Venezuelan President Nicolas Maduro holds the country's constitution during a press conference following the ruling Socialist Party's victory in legislative elections that were boycotted by the opposition in Caracas, Venezuela, on December 8, 2020. A proposed foreign funding law could have serious negative consequences for independent media outlets. (Reuters/Manaure Quintero)

Proposed Venezuelan foreign funding law could have ‘huge impact’ on independent outlets

When Ewald Scharfenberg launched the investigative news website Armando.Info in 2014, about half of his start-up funds came from Venezuelan donors, subscribers, and advertisers, while overseas foundations provided the rest.

But amid the worst economic crisis in Venezuela’s history, local income has disappeared, forcing Scharfenberg to rely almost entirely on international donations to keep Armando.Info alive.

That’s why he is dismayed by a proposed foreign aid law that Venezuelan legislators are expected to approve in the coming months. In a nation with an authoritarian government that has already severely curtailed press freedoms, he says the legislation could squeeze or cut off one of the few sources of financing still available to independent news outlets in Venezuela.

“The law could have a huge impact,” Scharfenberg told CPJ in a telephone interview.

Momentum for the bill is growing following disputed elections in December that gave the ruling Socialist party control of the National Assembly for the first time in six years. President Nicolás Maduro then announced that legislation to regulate donations from foreign governments and philanthropic organizations would be a top priority.

“The foreign aid law will be approved this year,” Maduro declared in a March 2 speech. “It’s very important. It’s critical.” 

Venezuela’s proposed legislation follows similar laws passed by authoritarian and repressive governments elsewhere in the world that have cut off funding for nongovernmental organizations (NGOs) and independent media outlets.

For example, a Russian law passed in 2012 has been reformed several times and now includes requirements for local media companies, individual journalists, and bloggers receiving donations from abroad to publicly identify themselves as “foreign agents” and report how they spent the funds or face fines that could reach the equivalent of nearly $1 million, CPJ has documented. In India, the Modi’s government increasingly aggressive use of the Foreign Contribution Regulation Act–which regulates foreign funding for civil society groups, including some media outlets–has led to tax raids and the cancellation of more than 19,000 NGOs’ licenses. This has made it far more challenging for small organizations to secure financial support, according to news reports.

In Nicaragua, where President Daniel Ortega’s Sandinista party controls all branches of power, the legislature in October passed a law requiring foundations that receive overseas grants to register with the government as foreign agents and to file reports detailing how they spent the money. That prompted the closure in February of the Nicaraguan chapter of the writers association PEN International and the Violeta Barrios de Chamorro Foundation, which promotes free expression.

“This is a day of mourning for civil society groups that reject being designated as foreign agents inside our own country,” journalist Cristiana Chamorro, director of the Chamorro foundation, told a February 5 news conference in Managua.

It’s unclear what the Venezuelan law would entail. However, a similar bill in 2006 would have required foreign donations to be funnelled through government agencies, allowing them to decide how and where to disburse the money, Marianela Balbi, director of the Caracas-based Institute for Press and Society (IPYS), told CPJ. She said that legislation, as well as another foreign aid bill introduced in 2009, were set aside amid a backlash from foreign governments and local foundations.

Now, however, Maduro–who has been president since 2013–tightly controls all branches of power as well as the military. In September 2020, a United Nations panel accused his government of carrying out crimes against humanity, while CPJ has documented its campaign to harass, censor, arrest, and imprison independent journalists.

Amid these challenges journalists are among the few dissenting voices remaining in Venezuela and they continue to report on government repression, corruption, environmental disasters, and deteriorating living conditions that have prompted more than 5 million Venezuelans to flee the country since Maduro took office, one Caracas editor told CPJ.

Such reporting “causes a lot of political damage,” said the editor, who requested anonymity for fear of reprisals. By seeking to pass the foreign aid bill, “the government is taking revenge.”

