[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE VENEZUELA CRISIS: THE MALICIOUS INFLUENCE OF STATE AND CRIMINAL
ACTORS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
THE WESTERN HEMISPHERE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 13, 2017
__________
Serial No. 115-65
__________
Printed for the use of the Committee on Foreign Affairs
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Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas KAREN BASS, California
DARRELL E. ISSA, California WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina AMI BERA, California
MO BROOKS, Alabama LOIS FRANKEL, Florida
PAUL COOK, California TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida DINA TITUS, Nevada
ADAM KINZINGER, Illinois NORMA J. TORRES, California
LEE M. ZELDIN, New York BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr., ADRIANO ESPAILLAT, New York
Wisconsin TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on the Western Hemisphere
JEFF DUNCAN, South Carolina, Chairman
CHRISTOPHER H. SMITH, New Jersey ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida JOAQUIN CASTRO, Texas
MICHAEL T. McCAUL, Texas ROBIN L. KELLY, Illinois
MO BROOKS, Alabama NORMA J. TORRES, California
RON DeSANTIS, Florida ADRIANO ESPAILLAT, New York
TED S. YOHO, Florida GREGORY W. MEEKS, New York
FRANCIS ROONEY, Florida
C O N T E N T S
----------
Page
WITNESSES
Mr. Francisco Toro, executive editor, Caracas Chronicles......... 9
R. Evan Ellis, Ph.D., senior associate, Americas Program, Center
for Strategic and International Studies........................ 15
Harold Trinkunas, Ph.D., senior research scholar and associate
director for research, Center for International Security and
Cooperation, Freeman Spogli Institute for International
Studies, Stanford University................................... 43
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Jeff Duncan, a Representative in Congress from the
State of South Carolina, and chairman, Subcommittee on the
Western Hemisphere: Prepared statement......................... 4
Mr. Francisco Toro: Prepared statement........................... 11
R. Evan Ellis, Ph.D.: Prepared statement......................... 17
Harold Trinkunas, Ph.D.: Prepared statement...................... 46
APPENDIX
Hearing notice................................................... 72
Hearing minutes.................................................. 73
Questions submitted for the record by the Honorable Jeff Duncan
and written responses from:
Mr. Francisco Toro............................................. 74
R. Evan Ellis, Ph.D............................................ 76
Harold Trinkunas, Ph.D......................................... 80
THE VENEZUELA CRISIS: THE MALICIOUS
INFLUENCE OF STATE AND CRIMINAL
ACTORS
----------
WEDNESDAY, SEPTEMBER 13, 2017
House of Representatives,
Subcommittee on the Western Hemisphere,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:08 p.m., in
room 2200, Rayburn House Office Building, Hon. Jeff Duncan
(chairman of the subcommittee) presiding.
Mr. Duncan. A quorum being present, the subcommittee will
come to order. I now would like to recognize myself for an
opening statement.
Today in Venezuela there are over 600 political prisoners.
The country is a failed state and a humanitarian disaster.
Since April, more than 125 people have died, over 2,000 have
been injured in protests at the hands of the Venezuelan
Government. Food, medical supplies, and basic goods remain
scarce. The legitimate democratically elected National Assembly
has been silence in favor of a sham constituent assembly full
of President Maduro's supporters. The previous attorney general
has fled the country after publicly opposing Maduro's abuse of
power.
Today, Venezuela has entrenched itself as a dictatorship,
unmoved by international condemnation and the pleas of its
people. The political economic human rights crisis in the
country is appalling for the 30 million citizens of Venezuela,
and it threatens to destabilize the region.
The United States has very clear interests in Venezuela. We
want regional peace without masses of refugee flows or public
health threats from rising cases of malaria, diptheria, or
Zika. We want to see a democratic country that represents the
rule of law and that is accountable to its people. We want to
see a country that doesn't use its power to beat up, imprison,
torture, and kill its own citizens.
We want to ensure that Venezuela does not become a
narcostate that provides safe harbor to terrorists or
transnational criminals. We want a stable energy market that
promotes energy security. We also want to certify that
Venezuela does not become a pawn for Russia, China, or Iran to
exploit for their own geopolitical purposes. And bottom line,
we care about the Venezuelan people, and we want to see them
prosper. Let me repeat that. We care about the Venezuelan
people, and we want to see them prosper.
To those ends, the U.S. Congress has issued public
statements in past legislation calling for the Maduro
government to return to a democratic order. This subcommittee
has held four hearings on Venezuela over the past 2 years.
President Trump has affirmed that Venezuela remains a U.S.
priority, and his many efforts, combined with Vice President
Pence's recent visit to the region, underscore U.S. solidarity
with our partners in the region and with the Venezuelan people
in our commitment to see the Venezuelan Government end this
embrace of tyranny.
I commend President Trumpand his administration for their
efforts, and I want to underscore that we support further U.S.
and international action to pressure the Maduro regime and to
convince those who follow his leadership that they will not
succeed in destroying the country.
While the United States under President Trump's leadership
has been unwavering in our support for the Venezuelan people,
many other countries in Latin America, Europe, and Asia have
also demonstrated courage and conviction in jointly condemning
the breakdown of democratic order in Venezuela and in offering
full support and recognition for the democratically elected
National Assembly. I believe it is critical that we continue to
speak and act together in our support for the Venezuelan
people. Dialogue alone is fruitless without a series of
preconditions that level the playing field for democratic
actors and without corresponding simultaneous multilateral
pressure. Therefore, I strongly urge other countries to
continue their efforts to step up said pressure.
Recently, I, along with the ranking member Sires, led a
congressional delegation visit, which included Ms. Kelly and
Mrs. Torres and Mr. Espaillat of this subcommittee, to the
Dominican Republic, Haiti, Colombia, and Peru. In our meetings,
we emphasized U.S. congressional commitment to supporting
democracy, rule of law, and human rights in Venezuela and urge
greater regional cooperation to call out the Maduro government
for its reprehensible behavior against its own people and to
pressure the Venezuelan Government to restore the country's
democratic institutions. Decisions like Mercosur's suspension
of Venezuela and recent Lima Declaration, which was signed by
12 Latin American countries, are important steps in that
direction.
With that in mind, I strongly urge the European Union to
enact sanctions on the Venezuelan dictatorship to cut off
another important source of financing and ratchet up pressure
on the Maduro regime.
Yet regardless of any strong measure the U.S. or other
countries in the Western Hemisphere and the European Union may
take against the Maduro government, various state and criminal
actors have undermined those measures' effectiveness and
blunted our objectives. Cuba, China, Russia, and Iran are the
underlying supporters of the Maduro regime.
Beginning with the rise to power of Hugo Chavez, the Cuban
dictatorship has exported his system of oppression to Venezuela
under the guise of medical doctors and teachers. For their
part, Russia and China have funded the expansion of Venezuela's
military arsenal and invested heavily in Venezuela's corrupt
state-owned oil company, PDVSA.
Iran has attempted to strengthen economic and diplomatic
ties with Venezuela through visits in 2016 by Iranian President
and Foreign Minister. Multiple reports exist of Hezbollah's
activities in the country. Just earlier this week, President
Maduro met with President Rouhani to strengthen their
cooperation.
In addition, criminal organizations also operate in the
country with unfettered access, fueling corruption, graft, and
an increase in narcotrafficking and other illicit activities. A
few years ago, U.S. Government drug trafficking maps showed
virtually all suspected drug trafficking flights from South
America originated in Venezuela. Today, we are seeing drugs
from Venezuela entering neighboring countries as well as
heading to the United States.
