Venezuela’s experiment with democracy is falling apart. With rising totalitarianism, an economic crisis and food scarcities, more than 50% of Venezuelans want out of their own country. Eden Gillespie investigates.

Venezuela is confronting a severe economic crisis that has seen almost 60 people dead in two months of brutal protests. Rising inflation and food, medicine and electricity shortages have emerged as a result of Venezuela’s poorly-managed economy that relies heavily on the profit made from oil exports.

With falling prices of oil in recent years, declining by 50% in 2015, Venezuela has struggled to maintain a stable economy. For a nation reliant on oil export revenue for 50% of its GDP and for 95% of their export revenues in total, these declines in oil prices have completely winded the economy.

“It’s important to admit that the Bolivarian governments in the past 18 years were incapable of transforming the economic structure of the country,” says Dr Luis Fernando Angosto-Ferrández, a lecturer of Anthropology and Spanish and Latin American Studies at Sydney University.

“There remains a structure of rentier capitalism which is absolutely dependent on the rent obtained by oil production and exportation. Certainly much of the money that was obtained through that oil revenue ended up in public redistribution,” he says.

Oil revenue has played a large part in driving Venezuela’s socialist economy and addressing the nation’s high levels of inequality. This revenue has been poured into social investments amounting to 62% of the government’s budget in 2015. President Maduro has continued to donate generous amounts to social programs, desperately clinging to the legacy of his predecessor, Hugo Chavez. The once popular Chavez came to power in 1999 by championing the nation’s impoverished working class, signalling the beginning of the United Socialist Party of Venezuela’s 18 years of power.


Image credit: Andrés E. Azpúrua

While Dr Angosto-Ferrández believes there should have been a greater effort to diversify production, he says the government was not misguided in funding social programs and repaying ‘the social debt’. “The problem is, not in my view, the investment in social service provision, but the lack of capacity in transforming the economic sector,” he says.

Venezuela’s dependency on imported goods has only served to worsen the crisis. Recent food shortages have seen citizens eating far less food bought at much higher prices. Maduro’s government inherited a broken agriculture industry from the Chavist era where high oil prices meant that the nation could afford to import the majority of their goods. Now, over 70 per cent of the nation’s goods are imported and a striking 3 per cent of agricultural proprietors own 70 per cent of agricultural land in Venezuela, one of the highest levels of land concentration in Latin America.

According to Nathan Tankus, Research Scholar at the Modern Money Network, for Chavez “it was practically impossible to accomplish fundamental reform without attacking the political and paramilitary power of the big landowners, and Chavez was deeply constrained by United States intervention as shown by the 2002 coup attempt”. Mr Tankus believes that “if Venezuela were self-sufficient in food there would still be quite a number of problems but the current crisis would simply not be what it is.”

For political consultant and Venezuela expert, Dimitris Pantoulas, foreign currency restrictions are what have toppled Venezuela’s economy. Under Maduro’s administration citizens are barred from accessing foreign currency, with only a select few allowed entry into the market who receive foreign currency in preferential and highly overvalued rates.

According to Mr Pantoulas, this embargo on foreign currency has allowed those loyal to Maduro to rake in the benefits. He says those pretending to use the foreign currency for the good of the Venezuelan people often sell foreign currency on the black market or deposit it abroad, depriving the society of much needed imports and driving the Venezuelan economy into the abysm.

April 20, 2017 photo, a woman is aided by fellow demonstrators after falling, overcome by tear gas, during anti-government protests in Caracas, (AP Photo/Ariana Cubillos)


“The government gets money from the oil company at an artificial high currency rate. The official rate is 10 BSF for 1 US$ and the black market currency price is 6000 for 1 US$. This is a massive corruption scheme from the government because they only give money to people related to the government, “Mr Pantoulas says.

“It’s like a better deal than the lottery. Maduro has repeatedly said that he was going to change this currency exchange system but hasn’t because of the vested interests behind it,” he says.

The government’s unsustainable economic policy has made many Venezuelans anxious about the future of the nation. This uncertainty has led many young Venezuelans to emigrate. According to a 2016 Datin Corp poll, 57 percent of Venezuelan voters want to leave the country.

“Venezuelans, we are trapped. For young people, it’s very difficult for them to tell me what will be their life. They are leaving the country. We are facing a huge drain of people who are educated. We have in Venezuela, the most intellectually capable emigrants in Latin America,” says Dr Miguel Angel Latouche, an Associate Professor in Political Science at the Universidad Central de Venezuela.

