Examining Challenges and Chances for a Successful Coup in Venezuela

Nextbigfuture wrote several articles in early 2018, where we looked at the rapid economic and social collapse in Venezuela and believed it would lead to a military coup. Nextbigfuture predicted the coup would happen by the end of 2018. There are now about 26 days for that to happen. Clearly, this is highly unlikely.

Venezuela’s Economy Has Continued to Implode

Venezuela’s economic situation and social situation have continued to get worse and worse by the day. There has been talk about getting rid of Maduro and his regime.

Venezuela relies 90-95% on oil exports for outside cash. Oil is over half of the economy. Oil Production has dropped from 1.5 million barrels per day early in 2018 to the 1.0 to 1.2 million barrel per day range. Nextbigfuture did expect in March for Venezuela’s oil production to drop even faster than it was to that point. Nextbigfuture thought it would fall to the 1.0 million barrel per day or less by September. Venezuela is still dropping at a fast pace. It is tough to get accurate and honest numbers on anything. Inflation is at hyperinflation 1 million percent range. Again it is tough to get honest or accurate numbers and what is correct is changing day to day and is different across the country.

It is horribly bad and continues to get worse.

Talk From High-Level US Officials and With Regional Leaders on Coup or Regime Change

The talk is from fairly high-level officials in the US government like Senator Marco Rubio.

The has placed sanctions on Venezuela. The U.S. has imposed sanctions on Venezuela’s first lady, Cilia Flores, hitting Nicolás Maduro’s “inner circle.”

In September, President Donald Trump appeared to encourage a military coup in Venezuela, saying the “horrible” socialist government represented a threat to its own citizens. This was reported by the Miami Herald.

Speaking in New York ahead of a bilateral meeting with Colombian President Iván Duque, Trump questioned the bravery of Venezuela’s military but suggested they could easily overthrow President Nicolás Maduro amid an economic and humanitarian crisis.

“It’s a regime that frankly could be toppled very quickly by the military if the military decides to do that,” Trump said.

VP Mike Pence has been talking and trying to persuade global changes that would weaken the Maduro regime. Pence has tried to get China to shift its support. Pence has tried to get South and Central American countries to act in support of regime change.

An Ex-Mexican Foreign Minister talked about whether it was time for a Coup in Venezuela in the NY Times in September.

In September, Luis Almagro, the secretary general of the Organization of American States made a warning to Maduro at a rally on the border between Colombia and Venezuela. Luis said no option was off the table in Venezuela, and a “military intervention” to “overthrow” its government, could not be discarded.

In September it was revealed that senior-level officers from the Venezuelan army had approached the Trump Administration a few months before. They announced they were plotting a coup against President Nicolás Maduro, and requested telecommunications support for that purpose. The American officials declined, and the Venezuelans were on their own. There was a failed attempt or fake failed attempt with a drone. This was used as an excuse to purge, arrest and probably torture a large number of army officers accused of involvement in the plot.

Millions of refugees fleeing Venezuela put a strain on neighboring countries. The neighboring countries now have skin in the game.

Risk of Coup has Increased With the GDP Contraction and Falling Oil Production

For the known factors of a military coup, the one factor that is known to change the most is the GDP growth.

The factor of GDP contraction in coup risk uses a square root multiplied by -1. So -9% GDP growth is a -3. A -16% GDP growth is -4.

NY Times have published different opeds about what is preventing a successful coup, the risks of a failed coup and the need for change.

There are thousands of Cubans inside Venezuela in key military, intelligence and important roles. They monitor military, national security and intelligence on behalf of Maduro’s administration. Venezuela provides subsidized oil supplies to Cuba. Cuba and Venezuela’s regime have each other backs.

Venezuela uses oil for the friendship of Russia and China. China and Russia are supporting a morally bad situation, but this is global politics. Only idealistic fools sell out their national self-interest on behalf of moral principle.

It is up to other nations with different national interests to change the self-interest calculations for other countries to help them “do the right thing”.

High-ranking officials in the military explicitly side with the regime. Many have been placed in those positions via purges of the ranks after the faked drone attack incident or after the ineffective helicopter incident.

There is not unity with Maduro at the soldier level or lower officers. Plus if the self-interest calculation could be changed then military officers could flip to a different winning side.

Critical military positions are held by people put in place and are being paid more by Maduro in power and money.

How Weak Can Venezuela Get? How Bad Can Things Get Before Forces For Change Get Motivated to Effectively Act?

It got bad enough for the people of Venezuela long ago. The need for elections to be rigged and stolen was when there was a majority of people in Venezuela who wanted change.

