Summary - Venezuelan President Nicolas Maduro is cracking down on officials in the PDVSA, the state-owned oil company, and placing military officers in charge. The government has arrested 65 oil industry officials on corruption and money laundering charges.
claims that the purge and the new appointments will help clean up and
discipline Venezuela’s struggling oil industry. However, it’s far more likely
the moves are meant to eliminate potential rivals and reinforce Maduro’s
control over one of the key pillars of the state apparatus.
the world’s largest oil reserves, Venezuela’s oil industry is the government’s
main source of revenue. Venezuela’s economy is highly dependent on oil, which
constitutes 96 percent of its exports. However, depressed global prices, a lack
of capital expenditure, and PDVSA mismanagement have driven Venezuela into a
profound economic crisis. In October, crude oil output dropped to its lowest
level in 28 years at less than 2 million barrels per day. Production
facilities, exports, and crude oil quality are all deteriorating, and some
believe that oil production could fall by another 10 percent in 2018.
purge of the PDVSA. Despite the fact that the Venezuelan government previously
denied any allegation of graft within the PDVSA, Maduro has suddenly launched a
“crusade” against corruption and treason within the state oil company and the
oil ministry. On November 30, Venezuelan prosecutor Tarek William Saab declared
that Nelson Martinez and Eulogio Del Pino, both former heads of the PDVSA and
the oil ministry, had been arrested. Diego Salazar, a relative of former PDVSA
boss and former UN Ambassador Rafael Ramirez, was arrested as well and accused
of laundering $2 billion of PDVSA funds in Andorra.
strategy has a political dimension as well. It casts former oil officials as
scapegoats for the country’s economic woes, and the purge also allows Maduro to
remove potential rivals and personnel deemed to be disloyal. Rafael Ramirez and
Maduro have had a longstanding rivalry, and Ramirez was believed to have had
aspirations to replace Maduro as president. Ramirez openly criticized Maduro’s
government for its mishandling of oil production and the economic crisis. In
response, Maduro removed Ramirez from his position as UN ambassador.
appointments to the PDVSA. Maduro appointed National Guard Major General Manuel
Quevedo to head the PDVSA and the oil ministry. Quevedo, who is considered a
close ally of Maduro, does not have any prior experience with the oil industry.
Quevedo has said that he plans to appoint more military officers to senior
management positions overseeing key areas of production in the PDVSA. In
addition, Quevedo will be involved in the PDVSA’s foreign debt restructuring
negotiations. Quevedo has been accused of committing human rights violations
against anti-Maduro protestors in the past, and US Senator Marco Rubio included
Quevedo on a list of Venezuelan officials who should be sanctioned. As of yet,
the U.S. Treasury Department has not placed any sanctions on him.
Venezuelan military, which regards itself as apart and above other state
institutions, has been involved in politics throughout Venezuela’s history.
Hugo Chavez entrenched the military’s influence in government shortly after
being elected in 1998 in order to garner wider support for his left-wing
Bolivarian movement. Former and active military officials were placed in charge
of various government ministries and social programs. In addition, the Chavista
government turned a blind eye to corruption and drug trafficking conducted by
high and mid-ranking military officers. Unlike Chavez, Nicolas Maduro does not
come from a military background. As the crisis in Venezuela has worsened,
Maduro has needed to buy further support from the military to ensure their
Maduro purges the oil industry and the military consolidates control, the
future of Venezuelan oil hangs in the balance. Inexperienced military officers
could further mismanage the ailing oil industry, making a bad situation worse.
Furthermore, increased military influence also raises concerns over the future
of civilian control over the country’s oil reserves and the further erosion of