The Weekly N&C for September 8th, 2008

Now is it time to panic?

With headlines such as these available recently, it seems fairly likely that one could wave them around and stir up quite the panic.

Nicaragua Supports Russia, Recognizes Georgian Rebel Regions

Russian Confirms Upcoming Naval Maneuvers with Venezuela

Talk of Cuba, Venezuela Hosting Russian Military Bases --STRATFOR (subscribers only)

Well, were one to be a resident of Nicaragua, Cuba, or Venezuela that is holding on the hope of seeing the local Communist (-inspired) regime get chased out, those would be pretty disheartening headlines. Folks living next door to such Worker’s Paradises might not be thrilled about them either. But likely as not the only people with real reason to panic about a possible return of Russian expeditionary forces to the Caribbean region are the resort hotel operators who would have paying European tourists bumped from rooms so that Russian officers could return to treating an assignment there as a standing order to vacation.

The logistical realities of operating on the opposite side of the world are a stretch for those military forces that specialize in such deployments. The Russians, who did many things very well, and still do some things very well, do not count globe-spanning logistical capability among those things. Given the lack of on-board ammunition reloads and the appallingly short endurance at sea of most modern light *surface* warships without dragging a fleet oiler around, a Russian squadron of surface vessels in the Caribbean Sea has always been an amusing conceit tied closely to the port it is based in, with pretty much a one-time utility offensively against a major power.

Conventional Air operations are actually easier and more useful, as are bases for submarine replenishment. Both are primarily defensive assets, and both vastly complicate the plans of any military activity in the area, and that seems to still be the major reason why Cuba and Venezuela are willing to keep bringing up the topic. Well, in fairness, that is why the rational actors in those regimes keep bringing it up. The less-well-balanced members of the regimes seem to take endless (and nearly inexplicable) pleasure in just doing things that make substantial parts of the American political scene howl.

Very well then, that all seems to show that the sum total of those headlines is a minor complication to U.S. military and political affairs, sufficient fighting power to potentially put the continued liberty of Aruba at risk, and a major threat to the supply of fruity cocktail drinks at any resorts open to off-base leave by the visiting team.

That is, as long as there is no significant logistical capacity or inherent ability to project force by the hosting nations. With a force structure in place of competent local capability, the Russian expedition (or any other visiting power’s) becomes a “stiffener” instead of merely a “tripwire”, e.g. they add to real offensive and defensive capabilities rather than just being a presence that must be considered by any outside intervention. The threat that one or more of the “bad boys” of Latin America gaining such ability is real however, and while the Russians may well play the enabler’s role for now, it is what those regimes are doing and how they are doing it that should be seen as grounds for very real concern. You see, the way for a regime to cement control and then expand their power is to…

…win one election.

Specifically, win one popularly contested election under some circumstances considered “fair”, at least enough to gain recognition by various international bodies as “fair”, *and then change the rules*.

Of all the Latin American states currently under some variation of Communist (-inspired) governance, only Cuba remains a product of the Revolutionary Struggle. Nicaragua’s revolution has been swept away by several rounds of functional multiparty contests, but the last such brought back the old revolutionaries. Venezuela succeeded in utterly despoiling the democratic process without any successful revolution or coup, only to install the very face of one failed coup as President by electoral means. Ecuador, Bolivia, and some might argue Paraguay have all held polls and as a result now have functional oligarchies of the Socialist ilk to replace their traditionally Aristocratic ones. Leaving aside Cuba as unique, there is one unifying step of the processes common to all the others, and the key was Venezuela. For a candidate to be able to carry a plurality in what would be considered a “fair” election in any of those counties requires that the mass of the impoverished turn out to vote, and vote in the main as a bloc. To get them out of the, for lack of a better word, slums on election day, they need to either believe the promises of state largesse, or be so afraid of something that they vote for the candidate “against” that which they fear.

In Venezuela first, and then later in the others, the promise of Socialism and the state largesse that comes with it could be made believable because of national wealth; in specific, because of Oil money. The fear didn’t even need to be an outside threat at first. All that was needed at that time was to make the entirely plausible claim that the current political aristocracy had its finger on all that wealth and that if power was not taken from them, no significant amount of that wealth would ever be distributable to the masses. A mature democracy could have found a better way to see to the betterment of the nation and populace, but no one has ever accused Venezuela of being a mature institutional democracy of any real measure. Instead, raw populism and simplistic promises of using state power to mandate redistribution carried the day and Hugo Chavez and a rather small leadership clique gained access to the national wealth.

From that beginning, some promises were indeed fulfilled (no matter how impractical those promises were in the long run) and prices were subsidized on goods, basic education was expanded and state-run exercises in employment provision were put into place. But with hands in the till, so to speak, by the ruling clique and the philosophical need to expand the “revolution”, the treasury outflow clearly outpaced the inflow. Only a persistent rise in petroleum prices kept things close to balanced for a while. But gifts of oil “in thanks” to Cuba, and that expanding “revolution” which had to find funding first Nicaragua’s old Marxists, then Ecuador’s new “reformers”, then Bolivia’s nativists-turned-socialists all taxed the currency flows. Add in the burning desire of the new regime to make themselves equal or superior to the old aristocrats (at least in greed) and the cost spiral that happens when a nation simply coins money and hands it out to the masses, and the limits of productive worth on the nation were rapidly to be exceeded.