The need for purges and outside Cuban assistance to maintain military and security apparatus control is when there would have been internal military and other opposition. The opposition was ineffective or outplayed.

Outside countries are getting quite motivated to want Maduro out. It is question of the benefits of acting versus the costs needed to ensure a successful move.

The US has the military power to do it and succeed in the change. The issue is managing what comes after and not having failed state problems like in Iraq or Afghanistan. It is getting into you broke it so you own the problem now. Even though it is already broken.

Other nations in the region have the military and resources to act and succeed in the initial change. Again it is the issue of making the what comes after work. There is also more risk of not having quite enough or being willing to commit enough to make the change successful.

What Could Change the Calculations Enough for Coup or Regime Change Success?

If Venezuela oil industry collapses more so that oil production and oil exports drops to say 200,000 to 500,000 barrels per day or less then Maduro would probably not have the oil to buy Cuban, Chinese or Russian friendship. It is not clear what the level of oil production has to get to reach critical levels. It gets cheaper to payoff groups inside and nations outside the country flip or lose interest.

Lower oil prices also make it less expensive for a country that is not using oil to pay for a change. $50 per barrel oil at 200,000 barrels per day is $10 million per day ($3.65 billion in revenue) to defend against people changing sides. At 1 million barrels per day, they have $50 million per day ($18.3 billion in revenue). They have to pay the costs to operate the oil extraction and distribution and get some food and other costs.

The speed of the drop is also important. Supporters will be less certain that they are on the right side. Supporters would not want to be on the wrong side when the music stops. They could think yes I am still getting my money and other benefits but Maduro has to payoff say 1 million people, Cuba and China in some form. I do not want to be among the last going for the exit.

It then becomes Cuba, China and Russia just supporting Maduro to cause problems for the USA. Instead of just causing problems for the USA and getting oil. Russia may also be supporting Maduro to get competing oil off the World market to make more room for Russian oil. Russia may not need a payoff so much as less oil in general and problems for the USA.

If it just becomes China and Russia acting against the USA to spite the USA, then it moves into a negotiable position. Trump could more easily change the calculations for China. Buy them off with some other offer. China currently thinks they can put some money into Venezuela to keep oil production at 1 million barrels per day or more. If actions from within or outside Venezuela or the implosion just continue and causes the production to drop enough, then Venezuela could lose friends outside and people could flip inside.

The less oil there is and if exports to Cuba drop then it becomes cheaper for someone else to pay for support to flip. Less expensive change means it is less costly to pay for key support to change sides.

Oil is the key to who stays a friend or not.

Going deeper is that key oil fields, ports and key oil facilities would also be important. Other infrastructure like electricity mostly no longer works anyway.

I thought before a critical level would be one million barrels per day. I now think it has to be less than that. I do not think it is a specific level but as it gets to 500,000 barrels per day or 200,000 barrels per day and it is dropping like a rock then there will be some crisis of confidence in Maduro.

This dynamic is what is different versus Cuba and North Korea. Cuba and North Korea do not have their main financial strength clearly and publicly cratering.

The Venezuelan people and lower level military will be ready to support new management. They will not be that picky who that new management is initially. They will be ready to string up Maduro and the holdouts who do not flip early enough.

Nextbigfuture still thinks the coup is likely and should be inevitable at some point. If the oil production keeps dropping then it should be a question of when and not if. If oil production completely stops for three years and Maduro and his people are still in charge, then I will believe they have found a way to hang on to power without oil. They will have transitioned into a Cuba or North Korea that has no oil and crappy dictatorship. I still think they are crappy oil supported dictatorship.

A successful military coup just has to switch to opening to the US and other South American countries. Then the aid will come in. Halliburton and other oilfield companies get contracts and they fix the oil production. By opening up to the US and US companies, the US will guarantee civic and business stability. A US-backed stability means Venezuela is back to 3.5 million barrels per day of oil production by 2030. Food and medical aid comes in the same day or in the same week that the request is made.

The new military leader has to say the magic words in private – yes we will be an American puppet or in game of thrones terms – I will bend the knee to Trump. Arguing against the magic words hypothesis is that Trump met with some potential Venezuelan coup leaders already and did not support them. We do not why and how that played out. One would think the coup leaders were prepared to do whatever was being asked of them. Yet there was still no support. The coup leaders were clearly proved to be too weak. So is there also some critical power balance ratio that is needed before the US provides support. Does a Venezuelan coup need other South American support or do they have to fit some other kinds of profiles? I think there is some groups that can get support but this would require the kind of intelligence that is not publicly available.

