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Analytic Guidance: Venezuela's Political Factions

10 MINS READFeb 8, 2015 | 14:14 GMT
Venezuelan President Nicolas Maduro (C), Venezuelan Parliament President Diosdado Cabello (L) and then-Defense Minister Carmen Melendez (R) attend a military ceremony in Caracas on Dec. 27, 2013.
Venezuelan President Nicolas Maduro (C), National Assembly President Diosdado Cabello (L) and then-Defense Minister Carmen Melendez (R) attend a military ceremony in Caracas in 2013.
(LEO RAMIREZ/AFP/Getty Images)
Summary

As its economic crisis grows more severe, Venezuela is paralyzed by a struggle among the political factions that make up its ruling elite. Since former President Hugo Chavez's death, these groups have essentially ruled the country by committee. Caracas has been gridlocked on key policy decisions as a result. However, Venezuela's precipitous economic decline will require some kind of action, making the political impasse unsustainable.

Though Venezuela's economic and political future ultimately will depend on greater forces, such as global oil prices, the various factions will influence short-term events and decisions. These groups will face difficulties in the legislative election scheduled for October. A loss in that election could threaten their unity and lead them to challenge President Nicolas Maduro's authority.

The roots of Venezuela's fractured political system lie in the origins of the ruling United Socialist Party of Venezuela. When he became president in 1999, Chavez counted on the backing of numerous leftist civilians who had supported his election bid, including the Venezuelan Communist Party and civilian organizers, such as Maduro. However, Chavez also provided government positions and benefits for military officers who accompanied him in both of his 1992 coup attempts. The resulting political party was divided between numerous factions with little in common ideologically except for their loyalty to Chavez. These political cliques subsequently carved out their own territories within the state's bureaucracies.

The differences among the ruling party's factions did not present a major problem for the government at first. Because the government's power rested on major public spending funded by rising oil revenue, few members of the ruling elite had either the ability or intent to significantly challenge Chavez. Moreover, Chavez incorporated Cuban military and intelligence personnel into Venezuela's security structures. Because of Venezuela's patronage of Cuba, these officials had a vested interest in securing the government's survival. (Cuba's loyalty, however, is now in question because of the country's political negotiations with the United States.)

The party was less stable after Chavez's death in 2013. The succession agreement reached after Chavez's death left Maduro as president and Diosdado Cabello as National Assembly speaker. But political power in Venezuela is diffuse, and Maduro and Cabello rely on other factions to rule effectively. No single group in the government has the power to dominate the ruling party.

Though Maduro is president, other figures, whose differing interests block any coherent economic or political decisions, constrain him. Maduro and his inner circle are likely to make cautious economic adjustments that will not provoke a public backlash. However, the economic deterioration spurred by falling oil prices during the past four months threatens the government's plans. The ruling party's public approval rating is dropping, and a loss in upcoming legislative elections could threaten party unity this year and in the longer term.

The most notable struggle between Venezuela's political factions concerned the country's economic direction. While he was vice president for economic affairs in 2013 and 2014, former Energy Minister and Petroleos de Venezuela (PDVSA) President Rafael Ramirez began promoting a series of measures intended to address some of the country's economic distortions and woes. His suggestions included the steady convergence of the country's exchange rates and an increase in the heavily subsidized price of gasoline. These measures could have improved cash flow for PDVSA and the country's public finances but likely would have spurred inflation and rapidly affected the ruling party's public approval. The measures were not adopted, probably because of the potential negative effects. In September, Maduro sidelined Ramirez, first appointing him as foreign minister and then as Venezuela's ambassador to the United Nations.

Maduro's Loyalists

Maduro, his wife, Cilia Flores, and those around them form a significant faction within the United Socialist Party of Venezuela. Flores served as Chavez's legal counsel prior to his release from prison in 1994. This relationship helped Maduro politically. Maduro served as head of the legislature and then was named foreign minister in 2006 before becoming president in 2013. Maduro played an unspecified role in helping Cabello and former Gen. Miguel Rodriguez Torres organize the country's colectivos. His period as a student in Cuba during the 1980s likely allowed him to curry favor with Cuban leaders. Venezuelan legislator Elvis Amoroso, the deputy head of the National Assembly, is likely a Maduro ally, which gives the president some influence in the body controlled by Cabello. Maduro's vice president, Jorge Arreaza, directly administered the National Foreign Trade Center, a government body that administers the disbursement of foreign exchange funds, though Cabello's brother is also among its directors.

Despite Maduro's influence, larger forces — such as the country's economic decline — are calling into question his ability to manage the country. The economic crisis will continue eroding his — and by extension, the ruling party's — political legitimacy among voters. It will be crucial to see whether Maduro can access any economic lifelines to offset the crisis or whether his faction will continue to weaken. If he struggles to implement specific policies or make political appointments, it likely means that he is meeting resistance from elsewhere in the government.

Cabello and His Military Allies

Diosdado Cabello and the people around him make up the second faction. As head of the National Assembly, he is effectively the second-most powerful official in the country. Cabello's influence can also be seen in the Bolivarian National Intelligence Service, which is under the Interior Ministry's authority and is headed by Gustavo Enrique Gonzalez, a former political patron of Cabello. Cabello's influence also likely extends into the colectivo movement, since he played a major role in forming and arming these organizations in 2001 and 2002 during his stint as presidential secretary and in the vice presidency.