While no one would claim that economic good sense raised its head in the Bolivarian Republic government, even the simplest member of the ruling clique could see the level of coins in the treasure chest sinking. The brains of the bunch (there are several, actually) realized that if something was not done to lock in the system as they wished it to be, when the well ran dry they would be abandoned by supporters and foreign friends alike. In a surprisingly efficient set of maneuvers, two parallel courses were set in motion.

The first came from the standard Populist-turned-Dictator playbook; Change all the rules of how the government is mandated. First, stand up some enemies of the state (and thus “the people”), so both internal and external foes had to be found. Chavez himself had by this point endured one attempted military coup, and had painted it as a creature of the former aristocracy and a foreign power. That helped things along, as no populist leader in Latin America can go wrong by blaming the rich and the Americans for something troublesome. Internal foes were also picked out. General Baduel for one, long a supporter of the Chavez regime, found himself on the outside of the clique. Next, monopolize the means of communication. Again, this too is a simple task given the history of government intervention in the media. Once those things are done (to the joy and applause of the majority of the electorate), rewrite the laws governing election rules and hold another plebiscite or a referendum on power. This, like several parts of the above steps, is an ongoing process. The Chavez faction “won” one election that was so manipulated that the opposition parties boycotted participation. For one to call that a big mistake on their part is making an understatement. The then-existing constitution of Venezuela had (and still has) very clear emergency powers and the ability of the executive to ask for dictatorial authority. If the representative Congress passes the authorization, the President can *perfectly legally* run the country by fiat for a period of 18 months. Technically, the only thing the executive can’t do in that time is change the constitution, but if the Constitutional Court is packed no challenge to laws made by edict stands a chance. This course has played out almost to perfection so far. The one and only miscalculation was an attempt at fully rewriting the constitution that was put to referendum and failed. Chavez’s last period of rule-by-edict expired at the end of July of this year.

The second course in play is to seize the means of production of everything that generates foreign exchange, manages financial movements internationally, or produces an essential resource for the economy that was held by private, especially foreign, investors. Grabbing control of the exportable resources was not difficult, as most all of them were being produced under fairly onerous national licenses anyway. Seizing the Exchange Banks was a little more difficult legally, but such expropriations can be arranged by various means. Keeping them open after one seizes them is a bit harder these days than in years before, but if a few countries willing to collaborate (for their own reasons) keep links open and no major binding financial sanctions regime falls against the effort, it all works out. Nationalizing fixed industry is the hardest of the lot, as in the case of Venezuela most of the important industries had been capitalized by foreign investments. If the owners were all locals they could just be run over legally, but to pick the example of the Cement industry, all three major producers are subsidiaries of large foreign industrial conglomerates. That effort hasn’t gone so well to date, but at least on paper all three Cement producers have now been nationalized.

So why is this second course such an important part of the scheme? No, not because it enables yet more government patronage. Instead, while it does little to help in the long run, in the short term it pours capital (the equivalent of more coins) back into the treasure chest. It was a play for time.

But was it long enough? The process of all this is being echoed down the chain. Nicaragua is inviting in Iranian-linked “investments” and the regime there is trying to revise some parts of the legal system. Ecuador is inviting in Chinese investment, at the same time moving to nationalize existing oil production and mass media, and has a constitutional referendum about to be voted on. Bolivia just went through a cleverly-run “recall” of the government, who recalled themselves as a means to capitalize on popularity after the seizure of the nation’s natural gas industry, and is now proposing a constitutional referendum. All of these efforts to lock-in the current regimes are underway, and all need more time to solidify control, and all the while they hold out their hand and money from Venezuela (and from “useful idiots” fronting a fair number of the NGO’s working the Andean region) has to be put in to keep the “revolution” going.

Was it long enough?

Inflation in Venezuela hit 22% officially as of early this year. Some judgments put it at over 30% now. Price subsidies failed, as did mandatory distribution orders for basic foodstuffs. A friend, passing along a personal letter, quotes (translated) “…Food- there is no tomato sauce, mayonnaise, rice, or coffee and it looks like these are going to (continue to) be scarce... It looks like one of the laws Chavez did is he can expropriate these to the national producers of food and he is nationalizing all he can do with force.”

Oil production infrastructure is going on 10 years with no significant re-investment.

Was it enough, or will the money and power have to come in somehow else?

Venezuela refuses to return to anti-drug cooperation pact

Was it, or will there have to be decisive measures?

"Todo ello a través del anuncio de 15 Nuevas Leyes que serán presentadas al País antes del 23 de Noviembre."