| One of the world's many|
|Systems and types|
|Not as dysfunctional as the Middle East|
It can be hard to get reliable news from Venezuela thanks to their state-sponsored media. That, and it's a
global security threat? nominally socialist country, and those are unpopular with Latin expats.
As a result of Chávez's policies, Venezuela has miraculously taught 1.482 million people to read and produced a 98% literacy rate! They also have longer lifespans, presuming of course that they don't criticize the government or get recruited/mowed down by a colectivo (state-sponsored biker gangs who have better hardware than the police). Of course the Interior Minister assures us that crime is down
5% 30% 60%. However, when oil prices started to tank around 2014 and Chávez died around the same time, it all went to shit.
Venezuela is a huge exporter of petroleum. The Venezuelan government owns the oil company, PDVSA, which in turn owns Citgo. When you buy gas from Citgo, you're buying communism! Though since the alternatives though are the likes of ExxonMobil, BPAmocoArco, ConocoPhillips, MarathonAshland, UltramarDiamondShamrock, FinaTotal, and ChevronTexaco, maybe Citgo is not too awful a choice.
Venezuela is quickly running out of money and it's unlikely that the oil prices will ever go back up. At the same time, inflation is growing rapidly (70% a year), though the government forcibly says that 10 bolívares fuertes (their currency) is equal to $1 USD.
They basically have no options left, since their entire economy depends on oil. Pretty bad timing since their old refineries and tankers are breaking down, and they can't afford to maintain them. They can't diversify (despite Chávez's big talk) since they lack the facilities to refine their own crude, let alone manufacture it into oil-based products.. Worse yet, Venezuela's exports have become even more dependent on oil under Chávez then they were before and what little agriculture there was before is now so definitely wrecked, that Venezuela is a net importer (sometimes of nearly 100%) in most basic foodstuffs. The millions spent on diesel and natural gas power plants have curiously gone missing. Unless oil somehow bounces back up to over $100, and the whole world forgets fracking exists, Venezuela is headed down.
Venezuela is what happens when people elect charming incompetents who then refuse to leave when asked. In fact, their Finance Minister denies the very concept of inflation. And their Environmental Minister denies that zoo animals dying is related to food shortages. They're like Wile E. Coyote having run off the edge of a cliff. As soon as they admit to the facts, everything will start falling so it's better to just believe the lie.
Officially recognized Monopoly money
Through the regulated institutions, you can only get 10 bolívar per dollar, but on the black market it's more like
4,000 40,000 800,000. Thus people will pay with USD, or exchange via the black market.
At the same time the government is mismanaging the economy (for ideological reasons), the exchange rate is being used as a money laundering scheme for drug traffickers and the nation's elites. The government gets money by selling oil. They turn around and give the money to importers in exchange for Bolívares. The importers were supposed to take that money and import goods, but instead they pocketed no less than $122 Billion of it. That's just what we know of; we don't know where the rest went.
Now, let's say you're an importer of medicine. You go to the government and say you want to import antibiotics at $1USD per unit. The government agrees, and gives you $100,000USD in exchange for anywhere between 400,000 and 1,000,000 bolívares. That's great, except you're actually buying the antibiotics for $0.10 per unit. So you only spend $10,000 on antibiotics, but tell the government that you spent it all. The other $90,000 is offloaded on the black market at 2000 bolívares per dollar or more. Rinse and repeat. Congratulations, you now have zillions of bolívares fuentes and have helped contribute to the hyperinflation of Venezuela.
I drink your milkshake
The army has shown that, if they feel like it, they'll "expropriate" private property. Now, while it can seem revolutionary and fun, the downside is that nobody is going to invest any serious amount of money in a new industry, because they can't be certain the government won't hoover it up.
Just as Argentina claims the Falkland Islands as theirs, Venezuela also claims two thirds of neighbouring country to the east Guyana, what Venezuela calls Guayana Esequiba (after the Esequibo River, whose basin lies largely there).
Of course, just like in Argentina, the Venezuelan government waves the Guayana Esequiba flag whenever there's a problem at home so that they can distract the people.
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- Patricia Torres and Nicholas Casey, "Armed Civilian Bands in Venezuela Prop Up Unpopular President", NYT 22 April 2017.
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- U.S. v. Rincon, Shiera Indictment
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- Expropriate it!"
- "The Sickly Stench of Corruption", Economist via The Americas 30 March 2006.
- Editorial board, "Venezuela's Military Needs to Get Out of Business", Bloomberg (6 May 2016, 10:42 AM EDT).