Yesterday, the State Department affirmed that in Venezuela,
drug trafficking organizations have completely penetrated
virtually every security, law enforcement, and justice-related
institution in the country. And any solution to the Venezuelan
crisis requires a solution to the drug trafficking organization
presence.
In February 2017, the U.S. imposed sanctions on the
Venezuelan Vice President, designating him as a drug kingpin,
and revealed the Venezuelan Government's complicity in drug
trafficking. Questions remain regarding the Venezuelan
Government's ties to foreign terrorist groups and concerns
about Russian and Chinese arms falling into the hands of these
or other criminal actors.
Today, we want to examine the role these actors play in
sustaining the Venezuelan dictatorship and consider what might
constitute an effective U.S. and international response.
With that, I will turn to the ranking member for his
opening remarks. And I look forward to hearing from our
panelists today. I turn to the ranking member for his
statement.
[The prepared statement of Mr. Duncan follows:]
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----------
Mr. Sires. Thank you, Chairman, and thank you for holding
this timely hearing. Thank you to our witnesses for being here
today.
We have watched week after week Maduro continue to expand
his authority at the expense of the Venezuelan people. Just
last month, the National Constituent Assembly, the fraudulently
elected puppet Congress orchestrated by Maduro, approved a
Presidential decree giving itself authority to pass
legislation, replacing the opposition dominated in legitimate
elected National Assembly. Political prisoners continue to be
kept under lock and key, while families are unable to access
basic necessities such as food or lifesaving medicines.
Despite all this, Venezuela continues to enjoy the support
of some Latin American and Caribbean nations, in addition to
others which help prop up the Maduro autocracy.
When the Organization of the American States recently tried
to press Maduro to take concrete steps to improve the human
rights situation and restore democratic institutions, the
resolution failed because a number of small countries abstained
or voted against the measure. It is worth noting that 95
percent of the Western Hemisphere lives in countries that have
voted to strongly condemn the Maduro regime's actions. There is
a consensus among the majority of the hemisphere, multilateral
institutions such as the OAS, the United Nations and the
European Union, that Maduro is destroying democracy and
violating human rights.
In order to reach a sustainable political situation, it is
imperative that we work with our allies in the region and
around the world to present a unified condemnation of Maduro's
autocratic regime and fight together for a restoration of
democracy for the Venezuelan people.
I am encouraged that regional leaders in Brazil, Colombia,
Peru, Canada, and many others are criticizing Maduro for this
gross abuse of human rights, and hope that more will join their
neighbors in calling for a resolution to this crisis and
productive engagement with the opposition.
Maduro's descent into authoritarianism has not only
jeopardized the lives of innocent Venezuelans; it has also
created an environment ripe for dangerous foreign influence
from countries such as Iran, Russia, China, and Cuba.
The State Department has already noted that Venezuela is
home to several individuals linked to designated foreign
terrorist organizations, including Hezbollah. As a continued
sponsor of terrorism, Iran's interest in Venezuela should be a
concern to the Western Hemisphere. As Cuba continues to imbed
itself deep within the Venezuela security network, Chinese and
Russian presence in the country's economic activities provide
new opportunities for influence within the region.
I believe that it will take a coordinated effort amongst
the Western Hemisphere nations to present a viable solution to
the ongoing crisis in Venezuela. I am hopeful that more
regional partners will come forward in denouncing the Maduro
regime.
I am eager to hear how our panelists view the role that
external actors play into the gang situation in Venezuela and
look forward to their recommendations as we continue to grapple
with this complex issue. Thank you.
Mr. Duncan. Thank you, Ranking Member Sires.
The Chair will now go to Mr. DeSantis for an opening
statement.
Mr. DeSantis. Well, Mr. Chairman, thank you for having the
hearing and your attention to this issue. It is very important.
The more and more we have seen the Venezuela piece, the
more and more we can say that the Obama administration deal
with Cuba has been a total failure, because Cuba and the Cuban
military are driving a lot of the bad things that are happening
in Venezuela right now. And, of course, we have these reports
of diplomats being harmed in Havana. We still don't have all
the facts on that, but I don't know how you can spin that as
anything other than an attack. The evidence is just too
overwhelming.
So we obviously need to hold Maduro accountable, but we
need to hold the Cuban Government accountable too, because they
are the root of a lot of these problems. I yield back.
Mr. Duncan. I thank the gentleman.
No other members have opening statements.
So before I recognize the panelists, you will notice a
lighting system in front of you. Five minutes is what you will
be recognized for. When it starts to get down to a minute, the
yellow light will come on. And when you run out of time, it
will be red. If you could acknowledge that and start wrapping
up your statement, it will help us stay on time.
Members, all the bios for the witnesses are in your binders
and provided earlier, so I am not going to read those. And once
the witnesses offer testimony, all three, we will go into the
question-and-answer portion of it, and each member will be
recognized for 5 minutes.
So I will start with Mr. Toro. You are recognized for 5
minutes.
STATEMENT OF MR. FRANCISCO TORO, EXECUTIVE EDITOR, CARACAS
CHRONICLES
Mr. Toro. Okay. Thank you so much, Chairman Duncan.
I wanted to focus today on the role of Cuba. I think when
we talk about foreign influence in Venezuela, it is really Cuba
and then everyone else. The influence of Cuba has been so
overwhelming.
On Sunday, October 14, in 2007, then President Chavez made
a startling statement during his famous Alo Presidente show,
which was broadcast from Santa Clara in Cuba then. He was
addressing Fidel Castro directly across from him when he said,
``Deep down, yes, we are just one single government. Venezuela
has two Presidents, but we are one single government. We are
advancing toward a confederation of republics.''
Now, that is obviously a bit of overstatement. They are
separate governments and separate juridical traditions, et
cetera, but the ambition that Chavez and Fidel Castro had was
something beyond the normal alliance, and we have seen it play
out in over the last 10 years in really nefarious ways.
And it is important to understand that Venezuela always had
four traditional service branches in the armed forces: The
army, navy, air force, and the national guard, which is like a
military police. But on Cuban advice, in 2005, a fifth service
branch was added called the Milicia Bolivariana, the Bolivarian
militia, which was an avowedly political arm of the ruling
party organized, trained, and armed as a military force. Okay.
The Bolivarian militia has been derided over the years as
sort of a grannies army, that they don't seem to be much of a
fighting force, but there are hundreds of thousands of
terrorista political activists under arms. And we have seen
this, and in the last couple of years, the Bolivarian militia
has become more powerful. President Maduro has made a
calculated decision to strengthen the Bolivarian militia.
And what is really concerning about this, and what I think
the committee should really sink its teeth into here, is that
there have already been a series of leakages of weapons from
the Venezuelan military to nonstate actors. Okay?
So we have seen criminal bans in Venezuela that are
dedicated to extortion, drug trafficking, but local drug
trafficking, buying weapons, buying assault rifles, buying C-4
plastic explosives from the military. And we see the Venezuelan
military getting more and more powerful weapons under its
control.
Now, early last year, it was reported--Reuters reported
that Venezuela had acquired over 5,000 surface-to-air shoulder-
mounted MANPADS missiles, heat-seeking missiles that a single
person could shoot. Those have been under the control of the
Army for the last several years, since they were bought.
We understand that as many as 1,000 of those MANPADS
systems could be transferred to the Bolivarian militia in the
coming weeks. And while the ARMY has leaky ways of keeping
track of its stock of weapons, the militia has no system that
we know of to log these weapons.
