Why Is Venezuela’s Devastating National Crisis Just Another Shrug For The World?

Venezuela, an OPEC member state that has the largest proven reserves of oil in the coalition, is now the region’s poorest performer of GDP growth per capita.

Courtesy of Al-Jazeera

• Venezuela is located on the northern coast of South America, sharing a border with Colombia, Brazil and Guyana.

• GDP (purchasing power parity): $404.1 billion 

• Venezuela has proven oil reserves of approximately 300.88 billion barrels.

• More than 82% of Venezuelans live below the poverty line as of 2017.

• Tension in Venezuela is on the rise again as the opposition and the government accuse each other of trying to stage a coup.

• There has been a wave of anti-government protests and 64 people have been killed in protest-related violence since April 2017. 

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Quick Timeline of Venezuela Politics:

• February 1992 - A coup led by Hugo Chavez is defeated.

• 1999 - Chavez introduces a new constitution that extends his term, allows him to run again, closes the Congress and changes the name of the country to the Bolivarian Republic of Venezuela.   He also signs a law that allows him to bypass the Venezuelan Congress on economic reforms.

• April 11-13 2002 - A coup ousts Chavez for two days.

• October 22, 2002 - High-ranking military officers go on national television to denounce Chavez and call for the public to rally against him.

• December 2, 2002 - A general strike begins.   The strike lasts 64 days, costs Venezuela $4 billion in oil revenues and affects oil prices worldwide.   During the strike, crude output is estimated at about 400,000 barrels a day, compared to the pre-strike level of 3 million barrels a day.

• June 3, 2004 - Venezuela's National Electoral Council (the opposition) announces that the opposition has collected enough valid signatures to call for a referendum against Chavez.

• August 15, 2004 - Initial results in the recall referendum show more than 58% of Venezuelans have voted to keep Chavez in office while 42% favor ousting him.   The next day, a group of observers led by former US President Jimmy Carter announce that they found no fraud in the recall election.

• December 3, 2006 - Chavez wins re-election.

• May 24, 2011 - The United States imposes sanctions against seven companies, including Venezuela's state oil company, for supporting Iran in the energy sector.

• October 7, 2012 - Chavez is re-elected.

• March 5, 2013 - Chavez dies of cancer at the age of 58.

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• April 14, 2013 - Nicolas Maduro narrowly wins the presidential election with 50.8% of the vote, defeating opposition candidate Henrique Capriles Radonski. 
• He was elected by a margin of less than 2% over his opposition opponent, Henrique Capriles, casting doubt on his ability to maintain unity within the left-wing ruling alliance assembled by Chavez.

• February 2014 - Protests are held in response to economic problems and a spike in crime.   Some demonstrations turn violent, with at least three protestors dying amid the unrest.

• February 20, 2015 - The mayor of Caracas is arrested and accused of being involved in a plot to overthrow the government.  The opposition says the mayor's arrest is an attempt to divert attention from the country's economic woes.

• March 9, 2015 - President Barack Obama issues an executive order meant to address the human rights crisis in Venezuela, with sanctions against seven individuals.

• January 15, 2016 - Maduro declares a state of "economic emergency."   The country's economic woes are rooted in falling oil prices, plummeting currency rates, power struggles within the government, the looming possibility of default and ongoing food shortages.

• October 2016 - After a recall referendum to oust Maduro is halted, opposition lawmakers meet for a special session to discuss the possibility of impeaching Maduro.   Pro-government protestors break into the assembly hall to disrupt the meeting.

• March 29, 2017 - The Venezuelan Supreme Court strips the National Assembly of power.   The court rules that all powers vested under the legislative body will be transferred to the Supreme Court.   Opposition leaders say that the move is comparable to a coup.

• April 2, 2017 - After several days of protests, the decision to transfer all legislative powers to the Supreme Court is reversed.

