Venezuela Politics 2

While spending on social programs exploded, production declined in both industry and agriculture. As long as oil prices were sky-high, things went smoothly. But the seeds were laid for Venezuela’s impending disaster.

Hugo Chavez ” Socialism for the 21st Century ” had a lot in common with the model that went to the grave when the Iron Curtain fell in Europe. And as in Eastern Europe, the absence of a functioning market eventually became fatal for Venezuela.

A rigid price and currency control made it increasingly difficult for private companies to make money. Without access to currency to import necessary inputs, production stalled. And when the authorities set prices that were below production costs, it had no intention of continuing the business.

At the same time , the state took over many businesses in industry and agriculture – either by forced takeover at low prices, or by pure seizures. The result was a growing shortage of necessary consumer goods, goods that had to be bought from abroad – and paid for with oil money.

5: The power of oil – a corrupt state

As a country located in South America according to MILITARYNOUS, Venezuela is considered the world’s most oil – rich country . According to figures from the Organization of Petroleum Exporting States (OPEC), the country has oil reserves of around 300 billion barrels – a quarter of the entire OPEC. With such oil resources , there is room for major political mistakes, such as investing unilaterally in oil revenues and neglecting other sectors . Many have referred to such a situation as the curse of resource richness .

The right-wing regimes also made such mistakes before Chavez came to power, but this one-sided economic policy was strengthened after the “Bolivarian Revolution”. And the Chavez regime was lucky with the oil price in the early years. From 2002 to 2008, the price more than quadrupled, providing huge revenues for the Venezuelan state.

But after the financial crisis, in the autumn of 2008, the regime experienced its first major economic blue Monday. Oil prices fell dramatically, while the first signs of confidence in Hugo Cavez began to crumble among traditional supporters. This was due not only to the economy, but also to two other rapidly growing problems in Venezuela: crime and corruption .

Corruption has deep roots in Venezuela and was widespread long before Hugo Chavez came to power. The reason is that the country has classic characteristics of “the corrupt state”: a monopoly of power with large revenues (oil), a political culture characterized by camaraderie , lack of transparency and a near absence of control over state funds.

One of Chavez’s election promises was to break with this “legacy” of the rich elite. But it soon became apparent that corruption was more widespread under the new rulers than it had been under the old ones. An important source of income for corrupt employees was, and is, a currency system with three different, official exchange rates – depending on what is to be imported. Anyone who has access to buy dollars for the “best exchange rate” on the national currency bolivarianos can earn huge sums – either by importing goods other than those stated, or simply exchanging the money on the black market .

And with an increasingly extensive ” mafia economy “, combined with a growing shortage of food and consumer goods, Venezuela exploded into crime. The capital Caracas became one of the most dangerous cities in the world, with more than 3,000 killings a year. Today the number is even higher.

6: Chavez – after all

In 2012, it was clear to most commentators that the Chavez regime was about to lose its grip. The production of food, medicine and consumer goods had fallen dramatically and the country spent huge sums on imports. It became increasingly difficult to continue the expensive social policy, at the same time as unemployment increased. And crime has made everyday life a nightmare for millions of Venezuelans.

At the same time, the opposition was gathering ranks , after several years of internal strife and major political mistakes – such as boycotting the National Assembly for a period. Enrique Capriles , governor of the state of Miranda, was a new type of right-wing leader, who recognized the Socialist government’s efforts for the country’s poor. Thus, the charismatic Chavez got a real competitor to power for the first time, when the Venezuelans went to the polls in October 2012.

But even though many “chavists” had gradually become very critical of their president, it was a long step for them to vote for the right-wing candidate. Many remembered what life was like under the previous regime, and Chavez won the election by a clear margin.

Venezuela Politics 2