So while weapons have been subtracted from the Venezuelan
army for sale to criminal networks, the Venezuelan army, at
least in the Venezuelan security forces know that and have a
way of tracking it. Once hundreds or perhaps as many as 1,000
MANPADS are transferred to the control of the militia, you can
kiss them good-bye. There is no more tracking them.
A few weeks ago, when there was some tension with the
United States following President Trump's declaration, it was
very clear that the militia was given assault rifles to take
home. There is a question, are we looking at a scenario here
where Venezuelan military could be handing political activists
surface-to-air missiles, heat-seeking missiles that can bring
down an airliner at 20,000 feet to take home?
You have to understand that many of the Bolivarian militia
members are rank-and-file Chavista activists. These are people
who are often hungry, penniless and hungry. So we would be
looking, then, really at a buyers market for these
extraordinarily dangerous weapons. And that is a debate that I
don't see happening anywhere, really, and that I think that
should change.
[The prepared statement of Mr. Toro follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Duncan. Thank you for that. I am sure members will like
to delve more into that.
Now we will go to Dr. Ellis for 5 minutes.
STATEMENT OF R. EVAN ELLIS, PH.D., SENIOR ASSOCIATE, AMERICAS
PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES
Mr. Ellis. Thank you, Chairman Duncan.
Chairman Duncan, Ranking Member Sires, distinguished
committee members, thank you for the opportunity to share my
analysis with you today. I will summarize what are my written
remarks for the committee and would emphasize that these are
strictly my own opinions and not those of my employer.
I would like to emphasize how both Russia and China, in a
pursuit of their commercial and strategic interests in
Venezuela, have provided capital, goods, services, and
political backing that has indirectly enabled the populist
regime to ignore and ultimately destroy, as you alluded to, the
mechanisms of democratic accountability.
Between Russia and China, the PRC, in my judgement, holds
the greatest leverage over the fate of Venezuela, with the
control of financial instruments and loan-funded projects, as
well as flows of goods important to the regime's survival.
First, the PRC has become Venezuela's principal banker,
with PDVSA moving current accounts from Portugal's Banco
Espirito Santo to China's CITC Bank in August 2014. Venezuela
has also stored a portion of its gold reserves in China. Both
actions potentially protect Venezuela's assets partially from
international legal claims. However, they also give China
influence over Venezuela in how it responds to such claims.
Also, the PRC is Venezuela's major source of credit, as is
widely known, having extended an estimated $62.2 billion to the
regime since 2005 in the form of revolving credit relationships
repaid by shipments of Venezuelan oil.
As the majority of international companies have withdrawn
from Venezuela, the work performed by Chinese entities funded
by such credit has become increasingly critical for building
and maintaining the oil, electricity, and transportation
infrastructure to get Venezuela's oil to market.
Indeed, just days ago, the China-Venezuela High-Level Mixed
Commission met and authorized an additional $2.7 billion in
such new projects, including the construction of the Jieyang
refinery in China to process Venezuelan heavy oil. China has
further provided Venezuela with billions of dollars of military
goods on credit, displacing Russia as Venezuela's principal
arms supplier. Systems sold, just to name a few, include JYL-1
radars, K-8 fighter trainers, Y-8 and Y-12 transport aircraft,
SM-4 self-propelled mortars, SP-5 multiple rocket launchers,
VN-1, VN-18, and CS/VP-4 armored combat vehicles, CS/LMG heavy
machine guns, plus antisubmarine and antitank weapons, which
are, frankly, concern for neighboring Colombia if war should
ever break out between the two.
In addition, Chinese arms also include VN-4 armored cars
and VN-16 light tanks, which have been very publicly used by
the Venezuela national guard to suppress antiregime
demonstrations in recent weeks.
Russia. Russia's activities in Venezuela have been more
limited than those of the PRC, yet are still significant.
Russia has sold over $11 billion of military hardware to
Venezuela since 2006, including 10 Mi-35 attack helicopters, 38
Mi-17 transports, 3 Mi-26 heavy transports, 24 Su-30 fighter
aircraft, 100,000 Kalashnikov rifles, 92 T-72 tanks, and
approximately 200 BMP-3 and BTR-80 armored personnel carriers.
Russia has also sold, as my colleague rightly alluded to,
between 2,000 and 5,000 Igla-S anti-aircraft missiles, which
also I would agree with my colleague could gravely threaten
civil aviation were they to fall into the hands of terrorists.
Russia has also used its relationship with Venezuela to
project a military force into the region. Examples include the
deployment of two nuclear capable Tu-160 backfire bombers in
2008, later a flotilla of warships the same year into
Venezuela, and another deployment of Tu-160s to Venezuela in
October 2013, and farther, the second sending of warships to
Venezuela in March 2015 to conduct exercises.
With respect to commercial support, the Russian state-owned
company, Rosneft, has been a key financier for the Venezuelan
oil sector, providing an estimated $17 billion since 2008.
Indeed, as the liquidity crisis in Venezuela has deepened,
Rosneft has provided an additional $6 billion in loans to PDVSA
for future delivery of oil, in addition to the $1.5 billion
that it loaned in December 2016 in exchange for the 49 percent
interest in the PDVSA subsidiary, CITGO.
In formulating the U.S. whole-of-government strategy to
restore democratic governance to Venezuela, and I also would
commend the administration's efforts in that, I believe that
the U.S. must structure its sanctions and other actions and
strategic communication with an eye to convincing Russia and
China that their continued support for Venezuela's anti-U.S.
authoritarian regime will not get those countries to a stable,
internationally accepted successor, which would legalize and
make sustainable the deals that they have struck with those who
hijack the Venezuelan state and its resources.
While sanctions should be imposed, in my judgment, broadly
and not only against U.S. purchases of Venezuelan petroleum,
but also at the regime's access to the international financial
system. In that, I concur with your remarks about Europe, Mr.
Chairman.
While this course of action is harsh, I believe that it is
the best among imperfect options, short of military
intervention, to bring about change that most rapidly ends the
suffering of the Venezuelan people, and with that same
rapidity, would deny Russia and China time to advance their
position in the country through their own incremental deals
which continue to prop up the regime.
Thank you, Mr. Chairman. Thank you.
[The prepared statement of Mr. Ellis follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Duncan. Thank you for your testimony.
The Chair will now go to Dr. Trinkunas. Did I pronounce
that correct?
STATEMENT OF HAROLD TRINKUNAS, PH.D., SENIOR RESEARCH SCHOLAR
AND ASSOCIATE DIRECTOR FOR RESEARCH, CENTER FOR INTERNATIONAL
SECURITY AND COOPERATION, FREEMAN SPOGLI INSTITUTE FOR
INTERNATIONAL STUDIES, STANFORD UNIVERSITY
Mr. Trinkunas. Yes. Yes, you did, Mr. Chairman.
Chairman Duncan, Ranking Member Sires, members of the
subcommittee, it really is an honor to be here today to discuss
the negative influence of external actors in the crisis in
Venezuela. I am providing this testimony in my private capacity
as an expert on Venezuela, its politics, and its foreign
policy.
Mr. Chairman, Ranking Member Sires, I concur with your
assessment of both the situation in Venezuela and U.S.
interests at stake here, so I will not dwell on those further.
In my written testimony, which I am summarizing here today,
I focus on the role of China, Cuba, Russia, Iran, and illicit
nonstate actors in Venezuela. I am happy to go into further
detail on those in the Q&A, but I would like to make some broad
remarks here before we go into specifics.
