Octavian Report: What are the macro political issues in South America driving risk and uncertainty at the moment?
Jorge Quiroga: Clearly Venezuela, with a cascading effect on Nicaragua, Cuba, and Bolivia, is number one. And number two would be the trade or migration tensions coming from the north in particular, the change of policies or the potential change of policies in the U.S. vis-a-vis Mexico, Central America, and South America. I think those are the two primary geopolitical drivers.
To go a little deeper into both of them: on the first, Venezuela has been under the same regime for 20 years. It is the single case in the history of the world where the richest country in the hemisphere — probably more endowed with natural resources than even the U.S. or Argentina — has been utterly and completely destroyed. And it's now living through an economic debacle, a military catastrophe, and massive North Korea-style repression.
I think you'd be challenged to find a single other case of a country that has been so utterly destroyed and is not even in a war with another state or in a civil war (as is the case with Libya or Syria). Maduro's report card is hideous: in about six years the economy has gone down to less than 40 percent of what it was when he took office. Oil production is down to about a quarter of what it was. Hyperinflation is higher than it ever was in Zimbabwe; it's a world record. More refugees are fleeing on a monthly basis from Venezuela than were, at the height of the Syrian implosion, fleeing from that country. Scarcity is at Sudanese levels in Venezuela. They're a petro power and they have people cooking with wood, they have children being buried in cardboard caskets, people eating out of garbage cans. Malaria is back, diphtheria is back, measles is back. It is utter, complete destruction.
How are they staying in power, given their economic and social record and the catastrophe that they created? The only thing they're good at is repression. They have colectivos, armed gangs, that disperse crowds. That's the first level of repression. The second is the FAES. What is their specialty? They are really death squads with uniforms. When things get a little bit out of control, when the government cannot control the crowd with just their gangs, then they send the death squads in. And then they have the third and the fourth levels of repression. For politicians, SEBIN, the Servicio Bolivariano de Inteligencia Nacional. And for military people that are questioning the Cuban authoritarian position, they have the DGCIM (Dirección General de Contrainteligencia Militar), as witnessed by the recent torture and death of a Navy captain.
What is even more worrisome is that at this stage it's not just a domestic issue of complete economic social destruction with massive repression, it is that Venezuela has become occupied territory. Occupied by Cuba, by Hezbollah, by the ELN. And it is becoming a pure criminal state complete with "warlords" — either Cubans running the military or Hezbollah people running chunks of the territory or guerrillas running the gold exploitation or criminal gangs running the smuggling of gasoline.
So what happens in the next few months will be a major determinant of the future of Latin America. If Venezuela — and we're working on it — can regain democracy and freedom, I'm sure we will see democracy and freedom in Nicaragua and eventually in Cuba. And we will then have a hemisphere that is free and democratic from top to bottom with political differences that can be decided amid free elections.
On the other hand, if Maduro stays and the regime stays, then chances are Ortega will stay entrenched in Nicaragua, Morales in Bolivia. The gerontocracy in Cuba will stay entrenched there as well. They'll wait out this wave and then try to then extend back into Mexico, try to regain Argentina. And you will have a very mixed hemisphere with some democracies and lots of authoritarian, Cuban-like regimes.
On the question of trade and migration: in the U.S. there's a lot of discussion on these issues. I don't want to get into the personalities of who's governing or arguing in the U.S. But suffice it to say that things have changed. Normally in Latin America when elections rolled around, we always wanted a blender. Generally speaking, Democrats were open to our people, not our products; Republicans were open to our products, not so much to our people.
I think there is now a broad swath of the political system in the U.S. that is not open to our people or our products. They're changing trade agreements worldwide, not just with Latin America. They are also dramatically changing the migration framework. This goes well beyond economics: if the approval of the new Mexico, Canada, and U.S. Trade Agreement does not go through the U.S. Congress, chances are it can get stuck. If you know the history of Latin and Central America, nations there all copy/paste NAFTA. So if the agreement that has governed North American trade relations goes out the window, imagine that cascading down and having dramatic economic effects.
The same thing with migration. U.S. attention at the moment is clearly focused on Mexico and Central America, but I guarantee that if this Sunday they start doing deportations with ICE, they're not going to knock on the door and say, well, you're Peruvian or you're Ecuadorian or you're Bolivian — you can stay.
If a massive deportation starts, yes, they'll be mainly Mexicans and people from the Central American triangle, but there'll be all kinds of Latin Americans there and that xenophobia is contagious. I can tell you already that a lot of the Venezuelan refugees are being rejected in countries that used to welcome them with open arms. And if the U.S., the largest economy, can start doing deportations or building walls, that rejection of others and anti-immigrant position can then be very contagious.