State Weakness and Transnational Power: Explaining the Crisis in Venezuela
Frederick M. Shepherd
Venezuela, once one of the more prosperous and democratic nations in Latin America, is currently experiencing the region’s most severe political and economic crisis. Over five million people have been displaced, the economy is in a tailspin, poverty has grown dramatically to plague as much as 80% of the population, and the nation’s political divisions have deepened. Scholars and policymakers have, appropriately, focused on a wide variety of factors in explaining this crisis: the personalities of Venezuela’s leftist leaders Hugo Chávez and Nicolás Maduro; the early and more recent steps toward authoritarianism and away from democracy; and the influence of the United States on events in Venezuela. This article focuses on the Venezuelan state during the crisis, and how its exercise of “despotic” capacity made it a repressive actor in relation to its citizens, and a weak actor in relation to powerful transnational groups. The larger outcome has been a Venezuelan nation increasingly vulnerable to transnational criminal organizations and other external forces.
The current crisis has been deeply influenced by a combination of the Venezuelan state’s fundamental weakness and the strength of transnational forces within Venezuelan national boundaries. The body of the article explores Chávez and Maduro’s failed efforts to transform and dominate Venezuelan society in this larger context. The enduring weakness of the Venezuelan state, in a setting of a transnationalized society, helps to explain the nation’s sudden descent into crisis, authoritarianism, and desperate poverty.
This counterintuitive claim about the weakness of the Venezuelan state, as the Maduro government brutally represses its people, calls for deeper discussion of state strength. Based on the work of Michael Mann, this article’s discussion of state strength uses the more nuanced term “capacity,” and is based on a key distinction between two distinct types of state capacity. “Despotic capacity” refers to the ability of the state to dominate all that is narrowly political. It does not imply a large-scale state engagement with society, but rather a capacity to monopolize the political system, in the halls of power and national capital, but often not beyond. Mann’s “infrastructural capacity” implies a far different, more thorough-going type of state strength. He describes it as “the ability to reach down and centrally coordinate the activities of society.”
This type of capacity implies a state that influences the daily lives of citizens and institutions, within national boundaries in which it genuinely exercises authority. Scholars have used policy areas such as provision of education, economic management and regulation, law and order, social welfare, and the nature and scope of taxation, to assess infrastructural capacity. Latin American governments have frequently exercised despotic capacity, and have, with a few exceptions, struggled to exercise even basic infrastructural capacity. The evolution of state capacity in nations like Venezuela has been profoundly influenced by the power of external forces, which have sharply circumscribed the power of Latin American states. This article explores the impact of these forces on the current crisis in Venezuela.
Recent events in Venezuela are deeply influenced in several ways by processes begun in colonialism and extended in the subsequent 200 years of formal nationhood. First, colonialism put in place an alien, European-oriented political system that privileged colonial interests over those of indigenous Latin Americans. In a closely related process, structures of external domination were set up during and after colonialism. Most notable in the Venezuelan case was the emergence of powerful transnational corporations in the oil sector, as Venezuela became the largest oil exporter in the world by the early 1930s. Until 1975, this oil was extracted from enclaves beyond the reach of the Venezuelan state. Venezuela exhibited all of the features of a “rentier” state, as oil came to dominate the national economy and political system.
Second, formal independence in the early 19th century did little to create a sense of Venezuelan nationalism or to strengthen the governing institutions of the new nation. As pointed out by Miguel Angel Centeno, the almost total absence of international military conflict in Latin America allowed national states throughout Latin America, including Venezuela, to remain aloof from their citizens, and weak as national actors. As Charles Tilly and other theorists of the “bellicist” approach note, frequent international military conflict led to stronger states and greater nationalism in Europe. War increased the infrastructural capacity of those states that survived wars. These newly ascendant states were able to take meaningful steps to curtail the power of entrenched local or transnational non-state actors. This process was largely absent in Latin America.
Transforming Venezuela? State Initiatives in a Transnationalized Setting
All of these historical and conceptual points serve as a backdrop to the crisis that began with Hugo Chávez’s rise to power in the 1998 national elections. Chávez initially presented himself as an alternative to a corrupt political elite, offering a socialist and nationalist critique of neoliberal policies that had increased inequality in Venezuela during the 1980s and 1990s. This approach was encouraged by his political survival during the 2002 coup, which was backed by Venezuelan elites and the Bush administration.
