Narcoterrorists Challenge Venezuela’s Government and America’s Miners

Last month, Venezuela’s newly cooperative government passed a law ending the country’s exclusive control over its mineral resources, throwing open the doors to foreign investment (especially American investment). The law is intended to jump-start Venezuela’s long-stagnant economy—and, no doubt, assist Delcy Rodriguez in her effort to prove herself a useful partner to the Trump administration by providing the United States with access to Venezuela’s voluminous natural resources. The country is estimated to have some of the world's largest untapped gold reserves, along with deposits of coltan (used in the manufacturing of electronics) and other critical minerals.

But passing a law is only a small part of the process necessary to turn Venezuela’s mineral resources into a viable economic sector. At present, Venezuela’s sclerotic mining economy is dominated by local criminal syndicates, Colombian guerillas, and corrupt elements of the Venezuelan armed forces. They are the main beneficiaries of the country’s endowment of valuable minerals, and none are eager for American corporations to muscle in on their turf. 

“In Venezuela, there’s a pretty grim security panorama,” Bram Ebus, a Bogota-based researcher at the International Crisis Institute, told The American Conservative.

On the one hand, you have Venezuelan organized crime in this particular region, referred to as sindicatos… But then we also have the presence of Colombian guerrilla organizations, for example, the National Liberation Army (ELN). On the Colombian side, they’ve had a historic presence in the border region, but they have expanded deeply into Venezuela to control illegal gold mines over the last 15–20 years, operating in a tacit, mainly ideological alliance with authorities in Caracas.

Gold mining has proven to be a lucrative alternative source of revenue for the narcos. Gold prices have nearly quadrupled in the past decade, making its production ever more valuable, and it is relatively easy to launder into the legal economy. A recent New York Times investigation showed that gold from Colombian mines owned by the notorious Clan del Golfo ended up in the facilities of the U.S. Mint; it would not be surprising if the same were true of illegal Venezuelan gold. And as the Trump administration continues to crack down on traffickers headed northward with bricks of cocaine on speedboats and semisubmersibles, the easy cash provided by gold mining has become even more important.

Ironically, the Trump administration may have made it significantly easier for cartels to launder money to fund their drug operations. Venezuela’s state mining company, Minerven, nominally had control of all mineral resources in Venezuela and operated the few legal mines in the country. But Minerven has also been known to purchase gold that originated in wildcat mines, including those run by narcos. This is one reason the Treasury Department sanctioned the firm in 2019. Those sanctions have now been lifted as part of the Trump Administration’s efforts to open Venezuela for U.S. business, allowing Minerven to serve as a convenient avenue for cartel gold to penetrate foreign markets. Minerals trader Trafigura is already hammering out a deal with Minerven to transport Venezuelan gold to American refineries.

At times, Maduro’s government touted its efforts to crack down on illegal mining and run off the narcoterrorists, but those operations were less to end cartel control of mining in the region and more a way for government forces to muscle in on the business and get a cut for themselves. “The guerrillas were warned beforehand,” Ebus told TAC. “They told illegal miners: ‘The army is coming, move aside and open mines a bit deeper in the jungle. And good luck to you.’”

Without a significant change in the security environment in Venezuela’s mining regions, American investment in the industry remains an extremely risky proposition. Legitimate mining operations are difficult because of the severe lack of infrastructure available in Venezuela’s Orinoco Mining Arc, and operators may face retaliation from cartels and other organized criminal groups who currently control the resource-rich area.

Companies that would invest in Venezuelan minerals also put themselves at significant legal risk: Groups like the ELN and the Segunda Marquetália are designated Foreign Terrorist Organizations. If companies operating in Venezuela interact with the cartel economy, they may find themselves facing sanctions from the U.S. government. That interaction could be direct, like buying gold from cartel-controlled mines, but it could be as subtle as narco enforcers in the region extorting the company’s workers or charging tolls on drivers transporting freight to and from legitimate mines. Guerillas have become experts at monetizing even legal economic activity to finance their terrorist activities.

Rodriguez’s government in Caracas lacks the cohesion and resources necessary to exert meaningful control over the region, making it doubtful that the industry will be viable for significant investment in the near future. While the Venezuelan government does maintain military forces there, they are almost all complicit: The poor wages offered by the government are a paltry incentive compared to the opportunities offered by the gold industry. Many are happy to take a cut from the cartels as well—a circumstance that was part of the Trump administration’s justification for the raid that captured President Nicolás Maduro in January.

Reforming the Armed Forces is a lengthy and complex task, especially for a government that remains on a precarious footing. That process is ongoing—in March, Delcy sacked Maduro’s defense minister, Vladimir Padrino López, and replaced him with Gustavo Gonzalez Lopez, an old colleague from her time overseeing Venezuela’s secret police. But much of the energies will, out of necessity, be focused on bringing the military under control close to home as opposed to making sweeping and difficult changes on the periphery. (Getting into a confrontation with hardened Colombian guerillas is the last thing a weak Venezuelan government wants on its hands.)

“It’s very difficult for Delcy Rodriguez to draw up a military strategy in which state forces complicit in the illicit economy need to combat their partner with whom they conduct illicit mining operations,” Ebus noted. “And we also know that the ELN has sometimes operated like a sort of shock troops for the Venezuelan army, combating enemies in different sectors of the border with Colombia. We see that the ELN is actually better trained and more prepared than the Venezuelan State forces.” 

Maduro may be gone, but the challenge highlights the difficulties for the Trump administration of turning Venezuela into a stable country open for U.S. investment. “I’m not really sure if the Venezuelan Army right now is up for the task,” Ebus said.