Remember last time an oil economy crashed catastrophically?
Anders Aslund writes: Venezuela is not the first developed country to put itself on track to fall into a catastrophic economic crisis. But it is in the relatively unusual situation of having done so while in possession of enormous oil assets. There aren’t many precedents to help understand how this could have happened and what is likely to happen next.
There is, however, at least one — the Soviet Union’s similar devastation in the late 1980s. Its fate may be instructive for Venezuela — which is not to suggest Venezuelans, least of all the regime of Nicolás Maduro, will like what it portends.
Venezuela has been ailing ever since the decline in oil prices that started in June 2014, and there is no reason to think this trend will shift anytime soon. Energy prices move in long quarter-century circles of one decade of high prices and one decade of low prices, so another decade of low prices is likely. Similarly, the biggest economic blow to the Soviet Union was the fall in oil prices that started in 1981 and got worse from there.
“Maduro seems intent on printing money like crazy, so the next step will be hyperinflation.”
But the deeper problem for the Soviet Union wasn’t the oil price collapse; it’s what came before. In his book Collapse of an Empire, Russia’s great post-Soviet reformer Yegor Gaidar pointed out that during the long preceding oil boom, Soviet policymakers thought that they could walk on water and that the usual laws of economic gravity did not apply to them. Soviet policymakers didn’t bother developing a theory to make sense of their spending. They didn’t even bother paying attention to their results. The math seemed to work out, so they just assumed there was a good reason.
This is as true of the current Venezuelan leaders as it was of the Soviet leaders. The Venezuelan government, though it doesn’t claim to be full-fledged in its devotion to Marxism-Leninism, has been pursuing as absurd an economic policy mix as its Soviet predecessor. It has insisted for years on maintaining drastic price controls on a wide range of basic goods, including food staples such as meat and bread, for which it pays enormous subsidies. Nonetheless the Venezuelan government, like the Soviet Union’s, has always felt it could afford these subsidies because of its oil revenues.
But as the oil price has fallen by slightly more than half since mid-2014, oil incomes have fallen accordingly. And rather than increase oil production, the Venezuelan government has been forced to watch it decline because of its mismanagement of the dominant state-owned oil company, PDVSA.
And now Venezuela seems intent on repeating the Soviet folly of the late 1980s by refusing to change course. This is allowing the budget deficit to swell and putting the country on track toward ultimate devastation.
The Soviet Union in its latter years had a skyrocketing budget deficit, too. In 1986 it exceeded 6 percent of GDP, and by 1991 it reached an extraordinary one-third of GDP. Venezuela is now following suit. The Soviet Union used its currency reserves to pay for imports, but when those reserves shrank, the government financed the budget deficit by printing money. The inevitable result was skyrocketing inflation.
It seems as if President Nicolás Maduro has adopted this tried-and-failed combination of fiscal and monetary policy. Venezuela already is dealing with massive shortages as a result of its controlled prices, because the government can no longer afford its own subsidies. But it will get worse from here.
Maduro seems intent on printing money like crazy, so the next step will be hyperinflation. Inflation is already believed to have reached 700 percent a year, and it is heading toward official hyperinflation, that is, an inflation rate of at least 50 percent a month. Read the rest of this entry »
Nicolás Maduro es Encantador y Persuasivo! Venezuelan President Nicolás Maduro Threatens to Jail OpponentsPosted: October 29, 2016
Caracas (AFP) – Venezuela‘s President Nicolas Maduro threatened on Friday to jail his political opponents if they follow through on their vow of launching a legislative trial to remove him from power.
Shrugging off a partially-observed strike which the opposition called to raise pressure on him, the socialist president went on the counterattack.
Maduro sharpened the tone in a volatile political and economic crisis that has sparked food shortages and riots in the South American oil producer.
“If they launch a supposed political trial, which is not in our constitution, the state prosecution service must bring legal action in the courts and put in jail anyone who violates the constitution, even if they are members of Congress,” Maduro said in a speech Friday.
Friday’s strike was called after authorities blocked a bid by the center right-dominated MUD coalition to hold a referendum on removing Maduro from power.
After that move, the crisis heated up this week. Opposition lawmakers vowed to put Maduro on trial and exchanged accusations of coup-mongering with the mustachioed president.
Friday’s strike seemed to be only partially observed.
In the capital Caracas and cities such as Maracaibo and San Cristobal, the streets were quieter than normal but public transport was running and banks and some schools opened as usual.
Clashes broke out in recent days between riot police and pro- and anti-government protesters around the country.
Maduro earlier threatened to break the strike by sending the army to take over firms that took part in it.
The center-right coalition’s latest move to pressure the unpopular leftist leader came after anti-government protests drew hundreds of thousands of people on Wednesday.