The first thing I will say is that each of these actors in
Venezuela plays a slightly different role, of course, as I
detail in my testimony. But the important thing to note is they
are all in Venezuela at the invitation of Hugo Chavez as part
of his governing strategy back in the day before he was
deceased. Chavez's plan was to use these actors to increase
Venezuela's capabilities and to resist U.S. influence.
The thing to keep in mind is when oil was at $120 a barrel,
Chavez had the upper hand. Now that oil is at a third to half
of that, it is Maduro's aspiration that really makes Venezuela
vulnerable.
I would like to make four main points at this time about
the negative role of external actors in Venezuela. I concur
with you that these actors are principally enablers. They
basically provide capabilities to the Venezuelan regime that
allow them to pursue catastrophic policies for longer and at
less cost to the regime than would otherwise be possible.
The second thing is that the Castro-Chavez policies we now
observe in place in Venezuela are primarily designed to benefit
President Maduro and his allies. We should not assume that they
are the result the ignorance or external influence. They are
very much designed to support the regime's coalition, transfer
public resources into private pockets, and, in fact, this is
involvement in corruption, some officials are linked to drug
trafficking, some now are linked to human rights abuses, that
these actors cannot afford a transition back to democracy. They
fear being held accountable.
That said, I do think that at this point in time, and here
I am focused principally on how these actors can keep the
present regime in power. Their primary motivation for working
with the Maduro government is economic. They want to secure the
biggest possible return on their investments for interacting
with the Venezuelan regime. Of course, geopolitical interests,
ideological interests, may derive welcome benefits from that
participation of Venezuela, but that is relatively secondary to
their economic motivation.
With that said, I concur with Dr. Ellis that there may be
some opportunities there in the sense that they may fear that
these deals that they are making now may be invalidated in the
future.
Finally, I would say that not all of these external actors
have an equally negative role. I think that if you look at
China's involvement over time, they have become more skeptical
of the Venezuelan regime. They are more concerned about its
ability to pay back the existing loans. They are somewhat
disenchanted, as opposed to let's say the case of Russia, which
I really do think is playing a very opportunistic role these
days, picking up Venezuela's oil assets for pennies on the
dollar. There may be an opportunity there that the United
States should be exploring.
The final thing I would say is that I concur with you and
with the ranking member that we are seeing the most positive
external environment for international collaboration to address
the crisis in Venezuela since President Maduro took office, a
decided shift against the Maduro regime, not just in Latin
America, but also increasingly in Europe, and that is something
the United States, I agree with you, should capitalize on.
That said, I am skeptical that there are solutions in the
short and medium term to the crisis in Venezuela, and that
guides a set of recommendations that I would like to make now.
The first is, I do think it is time to begin serious
contingency planning to address a full-scale humanitarian
crisis in Venezuela. This means collaborating with efforts
already underway in Colombia and Brazil to deal with Venezuelan
economic and political refugees. It means shoring up the
efforts of small island states in the Caribbean, which have
already been badly affected by the recent hurricanes. It means
increasing monetary assistance to credible civil society
organizations that can actually get food and medicines to
Venezuelans, maybe initially just on the border, but there may
be other opportunities.
And finally, I would say that we should talk to the states,
including the ones that have a negative influence, who have
significant personnel present in Venezuela, the Chinese, the
Cubans to understand exactly what the limits of their support
are. Are they willing to support at all costs, no matter what,
or is there some room short of that that could be explored?
Second, deepen, accelerate strategic engagement programs in
the Caribbean. I commend the subcommittee's work on that. I
know you have been doing important work in that area. The time
after these hurricanes is, I think, an important time to
capitalize on that forward-leaning effort that this
subcommittee has supported.
I concur with you on the need to build on the international
consensus. Any U.S. diplomacy is magnified if we work with our
partners in the region.
And finally, I would consider targeted sanctions against
individuals and businesses that are enabling the Maduro regime.
The Maduro regime is enabling external actors that have not
paid much cost for supporting Venezuela so far, and individual
sanctions and sanctions against businesses might produce less
of a diplomatic blowback than general sanctions.
I conclude my remarks there.
[The prepared statement of Mr. Trinkunas follows:]
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----------
Mr. Duncan. I thank all of our panelists, and great
testimony.
Dr. Ellis, the deteriorating economic situation in
Venezuela makes investment in the country increasingly risky
for anybody, especially as Venezuelan oil production continues
to decline. In your opinion, why is Russia willing to take
these risks?
Mr. Ellis. Thank you, Chairman Duncan. I believe that
Russia itself is not the one taking the risk, but rather,
specific Russian companies, Igor Sechin with Rosneft,
presumably with the backing of Vladimir Putin.
I believe, frankly, that in addition to the economic
interest, both Russia and China have a long-term strategic
interest in having a relatively anti-U.S. actor close to U.S.
shores that grants them privilege access, not only to the arms
market and the oil market, but other markets as well. And so to
the extent that it is in both of those countries' interest to
sustain that, you know, the small amount of capital,
relatively, that is being invested is a minor price to pay, in
my judgment.
Mr. Duncan. One thing I have always thought about is, I
mean, Russia is a gas station masquerading as a country. They
don't need the oil. It is not about that geopolitical dynamic
of a natural resource.
So with their investment in PDVSA, if Venezuela defaults on
the loans, then, basically, Rosneft will have controlling
interest, or 49 percent interest in CITGO. What does that mean?
Mr. Ellis. That is an excellent question, Mr. Chairman. I
believe this illustrates an opportunity in part of the Russian
strategy. I think in many ways, Russia became somewhat careless
as it advanced the last $6 billion in advance loan payment. And
I think at the point in which they put in the money for CITGO,
what they failed to understand was that, you know, the degree
to which, for example, with CFIUS review, that their ability to
actually take control over CITGO holdings in the U.S. could
actually be denied.
So I think Russia finds itself in a difficult position, and
indeed, public information indicates they are currently
negotiating actually to swap the access to CITGO for
potentially other assets, which might include Petropiar, which
might include expanded access to Petromonagas and others, which
really goes to Russia's farther strategy, in my judgment, which
is to use Venezuela's time of need, not only to sustain the
regime, but to broaden the holdings that they have to
Venezuela's 300 billion barrels of oil.
And I think their calculations really come down to whether
they think, at the end of the day, I believe that Russia and
China as much as everyone else wants to transition away from
the Maduro regime. But what they want to transition to is very
different. I believe that they are hoping that they can get a
transition to an equally anti-U.S. authoritarian regime that
will let them legally legitimize their holdings. And so to the
extent that they believe that they can get that and not be
forced to cooperate with the United States toward a more
democratic regime, I think they will still continue to play
this game to fund the regime as they have.
Mr. Duncan. So you mentioned a lot of the weapons. Is there
any possibility those weapons could fall in the hands of the
criminal element or the narcoterrorists at all?
Mr. Ellis. They already have, Mr. Chairman. Especially with
respect to small arms. I mean, everything from----
Mr. Duncan. Beyond small arms. I am talking about some of
the larger, more capable weapons that you mentioned.
Mr. Ellis. Indeed, as my colleague Mr. Toro also mentioned,
one of the particular concerns are the Igla-S anti-aircraft
munitions, which, especially to the extent that they are
transferred away from the regular Army, there is the
opportunity for those to begin to be sold to other people.
So it is certainly that, especially as there is a
deterioration in order. And what is particularly concerning not
only is the black market sales, but if there is a collapse of
order, a split in the military as part of a succession crisis,
that becomes one of the moments in which those type of arms
could begin to even more rapidly disappear into other hands.
