Thursday, August 27, 2015

Dear Venezuela: "I wish I knew how to quit you"

In a national survey, the pollster Consultores 21 found 30% of Venezuelans eating two or fewer meals a day during the second quarter of this year, up from 20% in the first quarter. Around 70% of people in the study also said they had stopped buying some basic food item because it had become unavailable or too expensive.
That is in Venezuela, not in some stereotypical sub-Saharan African country ravaged by decades of civil war after gaining independence from the colonial White supremacists!

I am not even from Venezuela and I get worked up reading such news--all because it was the first ever country that I visited after leaving India and making myself at home here in these United States.  In many posts, the last one in April, I have written about my intellectual and personal experiences in Venezuela, and about my utter disappointment with the recent developments.  I suppose for my own health, I should cease my relationships with countries and people; but then, to quote that wonderful line from Brokeback Mountain, "I wish I knew how to quit you."  Thus, here I am reading up and blogging about Venezuela!
Food-supply problems in Venezuela underscore the increasingly precarious situation for Mr. Maduro’s socialist government, which according to the latest poll by Datanálisis is preferred by less than 20% of voters ahead of Dec. 6 parliamentary elections. The critical situation threatens to plunge South America’s largest oil exporter into a wave of civil unrest reminiscent of last year’s nationwide demonstrations seeking Mr. Maduro’s ouster.
Even as I read that, I recalled a colleague rambling on and on a few years ago about how Hugo Chavez--Maduro's predecessor and mentor--was the best thing that ever happened to Latin America.  "He is not any dictator like how he is presented here" she--an uber-left White American academic--argued.  I suppose every sociopath has his defender!

Caption at the source:
A woman holds up a giant hundred Bolivar note with the word, “Hungry” written on it in Spanish during a gathering to protest the government of President Nicolas Maduro, as well as economic insecurity and shortages, in Caracas, Venezuela, August 8, 2015.
The messed-up Chavez policies that Maduro has continued with were underwritten by high oil prices, which have fallen way down from their triple-digit highs.
A year ago, the international price per barrel of oil was about $103. By Monday, the price was about $42, roughly 6 percent lower than on Friday.
Indications are that the oil prices will not bounce back up any time soon.
David L. Goldwyn, who was the State Department special envoy and coordinator for international energy affairs in the first Obama administration, said that if the Brent global oil benchmark price stays below $45 a barrel, that is “a red flag for stability issues across the oil producing world.”
“The hemorrhaging of government budgets reliant on oil will force dramatic cuts in spending or dangerous increases in borrowing, if not both,” Mr. Goldwyn said. “The countries without significant foreign exchange reserves are most at risk, and they include Nigeria, Angola, Algeria, Venezuela and Iraq."
So, what is Venezuela doing?  Adding more zeroes to its currency in order to counter hyperinflation! 
Many Venezuelans have to carry wads of cash in bags instead of wallets as soaring inflation and a declining currency increase the number of bills needed for everyday purchases. The situation is set to get worse. Inflation, already the fastest in the world, could end the year at 150 percent, said the official.
Larger denominations will help those people from having to carry bags of cash to buy bread and milk!
The new notes -- of 500 and possibly 1,000 bolivars -- are expected to be released sometime after congressional elections are held on Dec. 6, said a senior government official who isn’t authorized to talk about the plans publicly.
When oil prices were high, Venezuela's Chavez sent highly subsidized oil across the waters to his pal, Castro.  What an irony that the Castro brothers have all but ditched their socialist rhetoric and now want to make friends with the US, while Venezuela is adrift in a hyperinflationary socialist mess where supermarket shelves are bare.  


Ramesh said...

The economic policy of every oil rich nation (with the honourable exception of Norway) is complete bonkers. Venezuela is simply the extreme example of this. If your colleague's view was that Chavez was the best thing to happen to Latin America, then she ought to go spend three months living in the country as an ordinary citizen. With Paul Krugman and Noam Chomsky for company.

I wish Norway's treatment of the oil bonanza were given much more publicity and held as a shining example of how a responsible government ought to behave. They put aside a fund, to absorb oil price shocks and as a legacy to future generations. I remember that at one point in time, every Norwegian had theoretically become a millionaire as a result of this fund. Of course, nobody was allowed to touch that fund - it was for future generations. What a responsible way of managing your country instead of leaving a mountain of debt to our children.

Sriram Khé said...

She is a huge fan of Chomsky, of course! ;)
(Full disclosure: there are plenty that Krugman and Chomsky write that I agree with. It is just that I am not their faithful.)

A Norwegian model didn't happen at other places, except in Alaska, because for those to work there is an important ingredient: democracy. All those other oil-rich countries are screwed up not because oil by itself is a curse but because they have kingdoms, dictators, and mad men in power.

(Though, one can also make an argument that a Norway that is so committed to climate change issues should firs stop supplying fossil fuels to the rest of the world!)

Ramesh said...

The miracle of what happened in Norway is that it did this despite being a democracy. For all its virtues, democracy can never be accused of propagating the very long term. Voters vote for themselves and not future generations, as has been observed a zillion times. Witness the deficits you run, the complete economic suicide of the NHS in the UK, the pension systems in France ...... I can go on and on. In fact I would have expected such long term thinking in a Singapore, or even China. And yet it has happened in Norway.

Sriram Khé said...

Well ... the Scandinavians are different from the French, right? ;)

The baby-boomer voters appear to be some of the most selfish voters ever in all the Western democracies. The problems you list are all the boomer generational ones. A contrast to their parents who sacrificed quite a bit (not that the older time period was a better one--the horrible treatment of blacks here, the colonies that ruled over the brown- dark-skinned people, ...)

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