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People line up to buy toilet paper at a supermarket in downtown Caracas, on 19 January 2015. REUTERS/Jorge Silva

Venezuela: Unnatural Disaster

Alongside Venezuela’s growing political tension, the collapse of the country’s economy and health care system are leading to an equally dangerous social crisis. To stave off a humanitarian disaster that could well turn today’s polarisation violent, Venezuela needs an emergency program, careful reform of price controls, political consensus, and international support.

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I. Overview

The accelerating deterioration of Venezuela’s political crisis is cause for growing concern. The collapse in 2014 of an incipient dialogue between government and opposition ushered in growing political instability. With legislative elections due in December, there are fears of renewed violence. But there is a less widely appreciated side of the drama. A sharp fall in real incomes, major shortages of essential foods, medicines and other basic goods and breakdown of the health service are elements of a looming social crisis. If not tackled decisively and soon, it will become a humanitarian disaster with a seismic impact on domestic politics and society, and on Venezuela’s neighbours. This situation results from poor policy choices, incompetence and corruption; however, its gravest consequences can still be avoided. This will not happen unless the political deadlock is overcome and a fresh consensus forged, which in turn requires strong engagement of foreign governments and multilateral bodies.

As the 12th largest oil producer in the world, with the largest reserves, and a beneficiary of the most sustained oil price boom in history, Venezuela ought to be well placed to ride out the recent collapse of the international price of crude. The oil boom, combined in the early years at least with the government’s redistribution policies, produced a significant decrease in poverty under the administration (1999-2013) of the late Hugo Chávez. The economy was showing signs of strain, however, well before the 50 per cent fall in prices at the end of 2014, a year in which GDP shrank by more than 4 per cent and inflation rose to 62 per cent. Expropriations of private land and businesses, stringent price and exchange controls and inefficient, often corruptly-run state enterprises undermined the nation’s production of basic goods and services. Having incurred massive debts, spent most of its international reserves and emptied a stabilisation fund set up for such contingencies, the government faces a critical shortage of hard currency and the prospect of triple-digit inflation this year and can no longer afford to make up domestic shortfalls of consumer goods with imports.

The impact has naturally been felt most keenly by the poor, who rely on increasingly scarce supplies of price-controlled food, medicines and other basic goods for which they must often queue for hours, with no guarantee of success. Those with ailments such as cancer, HIV-AIDS or cardiovascular disease can go months without medicines they require to survive. Hospitals and even private clinics cannot maintain stocks of medicines and other basic supplies, including spare parts to repair equipment. The hospital crisis is exacerbated by government failure to complete a rebuilding program begun in 2007 or fulfil promises to construct new facilities. Thousands of doctors and other medical personnel have resigned due to low wages and unsafe working conditions. Surgery waiting lists are growing, and staff vacancies go unfilled.

Some economists predict a sudden collapse in food consumption and widespread hunger, and public health specialists already say that some surveys are showing chronic malnutrition, although the country is not yet on the verge of famine. The collapse of the health service, however, can have pernicious short-term effects, including uncontrolled spread of communicable diseases and thousands of preventable deaths.

Aside from purely humanitarian concerns, Venezuela’s neighbours and the wider international community have pragmatic reasons for acting. If a solid institutional and social welfare framework can be restored through a negotiated settlement, and economic measures taken to deal with inflation and scarcity, a humanitarian crisis can be averted. If not, the collapse of the health and welfare infrastructure is likely to make political conflict harder to manage and could lead to a further erosion of democracy and an increasing likelihood of violence.

This in turn would have an impact beyond Venezuela’s borders. Potential risks include large-scale migration, the spread of disease and a wider foothold for organised crime. Without a change of economic policy, the country is heading for a chaotic foreign debt default, probably in 2016. An unstable Venezuela unable to meet its international commitments could destabilise other countries in the region, particularly Caribbean nations that have come to rely on subsidised energy from Caracas. It would also have a direct impact in Colombia, along a border already under multiple threats.

This briefing is the product of research conducted between April and July 2015, which included field trips to Zulia state and the greater Caracas area. Among a wide variety of sources consulted were many grassroots sympathisers of the government and several mid-ranking officials. Unfortunately, the ministers of food and health did not answer requests for interviews.