Mr. Duncan. My time has expired. I will turn to the ranking
member.
Mr. Sires. Thank you, Chairman.
You know, as I look at Venezuela, I see the same game plan
that was implemented in Cuba. First of all, in Cuba, they
started out with the Communist assembly. In Venezuela, it is
called the National Constituent Assembly. Basically, that is to
take away power from any kind of democratic effort to put it in
the hands of these groups.
The second step is, basically, to eliminate the opposition.
They eliminated the opposition in Cuba. They eliminated the
opposition, putting them in jail in Venezuela.
And the third thing is this whole structure of committees
that they are setting up throughout the country, where the
committees basically tell on the activity of the public, you
know, what the people are doing, and then they can go and put
them in jail.
So I see the same formula, actually, being implemented in
Venezuela. Now, what can we do about it? I think we pretty much
have to depend on all the other countries around Venezuela to
continue to put the pressure and prohibit them from using the
World Bank and so forth. But I think other than that, we are
kind of limited on what we can do, you know, in the country. So
would you agree with that?
Mr. Ellis. First of all, Mr. Chairman, I would thoroughly
agree. Clearly, not only Hugo Chavez, as my colleagues alluded
to, but continuing with Nicolas Maduro, who have continued not
only to follow the Cuban playbook, but indeed, have received
the benefit of their consultation as well as the active
presence of the Cuban DGI, the Avispas Negras, and various
other organizations to include those introduced through the
doctors. And so if it looks like Cuba, that is not entirely by
coincidence.
But beyond that, I actually believe that we are at a unique
moment where, although oftentimes sanctions are not effective,
sanctions may have a particular opportunity to be effective in
this case, specifically because PDVSA is at the brink of a
cascading liquidity crisis.
You have a series of events, whereby which, for example,
certain bond payments, the $3 billion that are due in October,
that if PDVSA goes into technical default, you have a situation
where the creditors, including of course, Rosneft that you
alluded to, and the other PDVSA creditors from the bond from
last year, as well as other international claimants such as
Crystallex and others, all begin to jump on international
assets, which effectively shuts down the regime.
I fundamentally believe that there is some point at which,
if the money flow that accounts for 96 percent of Venezuela's
ability to import the food and medicine it needs for its people
is effectively shut down through that international legal
battle, you do force a situation in which you may have regime
change. And the way that we structure sanctions may impact how
that comes about.
Mr. Sires. Mr. Toro?
Mr. Toro. I think it is important to understand that the
U.S. has a lot of leverage. The United States buys 720,000
barrels a day from Venezuela. I read in the Washington Post
last month that there is scope for creativity here if people
are willing to explore it. It is nowhere written that the
United States has to buy this oil. And if it does buy it, you
could think creatively about conditioning payments to some kind
of mechanism where the National Assembly, the duly-elected
National Assembly in Caracas approves the use of those
payments. You could think of escrow systems. You could think of
different ways of leveraging the fact that, yes, the United
States needs this oil. Yes, Venezuela needs to sell this oil,
but not under just any old conditions.
Mr. Trinkunas. Thank you, Ranking Member Sires. I concur
with you that collaboration from the countries in the region is
important. We know from sanctions that they are more effective
the more that the key parties are present. I also think there
is an opportunity to put pressure on individuals and businesses
that facilitate and serve as fronts for the officials in the
Venezuelan Government that have engaged in corruption or
benefit from drug trafficking. Cooperation with regional
financial centers, especially in places like Panama would be
important. So I do think there is room for creativity both in
the kinds of sanctions and then how the earnings of Venezuela--
--
Mr. Sires. In terms of the game plan that I described at
the beginning of my comments, do you agree with that? Do you
see similarities?
Mr. Trinkunas. To----
Mr. Sires. To the Cuban game plan.
Mr. Trinkunas. I do think that there is a similar level of
effort to achieve authoritarian control. I do see a lot of
similarities also to what Hugo Chavez did in 1999. It is just
when Hugo Chavez shut down the Congress and the Supreme Court
in 1999, it was popular, and now it is not popular. So I don't
let the Venezuelans off the hook, sir.
Mr. Sires. Mr. Toro, do you agree with that game plan that
they are implementing?
Mr. Toro. Absolutely. The difference is that in Cuba in the
late 1950s and 1960s, they had firing squads, and so things
went much more quickly. If you are trying to do the same thing,
but you are not going to have firing squads, it is going to
take you 17 years or 18 years instead of 6 months or a couple
of years. But you see the procession.
And Venezuela now is at a very peculiar point in its
history in that it still has an organized independent political
opposition hanging on just barely in the Mesa de la Unidad
Democratica, in MUD. They are trying to figure out ways to stay
relevant and to stay united and to stay cohesive and to stay
effective under a lot of pressure.
It is not a given that Venezuela will always have that kind
of opposition. Venezuela could end up just like Cuba with only
dissidents and not an organized----
Mr. Sires. My time just ran out, but I do think that
Venezuela is going to move on private property in the next
year.
Thank you, Chairman.
Mr. Duncan. I thank the ranking member.
Now we will go to Mr. DeSantis from Florida.
Mr. DeSantis. I thank the witnesses.
And just following up on the Cuba stuff. How do the Cuban
military officers and soldiers exert power and influence over
the Venezuelan military government? Doctor?
Mr. Trinkunas. So Venezuela invited in 40,000 Cuban
personnel during the Chavez regime. Most of those were doctors,
but a significant number were intelligence officers and
military advisers. The most important role that they play is
really as spies on the activities of the Venezuelan officer
corps. It makes it very difficult for anybody in the Venezuelan
officer corps to remain independent or nonideological or
nonsupportive of the regime. So they have also taught the
Venezuelans themselves how to conduct surveillance of their own
officers. So it is really in support of maintaining regime
control that they play a role.
Mr. DeSantis. You want to----
Mr. Toro. I think it is important to understand also that I
think if we go back 5 years, that was very much the case. You
had Cuban military personnel, spies, pretty much in every
Venezuelan army unit. And in the last 3 years, that has changed
a little bit, because that was generating a lot of resentment
inside the Venezuelan military. It is humiliating to be spied
on openly by foreigners.
So in the last 3 years, what we have seen there is a move
away from this unit-by-unit surveillance. And the way I put it
in my written statement is the Cubans used to be everywhere,
now they are just at the top. So you have, in Miraflores in the
Presidential palace in Caracas, you have the situation room
where intelligence gathered mostly by Venezuela, it is a little
bit by Cubans, is funneled and analyzed and fed to the top
leadership, really by Cubans. So they have become a kind of
mechanism for dictatorship, if you want to put it that way.
They are playing a consultancy role, but a very high-level
consultancy role. High-level decisions are never made without
asking the Cubans for advice first, and Venezuelan high regime
officials are traveling back and forth to Havana all the time.
Mr. DeSantis. So the Cuban military officials and
intelligence officials, are they shaping the oppression of the
Venezuela people and the opposition?
Mr. Toro. Very clearly.
Mr. DeSantis. And what specifically do they do to do that?
Mr. Toro. Well, it is just day-to-day management of the
political crisis. It has taken a lot to break the Venezuelan
opposition to set it against the various groups against one
another. It has taken a lot to identify the fracture points
inside the Venezuelan opposition and play on those.
