Venezuela is a OPEC country situated in Latin America; once used to be one of the Richest but now in Shattering Depression and having . It has highest proven Oil Reserves (300 Barrels) even greater than Saudi Arabia . It’s economy is believed by IMF to shrunk by 10% ; ie , the performance is even Worse than Syria . It’s INFLATION is at a Staggering increased from 700% to 14000% with 3% /day and predicted to reach 100000% (Could you believe this) making their Currency Worthless . Also having one of the largest Oil Reserves still 3 out of 4 citizens are having Involuntary Weight Loss , averaging 19 Pounds in 4 years . Fraud , Black Marketing and Violence are casual activities practised daily . Crime rate there in 2014 was equivalent to that of IRAQ in 2004 . This is perhaps the biggest Hyperinflation Episode after the Zimbabwe’s currency collapse in 2000s and German’s monetary hell in 1920s
But how an established Democracy fell to such a status ; according to STEVEN LEVITSKY a Harvard University professor , Venezuela is only 1 of 4 or 5 or probably the only one as no one else was that Rich , every Regime in a democracy quits before situation worsening that much . Democracy was founded there in 1958 by the three leading parties , later succumbed to two agreed to share power among themselves and revenue among it’s Constituents . But the pact which was meant to preserve Democracy started dominating it and sharing wealth fostered Corruption and Party Leotes choose the candidates and blocked Outsiders . The Economic shocks then presented a situation of Rigged Economic system .
Then Lt. Col. HUGO CHAVEZ came in the story ; he attempted a Coup , though it failed and all were Imprisoned but the Anti-Establishment message was resonated and Chavez came in the Stradom . Change in election rules were intended to save the two party system but it actually Doomed it and allowed Third party to break into the game . President freed Chavez hoping for Tolerance but nothing a sort of happened . The economy worsened and then Chavez also contested in the 1988 Elections and hus message of returning Power to people saw him winning it as well a she had appeal to poor and struggling middle class . But even after his victory two parties were still dominating the Government Institutions . He passed a new Constitution and purged government jobs . Some popular moves were broadly popular like Judicial reform reducing Corruption and abolishing the upper house . Initially he and his Bolivian Revolution managed to combine social spending with degree of economic competence . When global prices were high (2005-14) the Oil revenues were recycled into welfare programmes and social bulding . Results were Spectacular gaining worldwide praise from Socialists .
But after some time it was being said that Chavez was checking his Authorities too mucb and it was leading to a SAVVY Institutional Engineering concentrating power in a single hand . He was becoming Authoritarian , corrupting courts and dismantling democratic checks and balances . When members of business and political establishment objected to a Series of Executive Decrees in 2001 he declared the Enemies of people’s revolution and justifying his serious actions and picturized the sotuation as if Opposition is trying to sell Venezuelan Interests out . In 2002 amongst Economic Downturn , protests took place to overwhelm the presidential palace ; he ordered Milirary to restore order but instead it arrested him only and installed an interim leader . It happened because his foreign policy such as aligning with Cuba and arming Colombian insurgents outraged the Military and they found war on Elites as Risky .
Then a further Twist came in the story and Coup leaders overstepped , dissolved Constitution and Legislature , sparked Counterprotests and returned Chavez to power . But now the image of Chavez as a fighter of Poverty was completely destroyed . He and is supporters saw Politics as a zero sum battle for survivala and all independent institutions were sources of Intolerable danger , licenses of media outlets were suspended . Labour Unions of protested were Blacklisted or replaced by Outright . The Extreme line was crossed when even the Supreme Court challenging him was Gutted , unfriendly judges were replaced by Loyalists and it lead to a highly POLARISED Society having two segments woth no compromise and full threats .
One prolem was not fully solved the other kept raising it’s head . Now all the Workers of state run oil firm , PERTROLEÒS de VENEZUELA (PDVSA) which had associations woth Elites and US . Chavez on order to save the Economy staved another uprising ; after the strike collapsed he fired 18000 Workers , skilled technicians and managers ; and replaced them with 100000 Supporters . Firm’s operating budget now was diverted for Chavez’s political base . In 2011 , $500m was transferred from PDVSA Pension Fund to government linked Financiers run Pyramid scheme , none of whom faced Prosecution . After dethroning Corrupt elites he established his own .