To forestall the severe consequences of a humanitarian crisis in Venezuela:

  • The government must acknowledge the problem. Concealing true statistics and harassing those who publish or demand access to data must cease.
  • Any political dialogue or agreement must prioritise concerted action to guarantee supplies of scarce goods, including medicines, medical supplies and basic foodstuffs, for the neediest, and a social safety net without partisan intervention or manipulation that incorporates as providers non-governmental actors, including the Catholic Church and humanitarian organisations.
  • The current unworkable system of price and exchange controls that fosters corruption, smuggling and the black market and fuels inflation and scarcity needs to be carefully dismantled and replaced with mechanisms that provide a safety net for the poor without stifling production.
  • The government should seek broad support for an emergency program that restores economic equilibrium and protects the most vulnerable from the consequences of the necessary adjustment, rather than blaming the opposition and foreign governments for an imaginary “economic war”.
  • The opposition should resist the temptation to score political points, acknowledge there is no painless solution and present a clear economic and social reform agenda.
  • Venezuela’s neighbours and the broader international community must abandon their reluctance to act, and explicitly press for restoration of the rule of law and of institutional checks and balances, beginning with close oversight of the December parliamentary elections.
  • They should also help alleviate the social costs of the current crisis by offering food and medical aid and helping Venezuela cope with and control existing epidemics and prevent future ones.

Caracas/Bogotá/Brussels, 30 July 2015

Cuyuní River from the plane between Georgetown and the Etheringbang airstrip. CRISISGROUP/Bram Ebus

Troubled Waters along the Guyana-Venezuela Border

Gold and migrants stream across the stretch of the Cuyuní river that marks the Guyana-Venezuela border. Guerrillas and criminal organisations control much of the flow. Their turf wars are already spilling over and could intensify if foreign powers intervene to topple Venezuelan President Nicolás Maduro.

Just outside Etheringbang, a tiny Guyanese outpost in the jungle on the Venezuelan border, the Cuyuní river that separates Guyana from Venezuela winds through banks thick with undergrowth. On the northern side, locals tell me, lies a camp for Colombian guerrillas living some 700km away from their homes, while other armed groups also operate nearby. From my vantage point by the water I cannot discern the camp, but I do see three men dressed in black – one carrying a large-calibre firearm – standing in a small clearing. I keep a safe distance and watch as a passenger boat putters by and the men in black demand that the captain stop. It is the first of a series of checkpoints – this one manned by the guerrillas, another by criminal gang members and a third by Venezuelan security forces – where passing boats submit to extortion before reaching the gold mines further along the river.

Etheringbang sits on the western edge of the Essequibo region, 160,000 square kilometres of nearly impenetrable rainforest. Along with an offshore oil field, Essequibo is the subject of a territorial dispute between Guyana and Venezuela, predating the former country’s independence from Britain in 1966 and now pending before the International Court of Justice in The Hague. But to the Guyanese authorities, that legal battle is a less immediate concern than their frequent skirmishes with the illicit profit seekers who work along the Cuyuní.

The river snakes through landscapes filled with lush vegetation but overrun by criminal enterprises.

The river snakes through landscapes filled with lush vegetation but overrun by criminal enterprises, primarily in illegal gold mining and human trafficking. The latter business is fuelled by the crisis in Venezuela, where government and opposition are slugging it out amid an economic catastrophe that is producing mass emigration, including to Guyana.

Even though Washington has seemingly dialed back its bellicosity toward Caracas, senior military officers in the Guyanan capital Georgetown worry about the possibility of a foreign military intervention to topple the government of President Nicolás Maduro in Caracas. An army major tells me about his concern that intervention could push various non-state armed actors now sheltering in Venezuela into Guyana. These actors would likely include members of the Colombia’s National Liberation Army (ELN), guerilla opponents of the government in Bogotá who have long been in Venezuela, but have expanded their presence in the past three years and aligned with Maduro in the face of the international pressure upon him to step down. They would also include organised crime groups known as sindicatos that feed off the explosion of the illicit economy in Venezuela’s mining regions.

On his smartphone the major flips through pictures of armed men he says are now active on the border, taken from social media accounts. Foreign intervention, in the major’s words, could spark the “synchronisation of all Venezuelan criminal elements” as they push into Guyana. Even absent an intervention, the complex and violent dynamics among the groups sparring to control Venezuela’s mineral wealth are already pushing armed actors over the border into this small Caribbean state with only 3,500 men under arms.

