In Venezuela, the key to state control lies in two things: oil and guns. Those with the guns, i.e., the armed forces, have the ability to threaten the state, but those with the oil have the revenues to silence the guns and the populace. Therefore, if the state is to control the populace and the armed forces, it must control the oil. This model has worked relatively well for Venezuelan President Hugo Chavez in his 11-plus years in power. The state has taken control over the oil revenues, the population has been heavily subsidized and for the most part, the loyalty of the generals has been purchased by the regime. The situation has by no means been all rosy for the Chavez government, however. The government is dealing with a host of issues right now, including a growing electricity crisis, preparations for legislative elections in September, striking workers and mountains of debt owed by state oil firm Petroleos de Venezuela (PDVSA), all of which require expensive short-term fixes. Venezuela's pocketbook is being stretched and the economy is in a state of slow decay, but enough funds appear to be flowing for now to keep Chavez in control. A number of Venezuelan opposition media outlets (many of which influence the U.S. media) regularly convey the impression that the Chavez government is on its last legs. These reports paint a picture in which disaffected generals in a military overrun by Cubans are on the verge of rising up against the president. The so-called "Cubanization" of the military has accelerated in recent years, and signs of stress are visible in the regime — but not to the level portrayed in most political analysis on Venezuela. In particular, the military has been impotent against Chavez for years. In the following report, STRATFOR will take a deeper look at the restructuring of the Venezuelan armed forces under the Chavez government and the steps that the president has taken both to enervate and appease the military as a form of political insurance.

Ensuring Loyalty with a Pay Bump

The Venezuelan government is wracking up a hefty bill for expensive electricity generators, fuel imports to run those generators, debt obligations to foreign oil firms and various forms of political patronage in the lead-up to September legislative elections. At the same time, Caracas needs to deny the armed forces the incentive to challenge the government as the economic climate deteriorates. The short-term answer for this is a pay bump for the armed forces. In his weekly television address, Alo Presidente, Venezuelan President Hugo Chavez announced April 25 his government's intent to invest $145.5 million bolivars ($33.8 million) to raise the salaries of all ranks in the armed forces by 40 percent, paid retroactively from April 1. No other details on the division and distribution of the salaries by rank were released. The Venezuelan military, which reportedly had not been given a raise in more than four years, reacted with predictable enthusiasm to the raises. Along with the rest of the Venezuelan public, military personnel have been struggling with the country's skyrocketing inflation, which a recent currency devaluation has exacerbated. With the salary increase, Chavez claimed a "recently commissioned lieutenant" will now make a salary of nearly 2,500 bolivars ($581) a month. Venezuelan army tanks during a military parade in Caracas on April 19 At first blush, a 40 percent wage increase for an 82,000-strong military would appear to be a very large fiscal expense that would stress the government's finances. However, two factors make this wage increase much less financially burdensome. First, in light of the January devaluation of the bolivar, local-currency proceeds from oil sales have now doubled, meaning the government will have plenty of bolivars to support the wage increase. Second, since the annual inflation rate — as reported by Venezuela's central bank— stands at about 30 percent, the wage increase only amounts to around 10 percent in real terms. The devaluation and recent changes to the central bank's charter will likely increase inflationary pressure in coming quarters, continuing the erosion of real wages.

