Following the publication of Sabrina Martin’s article in Panampost, “Looting on the Rise as Venezuela Runs Out of Food, Electricity,” several readers have been asking how Venezuela — a country that in the 60s and 70s was regarded as a future Australia — got so bad.
Hundreds of reasons help to answer this question, especially in the wake of some of the country’s stronger moments. Liberal policies between 1930 and 1966 allowed Venezuela to grow faster than any other country in the world — a kind of China of its time. This along with the nationalization of oil in 1976 and “Caracazo” in 1989.
But overall, the crisis has two main explanations: One is the nefarious dependence on oil, which has a castrating effect on the population. The second is that all these elements are controlled by a political elite that has perpetuated widespread poverty, while simultaneously becoming extremely rich. They continue exploiting and plundering the country with this system, knowing that if they lose power, they will be judged both locally and internationally.
Here we have 16 reasons why Venezuela is dangerously close to an abyss from which they can not get out:
1) 1992: Hugo Chávez and a group of military officers stage a coup d’etat in February and another in November.
2) 1994: After spending only two years in prison, then-President Rafael Caldera pardons those plotters, starting with Chávez himself.
3) 1998: Venezuelans, mostly of the middle class, decide to vote for Chávez, who has thrown himself into the presidential race. They want “order” and a “strong hand” to fight the underworld of crime, and are disenchanted by an economic crisis caused by a spike in oil prices.
4) 2001: Chávez begins to show a dangerous socialist drift. Thousands of Venezuelans take to the streets against him. The president declares that his government is a ” peaceful but armed revolution.”
5) 2002: A massive protest leaves 17 dead and Chavez is ousted from power in a coup led by businessman Pedro Carmona, whose aims are still the subject of speculation.
6) 2003: After a two-month strike that sought to evict him from the country, the president decrees exchange controls, which become more draconian and continue through today. For 13 years, Venezuelans have not had a legal currency exchange market. The price of the Bolívar (Bs) has gone from 900 Bs. to Bs. 1.2 million per dollar, but international reserves have not increased.
7) 2004: Chávez holds a referendum that ratifies his term in office although the opposition claims that the vote was rigged. Skeptical international observers are never invited to observe elections again. In the same year, Chavez creates the “Bolivarian Alternative for the Americas” (ALBA) as an alternative to the FTAA, the hemispheric free trade zone proposed by the United States. ALBA includes Caribbean and Central American countries, and Venezuela sells its partners oil at discount prices with a two-year grace period and a 20-year repayment period.
8) 2005: Chávez defeats a demoralized and divided opposition which decides to abstain from the parliamentary elections, in which only 10 percent of the population vote. The president controls parliament in its entirety along with the judicial and executive branches.
9) 2006: Keeping Venezuela under tight control, Chávez wins the presidential election once again with 62 percent of the vote. The price of oil is fixed at US $100, where it would remain for almost seven years. He claims throughout his campaign that those “who voted for Chávez did so for Socialism.”
10) 2007: Immediately after his reelection, Chavez begins an aggressive policy of confiscation and expropriation of private companies. He aims to control the media and the food industry while introducing constitutional reforms that would make Venezuela practically a communist country. Alarmed, Venezuelans vote No in the constitutional referendum. Chávez recognizes his defeat, but notes that he is going to continue his interventionist policies. Soon, shortages of essential commodities like milk become a problem as the food industry is one of the hardest-hit by Chávez’s policies.
11) 2008-09: With oil being sold at US $140 per barrel, Chávez destroys Venezuela’s national industry with exchange controls, preventing companies from buying supplies and essential raw materials while flooding the country with cheap agricultural imports. Overpricing and corruption abound. After a serious drop in oil prices, the economy suffers. Chávez, however, passes an amendment that allows him to be reelected indefinitely. He also increases the country’s debt as China takes over large areas of the Venezuelan economy.
This is the real beginning of the downfall of the Venezuelan state, which between 2007 and 2016 has always handled over 10 percent of GDP fiscal deficits, according to economist Luis Oliveros. The central government, which in 1998 had 800 thousand employees, now exceeds 3 million (10 percent of the population) and ministries — which in 1998 were 12 — are 36 in 2016
Also in 2009, the first Venezuelan electricity crisis occurs. Chávez announces an emergency plan with the importation of power plants from Cuba. It is estimated that the emergency electrical plan costs US $40 billion, which could have been used to purchase a new electrical system in Venezuela. This results in abundant corruption that has never been investigated, although the money ended up in Andorra and Switzerland.
12) 2011: Chavez announces to the people that he has cancer, nevertheless declaring himself a candidate for next year’s presidential elections, with a spending plan so aggressive that economists Ricardo Hausmann and Miguel Angel Santos have estimated it made oil prices reach the equivalent of US $197. At that time, oil is at US $60, and the difference was covered with debt. Minister Jorge Giordani says corruption stole $25 billion.
13) 2012: Chavez wins the presidential election, and only appears in public twice: two days after the election to receive his accreditation, and on December 8 to say he has to undergo surgery again. He adds that if he can’t exercise his mandate, that his heir Nicolas Maduro should take over. Chavez dies on April 5, 2013 and Maduro wins the contest a month later, though controversial. Maduro inherits a country in the process of falling oil prices. With no idea of what to do beyond orders to strengthen the “Socialism of the 21st century” philosophy he received from his political father, Maduro destroys any productive policies left in his government.
14) 2013: Paralyzed, Maduro is taking no steps beyond issuing money to raise the country’s fiscal deficit (many estimate at more than 20 points of GDP) and praying that oil prices rise. He also tightens foreign exchange controls to pay the foreign debt. It is estimated that the money supply increases tenfold in these three years, a process that leads to spiraling inflation.
15) 2014-15: The grasp that Maduro has on imports to pay debts leads to a shortage of medicines by 95 percent, and food above 80 percent. The minimum wage of Venezuelans reaches less than one seventh part of goods and services, and lines are increasingly forming in front of the few supermarkets that remain open. The ruling party loses the parliamentary election by a landslide, and since then, thanks to the control that the ruling party still has on the remaining powers, Maduro tries to stop what is already vox populi in Venezuela: his ousting as a result of his inability to solve the crisis.
16) 2016: In parallel, the return of the cyclical weather phenomenon of “El Niño” has led to — thanks to incompetence by authorities and theft — widespread power outages across the country. The sum of the growing hunger (it is estimated that 76 percent of Venezuelans have fallen into poverty and 13 percent eat only twice a day), supply shortages and electricity failures have made Maduro a ruler that is rejected by 85 percent of the population.
Looting last week was contained by Governor of Lara Henri Falcón. The former “Chavista” noted that “this is a thousand times worse than the reasons that led to the ‘Caracazo’” and that in any moment, political, social and economic crisis may lead to a conflict with incalculable consequences.
Pedro García is the Spanish managing editor of the PanAm Post. He is a Venezuelan journalist with over 25 years of experience in local newspapers, radio, television, and online media. Follow him @PedroGarciaO.