Streets of Gold

It is hard to overstate the remoteness of Etheringbang.

It is hard to overstate the remoteness of Etheringbang or how far it seems from the authorities in Georgetown. The town doesn’t appear on many maps. The small aircraft that I take to the outpost carries four other people – a Guyanese miner and two Venezuelan women accompanied by a man. The other seven seats are stacked with vegetables and mining equipment.

Throughout the 90-minute flight from Georgetown, our plane never climbs above the clouds, giving us an unrivalled view of the rainforest. Some distance to the right of our flight path is the site of Jonestown, where an infamous mass suicide by a fanatical U.S. sect claimed over 900 lives in 1978. Every few minutes, a patch of brown appears in the green vastness, pitted with pools of stagnant water, sometimes stretching along a dried-out riverbed or creek. These are the scars of gold mining, a major driver of environmental degradation in the Amazon basin.

After making a sharp turn above Venezuela, our plane heads for an unpaved airstrip, an ochre scratch in the verdant carpet below. Next to our landing spot is an office of Guyana’s Geology and Mines Commission and another building shared by the local police and a single migration officer.

Etheringbang, which is a one street town by the Cuyuní River. You can't find Etheringbang on google maps, but it's located across San Martín de Turumbán, which lies on the Venezuelan side of the Cuyuní. CRISISGROUP/Bram Ebus

Etheringbang has no mayor. The town is not much more than one unpaved street along the Cuyuní, lined with nightclubs, brothels and restaurants as well as humble convenience stores and a few palm trees. Around 8pm, reggaeton starts blasting through the wooden dance palaces’ speakers, drowning out the generators growling along the riverbank.

The main currency in Etheringbang is gold.

The main currency in Etheringbang is gold. At the convenience stores, the prices are even denominated in it – 0.2g for a big jar of Nescafé, 0.3g for peanut butter. The town is far from any bank dispensing Guyanese dollars; the more readily available Venezuelan bolívar is nearly worthless, given the hyperinflation across the river.

Twice a day, in the morning and at the end of the afternoon, a few police officers take a tour of town. They walk down the main street in shorts and flip-flops, sporting machine guns. On my second day in town, as I browse a convenience store’s wares, I meet the police chief, who wears dark sunglasses after twilight, a thick gold necklace, watch and wristband, and a ring with a big Mercedes-Benz logo. He greets me suspiciously, and his body language tells me that he has no interest in conversation.

Tied up outside the store, dozens of motorised canoes cluttered with empty plastic oil barrels float on the Cuyuní’s calm waters. The men who operate these improvised riverine fuel trucks are temporarily out of work because fuel supplies from Venezuela have been paralysed. The collapse of the Venezuelan oil industry due to the country’s political and economic implosion, exacerbated by U.S. oil sanctions imposed in January, halted the flow of both oil and gasoline across the border. Deprived of Venezuelan fuel, a main prop of the local economy, Etheringbang’s people are left with just a few means of survival: gold mining, work in the music-blaring bars and the sex industry.

Migration and Exploitation

There are more than 36,000 Venezuelans in Guyana, a country of 780,000. Some are refugees who have come themselves; others are victims of human trafficking. The Cuyuní is one of three major migration routes from Venezuela into Guyana. From San Martin de Turumbán, the Venezuelan town nearest to Etheringbang, migrants and refugees cross the river, which demarcates the border for a 100km stretch before curving inland. They can reach Guyanese cities after three days by boat.

The second route goes through Brazil, traversing Roraima state and its capital Boa Vista, and entering Guyana through a village called Lethem. A bus then takes the migrants and refugees on an eighteen-hour drive through the jungle to Georgetown. Guyanese media warn of corrupt police officers “shaking down” foreigners on this route and demanding cash or gold payments at checkpoints. I ask a local NGO employee working with refugees if the shakedowns are frequent. “It is the rule”, she answers. A representative of the International Organization of Migration confirms that extortion is common at checkpoints.

The third means of entry is by sea. In one of the places where the boats arrive, the town of Mabaruma near the border, hundreds of Venezuelan refugees sleep on the streets, as the Guyanese police have barred them from travelling further. Since a ferry bearing some 140 Venezuelans arrived in Georgetown in May 2019, the authorities have tried to halt the influx of migrants into the capital.