Rodriguez Torres, the retired general who helped organize the colectivos, is reportedly close to Cabello. Rodriguez Torres is an instructor at the Venezuelan military academy, a role he took on four months after leaving the Interior Ministry. Rodriguez Torres' potential for influence in the government likely comes from the prevalence of his military cohort in key government posts, his long tenure as director of Venezuela's intelligence service and his role in organizing the colectivos alongside Cabello. Gen. Vladimir Padrino Lopez, who serves as defense minister and head of the joint chiefs of staff, and army commander Gen. Jose Izquierdo Torres are both from Rodriguez Torres' graduating class at the Venezuelan military academy. Gen. Manuel Bernal Martinez, commander of the 31st Mechanized Infantry Brigade (a well-equipped unit permanently stationed in Caracas), is also reportedly close to Rodriguez Torres.

Venezuela's Military and Auxiliary Forces

The loyalty of the armed forces, perhaps more than any other institution or faction, will determine Venezuela's political direction during the economic crisis and potential political crisis. The state has taken some measures to manage this potentially dangerous entity, increasing the role of the Venezuelan armed forces since the coup attempt in 2002. Officers have been appointed to strategic positions in which they can benefit from illicit activities. Chavez and Maduro also prioritized giveaways of goods and financial benefits to officers and enlisted men to maintain their loyalty. Frequent reshuffles of national- and unit-level commanders have prevented officers from amassing too much influence. The last major reshuffle occurred in July 2014.

Strong military support (or at least limited dissent) has safeguarded the government so far. However, with the growing effects of the oil price decline on Venezuela's economy, it will be crucial to watch whether the military maintains loyalty to Maduro amid future setbacks. The differing chains of command in the country could complicate any military moves against Maduro. The armed forces are linked to the joint chiefs of staff by regional entities referred to as Strategic Defense Regions. The regional commanders come from different branches of the armed forces, though age cohort broadly links them. While it is conceivable that individual units under the command of each regional commander could prove disloyal to the government in case of a political crisis, these commands (and their frequent reshuffling) could give the government an extra layer of insulation against military disloyalty.

The government's auxiliary security forces are important, though not crucial, entities to observe as well. They can be divided broadly into colectivos and the Bolivarian militia. The loyalty of both these groups, but particularly the colectivos and their known political patrons, will be key to tempering future unrest.

The colectivo movement is a generic term for numerous loosely affiliated patronage networks that often function as security forces for the state. They have helped primarily by using harassment to disperse opposition demonstrations. Specific ruling party officials, such as Communes Minister Elias Jaua, local government officials in the municipality of Libertador, Rodriguez Torres, legislator Freddy Bernal and Cabello, reportedly have influence among the colectivos. The largest concentration of colectivos, located in the Jan. 23 neighborhood near the presidential palace, likely includes groups associated with Jaua, Cabello, Bernal and Libertador municipal council members.

However, some colectivos in the Jan. 23 neighborhood and across the country allegedly are involved in criminal activities, such as extortion and drug trafficking. Since 2013, the Venezuelan government has attempted to disarm some of these organizations but has met resistance, particularly after the October 2014 killing of a colectivo leader by police. These groups are probably not strong enough to pose a significant challenge to the armed forces in case their patronage links to the government weaken.

The Bolivarian militia, formally established in 2007, is the other major auxiliary force. The militia, which allegedly has nearly 100,000 members, is under the direct command of the army. However, the militia's reliance on the military for access to firearms and other weapons weakens its ability to act effectively against any internal threats.

The Energy Sector Faction

The final major faction to watch comprises individuals with links to PDVSA and the rest of the energy sector. Control of the energy sector has been crucial to maintaining government stability. The quick expansion of social programs after 2002 and the purging of thousands of PDVSA employees in 2003 secured political loyalty but permanently crippled the company's ability to expand oil production. This financial strain on the state-owned oil firm is the primary cause of the government's cash flow problems. Low oil prices have exacerbated these problems. With Ramirez sidelined, it will be crucial to observe whether Maduro can enact policies regarding PDVSA.

Maduro has attempted to raise gasoline prices steadily. Moreover, in early February, Venezuelan authorities arrested four managers from PDVSA's western division; at least two of the officials were suspected of involvement in fuel smuggling to Colombia. Such measures are necessary but could meet resistance from individuals and networks entrenched in the company. So far, there is no indication that anyone within PDVSA can challenge Maduro politically. However, the company is responsible for more than 90 percent of foreign exchange funds entering Venezuela and is key to secure public spending. Consequently, it will continue to be in Maduro's interest to maintain effective control over the company.

The measures Maduro has chosen to address the economic crisis, no matter how cautious, could bring him into further disagreement with other factions. For instance, the arrest of the PDVSA officials seems to be an attempt to disrupt corruption networks within the company. However, targeting illicit fuel shipments (which the company estimates at 100,000 barrels per day) carries the additional risk of angering people within the energy sector and those in the military who have benefited from smuggling.

If Maduro can raise the price of fuel nationwide — currently less than 10 cents per gallon at its subsidized price — the increased income could offset some of the financial pressure on PDVSA. However, raising fuel prices could also provoke officials who benefit from fuel smuggling. The large fuel subsidy spurred the illicit market for fuel in Colombia, and some civilian and military border officials tolerate cross-border fuel smuggling in exchange for periodic payments. Though these officials might not be able to retaliate against Maduro, his attempts to glean more funds from the energy industry could lead to further government infighting and political instability.

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