For those unaware, Venezuela is one of the quintessential examples of what we like to call a Socialist paradise and to be sure, we’ve had our fair share at the country’s expense.
From toilet paper shortages, to images of empty shelves, to hapless President Nicolas Maduro being pelted in the head with a mango by an angry Venezuelan woman, the country never disappoints when it comes to producing absurd outcomes. Years of incompetence have led to inflation on a massive scale, with the black market bolivar exchange rate now so low that a hundred bolivar note will buy you just 14 cents. Needless to say, slumping crude prices haven’t done the country any favors either and as we outlined a few days back [7], the country has now resorted to selling its gold to make bond payments.
[8]
What’s amusing to note is that even as everyday Venezuelans watch in horror as their purchasing power evaporates virtually by the day, Venezuelan government officials have been variously accused in the past of drug smuggling, a side job that can be quite lucrative especially when you share a border with Colombia. As Reuters notes, “The U.S. State Department said in a report in March corruption in Venezuela facilitates drug smuggling, and it implicated high-ranking Venezuelan government officials in the trade. The U.S. Treasury has placed nine Venezuelan officials on a ‘kingpin’ list, which bars those suspected of involvement in large-scale drug trafficking from the U.S. financial system.”
With that in mind, consider that on Tuesday, two of Maduro’s nephews were arrested in Port-au-Prince, Haiti, after they allegedly contacted a DEA informant requesting assistance in their effort to smuggle some 800 kilos of cocaine to the US where it was apparently bound for New York. Here are the details via WSJ [9]:
[They] also sent pilots to talk to an airport official at Roatán about the drug trafficking scheme, according to a U.S. document. “It looked like amateur stuff,” said a person with knowledge of the matter.
In subsequent meetings in Venezuela, this person said, the two Venezuelans brought a kilogram of cocaine to a confidential informant to show the quality of the promised shipment, which was to be sold in New York. Agents filmed and taped the meetings with the Venezuelans, this person added.
The two men, Efraín Antonio Campo Flores and Francisco Flores de Freitas, are nephews of Cilia Flores, Maduro’s influential wife.
As WSJ goes on to note, The First Lady - or, as she’s called in Venezuela, “The First Combatant” - has put many of her relatives in important government positions, including another nephew, Carlos Erick Malpica Flores, who is the chief financial officer of state oil company Petróleos de Venezuela and the country’s treasurer.” More, from Reuters:
She worked on the legal team of late socialist leader Hugo Chavez, working to secure his 1994 release from prison after a failed coup attempt.
In 2006, she became the first woman elected to lead the legislature, taking over that role from Maduro, and is registered as a candidate in the Dec. 6 legislative elections.
The arrest came as the US attempts to crack down on what Washington alleges is rampant drug activity among Venezuelan politicians and officials including Diosdado Cabello, president of the country’s National Assembly.
Needless to say Maduro isn't happy:
La Patria seguirá su Camino,ni ataques,ni emboscadas imperiales,podrán con el Pueblo de los Libertadores,tenemos un solo destino..Vencer....
— Nicolás Maduro (@NicolasMaduro) November 12, 2015 [10]
That's, "The fatherland will follow its course. Neither attacks nor imperialist ambushes can harm the people of the liberators."
Right, whatever that means.
Fortunately for Maduro, he may be able to use the incident to his political advantage at a key time. From The Telegraph:
The case is a major embarrassment for Mr Maduro, three weeks before the ruling Socialist Party heads towards parliamentary elections. For the first time in 16 years polls suggest the Socialists could lose control of the 167-seat national assembly.
Some analysts said that the arrests could play into Mr Maduro's hands, because he frequently styles himself as defending Venezuela against outside interference.
"The timing is hardly ideal," said Michael Shifter, president of the Washington-based Inter-American Dialogue think tank.
"The arrests could give Mr Maduro the excuse he was hoping for to declare a state of emergency and postpone the elections.
"He will blame the arrests on US imperialism and see them as an attempt to undermine his government."
That possibility is itself hilarious as Maduro is scheduled to speak today at The United Nations Human Rights Council in Geneva regarding Venezuela's reputation for sitfling dissent. Demonstrators reportedly organized a protest outside the UN gates.
In any event, this will certainly be an amusing case to follow. Maduro's nephews were due to appear before a New York judge today. If Venezuelan officials are heavily involved in the trafficking of cocaine to the US, maybe they can do their patriotic duty and use of the proceeds to offset the FX reserve burn before the country defaults.