On any given day, Etheringbang itself hosts over 500 people who mostly do not live in town.

On any given day, Etheringbang itself hosts over 500 people who mostly do not live in town, according to a local doctor’s estimate. Most of them are Venezuelans, of whom many are female sex workers. The other temporary residents come to town to rest, buy supplies or look for entertainment after weeks or even months of hard labour in the mining pits scattered nearby.

Juliette (not her real name) is a 22-year-old mother of two from Caracas. Five months have passed since she arrived in Etheringbang. Before then, she worked in the illegal gold mines of Bolívar state, Venezuela, which she left after contracting malaria. She then spent time as a migrant in Colombia before she returned to Venezuela and eventually crossed into Guyana.

“Survival sex” is the term that local sex workers give their occupation. Each client used to pay her about one gram of gold, but because of the fuel shortages clients now tend to pay 0.5g or less. “It barely covers room and board”, Juliette complains. She is three days late with her rent, and may be unable to send money home to her kids.

Etheringbang, which is a one street town by the Cuyuní River. Most inhabitants are Venezuelan sex workers and Guyanese miners. CRISISGROUP/Bram Ebus

“This Constant Threat”

The roots of this border outpost’s burdens and challenges – the population influx, the sublimation of legal currency to gold, the police venality, the prostitution – lie in the southern Venezuelan states of Bolívar and Amazonas, which border Brazil and Colombia, as well as Guyana. In 2016, President Maduro’s government, seeking to compensate for the country’s severe economic contraction, designated a massive area in these states for extraction of gold, coltan, diamonds, rare earths and other valuable minerals, branding it the Orinoco Mining Arc. Foreign investors have generally steered clear of the initiative, but non-state armed groups, often in cahoots with local security forces, have expanded their reach across these territories and captured much of the mineral wealth. In so doing, they have exploited the stream of migrant workers fleeing the desperate lack of economic opportunity elsewhere in Venezuela.

In Venezuela’s mines, Colombian guerrillas, above all the ELN, and, to a lesser extent, dissidents from the Revolutionary Armed Forces of Colombia (whose main body demobilised in 2016) clash for control with Venezuelan sindicatos. Their firefights have pushed the latter – as well as many ordinary Venezuelans looking to make a living – toward the disputed border with Guyana.

To ward off intruders, Guyanese soldiers are deployed deep in the jungle, but they tend to avoid actions that might lead to escalation with any potential foe. “They do not want to rock the boat”, explains a Guyanese entrepreneur, who owns a mine close to Venezuela. He crosses the Cuyuní with drums of fuel, equipment and food for his workers, navigating the three checkpoints along the way. All are armed with rifles while the guerrillas also carry grenades, he says. “We have this constant threat”, he adds, referring to the various armed actors situated along the border.

The expanding violence in southern Venezuela has already spilled across the river. In November 2018, a Guyanese policeman in a boat was shot from the Venezuelan bank of the Cuyuní. Sindicatos attacked Guyanese mining camps in January, and one of their members was killed in the shoot-out.

Containing the Risks of Violence

Authorities in Guyana are hard-pressed to contain the risks lurking in the beautiful rainforest that surrounds Etheringbang. The border with Venezuela is distant from the capital and hard for state institutions to reach. Guyanans tend to agree that the solution for Etheringbang’s problems lies not in Georgetown but in Caracas – and in hopes for a political settlement that could end Venezuela’s economic freefall and allow the state to wrest control back from armed actors that prey on the region’s population. Conversely, any attempt to end Venezuela’s political showdown by force, whether a coup attempt or foreign intervention, could have disastrous consequences for Guyana’s security.

Life along the Cuyuní ebbs and flows according to the state of the criminal economy.

In the meantime, life along the Cuyuní ebbs and flows according to the state of the criminal economy. Back in Georgetown, I swap messages with a mine owner I met in Etheringbang. Without fuel to run his operations his business is languishing. But a few weeks later, word arrives that fuel is coming in to the outpost again. Straight away, he boards a plane back to the jungle. The wheels of Etheringbang are spinning once more – the mines are up and running, gold is moving along the river and parties are raging at night on the southern bank.

Etheringbang, which is a one street town by the Cuyuní River. You can't find Etheringbang on google maps, but it's located across San Martín de Turumbán, which lies on the Venezuelan side of the Cuyuní. CRISISGROUP/Bram Ebus