Maduro vowed to respond forcefully. Read the rest of this entry »
The country is poised between chaos and dictatorship
“THIS government is going to fall!” chanted hundreds of protesters alongside the Avenida Libertador in central Caracas. Staring them down were ranks of security forces—from the police, the national guard and the feared, black-uniformed SEBIN (secret police)—charged with making sure that does not happen. Looming above was a huge grinning portrait of the late president, Hugo Chávez.
The protesters’ aim on May 18th was, as it has been on two previous occasions this month, to march to the offices of the National Electoral Council (CNE). The supposedly independent, but nakedly biased, institution has been delaying its consideration of a petition it was handed weeks ago, the first stage of a process to recall Venezuela’s president, Nicolás Maduro, through a referendum. With government forces blocking all routes to the CNE, the protesters were never likely to get close.
When a handful broke through the cordon, some attacking the police, the authorities had the excuse they needed. Multiple, deafening volleys of acrid tear gas burst above the crowd. At least 18 people were wounded and 26 detained. Pamela, a retired agricultural engineer in her 70s, was standing outside her home overlooking the avenue, holding a small handwritten cardboard sign saying “Maduro. Resign Now!” Tears in her eyes, she retreated inside. “This breaks my heart,” she said.
The regime may feel the day was a success. The protests were not huge. The poor have yet to stream down from the barrios en masse to demand the president’s ouster. But they are enraged and the government is worried. Almost 70% of Venezuelans want Mr Maduro to leave office this year, according to a recent poll. That demand is fuelled by the appalling deterioration of living standards under his incompetent rule. Venezuela is suffering the world’s deepest recession. Self-defeating price and currency controls and rampant corruption are causing shortages of everything from medicines to rice. “I am here because I am sick of queuing from dawn,” said José Galeano, a protester who describes himself as a poor man. “This has to end.”
Across Venezuela, small protests are now commonplace. Social media are awash with videos of shoppers plundering supermarkets and brawling with each other. As crime soars, the lynching of petty criminals is becoming more common.
The desperation such incidents reveal is dismissed by the increasingly delusional Mr Maduro during his endless television appearances. The shortages, he says, are the consequence of an “economic war” waged by enemies at home and abroad. Some in Caracas joke that he must be the only man who can claim to fight a fictional war, and then lose it. But they fear the direction his rule might now take. Read the rest of this entry »
— The Economist (@EconAmericas) August 12, 2015
Seventy years after the liberation of Auschwitz, violence and hatred against Jews is on the rise, especially in the Middle East and among Muslims in Europe
Jonathan Sacks writes: Last Tuesday, a group of Holocaust survivors, by now gaunt and frail, made their way back to Auschwitz, the West’s symbol of evil—back to the slave-labor side of the vast complex, with its mocking inscription Arbeit Macht Frei (“Work makes you free”), and back to the death camp, where a million and a quarter human beings, most of them Jews, were gassed, burned and turned to ash. They were there to commemorate the day, 70 years ago, when Soviet troops liberated Auschwitz and saw, for the first time, the true dimensions of the greatest crime since human beings first set foot on Earth.
“Today Christian communities are being ravaged, terrorized and decimated throughout the Middle East, sub-Saharan Africa and parts of Asia, and scores of Muslims are killed every day by their brothers, with Sunnis arrayed against Shiites, radicals against moderates, the religious against the secular. The hate that begins with Jews never ends with Jews.”
The moment would have been emotional at the best of times, but this year brought an especially disturbing undercurrent. The Book of Genesis says that, when God told Abraham what would happen to his descendants, a “fear of great darkness” fell over him. Something of that fear haunted the survivors this week, who have witnessed the return of anti-Semitism to Europe after 70 years of political leaders constant avowals of “Never again.” As they finished saying Kaddish, the Jewish prayer for mourners, one man cried out, “I don’t want to come here again.” Everyone knew what he meant. For once, the fear was not only about the past but also about the future.
The murder of Jewish shoppers at a Parisian kosher supermarket three weeks ago, after the killing of 12 people at the offices of the satirical magazine Charlie Hebdo, sent shivers down the spines of many Jews, not because it was the first such event but because it has become part of a pattern. In 2014, four were killed at the Jewish Museum in Brussels. In 2012, a rabbi and three young children were murdered at a Jewish school in Toulouse.
“In 2008 in Mumbai, four terrorists separated themselves from a larger group killing people in the city’s cafes and hotels and made their way to a small Orthodox Jewish center, where they murdered its young rabbi and his pregnant wife after torturing and mutilating them.”
In 2008 in Mumbai, four terrorists separated themselves from a larger group killing people in the city’s cafes and hotels and made their way to a small Orthodox Jewish center, where they murdered its young rabbi and his pregnant wife after torturing and mutilating them. As the Sunday Times of London reported about the attack, “the terrorists would be told by their handlers in Pakistan that the lives of Jews were worth 50 times those of non-Jews.”
