Venezuela is showing how a country can economically collapse live before our eyes . If it were not a great humanitarian disaster, it would be a very interesting direct economic experiment. Because Venezuela is creating a humanitarian crisis in the other border countries. In fact, more and more countries are limiting the entry of Venezuelans into their country.
Also, as long as the current situation continues, it does not seem that the hole in which they are buried is going to stop being dug. It is true that Venezuela still has important assets that can be sold little by little until they become puppets of China, but I do not believe that this is the destiny that Venezuelans want.
Why is Venezuela collapsing?
The times under Hugo Chavez and the Bolivarian regime were not all bad. The most affluent Venezuelans went shopping in Miami, the rest got currency easily thanks to the Cadivi. The president had a colorful program on television in which he responded animatedly to his citizens live.
But it is that Venezuela had a resource that then did not stop rising in price, oil. In fact, remember that an agreement was signed between Spain and Venezuela of 10,000 barrels of oil per day at 100 dollars per barrel for 100 years. At that time I even thought it was a good agreement. The criticisms that could be made to Venezuela were considered as right-wing attacks.
But something happened that was not counted in Caracas, the price of oil rose and fell, it was not going to always rise. The logical thing is for Venezuela to have tried to develop an alternative industry to oil.
For example, create infrastructures (airports) that would attract American tourists to its Caribbean beaches and natural parks, promote agriculture and the agri-food industry, create free zones, reach trade agreements with the main countries of the region. environment (Colombia, Brazil, Mexico, USA, Peru …) to sell products outside its borders. Explore the development of products and services related to the country's experience in oil (consulting, geotechnics, extraction tools …). That is, it could have advanced (and much) in its economy while oil prices were high.
In addition we have to add that the poor management of PDVSA (Petróleos de Venezuela SA, known as "pedevesa") and in general of the rest of the public administration. If you have a single resource such as oil, the management of it has to be spectacularly good and efficient. On the other hand, it was decided that PDVSA should become a source in which to plug all the adherents to the regime, as well as with the parallel administration with which the followers of the Bolivarian regime were placed.
To this we must add that the oil industry requires a lot of investment, something that was ignored by the Chavez regime, leaving the technical infrastructure of PDVSA obsolete and aging at the cost of extracting more money from it, the perfect cocktail for that the country in the face of a drop in oil prices was to be hit hard.
In addition, the government has spent decades deepening more in the policies that are leading to the crisis for example Banesco recently intervened , the second largest financial institution in the country, and one of the largest banks in the Caribbean (however, we warn that the depositors' money in banks with the Banesco and ABANCA brand outside of Venezuela is not in danger of falling into the hands of Maduro, years that the property depends on a company domiciled in Madrid).
The government has been talking for years about an "economic war" that provokes the shortage of its stores, as way to hide its uselessness and incompetence to manage. Venezuela has less economic freedom even than Cuba.
In that war they no longer have allies, because even Cuba, which was an ally of the Chavez regime, has proceeded to embargo Venezuelan properties in Cuba, as is the case of a refinery. All foreign companies that contract with the Maduro government are also having problems. For example, the Spanish airline Charter Wamos recently stopped them from renting a Boeing 747 to the state airline (Conviasa) that linked Caracas with Madrid and Buenos Aires for lack of payment, after these problems the newly created Spanish airline Plus Ultra has had these problems. Today contracting with the government of Maduro or its companies seems a guarantee that money will be lost.
More than macro data
One problem we have with Venezuela is that macroeconomic data are scarce and not very reliable. In this case we find that it is estimated that during 2017 inflation in Venezuela grew between 652.7% and 2400%, GDP fell by 12%, after having fallen by 16.5% in 2016 and 6, 2% in 2015. GDP per capita has also suffered, in 2017 it was estimated at 12,400 dollars, in 2016 it was estimated at 14,300 dollars and in 2015 at 17,300 dollars. That is, each year is much worse, by 2018 inflation is expected to exceed 13000%. It is not uncommon for Venezuelans to flee.
