The same drop in oil prices that has hit the Russian economy so hard has hit Venezuela’s even worse. Under the late President Hugo Chavez, the Venezuelan economy had become completely reliant on oil revenues. In 1998, the year before Chavez was elected president, oil accounted for 77 percent of Venezuela’s exports. By 2011, 96 percent of Venezuelan exports were petroleum products.
Under Chavez’ particular mix of Bolivarianism and Cuban-influenced Marxism, known as “Chavismo,” the Venezuelan government has systematically nationalized and expropriated nearly a third of Venezuela’s private companies (though the governmental lockdown on information makes the precise numbers nearly impossible to determine). The Venezuelan currency, the Bolivar (seeing a trend here?), lost two thirds of its value between its introduction in 2008 and 2013. The Venezuelan inflation rate from 1999 to 2011 averaged 23 percent, compared to the rest of Latin America at 4-5 percent.
The overwhelming nationalization of the Venezuelan economy has rendered many of its people dependent on the government, and that government is in turn dependent on oil. It has placed Venezuela in a more precarious position than Russia, which saw the ruble crash following the drop in oil prices in recent months.
It has been hard enough on the Venezuelan economy that President Maduro traveled to China during the first week in January, seeking new loans to try to keep the country afloat. From reports, there are no new loans forthcoming, however, Maduro said that there will be more Chinese investment in Venezuelan energy, technology, and infrastructure projects. He also claimed, “Sometimes there is a conspiracy to try to make the world see Venezuela as bankrupt. Venezuela is an economic power in its own right, with a productive population and giant potential.”
This kind of accusation of conspiracy against Venezuela is not new; just recently, Maduro accused U.S. Vice President Biden of “conspiring to overthrow him” after Biden’s comments at an energy summit in Washington. Biden had told other Central and South American leaders that Venezuela’s “days are numbered.” While Biden isn’t the most tactful, the dire economic straits that Venezuela is in should be obvious.
However, economic realities are not acceptable to the socialist regime, and accusations of conspiracy aren’t limited to outside players. Store owners have been jailed for “engineering” food queues, in spite of the fact that most of Venezuela’s food is imported, and they don’t have the petro-dollars to pay for it anymore. “Yesterday we detected that a famous chain of stores was conspiring, irritating the people,” Maduro told a crowd of red-clad supporters and soldiers. “We came, we normalized sales, we summoned the owners, we arrested them, and they’re prisoners for having provoked the people,” he said to cheers, adding that the state would take over the food stores. He has done the same with pharmacies.
But even socialists realize that jailing store owners isn’t going to fix a cash flow problem. Chinese investment is a possible remedy, but the Chinese will likely end up controlling a large part of Venezuela’s natural resources by the time they’re done. The other source of cash flow is narcotics.
On January 27, Spanish newspaper ABC reported that the speaker of the Venezuelan parliament’s former bodyguard had defected to the United States, and was going to testify to the involvement of the speaker, Diosdado Cabello, in the Cartel de los Soles, the Cartel of the Sun. While there is speculation about whether this means Venezuela has finally become a narco-state, the involvement with the cocaine trade goes back much farther than Cabello’s involvement.
Chavez’ regime has long had relations with the FARC, the Revolutionary Armed Forces of Colombia. They shared revolutionary, Marxist ideas. The Venezuelan regime has relied on the FARC (as well as the Cuban military) for training for the Popular Defense Units, pro-government militias similar to the Iranian Baseej. They have also asked the FARC to aid in killing opponents of the regime.
The FARC has also relied on cocaine for much of their funding in the last couple of decades. With the success of Colombian security forces acting against the FARC and other Colombian drug trafficking organizations, most of the flow of Colombian cocaine has been going through Venezuela, aided by the Cartel de los Soles.
The combination of socialist revolutionary ideology, deep involvement with the criminal/revolutionary underground, economic tribulation, and growing rhetoric against outside forces conspiring to bring the country low is extremely dangerous. Chavez initiated a major military buildup during his presidency, aimed at countering an American invasion through Colombia. His regime, and Maduro’s after it, has beaten the drum constantly that the United States is a threat that must be confronted. As the country’s situation grows more desperate, it bears considerable watching.
Image courtesy www.businessinsider.com.au
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