Sympathetic observers point out that he and his allies consistently won about 60% of the vote in national elections during his first decade of rule; more critical observers point to fraud and discrepancies that grew in significance with each passing election, until his triumphs could hardly be described as democratic by the time of his passing in 2013. The creation of a new legislature and new judicial institutions, which came to be dominated by Chávez supporters, ultimately enabled Chávez, and later Nicolás Maduro, to consolidate political power.
The promulgation of restrictive media laws also represented an important step in the direction of authoritarianism. In this setting, corruption flourished as well: Transparency International ranked Venezuela as the seventh most corrupt nation in the world in 2019, and the terms “kleptocracy” and “super network” of corruption have been applied to Chávez and Maduro’s rule. The more focused analysis that follows explores policies intended to transform Venezuelan society, in highly transnationalized sectors (such as oil) and in other domestic sectors. A central concern will be the complex and multi-level relations among external forces, the Venezuelan state, and Venezuelan citizens.
The state-run Petróleos de Venezuela S.A. (PDVSA) was created in 1976. Yet in the following two decades, Venezuela followed the regional trend toward neoliberalism, gradually reducing the state presence in the oil sector and providing opportunities for global oil companies. Falling oil prices in 1998 had a direct impact on the lives of many Venezuelans, and led many of them to question the prevailing neoliberal approach. Chávez’s nationalist approach to oil first took the form of an aggressive effort to lead OPEC to a more active global presence and to keep prices high. In November 2001, Chávez crafted a new law which mandated state majority control in any joint venture with transnational companies. This policy was among the main grievances of the (US-supported) leaders of the 2002 coup attempt against Chávez, and was the central factor in the subsequent three-month work stoppage in the oil sector. Chávez emerged ascendant in the wake of both of these threats to his power. This series of events enabled Chávez to link the Venezuelan opposition to the Bush administration and to neoliberal oil interests. He and his allies subsequently tightened control over PDVSA and, in 2006, increased the required government stake in the oil sector to 60%.
In the meantime, with rising oil prices during the 2004-2008 period, Chávez made oil central to his agenda by publicly promising to use the proceeds to bankroll his ambitious social policies, and arranged for these proceeds to flow directly into the government institutions—including the military—administering them. This arrangement contributed to Chávez’s popularity at the time. But it also further politicized PDVSA, and discouraged reinvestment of oil profits back into the oil sector. The larger result was, according to Daniel Hellinger, that “PDVSA in the Chávez years stagnated as a productive entity.” The Venezuelan oil industry was dealt massive blows with the 2008 global economic crisis and, especially, falling oil prices in 2014. All of this took place as dependence on oil for export earnings dramatically increased, from 68.7% in 1998 to 96.0% in 2015. As a result, the Maduro government made comprehensive overtures to international oil companies in 2016 to invest in certain sectors, which, given the international setting, bore little fruit. And the Trump administration applied sanctions on PDVSA in 2019. These “targeted” sanctions had a massive impact, as they focused on the very heart of the Venezuelan economy.
Venezuelan leaders also attempted to promote Venezuela’s export-oriented mining sector, including copper, coltan, diamonds and especially gold. The Orinoco Mining Arc (OMA), created by a Maduro government decree in 2016, designated 112,000 square kilometers in east-central Venezuela as a special area for mining. It was officially intended to regulate informal and illicit mining activity in the area, and to attract foreign investment. No reputable foreign companies have shown interest in OMA mining opportunities, and the national government has only been able to exert influence in a corrupt and arbitrary way. Most of the mining is being overseen by organized crime groups linked in varying degrees to drug networks and Colombian guerrilla organizations. The illicit groups charge the people doing the mining a “tax” of between 30 and 80 percent, with members of the military often taking a share of the proceeds as well. Both the military and the criminal organizations have been accused of large-scale human rights violations in the region, and OMA has had a dire impact on an area that is home to much of the nation’s fresh water. The Trump Administration placed sanctions on Venezuelan gold exports in 2019, with the European Union taking similar steps in mid-2020. OMA’s original intention of opening this region to foreign mining companies represented a concession to transnational power and state weakness. The reality of OMA is far more extreme, as groups that transcend Venezuela’s boundaries “function as a local proto-state: a political entity that fills the lack of state sovereignty in the territory.”
