16 Reasons Why Venezuela Is on the Brink of Collapse
Venezuela’s Eminent Collapse Was Decades in the Making
PEDRO GARCÍA OTERO MAY 2, 2016 AT 4:37 PM
Españo lFollowing the publication of Sabrina Martin’s article in the PanAm Post, “Looting on the Rise as Venezuela Runs Out of Food, Electricity,” several readers have asked how Venezuela, a country regarded as a future Australia in the 1960’s and 70’s, entered its current economic crisis.
There are hundreds of reasons for this. The policies of economic liberalism implemented between 1930 and 1966 allowed Venezuela to grow faster than any other country in the world as a kind of China of its time. Then came the nationalization of oil in 1976 and the “Caracazo,” a series of protests and riots that shook the capital in 1989.
But overall, the current crisis has two main explanations. One is the country’s nefarious dependence on oil, which creates a population used to dependence, not real productivity. The second is that a political elite that has greatly enriched itself has not allowed general poverty to diminish. Politicians continue to exploit and plunder the country’s wealth — in particular its oil wealth — knowing that, if they lose power, they will be brought to trial both locally and internationally.
The following are 16 reasons why Venezuela is dangerously close to economic catastrophe:
1) 1992: Colonel Hugo Chávez and other military officers stage a coup d’état in February and another in November.
2) 1994: After spending only two years in prison, Chávez and other plotters are pardoned by then-President Rafael Caldera.
3) 1998: Venezuelans voters, most of them middle class voters, elect Chávez as president. They want “order” and a “strong hand” to fight crime. They are also disenchanted by an economic crisis caused by a large drop in oil prices.
4) 2001: Chávez begins to show a dangerous drift toward socialism. Thousands of Venezuelans take to the streets against him. The president declares that his government is leading a “peaceful but armed revolution.”
5) 2002: A massive protest leaves 17 dead and Chávez is ousted from power in a coup led by businessman Pedro Carmona, whose aims are still the subject of speculation. Chávez returns to power 72 hours after being ousted.
6) 2003: After a two-month strike that fails to evict Chávez from the country, the president imposes foreign exchange controls, which become more draconian with time and are still maintained today. For 13 years, Venezuelans have not had a legal foreign exchange market. The price of the Bolívar (Bs) has gone from 900 Bs to 1.2 million Bs per dollar, but international reserves have not increased.
7) 2004: Chávez holds a referendum that ratifies his term in office although the opposition claims that the vote was rigged. Skeptical international observers are never invited to observe elections again. In the same year, Chávez creates the “Bolivarian Alternative for the Americas” (ALBA) as an alternative to the FTAA, the hemispheric free trade zone proposed by the United States. ALBA includes Caribbean and Central American countries, and Venezuela sells its partners oil at discount prices with a two-year grace period and a 20-year repayment period.
8) 2005: Chávez defeats a demoralized and divided opposition which decides to abstain from the parliamentary elections, in which only 10 percent of the population vote. The president controls parliament in its entirety along with the judicial and executive branches.