The Trump administration’s failed drive to oust President Nicolás Maduro in Venezuela has reached a critical turning point. Juan Guaidó, Trump’s choice to lead the country, is on the run, his main supporters are in jail—and Venezuela faces the world’s worst economic and humanitarian crisis outside of war in modern history.
Government and opposition negotiators have reportedly started to reach a political compromise. But no matter what happens politically to Maduro and Guaidó, the US administration may end up wondering why it was not more careful what it wished for in its Venezuela intervention crusade. That is because someone will have to assume responsibility for rescuing the country from a catastrophe that Washington has aggravated with its worldwide campaign of economic pressure. The world will logically look to Washington for that role.
Think of the last time the United States sought “regime change” in an oil-rich country and then had to foot the bill to resume energy production, quell a civil war, and stabilize a chaotic country. The United States invaded Iraq and discovered that, as the saying went, “If you break it, you own it;” this time the United States has worked hard to persuade more than 50 countries to recognize Guaidó as Venezuela’s legitimate president and cannot be surprised that it must take responsibility if its chosen candidate either takes over or reaches a deal for political transition in Caracas.
No one knows for sure how much restoring Venezuela to good health will cost. Ricardo Hausmann of Harvard University, who has been advising Guaidó, has calculated that Venezuela would need at least $60 billion over three years alone. The figures would balloon if support is extended to neighboring Colombia, which is engulfed in a spillover migration crisis caused by the Venezuelan turmoil.
“Venezuela is the most over-indebted country in the galaxy,” Hausmann said earlier this year. “First, second and third priorities have to be the recovery of the country. There’s a humanitarian disaster. There are millions of Venezuelans flooding into other countries. If you want to fix the problem, you can’t take money out of the system to pay yourself back. It will take years to start servicing debt.”
The Trump administration State Department does not like spending money on foreign aid projects and is distrustful of the international financial institutions that may have to be brought in to help, including the International Monetary Fund and World Bank. But as in the European crisis, the IMF will almost certainly be recruited—it has already begun looking into the matter. That might mean that the administration would have to support steps it has so far rejected to give greater shares at the Fund to emerging markets.
The administration might also have to enlist support for such a package at the IMF from Russia and China, which have opposed Washington’s quest for regime change in Venezuela.
Venezuela was once one of Latin America’s greatest economic success stories. Today millions of Venezuelans have fled the country, leaving behind a legacy of recent violence and a place of power blackouts, malnutrition, and threats of disease, especially among children and the poor. Economically, Venezuela is beset by virulent hyperinflation, with prices nearly tripling every month. External debt is spiraling out of control with a deep slump in oil exports because of the dire financial condition of the Venezuelan state-owned oil company, PDVSA.
If these disasters were to fall into Guaidó’s lap, the world will remember that his biggest supporters (after Trump) have been John Bolton, the White House national security adviser, and Secretary of State Mike Pompeo, who has advocated cutting foreign assistance.
Although many other Latin American countries agree that Maduro must go, most are too poor to provide financial assistance. In fact, Colombia, which has received 1.5 million Venezuelan migrants over the past year will also likely need financial assistance of its own to face the challenges of such massive flows. The migration crisis has left that country strapped for cash at the same time that it is trying to implement the peace accord reached with the FARC—the guerilla group that has terrorized Colombia for decades—which entails spending a substantial amount of resources on territories previously occupied by the group.
If the Venezuelan regime falls, the United States will be faced with a situation much like one that led to the initiative Plan Colombia, signed in 2000, that cost $10 billion over a period of 15 years. The difference is that now a similar plan would need to cover both sides of the border and would likely entail much more money over a possibly longer period of time, as Venezuelan institutions have to be completely rebuilt.
Granted, myriad factors have “broken” Venezuela, not least the mismanagement by its leadership over many years. But in leading the charge for change, the United States will have to act to vindicate its strategy—or pay the price for walking away from a disaster it has courted.
Monica de Bolle is a senior fellow at the Peterson Institute for International Economics and director for Latin American studies and emerging markets at the School of Advanced International Studies at Johns Hopkins University.