If the US support is provided, then those coup leaders with support should be able to then easily win and get the economy fixed over ten years or so. The US could try to arrange for certain terms or contracts to head China’s way if they get on the right side of this.

David Papadopoulos is a managing editor at Bloomberg who lived and worked as a reporter in Venezuela and his wife of many years is Venezuelan. He left Venezuela many years ago. The rest of his wife’s family left after her father was kidnapped by Columbians and freed after a few weeks. David’s view is that it would not be surprising if Maduro was gone in 20 days and would not be surprising if Maduro was still there and in charge in 20 years. He describes how Chavez led a failed coup and then the regime at that time made the mistake of allowing him to speak on national TV as part of the surrender agreement. Chavez had much more charisma and made a huge impression. Years later he won an election in a landslide. Chavez went about nationalizing business and the rest of the changes that happened which ended up where Venezuela is now. So someone with close ties says the leadership situation is too uncertain. The easier prediction is that the economy of Venezuela stays terrible with Maduro and the people continue to suffer.

37 thoughts on “Examining Challenges and Chances for a Successful Coup in Venezuela”

  1. The US should absolutely not get involved in Venezuela. If anyone should step in it would be Colombia, which was formerly united with Venezuela as “Gran Colombia”. They’re basically the same people, just divided by historical circumstance.

    As for China, I doubt they will throw too many resources into the black hole that is Venezuela. Sure, Maduro is a fellow socialist, but the China elites regard anyone who isn’t Han Chinese as a racial inferior, which is why they have put the Uyghurs in concentration camps.

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  2. The wars the US has been involved in since about world war 2 have revealed what some have called “The Pottery Barn rule”
    ie. You break it, you’ve bought it.

    Also described as “Quantum morality”. If you interact with a situation in any way you have now assumed responsibility.

    So if the USA (or Britain or France or any liberal democracy that goes along with this rule) gets involved with a failed state, they are obliged to keep pouring money into it until it is about as developed and peaceful as say… Chile.

    Regardless of the fact that half the nations in the world show no ability to be that developed and peaceful, regardless of any first world nation interfering with them or not.

    Which means that you absolutely cannot get involved unless you want to assume the responsibility for say civilising the Afghans. What a dumb idea that was.

    If a president wanted to destroy the USA, she would conduct a small military operation in India, and then the USA would be obliged to pay to bring 1.3 billion people into the 2nd world, if not the first.

    Ironically, the USA is actually better off to lose any such war. Then at least it can wash it’s hands of the matter while saying it tried but wasn’t up to the task.

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  3. As I’ve said a couple of times: The one thing that most predictions get wrong is that the boring, undramatic, things will slowly keep going in the current direction without sudden changes, option is always under rated when someone sets out to make a prediction.
    People, everyone, not just you, always weight the dramatic possibilities more highly than they deserve.

    Of course, the dramatic DOES happen. The collapse of the USSR. The Arab spring. World Wars. But most of the time… no it doesn’t. Especially not if you are looking at short term time limits.

    Doctorpat

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  4. People keep say I am pro-China.

    Because you give them apparent evidence of that, whether intentional or not.

    But China is losing this trade war

    One that they started…with US elites’ help when we opened up to China in the 70s for geopolitical reasons and why Americans-revolting-against-those-same-elites are closing for geopolitical reasons.

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  5. Though I do not agree with everything Luca says there are MANY here who have posted far worse than him yet you continue to tolerate them.

    Luca’s only fault is he speaks out against the evils of the US regime.

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  6. The interesting play will be which way it will fall over. Allying with the US is a simple path, but allying with China is the other real possibility. Though if that happened, I wonder how the US Monroe doctrine will play out…

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  7. Depends on who in the British rent-seeking political machinery ‘won’ from that.

    US sugar prices are unbelievably high even still today by world standards. All because of very high sugar tariffs going all the way back to the 19th century in origin. It is why the sugar cane plantation owners of Hawaii overthrew the monarchy and applied their banana republic to join the US as a mere territory — the reciprocity treaty between the US and the Kingdom of Hawaii expired and the plantation owners got slammed with 800% increases in tariffs on their sugar cane.

    So back to the British case, perhaps this is what the sugar providers in the British Empire wanted. They also didn’t have to take care of their former slaves any more and could exploit them as sharecroppers. Why do you think the defeated Confederacy immediately were able to switch to just that sort of business model? Because it was all worked out by the British and other early abolishers of slavery decades before, that’s why.

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  8. Exactly. Same with China. Same with Europe/NATO. Same with NAFTA. Same with Venezuela.

