Venezuela

Ichiro Suzuki

As soon as 2026 has started, U.S. armed forces attacked Caracas, Venezuela, captured President Nicolas Maduro and his wife Cilia Flores at their house and flew them to New York for trial. The Trump administration has installed Maduro’s Vice President Delcy Rodriguez as interim president. The operation is quite possibly violation of international law. Few countries have expressed outright support for the operation. Trump’s naked territorial ambitions in the western hemisphere has turned the clock back to the late 19th century. The Monroe doctrine is reinvoked. The age of imperialism is back.

Apart from geopolitics, the Venezuelan economy has experienced an unprecedented collapse since Hugo Chavez became President in 1999, promising completion of ‘Bolivarian Revolution’. Chavez immediately got the Venezuelan economy to a long-lasting downward trend. Socialism/ communism never brought buoyant growth anywhere, and Latin America is no exception. After Chavez’s death in 2013, his deputy Nicolas Maduro took over presidency, continuing to sink the economy for over a decade. Oil exports fell to half a million barrels a day in 2021 all the way down from 2 million barrels in 2015 according to the OPEc, and an estimated 80% of the country’s wealth has been destroyed since Chavez rose to power. The scale of wealth destruction is simply staggering. Weimar Germany in the 1920s is estimated to have lost 20% of wealth amid hyperinflation. The U.S. economy in the 1930s shrank approximately 30%. Only Syria since the last decade suffered a greater catastrophe than Venezuela, but Syria’s collapse was brought by a ravaging civil war. Venezuela did it in peace time with stunning mismanagement of the economy. 

So much for Latin America’s socialism. While Maduro have wrecked Venezuela’s economy, the founder of the People’s Republic of China didn’t do much better. The Chinese economy under Mao Zedong was a sheer disaster. Estimated 20 to 40 million people have died of starvation during the 1959-61 Great Leap Forward, for one of the worst famines in history. Then destruction of the economy intensified with Cultural Destruction in the 1960s. After Mao’s death Deng Xiaoping got China to a growth path in the 1980s, by liberating the economy from the Communist dogma. After two decades of exponential growth Xi Jinping turned the clock and has tightened the grip in Mao’s fashion by making management of the economy and corporations indoctrinated. He took China’s growth for granted. While demographic factors are taking tolls on China since Xi’s rise to power in 2012, that’s not the only reason behind the Chinese economy’s more pronounced slowdown than expected when Xi’s regime began. Top down management of the economy is showing some strong results, especially in manufacturing sectors. Nonetheless, misallocation of resources appears to be evident and is weighing on the economy as a whole. 

On top of the Venezuelan economy’s total collapse, human rights became almost non-existent under Maduro, and elections were stolen. Worse, Venezuela spread drugs in the western hemisphere, primarily in the U.S. Trump, therefore, moved to topple Maduro with blatant disregard for international law and norms. Western leaders who have been preaching rules-based order were put to shame. They didn’t even protest the U.S. vehemently, knowing that Maduro needed to go somehow. It would have been a great deal better if the dictator lost power in a more conventional fashion, but that was perhaps too much to hope. Even worse, Trump didn’t do it in order to uphold human rights in Venezuela. Things are twisted in the second quarter of the 21st century. 

China, Russia and Iran protested strongly, and this group isn’t so highly regarded. China has been the enabler of narco state Venezuela and the Maduro presidency, in an attempt to build its base in Latin America. However evil and incompetent Maduro was, toppling of him was not only legally questionable but also was an overt display of hypocrisy. China’s foreign minister Wang Yi denounced the U.S, that the country had no right to act as the world’s judge. Wang’s argument is abundantly legitimate. That said, not doing anything is allowing Venezuela going as it has been, embracing Maduro who managed the economy with stunning incompetence and stole the election in 2024. Again, this is not a straightforward world. 

An obvious concern that the Venezuelan operations bring up is Taiwan. Would Xi Jinping take it as confirmation of God-given right to invade the island that the People’s Republic claims to be its territory? He has a goal of retaking Taiwan while he is the President. Though Xi might send the People’s Liberation Army to invade Taiwan, the cost of warfare is estimated to be prohibitive. The PLA’s invasion would trigger U.S. armed forces to defend the island even if Trump is more sketchy about doing it than Biden.  Japan would be brought in based on the bilateral agreement. Local people would rise up against the invader. After all Taiwan is a thriving democracy as opposed to Venezuela whose economy was ruined by a dictator. In addition to warfare, maritime transportation would be severely affected, immensely damaging economic activities in China’s coastal regions. The damage could be as much as $5 trillion, which is about a quarter of China’s GDP, according to Bloomberg Research. Since the Communist Party’s rule hinges on economic wellbeing of Chinese people, such damages would delegitimate the CCP’s autocratic rule. A cool head wouldn’t do it, but you’ll never know. 

About the author: Mr. Suzuki is a retired banker based in Tokyo, Japan.