Cubanization

The salary increase for the military also comes amid rising public criticism of the politicization and so-called Cubanization of the Venezuelan military. Former Venezuelan Brig. Gen. Antonio Rivero claimed the "the presence and meddling of Cuban soldiers" in the armed forces prompted his April retirement. Rivero said Cubans were operating at some of the highest levels in the Venezuelan military, delivering intelligence, communications, weapons and other training for the troops. He also denounced the extent to which Chavez has undermined military professionalism, and complained of the government's move to expand its civilian militia. In the same address in which he announced the salary increase for the military, Chavez addressed Rivero's complaints, saying he was saddened by the general's attempt to draw attention to himself. Chavez also defended his decision to embrace the Cuban military presence by criticizing previous Venezuelan administrations for allowing the U.S. military to staff the offices of the country's Army Command Headquarters and manage Venezuelan state secrets. While the opposition is eager to exploit the public relations sensation of a general condemning Chavez's military policy, retiring generals and the Cuban links into the Venezuelan military are not exactly startling developments in Venezuela. The deep integration of Cuban forces in the Venezuelan military has been an open secret in recent years. By having enlisted soldiers and trainers percolate throughout the armed services at virtually all levels, the Chavez government has been able to tap Cuba's security and intelligence expertise to keep tabs on dissidents and quash any potential threats to the government. For its part, Cuba benefits from being able to influence the policies of a regional, oil-producing heavyweight in South America. As Chavez's political and economic vulnerabilities have increased, so have the opportunities for Cuba to entrench itself in Venezuela. This symbiotic relationship saw its clearest manifestation with the July 2008 passage of the Organic Law of the National Armed Forces. The law redefined the Venezuelan Armed Forces from a politically nonaligned professional institution (as stated in the 1999 constitution) to a patriotic, popular and anti-imperialist body, as described in the legislation. Chavez, not wanting to be caught off guard again by his generals as he was during an April 2002 coup attempt, created the law to develop a military primarily tasked with protecting and defending the regime from internal threats. The Cuban government, wanting to ensure Venezuelan dependency on Cuban security, is believed to have had a role in one of the more controversial articles in the law. This provision allows for foreign nationals (i.e., Cubans) who have graduated from Venezuelan defense institutions to earn the rank of officer in the Venezuelan armed forces. Another clause in the law forces officers into retirement if they are not promoted after two years. Though such provisions are common in many militaries, Caracas has used it with unusual frequency as a tool to remove potential dissenters. Under this system, political allegiance can easily supersede military merit when it comes to awarding promotions or forcing resignations. Cuban advisers, who have been tasked with identifying localized threats from within the armed forces, are believed to have significant influence on these decisions. Chavez recently remarked in Havana that he felt like he was "one more Cuban." But many Venezuelans do not like the Cubans' methods or their growing presence in the country, and Cuban integration in the Venezuelan armed forces appears to have alienated several high-ranking members of the military. Chavez, however, has knowingly incurred this risk, and undermining powerful military leaders was likely one of his key goals. Problematic generals can be forced into retirement while the Cubans closely scrutinize the remaining military elite, who are given perks to keep them loyal to the government. While this comes at the cost of considerable expertise and professionalism, Chavez's goal is to ensure that the upper ranks of the military lack the operational control to challenge the president. Mid-tier members of the military probably worry the Venezuelan president more, however. After all, Chavez was a lieutenant colonel with the charisma to rally a sizable portion of the military and lower classes around him in his 1992 coup attempt and victorious 1998 presidential campaign. As long as he is the one occupying the presidency, Chavez does not wish to see any lieutenant colonels following in his footsteps. Since Chavez lacks the same reach and oversight with the lower ranks of the military than he has with the generals, pay raises are a way to help mitigate potential threats emanating from below.

Militia Insurance

Chavez has also attempted to make up for any lingering dissent within the armed forces through the creation of the National Bolivarian Militia (NBM) in 2007, which has some 110,000 reservists, and has since reportedly grown to roughly 300,000 (though these estimates are likely exaggerated.) Efforts are also under way to bolster the NBM with peasant recruits and perhaps to form a marine militia. Members of the National Bolivarian Militia on Feb. 20 in Caracas The militias present themselves as a security element operating at the president's behest. Though the armed forces reputedly are responsible for their training, the militia does not exhibit the skills of an effective security force. Militia members are comprised of men and women of all shapes, sizes and ages from Venezuela's lower classes. It is no elite guerrilla unit; instead, it is a poorly trained peasant force. The state uses their exercises and marches as photo opportunities to demonstrate a military force ideologically bound to the regime. More important, the incorporation of the NBM into the armed forces provides the president a useful chip to keep the military elite in check. The Venezuelan Defense Ministry has also strongly resisted the deployment and armament of these militias. The ministry is believed to keep tabs on the militia's activities by maintaining physical control over its weapons arsenal, which consists mainly of AK-103 and AK-104 assault rifles acquired from Russia. The militia forces may not be well-trained, but ideology can be a powerful motivational force, and they could gain strength in numbers as Chavez continues his push to expand the force. Chavez's purpose in building the militia appears to be to make the cost of a coup too high, given the risk of a civil war between the militia and the military. Chavez’s militia-building efforts and apparent tendency to put more trust in his Cuban advisers than his own generals may be sore points for many within the military elite, but these are also the very tools he is using to keep the armed forces too weak and divided to pose a real threat to his regime. So far, the strategy has worked. And as long as the oil revenues continue to flow, the electricity crisis is contained and the military's wages can be paid, the Venezuelan president is likely to have the political insurance he needs to hold onto power.