    All of which proves that Trump isn’t stupid. One may not like what he’s trying to do, but it is pretty unbelievable to declare him ‘stupid’.

    He beat 17 other Republicans and a hardened Democrat-Who-Owned-The-DNC for crying out loud.

    And ‘unpredictably chaotic’ is not ‘stupid’ either. Nixon was the same way, different style. Drove the Soviets nuts. Seriously. And that was on purpose.

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  9. Predicting the future is like batting in baseball. Hitting 4 out of 10 and you are a hall of famer. Hitting 1 out of ten and you are terrible.

    THIS is why I don’t know why you are so harsh on Zeihan and his predictions and scenarios. I mean, you are both in the same business in a general futurist sense.

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  10. Zeihan with his geopolitical consultancy and Ian Bremmer at Eurasia group when they about a world with no superpower or absent superpowers is referring to where there would be lack of US activity.

    They don’t refer just ‘lack of US activity. At least Zeihan makes it clear that the US will be active, just such activity will be more narrowly focused on more narrowly parochial US interests of the kind Luca and most of the rest of the world HATE along with lack of the US maintaining the old world system.

    It is the combination of the two that is going to deal the double-punch to the world, not just the latter.

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  11. Why not? It has worked before.

    But I disagree with Brian that the US should take that course. It could just sit back and keep exporting more oil to replace Venezuela’s collapsing output to the world. No real effort or treasure is involved in that. And it is lower risk relative to most likely desired outcome — nation building is fraught with problems and lower ‘ROI’ than originally planned for, after all.

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  12. fixed. Thanks. I am checking to see if I can allocate the budget for a proofreader and for additional writing help and possibly a translation position. It may be worth at least a several month test to see if the economics work out. Initial losses could be acceptable if the metrics indicates the new helpers are moving Nextbigfuture to the next level.

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  13. I have banned Luca before. The ban did not span the changes in the comment systems and Luca does get new IDs to circumvent bans. I would say that if there are three people beyond yourself who feel especially strongly about rebanning Luca, I am willing to go with that. I will also see if spot.im allows tighter automated restrictions. They do have AI, so any flagged msgs from people can be rejected as opposed to approved.

    Added – Interesting I just found that automated moderation can be adjusted on an article by article basis. I flipped this article to strict auto-moderation. If desired by the majority auto-moderation can default to strict. This and some other settings can tighten the behavior. This comment system is used by the Fox News website. I suspected that they had to automate how to automatically manage extremely toxic conversations and to efficiently manage persistent trolls.

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  14. The guy running Belarus much like it was ran when it was an SSR is still in charge.

    So, the answer to ‘how bad can things go before there’s a coup’ can be ‘a long time’.

    What is needed is not a coup but an organically grass-roots initiated revolt by the people or Maduro & Thugs being bought out (that includes providing for their personal security).

    Either way, it isn’t in the US’ geopolitical interests to do anything about the status quo down there. After all, as noted, the drop in oil production helps US exporters who make up the slack.

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  15. Why is Luca Mazza, an admitted domestic terrorist, still allowed to post on this site?

    Hell, why have you not forwarded his data to appropriate authorities?

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  16. No, I think he means China who, in this day and age… is running concentration camps for Muslims to prevent potential terrorism. at least the US waited until it was attacked to go to war.

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  17. US can not interfere in Venezuela, that make them responsible for everything who follow. Note that death toll for non interference is totally irrelevant.
    At least for Trump who is certified evil. Obama could interfere but only if death toll was in millions and well reported.
    Yes you would have giant protests of liberals burning figures an black guy in Washington but Obama would survive it for the rest of his period.

    Trump can not do that, nor does he want to. He might ask others to invade and pay for the cost but he has to keep his dirty fingers clean.
    Issue is that I have no confidence in Trump,

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  18. Sr. I just want to know why you paint the map that way?? You are wrong about our country limits. What you call Guyana is actually a territory under negotiation between Venezuela y Guyana, until we reach and agreement about this matter that territory does not belongs to Guyana nor Venezuela. The writer of this news should read and search more information about the country he will talk before publishing the article. Guyana is taking advantage about the territory due to this stupid and ignorant government that is charge right now in Venezuela but soon we will get back in court this case.

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  19. I am also willing to accept that my model of world power and money etc… is flawed. Clearly it was not accurate enough in this situation. So what is your specific and falsifiable predictions around Venezuela. What happens next year? Within 3 years? Within 5 years? What is your prediction on China? US? Russia? Economic? I put out the predictions and you can make yours for specific timeframes with conditions where it is true or where it is false.

