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realclearworld

Why Venezuela’s ‘Plugged-In’ Elites Hold the Keys to Its Future

As it is in Cuba, so it is now in Venezuela. But what else would expect from a colony of the Castro regime?

Juan Nagel in Foreign Policy:

Why Venezuela's 'Plugged-In' Elites Hold the Keys to Its Future

A year ago, the opposition to Venezuela's government coined a term: the enchufados. It translates roughly as "plugged-in elites" (enchufe is the Spanish word for electrical socket), and it refers to the various cronies and other groups aligned with the government that are profiting from Venezuela's massive economic distortions.

The enchufados are a large, heterogeneous bunch, and they arguably hold the key to Venezuela's political future.

Last year, after the death of Hugo Chávez, the opposition candidate Henrique Capriles went negative against his acolytes. He tried to paint Chávez's heirs as simply looking to profit from the government. Now, many in Venezuela talk about the enchufados -- everyone either knows one, is one, wants to be one, or hates one.

Who are the enchufados, and what do they do?

Enchufados profit from the system of price controls and heavy government regulation that characterizes the Venezuelan revolution. They do so by smuggling, importing at subsidized rates, winning government contracts thanks to friends in high places, or being in charge of supervising companies.

Some are in the military, some are business people, and others are public employees. But foreign investors, large multi-nationals, and even foreign countries qualify.

Key among the enchufados is the military. Their main line of business is smuggling -- and the product that accounts for most of the action is gasoline.

Gasoline in Venezuela is the cheapest in the world. A liter of gasoline costs less than a penny, but in neighboring Colombia it goes for about $1.09. The profits from sneaking gasoline across the border are irresistible for the members of the military in charge of safeguarding it. Recent estimates suggest that 60 million liters are smuggled per month over the border with Colombia alone. Aside from that, there is significant smuggling of gasoline to neighboring Caribbean islands, such as Trinidad and Tobago.

The military is in charge of many other "businesses" in Venezuela. Many have been called out for alleged links to the drug trade. Last year an Air France jet landing at Charles de Gaulle Airport in Paris from Venezuela was discovered to be carrying the largest drug haul ever intercepted on French soil. That could not have happened without the consent of the military officials in charge of the international airport in Caracas. (In the photo above, members of Venezuela's National Guard seize a 2.6-ton shipment of cocaine that was on its way to Honduras.)

The military also controls the ports, and frequently takes bribes in order to speed up imports. It is also in charge of weapons purchases, and holds key positions in the oil industry. Essentially, being in the military means no oversight to shady dealings. In that regard, the country's chief enchufado is Diosdado Cabello, the president of the National Assembly and, in effect, leader of the Venezuelan Armed Forces.

As important as they are, members of the military do not work on their own. They have found allies in business people looking for preferential access to cheap dollars that they can then resell in the black market for a hefty profit.

Some of these people come from Venezuela's traditional elites. Others are foreigners connected to governments that are on good terms with Caracas: Many Chinese or Arab businessmen are doing very well in today's Venezuela. Foreign firms whose governments have proven to be allies of the country have also benefitted handsomely. For example, Brazil's Odebrecht, a giant construction company, has billions of dollars in projects with the Venezuelan government.

Continue reading HERE.

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