Moises Naim: The economic seeds of South American populism
Why the democracy movement in Venezuela stalled: “This is a dictator who has all the guns.”
Moises Naim, a distinguished fellow at the Carnegie Endowment and widely read international columnist, has written prolifically about the Venezuelan crisis. In a recent article in Foreign Affairs, co-authored with Francisco Toro, he called his homeland a criminal state in which looting by the leadership in cahoots with outlaw groups has hollowed out the public and private spheres. (Venezuela’s President, Nicolas Maduro, is under indictment in the Southern District in New York for drug trafficking and narcoterrorism.)
Naim and Toro describe a complete breakdown of Venezuelan society—financial, social, and humanitarian. Economic mismanagement has created one of the worst hyperinflations in history. The government just introduced a new bolivar, lopping six zeros off the old one—the third attempt to introduce a new “stable” currency since 2008. In total, 14 zeros have vanished (1 new bolivar is worth 100 trillion of the old ones). Put differently, all the currency in circulation in Venezuela in 1998, when Hugo Chavez was elected President, is now worth a sum total of three cents.
The humanitarian disaster is just as bad. Pre-Chavez Venezuela was, in Latin American terms, prosperous, although poverty, crime and political instability were on the rise. Today, the rate of child malnutrition, according to the World Health Organization, has soared to a horrific 36%. More than a third of Venezuela’s young are ill-fed or underfed. Perhaps the most telling figure concerns the exodus of young Venezuelans, a barometer of social despair. When I lived in Caracas in the late 1970s, Venezuela was a vibrant democracy and a magnet for bootstrapping foreigners—Argentines, Uruguayans, Peruvians and other Latinos, and for earlier waves of Italians and Spaniards. Today, Venezuela exports its own people. Nearly a fifth of the population is living abroad. One recent study puts the median age of migrants at 32. An entire generation of young is giving up on Venezuela’s future.
Naim has now told this story through fiction. Two Spies in Caracas recounts the efforts of two undercover agents—one a CIA spy, the other a top intelligence officer from Havana. Both are under pressure from their respective headquarters because, as Chavez bursts onto the political scene, neither agent has quite figured him out. And, oh yes--the workaholic CIA agent just happens to be female and lonely; the Cuban spy is a dashing 007-type, except he is increasingly prone to doubting his mission.
The spies are inventions of Naim, of course. But he weaves them into a plotline that largely follows actual events. The portrait of Chavez—charismatic, corrupt, emotionally needy, politically astute—could almost be reportage. The spies’ climactic encounter is fanciful, in an Ian Fleming sort of way, but Naim has otherwise fashioned a realistic ending, in which a dying Chavez anoints his protégé, Maduro, to extend his legacy under watchful Cuban eyes.
After publication of Two Spies in Caracas, I spoke with Naim from his home in Washington, D.C. An edited version of our conversation:
Lowenstein: Why did you write this book?
Naim: Because I had a story to tell that eluded verification. I decided I wanted to talk about what happened that I couldn’t confirm, could not corroborate.
Lowenstein: You mean the interplay of Chavez with criminal gangs?
Naim: Yes.
Lowenstein: And with the Cubans? You write in the book of a ceremony to recast Simon Bolivar, known to Venezuelans as “the Liberator.” Bolivar, of course, was a descendant of Spanish aristocracy. In the book, Chavez, with Cuban assistance, reinvents Bolivar as a mestizo—to symbolically bolster Chavez’s claim to power.
Naim: I describe the exhumation of Bolivar. That happened on camera. There was a whole spectacle, quite surreal. You have Chavez and military escorts open a casket and take samples. After the cameras left something else happened. This I know from different sources. After the public event there was a private event, with Cubans, where it was decided that Bolivar had been assassinated by oligarchs. It shows a different picture of Bolivar -- that he was [like Chavez] more mestizo than white. The genetic evidence is completely fake. The Cubans more or less anointed Chavez. It gave him the power of legitimacy.
Lowenstein: Are you saying that Chavez was a puppet? In the book, even the Cuban agent struggles to figure him out.
Naim: Chavez wasn’t a puppet. He surely invited the takeover, the infiltration of Cubans. Cubans have been running the intelligence services; they have had a huge role. [But] you cannot call Chavez completely a puppet. Fidel Castro and Chavez had a very strong personal bond.
You cannot say that of Maduro. He does not have the charisma, the knowledge, the smarts. He was trained In Havana, he there studied there. He was and is a Cuban operative.
Lowenstein: Was writing a novel a sort of protest? There was great hope in 2019, when more than 60 democracies (including the United States) recognized the opposition leader and President of the National Assembly Juan Guaido as the legitimate president of the country. But the democracy movement seems to have lost steam. Is writing a novel all that is left?
Naim: That’s exactly my sentiment, all else had failed. People thought you could unseat a dictator by just making speeches. This is a dictator who has all the guns.
Lowenstein: Why has the democracy movement sputtered?
Naim: It is very easy to be critical. At this point Venezuelans are fed up with politicians of all kinds. They want to eat. Personal safety is terrible. This is a terrorized, undernourished, depressed and frustrated society.
Lowenstein: Can you point to something in Venezuela to give us hope?
Naim: Recently, a group of opposition leaders met with representatives of the regime in Mexico. They issued a statement. These exercises end up benefitting the regime. It gives them legitimacy. The moment you say “negotiation” you divide the opposition.
Lowenstein: And the hope?
Naim: Venezuela is a failed state. It’s incapable of feeding its people or providing them with health care. Its oil supply is deeply crippled. It’s also a football between the big powers. A lot of what happens in Venezuela is decided by foreigners. Either Cubans, Chinese or Russians. They all have a finger in the plate. Then the U.S. and the European Union. But the support of America and other democracies is highly conditional and fragmented. There is a deep asymmetry. The keys to Caracas are in Havana.