Soon after his rise to power, Chávez launched large-scale social projects intended to transform Venezuelan society in a wide variety of areas. In an effort “to introduce Bolivarian nationalism into the educational sphere,” Chávez and his allies created the New Bolivarian Curriculum in 2007, and then, from 2011 to 2015, distributed roughly 100 million Coleccion Bicentenario textbooks to primary schools around the nation.
Basing its policies on the concept of “food sovereignty,” the Chávez government implemented a nationwide program for free breakfasts and lunches in schools, expanded soup kitchens, established price controls on basic foods, and created state-subsidized food markets. And in the area of land reform, the Land Laws of 2001 and 2005 led to the distribution of over 5.5 million hectares of land to 180,000 families by 2010. Yet these policies were plagued by a series of technical, political and economic problems driven by, and contributing to, the larger divisions within the nation.
Teachers’ organizations had not been consulted about education reform, and took a highly politicized stance against the government’s efforts, which in turn became increasingly “exclusionary” and confrontational.” Food policy was from the start plagued by bureaucratization and politicization, and price controls on basic foods created economic distortions. The food sector was eventually engulfed by the larger economic crisis. Land reform’s initial emphasis on distributing state lands to land-poor Venezuelans was soon replaced by expropriation of private lands, which led to polarization in the countryside. As state institutions became more directly involved in administering land reform, state weakness and bureaucratization became more evident.
Because they are primarily concerned with raising resources from society, tax policies bring into sharp relief the state’s infrastructural capacity. This is particularly the case in Latin America, where rates of taxation are historically low. And low taxing capacity is also a common feature of “rentier” states, such as Venezuela. The tax reforms that did take place under Chávez generally focused on the oil sector, with significant and politically sensitive increases promulgated in 2001 and 2005. These were not accompanied by major changes elsewhere in the tax system, despite a regional trend of nations pursuing comprehensive tax reform and significantly increasing tax revenue. As a result, Venezuela was the only nation in the region that experienced a decrease in tax revenue as a proportion of gross domestic product from 1990 to 2011. The dramatic growth of the informal economy in recent years has left much economic activity out of the reach of the Venezuelan tax system. The Venezuelan state’s tax weakness is most evident in the criminalization and corruption in border regions no longer controlled by the government. As noted above, groups linked to Colombian rebels and drug networks have implemented an unofficial tax system of their own in these areas.
There is some truth to the claim that the early policies of the Chávez regime were based on popular mobilization. As many as 8 million Venezuelans, or 33.5% of the adult population, took part in Chavista Communal Councils. Genuine collaboration between the state and these groups, marked by independence and initiative from the bottom up, would have represented an important element in state infrastructural capacity. Grass-roots organizations also played a central role in implementing Chávez’s social policies.
Carlos de la Torre’s careful analysis of these groups notes that these groups created “a new sense of dignity and inclusion” and “strong loyalties to Chávez that were partially transferred to his successor, Nicolás Maduro.” Yet, especially as crisis and polarization kicked in, the reality was far more top-down in nature. De la Torre’s final verdict on Chávez’s popular mobilizations, echoed by most others’ analysis, is that they were “autocratic,” they had the effect of “controlling civil society and the public sphere,” and that they “strangled pluralism.” Rather than a means for state infrastructural capacity, they became a tool for an increasingly despotic Venezuelan state.
The general accounts above demonstrate that the Venezuelan political system has grown increasingly authoritarian. In a more specific sense as well, the Venezuelan state no longer delivers on many elements of the basic function of law, order, and justice. Large chunks of the nation have effectively been taken over by transnational crime organizations and drug networks. The Maduro regime “is losing and negotiating away its monopoly of violence in Venezuela and its control over its territory to illegal armed groups.” Venezuela had historically been able to avoid the fate of Latin American nations caught up in the global drug trade. This is no longer the case. Organized crime networks with local, national, and global ties now challenge the state in Caracas, most major cities, the countryside, and especially along the border. Throughout Venezuela, powerful transnational organizations have effectively usurped the state in providing basic assurances of order.
