VENEZUELA: A Great Tumble

0
652
VENEZUELA

Few days ago, nearly 400 people were arrested for creating a huge ruckus in the streets and looting over food shortages in the capital city of Surce, Venezuela. During this food war, many people were reportedly marked dead by the local media, which is not accepted to be truthful by the authorities. More than 20 businesses were plundered and the local authorities claimed this act of  “vandalism” to be inspired from a right-wing faction within the country’s opposition, as reported in a national daily. “I have no doubt they paid them, this was planned.” This statement was not something new to be heard, as the filthy game of politics, there is rule of making irrational and insensitive accusations over the opponents. But by taking a deeper look into the matter, the sense of fatality seems to have grounded the locals who are the sufferers in this drowning state of the nation. With desperate masses shouting out “We want food!” protests and melees at shops have spread across Venezuela in recent weeks, caused by severe shortages. This was one out of the tenth situation that had prevailed in the country and dreaded the entire nation, which are already suppressed under brutal recession and the highest inflation rate across the globe. Searching for reasons for this current fiasco, people have claimed this situation to be a result of failed attempts of the ‘socialist economy policy’ of the Maduro’s and his predecessor, Hugo Chavez are to be blamed.

But how had all this begun in the country, which is now in the state of devastation and curbed downed in productivity?

 VENEZUELA HAS A HISTORY OF SHORTAGES

Shortages in Venezuela have been quite prevalent since decades, following the miscarried enactments of price controls and other socio-economic policies since the time of Hugo Chavez’s rule. Further, under the order of Nicolas Maduro, the failed policies of prices, massive importing and the major chunk hoarded by the government of the US dollars, made Venezuela fall short of various necessities in terms of daily food products like milk, various types of meat, coffee, rice, oil, butter prices, which had hiked and even personal hygiene products and medicines had fallen short in terms of supply. As a result of such mismatch, the Venezuelans have to wander around for food, wait in lines for hours and sometimes settle without having certain products.

All this had commenced in the year 1983, when CIA director Bill Casey made a deal with Saudi Arabia, in return for the latest American weapons, Saudi Arabia agreed to open the crude spigots which crippled the Soviet Union’s economic dependency, which had turned out to successful. But this had resulted in severely damaging the oil prices worldwide thus affecting other oil exporting countries including Venezuela, as well. As the oil prices collapsed, the economy of Venezuela had contracted facing sky rocketing inflation rates.

Inflation was at its highest, in the 1990s when it settled at 100% in 1996 and made the entire nation become a land of poor accompanied by helpless governing. This was the phase when Hugo Chavez came into power and made attempts to cool down the burning economy, by introducing economic control mechanism of capital flight, which had successfully reduced inflation by 25% annually.

Capital flight: It implies that the citizens are transferring their money or their assets to other countries in order to protect their finances from the increasing rate of taxes or the government that is on a verge to default on its debt. This is largely done by middle class and the upper class people in a socialist country, as the upper class people do not want to share their assets and thus decide to transfer its personal resources to other nations.

CHAVEZ’S FAILED ATTEMPT TO SAVE THE COUNTRY

 Thus majority of capital flight from Venezuela was been transferred to Florida, US, which was almost equivalent to a full year’s  worth of income,  due to the rich stability of US dollars and lack of confidence in the Venezuela’s citizens and investors.  One of the major consequences of the controlling policy of capital flight was shortage of domestic wealth in the country which resulted into a sharp decline in the foreign exchange rate, i.e., devaluation of the nation’s currency. Implicating, a higher capital flight leads to a higher devaluation of the national currency. As the currency is devalued, the citizens lose a huge chunk of their assets and income particularly, which further declines the purchasing power of the common man and also creates the situation wherein the importers are worse off. This final phase translates into an ever-growing inflation trap.

Chavez’s failed controlling policy of capital flight had devastated the economic and the financial stability of the country. To make up for his mistake, Chavez tried to restructure the role of government in the capital market by its meticulous intervention. This means that the government had used its own foreign reserves to purchase its own currency and stabilizing the existing domestic currency. The birth of CADIVI had happened back then, a state run exchange bill which granted its citizens with limited amount of US dollars in the times of when a person had to travel to US, purchase listed import goods or pay off foreign debts etc.  But to no avail, this system had a loophole which was already detected by the opportunists, who had collectively established a black market for US dollars. Now the local citizens had purchased the US dollars from the government by forging a flight ticket to US to meet the criteria and then selling these dollars at a hiked price, and earning huge profits from such activity. All this had encouraged the economy bubble to increase and further declining the value of Venezuelan Bolivar currency. This exchange mechanism had also empowered the local importers to sell both the imported as well as domestically produced goods to the nearby country of Columbia and get US dollars in return which could be sold in local black market to earn huge fortunes. Thus, import and export of local goods had become a lucrative business for many. The aftereffect of this was shortage of food in the country itself since the import quantity was so high that it had made the local goods to be depleted below the sustainable lines. In January 2015, the hashtagAnaquelesVaciosEnVenezuela or EmptyShelvesInVenezuela was the number one trending topic on Twitter in Venezuela for two days, with Venezuelans posting pictures of empty store shelves around the country. The reality had shocked the world that the country was dying out of lack of basic facilities followed by eruption of national health care crisis as well. The country still seems to be struggling with the same and entangled in a vicious circle of interwoven economic aspects leading to consistent inflation which has been translated into an apocalypse for the country.

“VENEZUELA: A MESS” COMING INTO THE NEWS

 All of this had started to be flashed into several media channels, when Maduro’s government was extensively being criticized for its failed attempt to curb down inflation which had doubled the rate to 56% now. The Democratic Unity Alliance (several different parties had joined their hands to slaughter only one enemy, Maduro) has left no stone unturned to show their antagony through public demonstrations. To bring an end to the fixed currency rate system,which established by the Chavez government, Maduro decided to call for another financial consultant which had asked the government to open its foreign exchange market, thereby devaluating the domestic currency through its normal global rates, which would have eventually lead to hyperinflation which would bring an end to this so called beneficial policy. Facing riots and mass agitation, by the crowds of upper and middle class people, this policy has not come to power and the country still breaths in the polluted air of an inefficient system. By 2016, experts feared that Venezuela was possibly entering a period of famine, with President Maduro encouraging Venezuelans to cultivate their own food. In January 2016, it was estimated, that the scarcity rate of food was between 50% and 80%.The newly-elected National Assembly, primarily composed of opposition delegates, “declared a national food crisis. Also, Many Venezuelans then began to suffer from shortages of common utilities, such as electricity and water due to the prolonged period of mishandling and corruption under the Maduro government, as claimed.

High inflation and scarcity of basic resources are the issues that continue to persist in this country which is doomed by the ignorant measure taken by its ruler and their abortive policies. The dominance of the Maduro government in the next elections as well, serves to haunt the local citizens who are dying out of lack of food and lack of choices. Justifying the shortages in the name of “economic war” by accusing US for the country’s deserted state seems like the only measure taken by the government to cover up its “crimes against humanity”.

All that one can hope for that, such bloody riots and the ignorance on the part of the government, takes the shape of a transition to democracy rather than declaration of a civil war in the country.

Comments

comments

Powered by Facebook Comments

LEAVE A REPLY