An ancient hatred has been reborn.
Some politicians around the world deny that what is happening in Europe is anti-Semitism. It is, they say, merely a reaction to the actions of the state of Israel, to the continuing conflict with the Palestinians. But the policies of the state of Israel are not made in kosher supermarkets in Paris or in Jewish cultural institutions in Brussels and Mumbai. The targets in these cities were not Israeli. They were Jewish.
According to the Middle East Media Research Institute, an Egyptian cleric, Muhammad Hussein Yaqub, speaking in January 2009 on Al Rahma, a popular religious TV station in Egypt, made the contours of the new hate impeccably clear: “If the Jews left Palestine to us, would we start loving them? Of course not. We will never love them…They are enemies not because they occupied Palestine. They would have been enemies even if they did not occupy a thing…You must believe that we will fight, defeat and annihilate them until not a single Jew remains on the face of the Earth…You will not survive as long as a single one of us remains.”
“Anti-Semitism has existed for a very long time. One critical moment came around the end of the 1st century C.E., when the Gospel of John attributed to Jesus these words about the Jews: ‘You belong to your father, the Devil.’ From being the children of Abraham, Jews had been transformed into the children of Satan.”
Not everyone would put it so forcefully, but this is the hate in which much of the Middle East and the Muslim world has been awash for decades, and it is now seeping back into Europe. For Jews, “never again” has become “ever again.”
“If the Jews left Palestine to us, would we start loving them? Of course not. We will never love them…They are enemies not because they occupied Palestine. They would have been enemies even if they did not occupy a thing…You must believe that we will fight, defeat and annihilate them until not a single Jew remains on the face of the Earth…You will not survive as long as a single one of us remains.”
— Egyptian cleric, Muhammad Hussein Yaqub, speaking in January 2009
The scope of the problem is, of course, difficult to gauge precisely. But recent polling is suggestive—and alarming. An Anti-Defamation League study released last May found “persistent and pervasive” anti-Jewish attitudes after surveying 53,100 adults in 102 countries and territories world-wide. The ADL found that 74% of those surveyed in the Middle East and North Africa held anti-Semitic attitudes; the number was 24% in Western Europe, 34% in Eastern Europe and 19% in the Americas. Read the rest of this entry »
Shootings in Caracas, Valencia and San Cristobal amid clashes between demonstrators, security forces and armed gangs
Three Venezuelans have died from gunshot wounds during protests against socialist President Nicolás Maduro, witnesses and local media have said, pushing the death toll to 34 from almost two months of demonstrations that have been answered with deadly force from both security forces and armed pro-government gangs.
“…Bus driver Wilfredo Rey, 31, died on Friday night after being shot in the head during a confrontation between demonstrators and hooded gunmen…”
Troops briefly clashed with a small group of protesters who attempted to block a highway in an upscale neighborhood of Caracas after thousands of opposition supporters marched to demand the release of students imprisoned during the unrest.
“…Jesus Labrador was hit by a bullet on Saturday in the Andean city of Merida during a shootout between armed protesters burning tires and hooded gunmen on motorcycle…”
Demonstrators complaining of soaring prices and product shortages have vowed to remain in the streets until Maduro resigns, although there are few signs that the country’s worst turmoil in a decade will force him from office.
Riot police in Venezuela have clashed with anti-government demonstrators who were protesting against the arrest of two opposition mayors.
[Check out Erika Johnsen’s comments]
Hundreds of demonstrators in the Venezuelan capital, Caracas, threw stones and sticks at the police. They responded with tear gas and water cannon. The clashes came a day after Daniel Ceballos and Enzo Scarano were detained over their alleged role in weeks of unrest that has left 31 people dead.
“The youth today have decided they’re ready to give up their lives for the country, for freedom.”
— Juan Requesens, a student leader at the protest
The government of President Nicolas Maduro has been the target of near-daily protests over the high murder rate, skyrocketing inflation and shortages of basic goods. He has blamed the violence on “fascist groups”.
Juan Requesens, a student leader at the protest, said the two mayors were “victims of persecution, abuse, and wrongful arrest”. Read the rest of this entry »
Defenders of the Venezuelan regime would never allow the White House to arrest opposition leaders and shut down unfriendly media outlets. So why the double standard?
Dictatorship and Double Standard
Michael Moynihan writes: At the southernmost point of Central Park, on a small strip of sidewalk abutting 59th Street, hundreds of Venezuelans swarmed a statue of Simon Bolivar, the Caracas-born liberator of South America and a figure now most commonly associated with the bolivarian revolution of Hugo Chavez and his rechristenedBolivarian Republic of Venezuela. But it’s an association that when mentioned inthis crowd produces furrowed brows and narrowed eyes, quickly followed by a rapid-fire recapitulation of Chavez’s many crimes.