Lowenstein: How would you categorize the Biden policy toward Venezuela?
Naim: They’re quite distracted [by Afghanistan]. There was anxiety among Venezuelans who supported Trump—anxiety that Biden would lift sanctions and be more benevolent toward the regime. None of that has happened. The Biden Administration has said repeatedly they will continue with sanctions. And that they want the regime to be changed.
Lowenstein: So one theme of your book is that Cuba has played a bigger role in Venezuela than perceived.
Naim: Yes.
Lowenstein: Another is the web of contacts between shady business cronies and the regime. You portray a fictitious business mogul who is essentially Chavez’s partner. It is not so far afield from recent headlines. The Wall Street Journal reported that the Venezuelan businessman Luis Mariano Rodriguez Cabello is under investigation by the U.S. for helping his cousin and Chavez’s former oil minister, Rafael Ramirez, amass $2 billion from Venezuelan government accounts, allegedly through fraudulent insurance contracts with the state oil company — which Mr. Ramirez formerly headed.
Naim: Chavez is deeply implicated in the criminalization of the state. Venezuela in streets, and in the corridors of power, is a highly criminal state. It started with Chavez and deepened with Maduro.
Lowenstein: Venezuela isn’t alone in turning to leftwing populism. Peru, Ecuador, Bolivia, Argentina—even Mexico—are moving or have moved leftward. Why this leftwing surge at the ballot box when established models such as Cuba haven’t succeeded?
Naim: The main defining variable is commodity prices.
Lowenstein: That’s fascinating. But it seems simplistic.
Naim: There is a second answer, which is ideological necrophilia—passionate love for bad ideas [literally, for dead ones]. Leftwing solutions have been tried and tested and they always fail.
Lowenstein: So why the appeal? Why now?
Naim: In countries where commodities are 50 % or more of exports, give me the price and I’ll tell you what the political mood is. When prices are low the economic situation becomes dire and that opens the way to unemployment, inflation, budget cuts and cuts in social programs. You get a very foul mood in society.
Lowenstein: Carlos Rangel., the late Venezuelan writer, blamed it on a latent anti-Americanism—what he called Latin America’s “love-hate relationship” with the United States.
Naim: I don’t think it’s genetic. Cultural stuff matters, but at the end of the day material incentives are what matters.
Lowenstein: The 19th century essayist Thomas Lander called Venezuela “a nation of accomplices.” Was he right—was there a consistent flaw in the political culture that accommodated rule by caudillos?
Naim: You can say that about any country.
Lowenstein: Who were the accomplices to Chavez? Was it the Cubans, or was it previous generation of democratic leaders, whose mismanagement led to Chavez’s election?
Naim: The Cubans were not just accomplices. They were facilitators.
Lowenstein: But don’t the old establishment liberal parties—Democratic Action and the Social Christians, deserve some blame?
Naim: Of course. They mismanaged the power they had. They didn’t realize that the oil wealth had to be better invested and distributed. Yes, the political parties were a disgrace. The intelligentsia, the businesspeople, the professional middle class were also negligent or short-sighted. But the narrative that corruption and poverty was the reason for Chavez? If you look at United Nations statistics, Venezuela was corrupt but far less corrupt than Brazil, Mexico or Peru. We had inequality but Brazil was the world champion in equality. We had poverty, but income per capita was one of the highest in Latin America.
Lowenstein: You say they didn’t realize they had to redeploy the oil wealth—but they did realize it. The well-known mantra for decades before Chavez was the need to “sow the oil”—to reinvest it in a more general prosperity.
Naim: That slogan was coined by the novelist and historian Arturo Uslar Pietri. Juan Pablo Perez Alfonzo [a midcentury energy minister and democratic reformer] had a different expression. He referred to oil as “the devil’s excrement.”
Lowenstein: Why didn’t the previous parties succeed at this—at reinvesting the oil wealth?
Naim: That is a very desirable goal. All governments have economic diversity and export diversity as a goal. Very few succeed. In that sense Venezuela is normal. Look at Chile. A great success—but it’s still [about] copper. In Russia, it’s still oil.
You can point to Norway, or the U.S. but these exceptions are countries that had a state, and state institutions, deeply grounded before the discovery of oil. Petrostates have a difficult relationship with democracy.
Lowenstein: What has happened to the oil wealth in Venezuela? Production in 2020 fell to roughly a half million barrels a day. Before Chavez, it was more than three million. Now, as you have written, gasoline shortages are a fact of life.
Naim: Petroleos de Venezuela [the state oil company] is a cage of thievery. It doesn’t exist [as it did]. They have run it into the ground. It doesn’t have the money, the people, the technical talent, the engineers. The company has lost the capacity to tap its own resources.
Lowenstein: To augment the currency, Venezuela is (partially) adopting dollarization. Can this revive the economy?
Naim: It’s an illusion that dollarization is a magic wand. Economists know that you need a package of measures. Dollarization should be part of a list of things. It will accomplish nothing unless you create a better environment for investment and promoting exports, restore the rule of law and the financial system, and restore the capacity of the country to produce hard currency.
Lowenstein: Was Two Spies sold in Venezuela? How was it received?
Naim: It was published last year—it was a great success. There was no reaction from the government.
Lowenstein: When was the last time you were in Venezuela?
Naim: A few years back. It was problematic and dangerous.
Lowenstein: Finally, what is your hope for Venezuela?
Naim: I would like to see democracy restored. Venezuela will have a very hard time if it continues to be run by a cartel of criminals.
Lowenstein: Thank you.