“The problem with our situation is that it is difficult for me to see what the plan is. We have a very responsible middle class who fear what the proposals for the people are at this point,” he says.

President Maduro’s defence is that a US-backed capitalist conspiracy is to blame for Venezuela’s economic woes. The United States and Venezuela have had a tumultuous relationship in recent times. This culminated in 2002 when Venezuela accused the Bush administration of supporting a Venezuelan coup to overthrow Chavez. In 2015 tensions exacerbated after Barack Obama issued a presidential order declaring Venezuela a threat to its national security and ordered sanctions against seven Venezuelan officials.

“The United States needs our pellet oil and our resources. The US finances pro-American parties to make internal war against the Bolivarian government, and alliances with private companies that distribute food in the country to hide products and cause food scarcity,” comments one Maduro supporter.

However, many people are sceptical of Maduro’s willingness to heap blame onto the United States, claiming he’s merely taken a line out of Chavez’s book. They say that the role of US intervention in Venezuela is devoid of solid evidence.

Political consultant Mr Pantoulas believes that it is a near impossible feat for Maduro to win the upcoming election in 2018. Even still, the challenge for candidates will be securing a policy that reverses Venezuela’s economic downfall while balancing the social issues facing the country. And steering the nation away from corruption and its marriage with oil revenue might just be the first step.

Eden Gillespie

Eden Gillespie

Eden Gillespie is a freelance journalist based in Sydney/Madrid. When she's not drinking sangria, she's asking (far too many) questions and watching serial killer documentaries.

How do you spend your days?

I'll start it with a coffee and the news, head to uni and write some stories. If I'm lucky I'll go to the dog park and pet some puppers. Lately, I've been obsessing over researching Spain, where I'll soon be based.

Why is journalism important to you?

In a time where "fake news" is a buzzword, quality journalism matters more now than ever. For me, journalism is an opportunity to tell important stories that otherwise wouldn't be heard. It's a way of letting people know what's going on, holding power accountable and most importantly, connecting with people from all walks of life.

What drove you to focus on journalism & writing? Was there a particular moment you can remember that led you to this field?

I was advised not to study journalism and told I'd "never get a job", but writing and journalism is something that I'm too passionate to give up on. Watching Louis Theroux documentaries was one thing that made me think 'yeah, this is what I want to do'.He stands for respectful, balanced and thought provoking journalism, and that really resonates with me.

What drives you professionally?

What drives me is as simple as a good story. Something that has meaning to me, draws an emotional response, or makes me question my version of reality.

In your opinion what are the three biggest problems facing the developed and developing world?

Nuclear proliferation, global warming, human trafficking.

If you hadn’t become a journalist what would you have done?

I'd make travel documentaries National Geographic style. If that failed I'd be a detective, criminal lawyer, or diplomat.

What led us to this moment in history?

I think a disenchantment with world leaders. Promises being broken, capital interests coming first over what populations need and want, and a lack of long term planning by policy makers. Basically, the obsession of holding onto power at all costs ala House of Cards.

What are the lessons we failed to learn during and since the 2008 crisis?

I'm going to quote economist Steven Hail and say that "By 2008, the global financial system had become so large and complex... that virtually nobody fully understood how fragile and likely to crash the whole system had become." Neoliberalism has a lot to answer for imo.

Can you list some ‘Baby Steps’ out of the current economic mess?

In Australia, I'd say we desperately need to focus on making housing affordable and take a long hard look at negative gearing. We should be stimulating employment and innovation especially, rather than doing things like making visa changes.

If you were a global President what would your first three pieces of policy be?

Crack down on corruption, dispose of nuclear arsenals, transition towards renewable energy.

Tell us something you have been wrong about?

I truly believed that Hillary Clinton would be the US president right now.

You are stuck in a ski lift for twenty four hours - you can have one person (living or dead) with you who will it be?

It's a tie between Gloria Steinem and Louis Theroux.

Name the book that changed you….

A Thousand Splendid Suns by Khaled Hosseini.

What would you do differently if you were to start all over again?

I don't believe in starting over. I'm strongly rooted in the "learn from your mistakes" school.

Give our readers, members and subscribers a piece of advice that has served you well…

Be kind and always keep your mind open. Don't ever assume that you know the full story.

Twitter: @edengillespie
Eden Gillespie

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