By Ayush Kukreja,
Large clouds of despair loom over the economically and politically crippled Latin American country of Venezuela. The fifth republic of Bolivarian Venezuela, under former lieutenant governor of the military Hugo Chavez (1998-2012), marked the deep-seated fear of a move away from democratic socialist society to an extreme leftist autocratic socialist regime. Nicolas Maduro’s regime since 2012 has just been a continuation of these dirty politics of expropriating country’s oil export revenues towards redistributive policies which has sent the economy for a major overhaul smitten by the Dutch disease. Venezuela’s inadequacy to cope up with the oil crisis is not just a surmise on the authoritarian rule by Chavez and Maduro to pull the country out of surmounting debt and corruption, but maintains a critical stance on how hunger for wealth and power has rotted the living conditions for the citizens of the country.
The country suffers from one of the worst inflation rates of the century with Bolivar constantly failing to match the increasing prices of oil barrel rates internationally. Rigged elections in the country saw interventions in the form of face-offs and coups by Juan Guaido, who has been internationally backed by the United States and the European Union and heralded as the legitimate president of the country. However, strained efforts by Maduro have created a state of fear throughout the country against democracy by locking up political opponents and shutting down institutions which go against his rule of decree. Agricultural and industrial resources in the country remain scarce owing to the economic lockdown of oil industries. Heightened agitation among the civilians maintains a decorum of revolt on the path to democratisation, frenzied by immoral acts of Maduro selling off country’s gold reserves to bring in imports. Continuing on the Monroe Doctrine, the United States’ plan of action has been much more diplomatic and political rather than military-based. With Venezuela’s allies Russia, China and Cuba in the cross hairs of the United States, there seems to be emerging a multilateral leveraged diplomatic plan by the US “Lima Group” and the International Council Group imposing strong sanctions on the country with regular peace talks taking place in Caracas and Oslo. The sanctions and the embargoes imposed on Venezuela cease to affront Maduro and help always reaches the country in some form of political assistance from the allies.
In the light of complete import and export sanction imposed by the United States, Venezuela is constantly trying to reach out to India, its second biggest importer of oil, for business expansion plans. Restrained relations with the US have also resulted in discontinued trade in USD, which has put Venezuela seeking help from India to deal in INR. Private players like Reliance Limited and Nayara Power engage in imports of 30,000 barrels of crude oil from Venezuela everyday in exchange for processed oil products, despite the heat of sanctions in the region. Mukesh Ambani’s Reliance facilities in the United States stand in alliance with the sanctions and he continues to operate from India to meet the demands of the Asia’s largest oil consumer from the Jamnagar-based single largest oil refinery in the world, with the ability to process relatively dense crude oil from the Latin American country. However, higher import bills are expected to cost a setback to the industry if exchange continues in INR. On the other hand, there seems to be a possibility of considerable discounts on the part of Venezuela to get rid of the 45 million cubic crude oil it stores in reserves. TATA industry’s plans to set up a passenger vehicle manufacturing facility in Venezuela stand stagnated due to the super low demand of the consumers and the entire country remaining highly indebted to the Indian pharmaceutical and textile industry in the past. Consequently, the exports from India to Venezuela remain at an all-time low today with the trade shares falling from US$ 200 million in 2013-14 FY to a mere US$ 21 million in 2017 FY. There does not seem to be much at stake for the Indian sectors involved in the export business to Venezuela, since the latter attracts the Indian market as the 86th largest import country. A cause for concern remains regarding the bilateral agreement between the two countries — constant payment delays by Venezuela for petrochemical products exported by India put the import business also into jeopardy. Oil fields in Orenoco belt acquired by ONG already lay stagnant and unused. India seeks to diversify its oil sources in the light of oil crisis in the Middle Eastern grounds, especially Iran and losing Venezuela seems to be an unfortunate option for India to sustain its oil needs.
There seems to be little fear in New Delhi regarding the internal situation of Venezuela and no possible intervention in the future is foreseen, for the political connection remains highly non-existent between the two. It seems difficult to make commercial relations, as stringent measures are put in place by the Western forces; India’s history with Iran is a testament to the case. Trump’s intervention remains a peaceful solution for now. The entire country seems to hinge on the sides taken by the military, be it Venezuela’s army supporting Guaido or the future possible intervention by US forces, which seems to be the last resort after all sanctions fail. Guaido promises amnesty to the military as a short-term solution to the urgent hunger for justice, but a long-term solution cannot deny the need for financial aid and political allies, arguably, like India for the restoration of a stable government and tackling humanitarian crisis.
As diplomatic relations with Latin America remain highly non-existent for India, opening dialogues for some form of aid extension at this critical juncture might consolidate political as well as commercial relations between the two countries. Visits by Indian President Ram Nath Kovind, Minister of State for External Affairs V K Singh and Vice President Venkaiah Naidu have initiated dialogues of interest in Latin American countries but the momentum of visits remains slow. Securing UNSC membership by associating with committees like BRICS, IBSA etc. seems to be the next strategic milestone for India, especially when Latin America contends for serious significance in the area of energy security. India could also seek to explore the rich mineral ores of copper, lithium, iron, gold and silver from the region in the market for growing consumer demands. All these privileges come with a diplomatic nexus that need to be achieved between the two countries and given India’s strong alliances with Mexico (yet another ally of Venezuela); it only makes sense for India to build a stronghold in Venezuela with multilateral interventions and investment. “This is a geographical area from which India can benefit enormously, and neglecting it would be a mistake. Not only does it represent a market of over 600 million people for Indian products and services, but conquering Latin America is key in India’s journey to become a true world leader and consolidate its global influence”, Mexican Ambassador to India Melba Pria said. New Delhi should conclude dialogues on PTAs (Preferential Trade Agreements) and FTAs (Free Trade Agreements) with Venezuela and consolidate its diplomatic presence in the country. It should remove all the psychological barriers for achieving its full potential in this relationship.
General opinion stands that in the light of international political situation, India as a neutral entity and a growing superpower should step in to evade issues such as Venezuelan crisis and prevent shifting currents in the global economy which are controlled by oil to a major extent. Sanctions imposed by Western forces should not deter India from getting involved in political hotbeds and it is high time for Indian foreign policy to take sides.
Ayush Kukreja is a Research Intern at Centre for Public Policy Research, he can be reached at email@example.com. Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.