Venezuela: A Country in Chaos
By admin July 27, 2017

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In 1953, LIFE Magazine referred to Caracas as “the capital of the opportunities in South America.” Throughout the 1950’s, 60’s and 70’s the Venezuelan capital flourished, as did much of the country, thanks in large part to the discovery of oil. The liquid gold transformed Venezuela into the richest country in Latin America and one of the richest countries in the world – a country held together by strong leaders and elevated social spending. Now, the South American country, completely and utterly corrupted by the “Dutch disease,” has transformed into something totally different – a failed state.

The list of problems facing Venezuela is exhausting. Economically, for a once fiscally prosperous country, the Venezuelan economy is spiralling out of control. The International Monetary Fund reports its economy has shrunk by almost one-fifth. The country’s tight currency controls has led to a dollar black market driving Venezuela to have the highest inflation of any country in the world and the ninth worst unemployment rate. Moreover, while international banks have sensibly distanced themselves from Caracas, Venezuela faces the very real threat of defaulting on sovereign debt owed to China and Russia to the tune of $55 billion, debt deals struck when oil prices were more favorable.

The economic nightmare has precipitated a full-blown humanitarian crisis with widespread poverty and sickness, food shortages and over crowded and under resourced hospitals. Meanwhile, the government can’t pay for basic imports like sugar and flour nor can afford to keep the lights on, forcing mass countrywide blackouts. As such, widespread social disorder has broken out with organized crime and extrajudicial police killings on the rise. This has led many Venezuelans to flee to neighboring countries, thereby triggering instability in the region.

One would be forgiven for thinking such a crisis is becoming of a fragile third world country with limited resources, yet according to OPEC’s 2015 figures Venezuela has the largest proven oil reserves in the world with 300 billion barrels. However, while plummeting oil prices have certainly played their part, it only reveals one part of this sad story. Rather, the severely mismanaged oil profiting approach of former President Hugo Chavez, an approach that has been continued by his handpicked successor Nicolas Maduro, best encapsulates Venezuela’s troubles.

Unsurprisingly, the socioeconomic crisis has spilled into the streets. With the chaotic situation stretching into a second year, there have been mass protests with hundreds arrested and a death toll over 100. On Wednesday, a two-day national strike began which culminated in the death of a 30-year-old man.

In response to the worsening situation, the highly unpopular President Maduro has convened a national vote on July 30, seeking to rewrite the country’s constitution by extending his governments expansive decree powers, a move the Presidents lauds as the “only road to restore peace.” Alternatively, critics argue the extension will erode the last vestiges of Venezuelan democracy. If successful, the highly controversial move will replace the national assembly, controlled by the opposition, with an entirely new legislative body filled with pro-government nominees. Considering the opposition has vowed to boycott the vote, the turnout will be exclusively pro-government.

On Wednesday, the Trump administration imposed sanctions on 13 senior officials of Venezuela’s government, military and state oil company Petróleos de Venezuela, S.A. (PDVSA) in an apparent attempt to pressure President Maduro from pursuing the controversial constitutional changes. This follows calls from the UN urging Maduro’s government to uphold the rule of law and freedom of assembly in Venezuela. In response, Maduro has called the threats from the United States “brutal” and “imperial.”

Venezuela is currently suffering from a great many woes. However, at the heart of this situation is failed leadership, which doesn’t appear to be going anywhere. In March last year, President Maduro exclaimed, “You won’t get rid of me!” Thus, while an increase in oil prices may grant Maduro temporary reprieve, it will not place Venezuela on the path to economic and social recovery.


Further Reading:

Venezuela to vote amid crisis: all you need to know

U.S. sanctions Venezuelan officials to pressure Maduro

U.N. urges Venezuela’s Maduro to uphold rule of law

Venezuela Crisis: What is behind the turmoil?

Political Risk Analysis: Venezuela’s Economic Crisis

Thanks for sharing !

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