“Duarte was merely cataloging the massive shortages of basic goods (rice, milk, toilet paper) that have crippled Venezuela in recent years, not engaging in a bourgeois, fascist bakeoff.”
The necessary symbolism of the meeting point trumped practicality: the crowd quickly swelled, spreading like an inkblot from the small patch surrounding Bolivar into a lane of midtown Manhattan traffic. They banged pots. They shouted slogans about the Cubanization of their patria, from which many are exiled. They carried signs detailing spiraling crime rates (23,000 murders last year), many plastered with grim photos of those abused and murdered, and others with mordant slogans (“In Venezuela everything is scarce, except bullets”).
We are far from the bloody streets of Caracas; these protesters are ringed not by heavily armed and body-armoured National Guardsman, but are politely attended to by a handful of paunchy and bored New York City cops. There was no threat of violence here–with the single exception of a slobbering, toothless, and possibly blotto Spanish speaker who, while ambling past the crowd, shouted something that drew the ire–and very nearly the flying fists–of a man with a large Venezuelan flag tied around his neck–the anti-Chavez superhero.
Frances Martel reports: Venezuelan dictator Nicolás Maduro has a violent situation on his hands, as protests against the socialist regime escalate and the death toll rises. Reuters reports that protesters have vowed to continue until Maduro resigns, but Maduro has only escalated the oppression, raiding Caracas homes in search of opposition leader Leopoldo López.
The streets of Caracas–already among the world’s most violent thanks to more than a decade of rule under Hugo Chávez–were aflame this weekend as Venezuelans used the national “Youth Day” holiday to trigger protests against the socialist dictatorship this weekend. This Youth Day, a holiday celebrating a battle of independence against Spain, three student protesters were reported dead and 23 injured thanks to government violence. The protest itself was peaceful; violence began when it culminated and police agitated the remaining protesters.
“I tell you, Maduro, you are a coward. You will not force my family nor myself to submit. To my family: Strength, I love you”
López tweeted yesterday. He also posted a video describing the protest and the next steps for his supporters…
Hugo Chavez’s legacy: How his economically disastrous, politically effective ideology will haunt the country he ruined.Posted: March 6, 2013
Even before Hugo Chávez died, he had become a ghost. A strange, unfamiliar quiet had fallen on Venezuela for weeks as people waited to hear the voice of the president who had been part of their daily lives for nearly 14 years. That’s because Chávez spoke to Venezuelans constantly. In his first 11 years in office, he addressed the nation, on average, every two days. His remarks, usually improvised, typically ran more than four hours. If you add up these talks, which all radio and television stations were required to broadcast, they would amount to 54 full days.
And then there was silence. Venezuelans last heard their president on Dec. 8 when he announced that he was returning to Havana for his fourth operation to treat a recurring bout of cancer. He wouldn’t return to Venezuela until Feb. 18, slipping into a military hospital in Caracas in the middle of the night. (His advisers later admitted that his ability to speak had been impaired by a tracheal tube that had been inserted to assist his breathing.) Chávez had made the trip home, but he never truly returned. He was present but could not be seen. The eerie quiet was only broken with the announcement, delivered by Vice President Nicolás Maduro late Tuesday, that the 58-year-old president was dead.
What has Chávez bequeathed his fellow Venezuelans? The hard facts are unmistakable: The oil-rich South American country is in shambles. It has one of the world’s highest rates of inflation, largest fiscal deficits, and fastest growing debts. Despite a boom in oil prices, the country’s infrastructure is in disrepair—power outages and rolling blackouts are common—and it is more dependent on crude exports than when Chávez arrived. Venezuela is the only member of OPEC that suffers from shortages of staples such as flour, milk, and sugar. Crime and violence skyrocketed during Chávez’s years. On an average weekend, more people are killed in Caracas than in Baghdad and Kabul combined. (In 2009, there were 19,133 murders in Venezuela, more than four times the number of a decade earlier.) When the grisly statistics failed to improve, the Venezuelan government simply stopped publishing the figures…
Argentina’s top TV journalist Jorge Lanata has alleged that he was held in the basement of Caracas airport for nearly two hours while Venezuela’s secret service erased his team’s camera, computer and cellphone memories. Only then, he says, were they allowed to leave the country…
- Venezuelan President Hugo Chavez wins re-election (edition.cnn.com)
- Chavez Re-Elected as Venezuelan President, Defeating Capriles (fox2now.com)
- Update: Tanks in the streets as Venezuelan electoral council declares Hugo Chavez victory (punditfromanotherplanet.com)
- Venezuelan election day – peaceful and transparent please! (dcmontreal.wordpress.com)