If you read Venezuelan news over the last couple of days,
we have one part of the opposition now at semi-open warfare
with another part. That is not casual. That is the result of a
Cuban strategy to sow divisions in a very canny kind of way.
Because we know that to the degree that the Venezuelan
opposition splits, it becomes harder for people like you to put
pressure--for the United States to put pressure, because, you
know, if half the Venezuelan opposition is accepting the
National Constituent Assembly, how exactly does the Lima group
or the United States or anyone else get off saying, no, this is
an illegitimate assembly?
So I think the Cubans are very good at this kind of work,
understand it very well, and have in Nicolas Maduro a real
hardliner, I mean, a man whose entire political vision was
built in Cuba.
Mr. DeSantis. So if you did not have any of this Cuban
influence and Cuban support, what would that mean for the
viability of the Maduro regime?
Mr. Toro. I think to some extent, because Maduro and the
inner clique around Maduro, they came up through the Liga
Socialista, this Cuban satellite party in Venezuela in the
1970s, but they thought like Cubans. They have been trained to
think like--Maduro never went to university, but he did go to
the school of international cadres in Havana for a year between
1996 and 1997. That was his university. So he thinks like a
Cuban Communist. The inner clique around him thinks like Cuban
Communists. And in a way, you know, the Cuban vice has been
embedded in the way that the Venezuelan security services do
their work and certainly in the way that the leadership clique
thinks.
Mr. Trinkunas. I would just add that, basically, the Cubans
enable President Maduroand his supporters to do what they want
to do sort of faster or better or more effectively. But,
basically, I agree with Mr. Toro, that this is their preferred
course of action. It is not being forced upon them.
Mr. DeSantis. But it makes their course of action more
viable against opposition because of the Cuban support.
Mr. Trinkunas. Correct. And, in fact, right now, they are
engaged in the strategy of shaping the opposition. It is an
opposition that they can easily manage by pruning off the parts
they don't want to deal with.
Mr. DeSantis. Great. Well, I thank you, thank the
witnesses. And I yield back.
Mr. Duncan. Dr. Ellis, do you want to chime in on that?
Mr. Ellis. Yes. I just want to say very briefly that, in my
judgment, that the Cubans are only able to imperfectly
compensate for the bad management of Maduro team. But at the
tactical level what becomes critical as the crisis deepens is
the DGI and others who are monitoring whether or not there is a
fracture in the military. Because I think with that, that
element of the support, basically, a collapse can occur more
readily with respect to the military split, it is a vehicle for
ending the regime.
Mr. Duncan. Thank you.
The Chair now will go to Ms. Kelly from Illinois.
Ms. Kelly. Thank you, Mr. Chairman.
While the U.S. has taken action to sanction individuals
profiting from the Maduro regime, other nations like China and
Russia have enabled Venezuelans actions. Venezuela is accounted
for 44 percent of total lending by Chinese banks in the region.
For Russia, Venezuela has been a major market for Russian
sales, armed sales with over $11 billion in sales since 2001.
Mr. Trinkunas, you stated that most outside actors that
trade with Venezuela do so to secure the biggest possible
return. As the economic outlook deteriorates in Venezuela, do
you expect outside countries to have more interests to exploit
a weak state or fear of possible default? And are there any
indications that China would inject capital into Venezuela to
keep the Communist (ph) government informed?
Mr. Trinkunas. That is a very good question, Congresswoman
Kelly. And I believe there is a difference between China and
Russian on this. I think China has become more reticent in
recent years. They are still providing some level of support.
They are not willing to totally completely cut and run, because
they are concerned about how that would be viewed by other
potential and existing partners around the world. They think of
themselves as a rising global power, and they know what they do
in Venezuela will affect their relations with other countries.
So they are reluctant to invest more money, but they don't want
to completely leave.
On the other hand, Russia, and specifically Rosneft, have
been behaving very opportunistically this year in terms of
acquiring stakes in joint ventures in Venezuela, as Dr. Ellis
and Mr. Toro explained. The one thing to understand about the
Constituent National Assembly, in addition to supporting the
completion of authoritarianism in Venezuela, it is a vehicle by
which the Maduro regime can try to provide some legal cover for
what the Russians, for example, are doing in Venezuela.
Mr. Ellis. If I could jump in, ma'am. I also believe that
China is now continuing to inject capital. The idea that
although China has become more cautious and has not extended
new loan vehicles; however, it is interesting the current $2.7
billion in new projects that was just authorized last week
actually is basically money that was paid down out of one of
the existing tranches of one of the heavy investment fund. And
so China is proceeding cautiously.
But I also believe that because the majority of those $62.2
billion that were lent was actually lent on generally 3-year
repayment terms and largely on a--you know, repaid out of
China--out of Venezuelan oil deliveries, that China is not as
worried about losing money as many think. As a matter of fact,
the amount that could be still owed to Venezuela may be--or to
China may be as low as $15 billion. And when you consider the
China investment corporation itself has a $900 billion loan
portfolio. For China, you know, taking a loss on $15 billion,
which is actually only half of the loans that Russia took as a
write-down when it wanted to reestablish its own relationships
with Cuba.
So my suspicion is that China is continuing to support the
regime; it is just doing so in a less overt way than people
like Igor Sechin are on the Russian side.
Mr. Toro. We should note that as far as we know, Simon
Zerpa, the PDVSA vice president for finance who was named as
part of the latest round of OPEC sanctions, is in Beijing now
and has been for a couple of weeks negotiating a--trying to
negotiate some kind of support deal. The--Beijing is--
obviously, it is difficult to get information out. It is hard
to know if it is going well or not. We will have much better
answers to the question when Mr. Zerpa comes back.
But it should be noted that sanctions, individual sanctions
against Simon Zerpa and against the national treasurer, Erick
Malpica Flores, the first lady's nephew also, have been very
effective in limiting their capacity to look for financing in
traditional ways. And so we have Simon Zerpa camping out in
Beijing for 2 weeks trying to solve that problem.
Ms. Kelly. I have used up all my time.
Mr. Sires. You have----
Ms. Kelly. I yield back the balance of my time.
Mr. Duncan. She yields back.
So the Chair will go to Mr. Yoho from Florida.
Mr. Yoho. Thank you, Mr. Chairman. Thank you, gentlemen,
for being here.
I hail from Florida, so we are very, very concerned with
this. We have got--in my past life as a veterinarian--I will
always be a veterinarian--and I had several clients from
Venezuela, and we have been following this, and it has only
deteriorated in this first half of the century.
And it is very disturbing to see what is going on there,
from the breakdown of the rule of law, the Communist state that
is developing, the dictatorship. The liberties that they had
are gone. They are already usurping the property and taking the
personal property. And I agree with Mr. Sires that this is the
prelude of what Cuba did with the Castro regime.
There are so many different avenues that I am concerned
with. You know, the terrorist networks that are developing
there from the Middle East, the Chinese influence, the national
security--these all tie into national security, but what I see
with the CITGO deal that was made with the loan--and I want to
touch on that just briefly--if Venezuela defaults, CITGO has
three oil refineries here, nine pipelines, and 50 petroleum
platforms. Are we to believe that if they were to default,
Russia takes that over in this area? Is that something that we
would anticipate? Or China, if China were to--if they were to
default to China?
Dr. Ellis?
Mr. Ellis. Yes. Well, first of all, my understanding is
there is a pending CFIUS review.
Mr. Yoho. Right.
Mr. Ellis. And I think, you know, heavy attention to that
would be merited to potentially blocking that, and I think
there are strong grounds for blocking the takeover by Rosneft
of those assets. And I think--my understanding is that out of
concern for that potential blockage, Rosneft is actually
working right now to switch out those assets for broader assets
in Venezuela.