In a more hopeful development, calls for genuine justice in Venezuela are increasingly coming from transnational human rights groups such as Amnesty International and Human Rights Watch, and from the Inter-American Court for Human Rights. The Maduro regime has long resisted these organizations. Yet, there are signs in mid-2021 that Maduro may be open to a United Nations presence to monitor human rights, especially in remote areas in which the regime fears losing control of national territory.
The Catholic Church has become an increasingly effective opposition force. Even as Pope Francis has struck a strongly anti-Maduro tone, his political credibility may enable him to mediate between the government and the opposition. Both the Catholic Church and transnational human rights groups have played crucial roles in Latin American nations pursuing justice in the wake of dictatorship. There is no reason they can’t do the same in Venezuela, and exert transnational influence in a way that benefits Venezuelans. Policymakers should, in this regard, view the transnationalization that has plagued Venezuela, as also providing political openings and opportunities.
Yet this external involvement in the search for democracy and reconciliation has its liabilities as well. Even as it has fought the good fight against the repressive Maduro regime, the domestic opposition has left itself vulnerable to accusations of being overly close to external actors: Juan Guaido appeared as a high-profile guest at Donald Trump’s 2020 State of the Union Address, and signed off on an ill-fated “Bay of Piglets” anti-Maduro military operation led by retired US military operatives. Given the history of US intervention in Venezuela and elsewhere in Latin America, it is essential that external influence be channeled through multinational and genuinely global channels.
Theoretical analysis should not distract from the overwhelming tragedy of the Venezuela’s slide into instability, repression, and poverty. Yet deeper analysis can provide important insights. The lesson this article draws is one of state weakness in a setting of transnationalization. This point may seem counterintuitive, as the Maduro regime monopolizes political power and represses its citizenry. Yet a close examination of events in Venezuela reveals that the state is unable to perform many basic state functions. This is a classic case of despotic capacity flourishing in a setting of state infrastructural weakness. External forces have stymied and hemmed in the Venezuelan state, at key moments and in crucial sectors. And the state’s very existence has been challenged by powerful external forces, which have bent the state to its will and exerted state-like authority in large chunks of Venezuelan territory. The growing power of transnational criminal organizations in Venezuela is merely the latest chapter in a long history of external domination.
Hugo Chávez scattered virtually all of his speeches with references to revolution, and continually asserted nationalist themes in much of what he did and said. But, for all of his initial popular support, he did not come to power on the wave of a thoroughgoing revolution. And, Venezuela was saddled with a state demonstrating little infrastructural capacity at the time of Chávez’s rise. Just as significantly, powerful transnational forces remained in place, deeply penetrating the Venezuelan nation. Chávez and his successors simply didn’t have the means to transform Venezuelan society. It seemed that this transformation might take place, as Chávez’s initiatives were initially buoyed by high oil prices. But, Venezuela was wrenched back to reality by transnational forces, and the nation rapidly descended into crisis. A brief moment of transformation (which seemed to resemble genuine state infrastructural capacity) soon became nothing more than despotic rule. The irony is that the Venezuelan state has emerged as a far weaker actor—barely controlling large areas of the nation it is supposed to rule This weakness leaves the entire nation in a vulnerable position as the Covid crisis spreads. The people of Venezuela, ruled by a despotic regime showing neither the inclination nor the capacity to confront this crisis, will continue to suffer as a result.
 Jon Lee Anderson, “Protests in Colombia, Elections in Peru, and Other Chaos in the Andes.” The New Yorker. 4 June 2021, https://www.newyorker.com/news/daily-comment/protests-in-colombia-elections-in-peru-and-other-chaos-in-the-andes.
 This perspective is based on my recent book on transnational actors in Latin America, which focuses on the complex interactions among citizens, national governments, and transnational forces. See Frederick M. Shepherd, The Politics of Transnational Actors in Latin America: Power from Afar. New York: Routledge, 2021.
 I use the term “state” to refer to the set of governmental institutions that claim to rule within the boundaries of a nation. I occasionally use the term government and regime when referring to specific historical moments. The term “state” does not refer to sub-national geographical units such as the 50 units that make up the United States.
