts his losses and walks away. This allows for chavismo to reassert control under a new goon.
Armed conflict is the worst-case scenario and not unlikely. Los Rodriguez are appointed kings, they would not have risen to that spot organically. Los Rodriguez are effectively under Trump’s protection from factional tension between the military, non-governmental armed actors, party hardliners and of course the opposition. If Trump pulls his protection, or maybe even if he doesn’t, a coup would be instantaneous. It’s just waiting to happen.
The situation is a black box and a tinderbox. What happens when protests start back up? Who will repress the people, and what comes next if they can’t? Maybe something we can’t foresee happens.
It’s funny to joke that the U.S. is running Venezuela now, but it’s not completely untrue. Delcy is only in power because she has Trump’s support. We don’t know how long that will last, but any outcome depends on what Donald Trump is thinking more than anything else.
Before I dig into what Donald Trump is thinking, we also have to remember he’s not always thinking it out. He doesn’t play 4D chess so much as checkers. Big, bold moves that inspire fear and awe, with no plan for what comes next. He makes it up as he goes along depending on (A) the laws of power and (B) what his base says on social media.
Many people have argued that he only cares about the oil. He has said as much and the concrete actions he has taken so far indicate he wants to rebuild Venezuelan oil. This is a guy who invested $1 billion in Atlantic City ($3 billion in today’s dollars), so economic viability is beside the point.
Trump has said this is about oil, but he has also said this is about drug trafficking. Even when he’s being fairly honest, he is always lying.
Venezuela is a top source of illegal immigrants to the United States, and a prolonged economic basket-case only ensures that spigot is never shut off.
There are geopolitical considerations. Trump wants to push back on Chinese influence in the region, and Venezuela is their closest ally in Latin America.
Maybe Trump did it because he’s obsessed with power games, and Maduro was clowning him on social media. This is an attack on Trump’s superpower in his native habitat.
All of these factors are real, but I believe Trump’s top consideration is his legacy. I think he’s coming to grips with his mortality and wants to be remembered as a foundational president and ubermensch. He wants to do something great for the history books.
What would the legacy of his first term be? If you glance at the numbers, it’s hard to argue economy with a straight face. Tax cuts and deregulation? Peace in the Middle East? Nope, there is nothing positive that could stand the test of time.
Trump needs something BIG to outshine January 6, two impeachments and everything else he knows about that will be made public only after he’s gone. Andrew Johnson is regarded as one of our worst presidents, but he acquired Alaska. That changes the story. Trump needs something like acquiring Greenland.
Short of acquiring Greenland, liberating Latin America from socialist dictatorships would be a remarkable legacy. Venezuela ceasing to subsidize Cuba would likely lead to the communist dictatorship falling. If those two communist dictatorships fall, all eyes will be on Nicaragua.
Then you could argue Trump’s legacy is El Libertador, or the Communist Slayer.
Or maybe it’s just the oil. Or maybe it’s all of the above. All of these factors converge in Venezuela. Oil, China, immigration, social media beef, legacy … All of these except drug trafficking.
There’s a nonzero chance of Trump going down as El Libertador. It’s a long shot, but I’m cheering for it.
To take us out, let’s have another look at the Trump Corollary to the Monroe Doctrine:
The U.S. will aggressively intervene in Latin American countries to pursue geopolitical alignment and Chinese containment within a transactional framework that rewards right-wing allies with massive financial support and legal clemency while punishing left-wing governments through regime-change efforts, tariffs and economic pressure. Promoting ideology and deferential working relationships are prioritized over democracy, the rule of law or institutional stability. Oh yeah, and we are declaring the War on Drugs is back on.
This was Part IV of the Madurazo series. See:
Expat Chronicles 