    For those who said that my prediction on Venezuelan coup was the same as Zeihan getting his prediction wrong about China collapsing like a house of cards. Zeihan said that it would happen within about 5 years in 2005, 2010, 2011 and then without dates in 2017 as far as I can tell. I have read all of his books or watched all his videos. Over the span of Zeihan’s predictions China’s economy grew about 10 times in nominal GDP.

    Over the span of my prediction Venezuelas oil production has dropped about 30-40% and GDP has contracted 12-20%. Venezuela has had coup attempts. US president, vice-president and senators have called for coup or have made pro-coup statements. Other countries in the region are talking about coup and are in support of it. All forecasts point to continued deterioration in Venezuela.

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  20. People keep say I am pro-China. But China is losing this trade war. I have written that and state it and it is a fact. The US is winning now with economic growth and getting better terms. The debate or valid inquiries are how much is being gained and at what future cost or at what current cost. The US has more economic and military power now. In any situation where that power match up is tested, then the US comes out ahead. The US sanctions Iran and Iran’s oil drops 60%. Now that the US has arrested the Huawei exec over Iran sanctions, let us see how much more falling in line there is. There will be blowback.

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  21. Iran not bending to US pressure? That situation is still not done. Plus Iran exports dropped 1.5 million barrels per day from 2.5 to 1. The US will win from that condition remaining indefinitely. It is not just black or white on US win one goal or another. There are multiple factors. 6 dimensional chess.

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  22. Predicting the future is like batting in baseball. Hitting 4 out of 10 and you are a hall of famer. Hitting 1 out of ten and you are terrible. But it is also level of difficulty. A player who is not a child can go to t-ball and hit baseballs out of the park 100% of the time. So making a prediction can be difficult or it can be easy. Making a prediction can be insightful or it can be simple and meaningless. I can predict that someone who is 20 will be 21 next year if they do not die. Also, predictions can be made which are not falsifiable. I have made plenty of predictions that were stated in a way that were precise and falsifiable.

    Loosening some of the terms and unpacking the Venezuela prediction. I said in those articles that Venezuela’s oil production was dropping rapidly and was going to continue to fall rapidly. I could have loosened up the parameters for a safer prediction on the coup. I could have focused on the aspect of coup attempts and not discussed whether the coups would be successful or not. I could have said that there would be calls for a coup from the US and neighboring countries. I could left off the timing or made it conditional. It will happen within 5 years with 60% certainty or there will be more attempts within 5 years with X% certainty and % tied to oil exports.

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  23. This is part of the reason why I believe the US has not stepped in. The current administration wants a positive return for spending the money to provide civic and business stability. Zeihan with his geopolitical consultancy and Ian Bremmer at Eurasia group when they about a world with no superpower or absent superpowers is referring to where there would be lack of US activity. You need to grow up and be willing to look at how things work rather than how you hope it would work. Also, right now people are dying by the tens of thousands in Venezuela and suffering and starvation for virtually the whole country. So things can be bad with the US and without.

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  24. The best policy may be to allow all supporters of socialism remain in the country. After they die off, Venezuelans not enamored of socialism may return, and form a constitutional republic similar to the early US to protect their liberties, and property rights.

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  25. “Only idealistic fools sell out their national self-interest on behalf of moral principle.”

    So Great Britain shouldn’t have abolished slavery, as sugar prices tripled in the aftermath?

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  26. That is such a wonderful idea! Give contracts to greedy US companies with a stooge government in place. Leech the country and give nothing back to the people. When the people rise and oust the US puppet government then sanction them so they cannot trade.

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  27. A successful military coup just has to switch to opening to the US and other South American countries. Then the aid will come in. Halliburton and other oilfield companies get contracts and they fix the oil production. By opening up to the US and US companies, the US will guarantee civic and business stability. A US-backed stability means Venezuela is back to 3.5 million barrels per day of oil production by 2030. Food and medical aid comes in the same day or in the same week that the request is made. The new military leader say the magic words in private – yes we will be an American puppet or in game of thrones terms – I will bend the knee to Trump. And voila, their country gets fixed and the US oil service companies make a few billion per year. The US could try to arrange for certain terms or contracts to head China’s way if they get on the right side of this.

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  28. I’m not sure a coup is necessarily a certain outcome. If as the article suggests the military is bribed into a coup and they aren’t getting paid by the government anymore, then perhaps why not? However, for the military to be motivated they would need to install a leader who can repair the economy and keep paying them off, that seems like a more complicated situation than a coup resulting in new elections and a return to popular democracy. It might be better for the military to get paid off as much as possible then flee the country with a nest egg, no need to stick your neck out.

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