 Michael Mann, “The Autonomous Power of the State: Its Origins, Mechanisms and Results,” in John A. Hall, Ed. States in History. Oxford: Basil Blackwell, 1986, pp. 188-191.
 Ibid, p. 190.
 Terry Karl, The Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of California Press, 1998; and Daniel Hellinger, “Oil and the Chavez Legacy.” Latin American Perspectives. Vol. 44, no. 1. January 2017: pp 54-77, https://journals.sagepub.com/doi/full/10.1177/0094582X16651236.
 Miguel Angel Centeno, Blood and Debt: War and the Nation-State in Latin America. Oxford: Oxford University Press, 2002.
 Charles Tilly, “War Making and State Making as Organized Crime,” in Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol, Eds., Bringing the State Back In. Cambridge: Cambridge University Press, 1985, pp. 169-195.
 Steve Ellner, “Defying Globalization’s Logic.” NACLA Report on the Americas. Vol. 39, no. 2. September/October 2005: pp 20-24, https://www.tandfonline.com/doi/abs/10.1080/10714839.2005.11722355; and Gabriel Hetlund, “Chavismo in Crisis.” NACLA Report on the Americas. Vol. 48, no.1. Spring 2016: pp. 8-11, https://www.tandfonline.com/doi/abs/10.1080/10714839.2016.1170289.
 Javier Corrales, “Backsliding through Electoral Regularities: The Case of Venezuela.” European Review of Latin American and Caribbean Studies. Issue 109, 2020: pp 41-65, https://www.erlacs.org/articles/abstract/10.32992/erlacs.10598/.
 Mark Dinneen, “The Chavez Government and the Battle over the Media in Venezuela.” Asian Journal of Latin American Studies. Vol. 25, no. 2, 2012: pp 27-53, http://www.ajlas.org/v2006/paper/2012vol25no202.pdf.
 Bram Ebus and Thomas Martinelli, “Venezuela’s Gold Heist: The Symbiotic Relationship between the State, Criminal Networks and Extraction.” Bulletin of Latin American Research, 2021: p. 5, https://onlinelibrary.wiley.com/doi/abs/10.1111/blar.13246; and Eduardo Salcedo-Albarán and Luis Jorge Garay-Salamanca, Super Network of Corruption in Venezuela: Kleptocracy, Nepotism and Human Rights Violation. Tampa: Scientific Vortex LLC and Fundación Vortex, 2021.
 Op. cit. Hellinger, “Oil and the Chavez Legacy,” pp. 63-64
 Leonardo Vera, “Venezuela 1999-2014: Macro-Policy, Oil Governance, and Economic Performance.” Comparative Economic Studies. Vol. 57, no. 3. September 2015, https://www.researchgate.net/publication/279218897_Venezuela_1999-2014_Macro-Policy_Oil_Governance_and_Economic_Performance; and op. cit. Salcedo-Albarán and Garay-Salamanca, “Super Network of Corruption.”
 Op. cit. Hellinger, “Oil and the Chavez Legacy,” p. 70
 Op. cit. Hetland, “Chavismo in Crisis,” p. 10
 Julian de Cardenas Garcia, “The New Integrated Oil Service Contracts in a Venezuela in Dire Straits.” Journal of Energy and Natural Resources Law. Vol. 35, no. 4. November 2017: pp. 417-431, https://www.tandfonline.com/doi/abs/10.1080/02646811.2017.1371412.
 Benedicte Bull and Antulio Rosales, “Into the Shadows: Sanctions, Rentierism and Informalization in Venezuela.” European Review of Latin American and Caribbean Studies. Vol. 109, 2020: pp. 107-133, https://www.erlacs.org/articles/abstract/10.32992/erlacs.10556/.
 Antulio Rosales, “Statization and Denationalization Dynamics in Venezuela’s Artisanal and Small Scale–Large-Scale Mining Interface.” Resources Policy. Vol. 63, 2019: pp. 1-9, https://www.sciencedirect.com/science/article/pii/S0301420718306718.
 Op. cit. Ebus and Martinelli, “Venezuela’s Gold Heist,” p. 3.