Mr. Yoho. Okay. You know, and we have had personal contacts
with people that used to work for the Venezuelan generals that
were working with our Government through different agencies, I
won't mention them, that have firsthand information that the
Vice President Asami, when he was a Foreign Minister, was
printing Venezuelan official passports for ISIS and Hezbollah
members that were entering our country.
And to me, this is just a very severe national security
risk. And I look back at the words of John Kerry when he said
the Monroe Doctrine was outdated and not needed. I think we
need to bolster it and really put an influence and, you know,
make sure we secure the Caribbean base in South America with
our policies.
And let's see. The corruption scandals. I mean, they are
widespread down there. And you brought up, there are over--Mr.
Toro, over 1,000 MANPADS that have gone missing. Is that--did I
hear that correctly?
Mr. Toro. No, no. Let me restate. There are 5,900 Russian
MANPADS, is the latest information I have, they are under the
control of the Venezuelan army. The question is what happens--
there is a plan now to shift about 1,000 of them to the
Bolivarian militia where they will not be as well safeguarded.
And we know that there are contacts between illicit groups,
drug trafficking groups, Colombian groups, groups that have
expertise shipping drugs from the northern coast of South
America to the United States. If you want to hide a MANPADS
system, they want to send it to the United States, just hide it
under a sack of cocaine. You can do that. So this hasn't
happened----
Mr. Yoho. Yes. That is not comforting.
Mr. Toro. It is not comforting. It is deeply concerning,
because it is--it is not just that there are these external
actors that are very worrying, it is a way they can overlap and
interact. If you have the drug trafficking route, because you
set it up for illicit narcotics, what else can you put on that?
Mr. Yoho. Mr. Chairman, I have got one more question. Do I
have time? I don't have a timer in front of me.
What we have heard is that the Maduro regime, and even
Chavez, had the Cuban soldiers around him because he felt they
were more loyal to them, because they are a student of
Castro's. Do we still find that today? Is the Cuban militia
that is around him and the military around him, are they more
loyal and protective of Maduro than the Venezuelan generals?
What are your opinions on that?
Mr. Ellis. I have heard similar things. And, you know, to
some degree, that may be the case, and it depends on which
specific loyalists. One of the difficult issues with many of
those, especially the Venezuelan national guard generals, is
they have become so deeply entwined in narcotrafficking and
other profiteering from the regime's economic, you know,
policies that, you know, their fate in many ways is actually
tied to Maduro's, although they are looking for transition to a
more rational management.
There is also some speculation, though, whether some, for
example, the Avispas Negras, the elite Cuban guard, are they
actually guarding Maduro, or are they actually guarding their
own, you know, Cuban personnel from the Venezuelans? So that is
a little bit of concern.
Mr. Yoho. All right. I yield back.
Thank you, sir.
Mr. Duncan. I thank the gentleman.
The Chair will now go to Mr. Espaillat from New York.
Mr. Espaillat. Thank you, Mr. Chairman.
I guess, how many Cubans are there? How many Cuban
operatives are there right now in Venezuela? Do you have an
approximate number?
Mr. Trinkunas. Congressman Espaillat, that is a very good
question. The assessment was in 2012 there was about 40,000.
However, at that time, Cuba-Venezuela trade was about $7.5
billion, more or less. Trade has dropped to about $2.2 billion.
And a lot of those personnel were being paid for by Venezuela
through subsidized oil. So those personnel, some likely have
been withdrawn just because Venezuela is not paying anymore. In
fact, there was a 8-month oil moratorium last year and early
this year, that is--Venezuela started shipping oil at a reduced
rate. But if those personnel are not in Venezuela, they have
likely been redeployed to the Middle East or Africa or
elsewhere in Latin America, because that is how--one of the
ways that Cuba earns money is through providing those
personnel.
Mr. Espaillat. And during the--is there a sign that there
is a crack in the wall, if you may, in the military, are there
any solid noncorrupt military professionals that are showing
signs of potentially objecting to Maduroand his ways?
Mr. Trinkunas. Let me just briefly say that there is--the
senior leadership is selected for ideological loyalty, and also
as Dr. Ellis and I am sure Mr. Toro agree, there is the issue
of connections to drug trafficking among the Guardia Nacional.
The junior officers are heavily ideologized at the national
Bolivarian Military University. It is those middle ranks that
have not been completely captured by the revolution, and that
is where you see this occasional small uprising, the
helicopter, the raid on the base. It is that set of officers
that, I think, are sort of most open to all these, but they are
being watched.
Mr. Toro. I think it--well, about 4 months ago, there was a
video--or 6 months ago, there was a video that, with little
notice outside the Venezuelan military, that showed a couple of
soldiers outside the main army base in Maracay rummaging
through sacks of garbage looking for food. Okay?
The video was not very much noticed outside the military,
but inside the military where everyone has WhatsApp, because
they are South Americans, it went viral. Everybody inside the
military saw it. And there was a moment when people in
different units inside the military realized, wow, it is not
just in this unit where we don't have quite enough to eat.
For middle-ranking officers, keeping morale and
preparedness and just basic discipline in a situation where you
can't always feed your troops is very difficult. And for the
army, again, trying to secure weapon systems when the troops
are hungry is, again, very difficult. So some of the people, I
don't doubt--I don't know if you can find very many people who
are not at all corrupt inside the Venezuelan military, but what
you can find is many officers who find that the current
government setup is unsustainable and find it difficult to
understand why they should try to continue to sustain it.
Mr. Espaillat. My last question is, I am kind of losing a
little hope on the sanctions positions, because as just stated
here, China has been substantially present there and may look
to bail them out. And, in fact, if we sanction them, that
provide them--provides them with a platform to then go out
there and demonize the U.S., and then here comes China and
bails them out. So is there any way that we can--what is the
objection to not buying their oil, for example? That is a
significant part of their economy.
And second, the second question is, what can we do about
the international--the smaller countries that have benefited
from petro [off mic] that seems to be bailing them out in the
international community both at the Organization of American
States as well as the United Nations?
Mr. Ellis. Congressman Espaillat, that is a great question.
I strongly believe that we are in a moment where sanctions can
make a difference, but only if done right and coordinated with
an effective strategic communications, not only to Venezuela,
but also to Russia and China.
First of all, I believe that it is actually important that
we do sanctions in a relatively quick fashion. I believe that
what you said is absolutely on track, that we need to move
forward with sanctions that cut off Venezuela's oil flow.
Although that will damage U.S. industrial interests, I believe
that in some ways that not only doing so shows that we do not
have a, you know, moral ambiguity in the game, but it also
accelerates the rate at which you force a crisis to the regime.
And, frankly, we also need to signal strongly to China,
because China watches this with one eye in the relationship
with the United States. And if they believe that we see this as
a strategic play on their part, they may or may not be willing
to put in that cash. They have been very cautious about that.
I believe also that we do need, as you pointed out--and, of
course, Dominican Republic, as you know that--and I was just
actually in Santo Domingo just a couple of weeks ago right
after your visit, sir, the committee's visit, and was struck by
the number of Venezuelans that you see. And so you have this
ironic situation in which friendly governments continue to go
along with the Venezuelan regime, while at the same time they
are suffering from the crisis that is created by the Maduro
regime. I think we need to manage that diplomacy carefully
through a bit of--you know, through a bit of tough love, if you
will.
