By Mario Colella
NANJING, China — Venezuela is in crisis; 2.3 million refugees have fled the country (out of a population of 32 million), it has a yearly inflation rate of 83,000 percent and 34,000 murders a year. With a mortality rate of 110 per 100,000 residents, if you lived in Caracas for 73 years, you would have an 8 percent chance of being murdered. Though there are a number of reasons behind this tragedy, the mismanagement of Nicolas Maduro’s government has been the primary cause. It was Maduro’s government that cracked down on the opposition, leading to his fraudulent May 8 re-election. It was Maduro’s government that chose to service its social programs and pay off foreign debt with the printing press, sparking catastrophic inflation. It was Maduro’s government that has refused regional assistance and refuted every condemnation of its actions as part of a nefarious “economic war.”
But Maduro’s government is not the only one responsible. The People’s Republic of China has been instrumental in sustaining the current situation, offering a $5 billion loan on September 13 to maintain the cash-strapped country. This was not meant as humanitarian assistance — the 75 percent of Venezuelans who have lost an average of 19 pounds since the beginning of the crisis should look elsewhere. No, this loan is meant to be a win-win situation, from a Chinese point of view. 96 percent of Venezuela’s exports is crude or refined oil, and China is a country with a significant need for energy. After all, that’s been the basis of many agreements and loans made in the country since 2008. The fact that 14 Venezuelans, two of them ex-deputy ministers, were recently charged with using the state oil company, PDVSA, to create a $2.3 billion-dollar corruption network through Andorra is completely incidental to the growing ties between the two states.
Speaking of those loans, it’s currently estimated by the Venezuelan think tank Econanalytica that Venezuela currently owes between $50-70 billion to the Chinese government, and this latest agreement hasn’t done much to cancel that debt. In fact, following Econanalytica’s calculations, the outstanding $5 billion loan, if paid back under current terms, would carry a total payment of some $23 billion. The debt may be paid back in either U.S. dollars or oil, but even this condition isn’t likely to be a relief. Venezuela currently produces 1.2 million barrels of oil per day, a precipitous decline from the 1.5 million it produced half a year ago, and the number continues to fall. Twenty years ago, Venezuela produced 3.5 million barrels per day. Worse still, the hyperinflation that has made an oil worker’s monthly salary worth less than the cost of dinner has caused many workers to abandon their posts or even steal machinery as they leave the company and flee the country.
What can be done? First, there must be credible monetary reform. Maduro’s government has twice redenominated its currency, but it continues to finance its spending by printing money. Until this process stops and a stable redenomination is reached, there is no path forward. Second, there must be a transition away from Maduro. He has shown himself to be not only economically illiterate and politically repressive, but callous beyond belief in the luxuries he allows himself — on his recent voyage back from China, he made a stop in Istanbul to have a steak with Nusret Gökçe, better known as the internet celebrity “Salt Bae.”
But the question remains: How well do China’s actions within Venezuela fit into the global context of Chinese foreign policy? Quite well, in fact. We could easily compare Venezuela’s Maduro to Malaysia’s Najib Razak (currently under investigation for $627.8 million having been transferred into his personal bank account) or Cambodia’s Hun Sen (a man well-versed in the destruction of political opposition), both key nations within the Belt and Road Initiative (BRI). A central project for Xi Jinping, the general secretary of the Communist Party of China, the BRI is covered by domestic propaganda as his masterstroke. Not only is it a demonstration of China’s greatness, but it is also a sign of Chinese leadership for the entire world. China has put great faith in nationalism, and “the rejuvenation of the great Chinese nation” does indeed have adherents within its borders. But how can this inspire other countries? How can China become a world leader, one that others strive to emulate, if it has no vision beyond its own wealth and power?
Narrow national appeals are not the worst problem of the Belt and Road Initiative. Sri Lanka, another Belt and Road target, has fallen severely behind on its debts to China and relinquished its Hambantota port to the Chinese government in 2017 for 99 years, following Hong Kong’s precedent. As mentioned before, Venezuela possesses significant oil reserves but is experiencing declining production; perhaps it only needs a firmer hand to manage its resources?
Mario Colella is an HNC Certificate ’19/SAIS M.A. ’20 student concentrating in Chinese Studies.