TODAY VENEZUELA – Venezuela sits on the world’s largest oil reserves. It had been South America’s longest-running democracy. Now it is an economic and democratic basket case with even electricity rationed by the leftist government of Nicolas Maduro.
Before the opposition coalition could take control of the National Assembly after winning 60 percent of the seats in December, Maduro’s lame duck United Socialist Party responded by filling 12 Supreme Tribunal vacancies with judges.
In what amounted to a coup of sorts March 29, that court “nullified” the legislature’s lawmaking powers, bestowing those responsibilities on itself. In addition, it gave Maduro the ability to suspend elections and imprison opposition leaders.
It previously had granted him sole power of the purse and overturned a law providing amnesty to 114 political prisoners.
The nullification was reversed April 1 after an outcry that included Maduro associates. But a week later the government banned opposition party leader Henrique Capriles, who narrowly lost the presidency in 2013, from involvement in politics for 15 years.
Bloody protests, including some fatalities, have gained momentum. (Maduro, no fan of any criticism, had pulled the plug on CNN for “distorting the truth” and booted the New York Times bureau chief.)
Shortages are rampant, including bread, soap and toilet paper.
A toilet paper alternative exists — the bolivar, the Venezuelan currency. On Nov. 1, a dollar could be exchanged for 1,567 bolivars. Four weeks later, it required 3,480 bolivars. The government is replacing its worthless 100-bolivar note with a new currency worth 20,000 bolivars.
It will make little difference as Maduro’s United Socialist Party — heirs to the movement founded by the late President Hugo Chavez, a self-styled revolutionary who ruled from 1999 to 2013 and fancied himself the Fidel Castro of South America — continue to take a wrecking ball to the economy.
The International Monetary Fund expects Venezuelan consumer prices to soar by 2,200 percent this year and the economy to contract by 8 percent.
The government continues to either seize industries or undercut their ability to operate profitability. General Motors pulled out last week after its plant was seized. McDonald’s operates sans Big Macs or fries due to food shortages. Major airlines — Delta, United and American included — have had profits frozen and curtailed flights.
Pepsi sustained a us$1.4 billion loss in 2015. Coca Cola temporarily stopped production due to a sugar shortage. Mondelez, maker of Oreos, lost us$800 million.
Chavez’s revolution broke up big farms and put farm workers in control. However, he also undercut them by imposing food price controls so low farmers couldn’t make a profit and increasing imports using oil revenues.
Agriculture — once the bedrock of the economy — is now on life support. Without oil money, food imports are down 50 percent and farmers don’t have access to seeds and fertilizer from overseas. Flour, rice, beans, milk and eggs are among the products rationed.
Medical supplies are lacking from penicillin to pain relievers. Hospitals are in crisis. Venezuela has sought UN assistance, although it lost its General Assembly vote for the second year because it failed to pay dues.
Oil revenues fell from $80 billion in 2013 to $25 billion in 2016. Despite their current rise, Venezuela will see little benefit. Because it didn’t pay bills for oil service providers, many rigs were shut down.
Last December, the government pledged half its shares in Petroleos de Venezuela as collateral for a loan from the Russian oil company Rosnet, owned by oligarchs with close ties to President Vladimir Putin. On April 4, a bipartisan group of six U.S. senators wrote Secretary of the Treasury Steve Mnuchin concerned Russia could control Venezuela’s oil infrastructure if Petroleos de Venezuela defaults on the loan.
Curiously, Citgo, its American subsidiary, contributed $500,000 to President Donald Trump’s presidential campaign, which went unappreciated. Trump has been photographed with the wife of opposition leader Leopoldo Lopez while calling for the release of political prisoners.
The only booming industry in Venezuela these days is passport applications to leave, reportedly requiring large bribes for processing.
Leftist initiatives as antidotes to poverty in Brazil, Chile, Bolivia and Ecuador haven’t worked. However, nowhere has the failure been as spectacular as in Venezuela, which has abused its resources and bought into a bankrupt ideology.
As protests spread to include Maduro’s base among the lower-middle class and poor, his days have become numbered. But rebuilding the remnants of a market economy, while meeting the needs of an increasingly impoverished population, will be a Herculean task.