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| Source: Babalu Blog |
A country that was once robust and had a thriving economy has now been left in the ruins. During the greater part of many years following Venezuela’s appropriation of a democratic government in 1958 through the 1980s, the nation was the most extravagant country in South America, as per PRT’s The World.
The world’s largest proven oil reserves lie in Venezuela, but the production is 2.3 times less than it was back in the 1970s. According to Forbes, Venezuela, from a high of 3.5 million barrels each day in the 1970s, delivers just about 1.5 million barrels each day as of now.
The decline in the production is attributed to mishandling of oil industries after the state was taken over by former presidents Hugo Chavez and Maduro. The crash in oil prices in the 1980s and the failure of economic policies led to the doom of its financial primacy in the region.
Out of the numerous problems that already exist, the countries indecisiveness to conclude on who should be the president among Nicolas Maduro and Juan Guaido and hyperinflation are the causes leading to the suffering of many people.
How Did the Former President Hugo Chavez Change Venezuela?
Hugo Chavez was introduced into the national scene in a flop military attempt uprising in 1992. Although he was condemned to prison for a long time, he acquitted early as the Venezuelan government did not consider that he or his ideas and policies to be a remarkable danger.
However, his firm assaults on political corruption and state inadequacy inspired an emotional response in the Venezuelan people and he won the 1998 elections.
His initial term in office was set apart by control in international strategy and he was a successive guest to the US. In any case, his idea to bring changes in domestic policy was more extremist with a specific spotlight on social programmes.
These focused on “missions” committed to improving access to health, schooling, social and financial security, food and land for the most unfortunate areas of the society. He made alliances with Cuba to help fulfil these aspirations. His abutment among the poor soared.
His programmes revolved around taking businesses and currency into his own hand also raising the oil prices, which eventually crashed. He also planned to ensure financial equality among all the citizens by increasing the minimum wages, as a result of which many Venezuelans were lifted out of poverty.
Other social indicators, prominently literacy, additionally improved and Mr Chavez and his political development had little trouble crushing the opposition that was severely divided and incapable of adjusting to these new Venezuelan realities.
Data suggest that he could bring down unemployment from 14.5% in 1999 to 7.8% in 2001. The poverty is estimated to have come down to 31.9% in 2011 from 50% in 1999.
Where Did It All Go So Wrong?
Venezuela is currently seen as a country resembling “country at war” if not worse. The problems like extreme food and medicine shortages, prevalent crimes in every city, continual electric breakouts, high murder rates, and looting and repressions will surely make anybody wonder as to how could a country that was once the most affluent in South America reach such a sorry state.
It all started when Venezuela followed the footsteps of Zimbabwe to increase the money supply as it had no other source to clear its debts. Hugo Chavez ran his presidential term from 1999 until his demise in 2013.
Chavez put into effect certain social programmes called Bolivarian Missions which were presumed to improve living conditions and promote economic democratization. The programmes which seemed to be good for people proved bad for the economy. For Chavez, this was all a way to win over people, but he forgot about the growing fiscal deficit.
Chavez spent more money than the country could afford on these programmes. He also borrowed money from other countries. 50% of Venezuela’s GDP was based on oil exports, which means when the oil prices were high, life was great. Contrarily, when the prices were low, life was rough.
The government, currently under Chavez’s successor Nicolas Maduro, followed the same strategy to overcome the budget gap– print money. Printing money set the direction of wind towards hyperinflation: “The value of the currency fell, and the prices of common goods quickly rose so high that it became difficult to afford for most people”.
A source reported that a cup of coffee cost 450 bolivars (Venezuelan currency) in 2018, earlier this year it costs a shocking 2.5 million bolivars. Moreover, 1 Indian rupee (INR) is estimated to be equal to 14,945 bolivars and 1 USD equals 248,487 bolivars.
Nearly, five and a half million people have fled Venezuela to escape clutches of poverty and destitution.
What Is Currently Happening in Venezuela?
After the death of Chavez, Nicolas Maduro fell heir to a troubled economy. Then in 2018, Maduro declared that he won the elections, but the opposition disagreed. The opposition said that the presidency is vacant.
Though the opposition parties hold a majority in the parliament, they are split over whether to boycott them.
A Messiah For The Venezuelans?
Juan Guaido, the president of the parliament is the one being accepted as a president by nearly 50 countries including most of Latin America, the US and the EU.
But Nicolas Maduro is still the one in charge. He has the backing of the military, which controls state oil company and the Supreme court, the national guard and a civilian militia.
Though Guaido cannot access these resources, he does have public support. Juan Guaido tried to put pressure on Maduro with the help of other opposition parties and also sanctioned blocking of Venezuelan oil exports. Many Venezuelan assets have been frozen in some international banks.
However, even after all this, Maduro is still around. Many of the opposition leaders have been imprisoned and several parties banned. Therefore, Guaido and the other prominent opposition parties are calling on people to boycott elections.
The people of Venezuela are being crushed in the midst of a pandemic and growing inflation. The outcome of these elections may give us an idea of what the future holds for Venezuela and its people.
Written by – Bhavana N
Edited by – Christeena George
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