Luz Mely Reyes, editor of the independent Caracas news website Efecto Cocuyo and a 2018 CPJ International Press Freedom Award winner, told CPJ that the government is paving the way for passage of the bill by slandering media outlets that receive grants from foreign governments and philanthropies like the Open Society Foundations, the Ford Foundation, Luminate, and the National Endowment for Democracy.

In January state broadcaster VTV and the pro-government Globovisión TV station falsely reported that Efecto Cocuyo had received $1 million from the British government to dig up dirt on the Maduro administration and slammed Reyes and her reporters as “journalistic mercenaries.” Foreign Minister Jorge Arreaza tweeted that by underwriting Venezuelan media outlets, the U.K. was engaged in “gross interference” in the country’s internal affairs.

Reyes told CPJ that her website had received grant money from the British government but that it amounted to just a few thousand dollars earmarked for an annual journalism training workshop run by Efecto Cocuyo.

Still, she said the false accusations “damage our reputation because many people believe these reports.”  

Roberto Deniz, an Armando.Info journalist who has broken major stories on government corruption, told CPJ: “I get seven or eight tweets per day calling me a mercenary and an assassin and [alleging] that I’m funded by the CIA. This is not a coincidence. The government is trying to convince the public that we are foreign operatives.”

There was no response to CPJ’s calls and emails seeking comment from Venezuela’s Foreign Affairs Ministry and Information Ministry.

The government’s longstanding crackdown on traditional media via restrictive press laws gave rise in the 2010s to digital platforms like Efecto Cocuyo, Armando.Info, and El Pitazo. They initially received healthy sums in local donations, advertising, and subscriptions.

However, those sources of income dried up amid Venezuela’s economic meltdown, which has led to the closure of businesses, massive unemployment, hyperinflation, and the collapse of the bolívar, the local currency.

“Bolívars have almost no value. So even if 2 million Venezuelans came together to donate to us it would be insignificant,” said Scharfenberg of Armando.Info. As a result, he says 90% of the outlet’s budget now comes from international donors.

“There is no other source of money,” said Felipe Estefan, the Latin America director for Luminate, a philanthropy established in 2018 by the founder of eBay. “I would say that these new digital media sites in Venezuela are almost entirely dependent on foreign philanthropy and we can’t expect them to become less dependent.”

But this lifeline could be jeopardized should Venezuelan lawmakers place tighter restrictions on foreign donations.

An official with one U.S. foundation noted that there are already massive complications and red tape involved in running media programs in Venezuela. These include a chaotic banking system and U.S. sanctions that prohibit any contact with the Maduro government. Should Venezuelan lawmakers place even more restrictions on donors, he said philanthropy groups could eventually decide to pull out of Venezuela as many did from Cuba following Fidel Castro’s revolution and the imposition of U.S. sanctions.

“I’m pretty sure donors would figure out a way to exit Venezuela responsibly, but they wouldn’t keep throwing money there if it’s going to become such a hassle,” said the official, who spoke to CPJ on condition of anonymity citing the sensitive nature of the subject.

He cited growing program costs such as legal fees for journalists facing lawsuits and secure internet servers to protect websites from a spike in cyberattacks from pro-Maduro hackers. In addition, many Venezuelan media outlets are now partially operating outside of Venezuela where the costs of living are higher.

Scharfenberg, Deniz, and two other Armando.Info editors moved to neighboring Colombia in 2018 after they were sued for criminal defamation over their reporting on corruption in a government food-distribution program and feared they would be detained. Other reporters and editors have temporarily fled Venezuela for safety reasons and now split their time between the United States and their homeland.

“That’s where it becomes more difficult for donors,” said another official at a U.S. foundation, who also requested anonymity. “It’s more expensive and harder to run a journalism shop from abroad. You also have to decide whether you want to support journalists who are in Miami” as opposed to those who are back in Venezuela.

But at least for now, Estefan and the two other foundation officials who spoke to CPJ said their organizations remain fully committed to independent journalism in Venezuela.

“We have moral responsibility to operate not just in countries where it’s easy to operate, but also to find ways to operate in countries where it’s difficult,” Estefan said.