Now as an Oil company , PDVSA was Destroyed and despite a Global boom being in oil prices , production was ruined . The Injury Rate (lost man-hours) just tripled . A refinery exploded in 2012 , which killed atleast 40 and damged $1.7Bn ; showing that even maintenance budget was siphoned off . The cash reserves depleted amd development projects were stalled . So both PDVSA and Venezuela were without any Cushion when oil prices fell in 2014 . Country was all set for economic collapse and political crisis ; Chavez’s support relied on oil-fueled patronage and once the money ran out it was an Obvious situation .
Now 2002 Coup fuenelled with Money and armed with state called COLECTIVOS became the Ruler of the state . They grew in power , challenged the Police and in 2005 finally expelled them from CARACAS , region of capitalhaving 10000 residents . There was never an official confirmation by the side of government for these , but praising them in public boosted their Confidence and many people started coming and joining it . Now in this only some criminal societies added Ideology and used it for winning Impunity and as a result Criminality and Lawlessness increasing the Death rate .
Now in 2013 Chavez died of Cancer and NICOLAS MADURO took over the power of an Economy which was in Shambles and had tenous support from public . With military he had less Sway than his predecessor and it got control of Drug , Food market and Gold Mining . In desperation he parcelled pit patronage . He was unable to pay for welfare programmes and Subsidies , he then started printing more Money driving Inflation making baisc goods Unaffordable . To counter the problem he placed Price controls and fixed Currency Exchange Rate . But it lead to reduction in Imports badly and business started shutting down . Maduro again printed more money driving Inflation up further . Global oil prices also crashed wiping down state Revenues and causing Deficit in Budget and as a Disaster he ordered to print further currency to continue with Welfare distribution and paying workers .
Government price control on Staples such as Flour and Cooking oil combined with collapse of foreign currency lead to food shortages . Food became scarce causing unrest and today many specially Children are dying of Malnutrition and there quarters of population has lost average 11kg of weight . Maduro’s survival became Contingent on those Handouts which he couldn’t afford . Apart from that Malaria cases are rising due to lackof treatment ; these all factors are leading to Emigration . With government stores empty and black markets mushroomed ; the Collectivos less reliant on government started taking control themsleves forming an Informal economy which spread Violence and were harder to reined in . In 2015 he tried to restore order and for that he deployed highly armed Police and Military units but the result was nothing but BLOOD BATH . The economy now was a Hybrid of Democratic and Authoritarian features and the Combination Mix was just Too Bad as can be seen . Internal rules changed daily and Opposition competed fiercely for power . With the lack of connections Chavez used to have with Political and Military elites made situation worse for him ; also he was highly unpopular so his Hold was even Weaker . Opposition won control of legislature in 2015 which led to Outright conflicts . The supreme court stacked with Loyalists dissolved the Legislature powers .
The Forex reserves which used to be at 43 Billion in 2009 are now down at 9 Billion raising goevernmnt prospect and state run oil firm Defaulted on foreign currency loans cutting it from Economic lifelines from any big country . According to government estimate 18 Billion each year is forgone due to Fuel Smuggling . Due to disparity in domestic and foreign prices some people erode fuel subsidies . Oil prices picked up since past few years but state oil company was lacking Underinvestment and was struggling to increase production . Output crashed to 1.69 million barrels /day half less than 2015 level and even less than 1999 when CHAVEZ came to power . All the big economies have broken Contact with this country and even Brazil , China and Chile have refused to recognise the Maduro government . Direct US Sanctions on Venezuela don’t seem possible and DONAD TRUMP has even mooted a milirary option . Normally any country will head to IMF in such condition but Venezuela had already broke it’s relations with it 2007 only .
Just few months ago Maduro took steps to rein in Fuel Subsidies . He said Gasoline should be sold at international prices to sto smuggling to Colombia and Caribbean . In such a country it is a matter of Huge Gamble . Removing subsidies will instantly hit millions of working Venzuelans as Fuel has been one of the few costs to remain stable amid this Hyperinflation . A similar hike in 1989 by President CARLOS PEREZ ignited mass riots and brutal repression ; incident known as CARACAZO or CARACAS SMASH . It was followed by attempted Coup so it was not a decision any Venzuelan leader would have accepted even in extreme but Maduro went for it as no option was left .
Maduro is COOKING Venezuela a Perfect Recipe of Destruction and Collapse . His Authorotarian policies can’t coexist , neither public nor Economy can take over this political system which can neither bend or break ; Venezuela has brought itself from Wealth and Democracy to a brink of collapse . This Article of mine was not on a recent Indian topic but this topic fascinated me as I was Curious to know this Story and in attempt of trying to study I hope I have taken you all on the Journey as well . It’s a story we all should know , should take lessons and should see how TIME Flies and how Powerful it is .
JAI HIND
ARUNESH SINHA