Although a GDP per capita of this level means that Venezuela is in the section of middle income countries, it happens that other more worrisome statistics that are not usually taken into account are emerging. For example 90% of Venezuelans have stated that they can not buy enough food and 61% have gone to sleep hungry. In fact, we are talking about the "Maduro diet", more than 60% of Venezuelans have lost 11 kilos in 2017, this being official data of the Venezuelan government.
In addition to the shortage of food, there are problems with medicines, many They are not easy to find or their price is extraordinarily high. But it is that produce in Venezuela is becoming an odyssey. For example, Ford stopped manufacturing vehicles in Venezuela in January due to lack of parts. Last year he only managed to manufacture 1% of the production capacity of the factory. Last year the General Motors factory was expropriated by the Venezuelan government. If the exprópiese of Hugo Chavez was going to create school.
The government has affirmed that the solution to the crisis is its cryptocurrency "Petro", which according to Maduro is backed by oil reserves (not extracted) of the country. As an analyst says, it is not a cryptocurrency, but a future sale of oil at best. However, to acquire Petros you need dollars, although I have not yet seen anyone who accepts being paid in "Petros" (and I personally recommend fleeing from said cryptocurrency, after all it is issued by a Central Bank that only provokes hyperinflation)
At first I commented that Venezuela is getting its citizens to flee the country. Tens of thousands of Venezuelans leave the country every day, either not to return or with the intention of not doing so until the situation improves. Currently 1.6 million Venezuelans live abroad, that is, one in twenty. One million left as of 2015. The high and growing crime does not help either, in Venezuela there were 26,616 murders in 2017, in Spain with 50% more population and tens of millions of tourists, we have been around 300 annually.
The country that is most noticeable is Colombia, along its 2,200 kilometers on the border with Venezuela has had to deploy 3,000 additional agents. It is true that many of the people who cross the border do so with the intention of buying food, but increasingly with the intention of staying. In February, more than 550,000 Venezuelans had arrived in Colombia with the intention of staying, it is estimated that by July of this year they will have been one million. Around 25,000 Venezuelans cross the border between the two countries on foot every day. We must also bear in mind that many Venezuelans simply go to Colombia to make the purchase. The situation in Brazil is not so desperate, but some estimate that it may be worse in the coming months. There are also tens of thousands in Peru, Chile or Panama. Venezuelan emigration is becoming a source of concern in the countries of the area.
At first emigrated the richest to Miami, Panama or Madrid, after the economic level has been declining and some take eight days by land to get to Chile. In Spain there are already more than 210,000 Venezuelans (the third largest country, after Colombia and the US).
Of course, the high need for passports is causing corruption in the concession of the same, since they have become a product of desire on the part of Venezuelans. Of course, obviously, passports are necessary for any immigration process that is done. Even for those who have dual citizenship, the law requires them to use the Venezuelan passport to enter and leave the country.
In fact something that I find incredible is that there are channels on YouTube and Venezuelan blogs that explain how to emigrate to the different countries and cities. Either to Spain or to Chile.
In summary, if we ever wanted an example of what a collapsing country is, Venezuela gives it to us. Shortage of basic goods (including food), inflation rising to such a level that there is a shortage of banknotes, crime is growing, GDP is falling and hundreds of thousands of people are leaving their borders. It is difficult to know how long this spiral will continue, but it is easy to see how little by little the country is going out. He also gives us as an example that oil and in general natural resources are little relevant to a country's wealth but this is another issue to be addressed at another time.
Ask the readers what measures should be taken in Venezuela to reverse the situation?
In The Salmon Blog | Venezuela has no money to … print money!
More information | Bloomberg, CNN
Picture | Saúl Briceño B.
Image | Iñaki Lopez Goicoechea
Picture | NeoGaboX