Mr. Duncan. We have time for another round if members would
like.
I would like to just raise a point. So under Chavez we saw
the Air Caracas flights, Caracas to Tehran, stopping in Beirut.
And Beirut is the lead country for Hezbollah. I mean, Party of
God, Iranian proxy.
How much activity is Hezbollah conducting in Venezuela? Is
there still as much Iranian influence as there was under Chavez
with Maduro? And are we aware whether the Air Caracas Tehran
flights are still going on?
Dr. Ellis.
Mr. Ellis. Chairman, that is a wonderful question. And I
believe there are two dimensions to this, the Iranian and the
Islamic extremists. And they are overlapping but somewhat
separate. Certainly, with the shift from----
Mr. Duncan. Some of us think they are one in the same.
Mr. Ellis. Yes. They are certainly reinforcing. And
certainly with the change in style in Iran from President
Ahmadinejad to President Rouhani, what you see is at least a
low profile.
But I believe that Iran's strategy in the region is
fundamentally the same. They are continuing to recruit
personnel for the Iranian madrassas from places like Venezuela.
They are continuing to introduce Quds Forces into the region,
although at a somewhat lower level. They are continuing to
work, many of us believe, on missile proliferation.
And one of the concerns is--and I think you have already
seen it--with President Rouhani's reelection in Iran, and the
freeing up of $150 billion in resources, and indeed the meeting
with Maduro just a short time ago, I think you are beginning to
see a renewed willingness of Iran to drop a little bit of the
caution that it had previously adopted when it was negotiating
the end of the sanctions regime.
Related to that, clearly, I am very concerned not only
about Hezbollah, but other Islamic radicals. As you rightfully
pointed out, Tareck El Aissami, the Vice President, is one of
the key people not only in terms of the religious activity, but
also with the criminal radicalization.
Hezbollah, both in Syria and Lebanon, but also in Latin
America, is a major drug-dealing and money-laundering
organization with ties in Colombia, Venezuela, elsewhere, that
is reinforced and plays with Iran, but also has their own
criminal agenda, which really leads to the growth of illicit
networks which fundamentally undermine and threaten the United
States.
So I am glad that you brought that up, sir, because that
emphasis has received probably less attention than it should
recently, the role that is being played.
Mr. Duncan. That has been an issue with me, the Iranians'
activity in the Western Hemisphere, not just Venezuela. We are
not going to take our eye off the ball with the things you
mention and what Iran, Quds' Force, their proxy, Hezbollah, are
doing here closer to home.
Last question. India, they are buying a lot of oil, I
understand. Are they propping up the Maduro government? Is it
anything we ought to be looking into?
Mr. Trinkunas, that is fine. Yeah.
Mr. Trinkunas. I was just going to make a brief point, that
I think India is an interesting signal of the change that you
are seeing, I think, in the Iranian relationship. When Iran
reentered global oil markets after sanctions were lifted under
JCPOA, a competitive dimension was introduced into the Iran-
Venezuela relationship because they are competing for markets.
And, in fact, India was traditionally an Iranian market that
would later on become a Venezuelan market.
So we shouldn't ignore the fact that there is a new
dimension to the Iran-Venezuela relationship where Iran is
competing for markets after being locked out for so long.
Mr. Ellis. Sir, India is a wonderful point. Thank you for
bringing it up. And it is interesting because even though
India's orientation toward the region, including under Prime
Minister Modi, has been relatively apolitical, it is
interesting that until the Jieyang refinery comes on in
Guangdong, in China, really it is the Reliance Refinery in
India that has one of the few capabilities in the world to
bring on and process Iranian heavy oil coming out of the
Orinoco Tar Belt.
It is also of interest that actually Rosneft has a play,
the Russian company, to actually buy a stake in that. And some
of us believe that part of Igor Sechin's play is to actually
refine Venezuelan oil in India.
But India, to the extent of which--there is probably as
much of an impact on Indian potential sanctions and cooperation
as there is from U.S. sanction. And so to the degree to which
India is willing to cooperate with us toward the Venezuelan
regime, that would bring a big deal of help in bringing
pressure on the Venezuelan regime.
Mr. Duncan. Thank you, gentlemen.
I said earlier Iran and Islamic extremism were one and the
same. Maybe not one and the same, but not mutually exclusive, I
guess is what I meant by that.
Any other members have any followup questions?
Mr. Yoho.
Mr. Yoho. Thank you again.
What is your recommendation with Goldman Sachs, who bought
$2.8 billion in bonds? Is that something that we should
discourage from American financial institutions, bailing out a
country that suspends or gets rid of their Constitution?
Thoughts?
Mr. Toro. I think the latest--well, the first round of
financial sanctions is narrowly constructed to prevent that
from happening again. It is unfortunate that it happened once.
But as I understand it, sanctions will not allow that to happen
again.
Mr. Yoho. Okay.
Mr. Trinkunas. Congressman Yoho, I think that is a very
interesting point, because I think you highlight a mechanism by
which you discourage financial institutions in the future of
taking the risk of dealing with the Venezuelan Government. You
don't have to prevent very many of these actions to discourage
many of them.
Mr. Yoho. Make an example out of them. I am a firm believer
in that.
One last thing, and I don't know if you touched on this.
Again, with the Citgo operations in the United States, and with
the Venezuelan Government suspending or changing their
Constitution, which I feel is through an illegitimate election
and process, would you sanction those companies, the Citgo
companies here, and prevent them from processing Venezuelan
crude and replacing it with U.S.? And I know you said it would
disrupt our system, but I think we could probably fill that
fairly quickly.
Mr. Toro. I am a Venezuelan national. I have family and
employees and friends there. I cannot support any such move.
And I think it is important to understand clearly the
mechanism through which stopping Venezuela from selling oil to
the United States is supposed to create pressure. I mean, this
is a hunger strategy. This is let us starve out the Venezuelan
population, let us put a hard stop to food and medicine imports
into Venezuela, and then they will overthrow the government. I
don't think that is a viable or defensible strategy.
Mr. Yoho. Dr. Ellis.
Mr. Ellis. Frankly, I wrestled with a lot of this in my own
testimony, because, obviously, we don't want to do anything
that hurts either U.S. companies or the Venezuelan people,
because at the end of the day our interests are in the well-
being of the Venezuelan people.
My two concerns is that a go-slow strategy of individual
sanctions, while certainly sending messages, prolong the rate
at which you have the suffering of the Venezuelan people while
giving Russia and China the opportunity to incrementally bail
out and advance their position more and more and more.
Whereas, the faster that we do sanctions, although
immediately painful, it creates a situation in which Russia and
China do not have the time nor the scope for being able to bail
it out. And, frankly, it sends a very strong message not only
to companies like Goldman Sachs, but companies such as Citgo as
well.
Mr. Yoho. Thank you.
Mr. Duncan. I thank the gentleman.
Before we end up, hurricanes have affected a lot of our
members on this subcommittee and their districts. So our
prayers are out to the State of Florida and Texas. And also to
the Caribbean, which we have jurisdiction over, has experienced
a lot of damage from the hurricanes. So our prayers are with
them, as well.
Pursuant to Committee Rule 7, the members of the
subcommittee will be permitted to submit written statements to
be included in the official record.
Without objection, the hearing record will remain open for
5 days to allow statements, questions, extraneous materials for
the record, subject to the length limitation in the rules.
There being no further business, the subcommittee will
stand adjourned.
[Whereupon, at 3:17 p.m., the subcommittee was adjourned.]
A P P E N D I X
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