• April 7, 2017 - The Venezuelan government notifies Henrique Capriles that he is banned from any political work for 15 years.   Capriles responds by stating that the government is violating the civil rights of protestors.

• April 17, 2017 - Maduro orders armed forces into the streets following weeks of deadly, anti-government protests.

• April 20-21, 2017 - As protests continue outside Caracas, at least 13 people are killed in a single 24-hour period.

• May 1, 2017 - Maduro announces that he has signed an executive order paving the way for changes in the constitution that will reshape the legislature and redefine his executive powers.   Opposition leaders express concern that the changes could enable Maduro to consolidate power in the executive branch.

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Why Is Venezuela So Divided?

• Venezuela is split into Chavistas, the name given to the followers of the socialist policies of the late President Hugo Chavez, and those who cannot wait to see an end to the 18 years in power of his United Socialist Party (PSUV)

• After the socialist leader died in 2013, Nicolas Maduro, also of the PSUV, was elected president on a promise to continue Mr Chavez's policies.

• Chavistas praise the two men for using Venezuela's oil riches to markedly reduce inequality and for lifting many Venezuelans out of poverty.
• Used much of the money to build homes for the poor and homeless.

• But the opposition says that since the PSUV came to power in 1999, the socialist party has eroded Venezuela's democratic institutions and mismanaged its economy.

• They also allege that opposition leaders are in the pay of the United States, a country with which Venezuela has had fraught relations in recent years.

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What Went Wrong?

• The country sits on the world's largest oil reserves, but, over the past decade, it has been the region's poorest performer in terms of growth of GDP per capita

• The government controls the price of basic goods, this has led to a black market that has a strong influence on prices too
• Inflation rates are over 400% and a volatile exchange rate.

• According to the Central Bank of Venezuela, the country has $10.4bn in foreign reserves left, and it is estimated to have a debt of $7.2bn.

• The most recent report by CENDAS (Centre for Documentation and Social Analysis) indicates that in March 2017 a family of 5 needed to collect 1.06 million bolivars to pay for the basic basket of goods for one month, that includes food and hygiene items, as well as spending on housing, education, health and basic services.
• The cost of that basket rosed by 15.8% that is an increase of 424% compared to 2016.

• When it became unprofitable for Venezuelan companies to continue producing their own products, the government decided to import them from abroad, using oil money.
• But oil prices have been falling since 2014.
• This left the economic system unable to maintain the system of subsidies and price controls that functioned during the oil boom years.

Courtesy of Al-Jazeera

• As many as 85 of every 100 medicines are missing in the country.
• Shortages are so extreme that patients sometimes take medicines ill-suited for their conditions.

• Venezuela has established different exchange rate systems for its national currency, the Bolivar.
• This has generated a situation in which Venezuelans are opting for Dollars instead of Bolivares.
• The government maintains a trade around 710 bolivares per US dollar.
• But the black-market rate has risen to 4,283 bolivars for one dollar.

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And What Has President Maduro Done?

• He has tried to assert a more authoritarian streak and tens of thousands of protesters have clashed with police.

• He seized power from the country’s legislature, effectively abandoning democracy and creating a new system one-man rule.

• Although Maduro has backtracked in the face of criticism from Latin America’s leaders he continues to face ongoing dissent from Venezuela’s general populace.

• Cries for respect of democratic norms are mixed with a broader list of complaints about Maduro’s government’s general incompetence.

• The Maduro government seems to have no intention of respecting the basic elements of electoral democracy.

• Venezuela’s murder rate of 91.8 per 100,000.
• The world’s second most violent country.

• President Maduro trying to entrench his position and silence critics since there are mounting frustrations over crime and economic problems.

• Venezuela’s government has jailed one opposition leader and barred another from running.

• Maduro and his small group of allies are rebuffing calls to resign or schedule an emergency election to let voters pick a new leader.

• President Maduro has long accused the U.S. of attempting to undermine his government in coordination with the country’s right-wing opposition.