 Jared Abbott, Hillel David Soifer, and Matthias Vom Hau, “Transforming the Nation? The Bolivarian Education Reform in Venezuela.” Journal of Latin American Studies. Vol. 49, no. 4. November 2017: p. 886, https://www.cambridge.org/core/journals/journal-of-latin-american-studies/article/abs/transforming-the-nation-the-bolivarian-education-reform-in-venezuela/64988F65604CC9ED8ED3CB6DAF1E08BE.
 Patrick Clark, “Sowing the Oil? The Chavez Government’s Policy Framework for an Alternative Food System in Venezuela.” Humboldt Journal of Social Relations. Vol. 33, no.1-2. 2011: pp. 143-144, https://www.researchgate.net/publication/259928687_Sowing_the_Oil_The_Chavez_Government%27s_Policy_Framework_for_an_Alternative_Food_System_in_Venezuela.
 Laura Enriquez, “The Paradoxes of Latin America’s “Pink Tide”: Venezuela and the Project of Agrarian Reform.” Journal of Peasant Studies. Vol. 40, no. 4, 2013: pp 621-629, https://www.tandfonline.com/doi/abs/10.1080/03066150.2012.746959.
 Op. cit. Abbott et al, “Transforming the Nation?” p. 907.
 Op. cit. Clark, “Sowing the Oil?” pp. 148-151.
 Op. cit. Enriquez, “The Paradoxes of Latin America’s ‘Pink Tide,’” p. 629.
 ECLAC (Economic Commission on Latin America and the Caribbean), Tax policy in Latin America: Assessment and guidelines for a second generation of reforms. New York: United Nations. June 2014, p. 27.
 ECLAC, Fiscal Panorama of Latin America and the Caribbean: Tax Policies for Resource Mobilization in the Framework of the 2030 Agenda for Sustainable Development. New York: United Nations, 2019; and James E. Mahon, “Tax Incidence and Tax Reforms in Latin America.” Woodrow Wilson Center Update on the Americas, 2012: pp. 1-27, https://www.wilsoncenter.org/publication/tax-incidence-and-tax-reforms-latin-america.
 Op. cit. ECLAC, “Tax Policy in Latin America,” pp. 12-15.
 Op. cit. Bull and Rosales, “Into the Shadows.”
 Carlos de la Torre, “Left-Wing Populism: Inclusion and Authoritarianism in Venezuela, Bolivia and Ecuador.” Brown Journal of World Affairs. Vol. 23, no.1. Fall/Winter 2016. pp 68, 62, https://bjwa.brown.edu/23-1/left-wing-populism-inclusion-and-authoritarianism-in-venezuela-bolivia-and-ecuador/. Also see, Laura Gamboa, “Opposition at the Margins: Strategies against the Erosion of Democracy in Colombia and Venezuela,” Comparative Politics. Vol. 49, no. 4. July 2017: pp 457-477, https://www.semanticscholar.org/paper/Opposition-at-the-Margins%3AStrategies-against-the-in-Gamboa/fc7cf72ecee9622cab3528beb89f0e0d42d4374d; and op. cit. Hetland, “Chavismo in Crisis.”
 Leiv Marsteinredet, “With the Cards Stacked Against You: Challenges to a Negotiated Democracy in Venezuela.” European Review of Latin American and Caribbean Studies. Vol. 109. 2020: p. 98, https://www.erlacs.org/articles/abstract/10.32992/erlacs.10553/.
 Op. cit. Bull and Rosales, “Into the Shadows,” p. 126.
 Paul Angelo, “The UN’s Moment in Venezuela Has Arrived.” Foreign Policy. 20 April 2021, https://foreignpolicy.com/2021/04/20/the-u-n-s-moment-in-venezuela-has-arrived/.
 Jon Lee Anderson, “In Venezuela, Americans Attempt to Stage a Bay of Piglets. ” The New Yorker. 13 May 2021, https://www.newyorker.com/news/daily-comment/in-venezuela-americans-attempt-to-stage-a-bay-of-piglets.
 John P. Sullivan and Robert J. Bunker, Eds., Covid-19, Gangs, and Conflict. Bloomington: Xlibris, 2020; especially Chapter 10, Keith Mines and Steven Hege, “Venezuela: Could the Coronavirus Threat Be an Opportunity?”