Venezuela’s collapse can be largely attributed to a failure of governance. While foolish economic policies garner much attention, at root they are the product of a corrupt and anti-democratic approach to governance.
Hugo Chavez’s central political principle was to seize as much power for himself as possible. He eliminated or emasculated all institutions that could possibly restrain him. Congress was replaced with a new National Assembly, which he controlled. Chavez used this Assembly to remove Presidential term limits. His intention was to rule for life, which he duly did for 14 years until his death from cancer in 2013. He switched to rule by Presidential decree and made up the law as he went along.
Chavez used the National Assembly to end judicial independence and pack the Supreme Court with cronies. The Supreme Court was then used to purge lower levels of the judiciary, with the firing of hundreds of lower court judges and replacement with Chavista loyalists.
Chavez also attacked independent trade unions, banning legitimate strikes, leading reprisals against strikers, and denying collective bargaining rights to unions whose election results were not state approved.
Chavez removed Presidential term limits because he was confident he would never lose another election. He ended the independence of the elections watchdog, the CNE, by packing it with loyalists. The CNE then abused its powers to ensure that Chavez would win every election he contested. Chavez’s United Socialist Party spent vast state funds on its election campaigns, the secret ballot was compromised and those who voted against Chavez faced losing state benefits and dismissal from state jobs. In a country where an ever-larger number of businesses were taken into public ownership, this made voting against Chavez extremely unwise. Electoral fraud is now so serious that in 2017 even the company that had supplied the technology for Venezuelan elections since 2004 stated that the latest election was clearly rigged.
PDVSA, the state oil company, used to enjoy considerable autonomy in corporate governance. It was run by professional managers under a professional board which reported to several different ministries. Chavez scrapped the governance structure and brought PDVSA directly under the control of the President’s office. This facilitated his total control over spending without any accountability or transparency. PDVSA had become Chavez’s personal oil company, and Chavez pillaged it at will.
Corruption was a double-edged sword that Chavez regularly wielded. Officials were encouraged to be corrupt. However, a step out of line and that corruption would be exposed to serious consequences. State contracts were regularly awarded as prizes to loyal allies, almost always without competitive bidding. Allies and relatives were given access to preferential exchange rates facilitated by control of the central bank, also now under direct Chavista control. This allowed them to make millions. Indeed, Chavez’s daughter María Gabriela Chávez, is now the richest woman in Venezuela with an estimated fortune of $4.2 billion. Foreign companies seeking to export to Venezuela were required to pay unofficial commissions to Venezuelan officials in the range of 15% to 20%. Imports from Argentina alone were estimated to total over $650m between 2004 and 2008. The military was also co-opted through the encouragement of rampant corruption. For example, state funds were provided to the armed forces to construct a large sugar plant in the state of Barinas in 2008. The plant was never built, and the funds disappeared.
Unsurprisingly, in 2008 Venezuela ranked 158 out of 159 countries on the Transparency International Corruption Index.
Chavez also ensured that the media was not able to hold him to account. He enacted vaguely defined “incitement” provisions, allowing for arbitrary suspension and license revocation of TV and radio stations such as RCTV. He arrested media executives when they published or broadcast material unfavourable to the Government. Between August 2009 and August 2010 the central government closed 34 radio stations, 2 regional TV stations, 6 cable TV stations and 2 newspapers. Chavez would instead require all TV stations to air his own lengthy TV shows, during which he would smear opponents and give away flat screen televisions to pre-selected voters.
This whole tragedy underlines the fundamental importance of core governance values and standards. These essential principles include the separation of powers between the executive, legislature and judiciary; an independent judiciary upholding the rule of law; a free press; respect for human rights, independent investigative institutions reporting to the legislature; transparency of government actions and accountability to the people. These are essential protections against an incompetent, venal and self-serving government. All these core standards were abandoned by Hugo Chavez, and the results are plain to see.
More information on the Venezuela Campaign can be found on their website.