A forward Soviet outpost on La Orchila Island is far from the end of it. Hyperinflation in Venezuela will reach 10,000,000% in 2019. It was not so long ago when Concorde jets were swooping in to whisk shoppers off to Paris from Simón Bolívar Airport and Pan Am was routing its New York-Buenos Aires flights with a stop in Caracas. Venezuela was an aviation gateway to South America.
Today, Vladimir Putin is Venezuela’s principal patron, the interlocutor among Hassan Rouhani, Benjamin Netanyahu, Mahmoud Abbas, Recep Erdoğan and Bashar al-Assad, a power broker in Asia extending Russia’s reach from Vladivostok after decades of strategic and economic neglect of its own Far East. Russia has returned. Its superpower status which it lost with the fall of The Union of Soviet Socialist Republics (USSR) has been restored. In exchange for shy loans and bailouts over the past decade, Russia now owns significant parts of at least five oil fields in Venezuela, which holds the world’s largest reserves, along with 30 years’ worth of future output from two Caribbean natural-gas fields. The Dragon and Patao Fields alone contain 2.4 trillion cubic feet of gas but now it is more than likely that the ‘Dragon can’t dance’. Venezuela also has signed over 49.9 % of Citgo, its wholly owned company in the United States- including three Gulf Coast refineries and a nationwide meshwork of pipelines- as collateral to Russia’s Rosneft oil for a reported $1.5 billion.
Venezuela is deeply indebted to Russia and China with all of its crude oil revenues directed to pay the interest on Chinese and Russian loans. China has become a creditor of last resort for Caracas as the economy implodes. Sanctions from the U.S. could force Rosneft and Chinese interests to seize Venezuelan oil assets outside of Venezuela. Measured by a combination of purchasing power-parity (PPP), exchange rates and nominal gross domestic product, Standard Chartered Bank expects that by 2020 China will be the largest economy- not the United States. What is worse is that by 2030 the U.S. may fall behind India as India’s annual GDP growth is set to accelerate from 6% now to almost 8% in the next decade. Using PPP alone China is already the world’s largest economy. India’s trend growth is accelerating to 7.8% partly due to the introduction of taxes. India is likely to become the world’s second-largest economy by 2030, next only to China and overtaking the US, according to Standard Chartered’s long-term forecast. By 2030 Asia’s gross domestic product will account for roughly 35% of global GDP, up from 28% last year and 20% in 2010. Six of the world’s largest economies could be in Asia in the next decade.
The perceptive Donald Trump opines that the Soviet’s foray into Afghanistan contributed to the collapse of the Soviet Union. The Soviet Union invaded Afghanistan in 1979, withdrew in 1989 and dissolved by 1991. But Afghanistan’s role was more military and perception-based than economic. The moral, social and political costs of the war were substantial. It was also the time when the Soviet Union’s biggest financial problem was declining oil prices in the age of Gorbachev’s ‘glasnost’ (openness) and ‘perestroika’ (restructuring). The costs of Afghanistan were significant, but not enough to cause the collapse of the Soviet Union. Trump’s observation that Russia used to be the Soviet Union but Afghanistan made it into Russia is not as bizarre as it may seem within the metanarrative of his politics to make America Great Again. The pundits searching for Pearson correlation coefficients to establish causation between the invasion of Afghanistan and the collapse of the Soviet Union will never find it; and as they calculate inside cloistered societies and latch themselves in conclave to fight over crumbs, Vladimir caressed Caracas in plain sight.
Iran’s Rear Admiral Hossein Khanzadi has rarely dispatched its surface warfare assets on transoceanic voyages but has flirted with the idea to send vessels to Venezuela. As isolated regimes with overlapping economic interests, Venezuela and Iran have longstanding ties, including well-established networks for commerce, banking and mutual investment. During 20 years of Chavista rule Venezuela was accused of helping Tehran- evade sanctions, launder money and being a safe harbour for Hezbollah. The telegenic Juan Guaidó has declared himself Venezuela’s interim president and is recognised immediately by Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Paraguay and Peru- but the military is with Maduro. Russia’s Dmitry Peskov warns of catastrophic consequences of such adventurism and that to violate the basis and principles of international law is not a path to peace. During the Catalonia crisis, the EU Commission’s First Vice President, Frans Timmermans, sided with Madrid condemning any effort to hold an independence referendum as a violation of the Spanish constitution and, therefore, as a threat to the rule of law in all EU countries. Turkey’s Ibrahim Kalin is singing for Maduro while the unelected EU High Representative Federica Mogherini scaffolds Guaidó in language reminiscent of EU support extended to Ukraine during the 2014 coup d’état. President of the European Council Donald Tusk claims that Guaidó has a democratic mandate from Venezuelan citizens but is mute on Macron’s violent treatment of Yellow Vest protesters according to Prime Minister Morawiecki of Poland. The Bolivarian Spring of the South is here.