Global Independent Analytics
Pedro Marin
Pedro Marin

Location: Brazil

Specialization: Latin America, Ukraine, North Korea

Fighting the crisis in Venezuela

To win an economic global war, Maduro has to engage in a local political battle

In 1992, when young military men led by Lt. Colonel Hugo Chávez tried to overthrow the Venezuelan President Andrés Perez, a hasty beam of light kindled in Latin America, getting all its people’s attention.

Some hopeful and yet naïve people thought it was a Cuban Revolution. Some others underestimated Chávez, due to his military profession. The fact is that seven years later, the Lt. Colonel was elected President, turning the beam of light in what many said was “Latin America’s guiding light”.

Since last year, the light seems to be disappearing, though. Amidst a rampant economic crisis, the Venezuelan opposition won the parliamentary elections in December, securing two-thirds of the National Assembly seats. It was a major blow for the United Socialist Party of Venezuela (PSUV), which used to hold a majority in the Assembly since 2000.

Last Friday, with a respectful and at the same time firm attitude towards the opposition, President Nicolás Maduro entered the National Assembly to deliver his annual State of Nation speech. He spoke about the harsh economic crisis in Venezuela, the Great Venezuelan Housing Mission, the victims of the “guarimbas” (the violent street protests that emerged in 2014 which resulted in the death of 43 people), the legacy of Simón Bolívar and Hugo Chávez (whose portraits were removed by National Assembly’s head Ramos Allup from the Assembly’s building hall earlier this month), and once again acknowledge the opposition’s victory, asking the representatives to support the government against Obama’s sanctions, established on March 2015, which may be ratified by the U.S President this year.

The issues Maduro took to the National Assembly are central as much as they are controversial. That’s because there is an actual struggle going on between the government and the National Assembly. For instance, the opposition wants to free the so-called “political prisoners”, most of which were detained due to their participation in the guarimbas – a measure which the victims’ families oppose – and want to privatize the Housing Mission, that is, to hand over the property deeds of the over 1 million houses, in what the Chavistas see as a move aimed at turning the popular housing program into a speculative private market.

Anyway, the most important part of Maduro’s speech was the final one, as the leader talked about his goals for 2016, which are: the recovery of Venezuela’s oil industry, the development of the country’s production capabilities, the recovery of the global oil market through alliances between OPEC and non-OPEC countries, the construction of more houses and the protection of the elderly.

It’s no coincidence that most of Maduro’s goals are related to the economy. He seems he understands, unlike Dilma in Brazil, that there’s no way to keep building a Venezuela for the people unless the economy is stable and independent. That’s why hours before giving his speech Maduro declared a 60-day economic emergency decree, which can be extended for 60 more days and gives the executive the control over the national budget to finance and implement policies to stimulate the economy, and calls for increasing the domestic production of basic goods and greater control over distribution networks.

Such measures are aimed at controlling the inflation, reducing the country’s dependency on the oil industry and avoiding the shortage of basic goods.

Ironically, Venezuela’s democratic-liberal path to the revolution is both what made Chavismo so popular and also what makes it so weak. Had Chavez seized power in 1992 and established a new form of government - what many would call a “orthodox” socialist revolution - Maduro wouldn’t be facing such crisis today. Take Cuba, for instance. The country was poorer in 1959 and had much more difficulties – such as illiteracy – than Venezuela in 1999. Cuba had an absolutely dependent economy as well, as the island’s main product for centuries was sugar and many of the goods the country and its people needs were imported, such as rice, meat, and of course oil. In fact, Cuba’s GDP per capita has always been smaller than Venezuela’s. The Cuban Revolution faced sanctions, blockades, and even military interventions.

Overcoming the crisis: The Cuban case

When Berlin’s wall felt in 1989 and the USSR collapsed in 1991, the Cuban economy crashed. The country’s agriculture relied a lot on USSR’s oil and machinery. That’s when the Special Period started: between 1989 and 1991, the GDP shrank by 25%, oil imports fell by 50%; the availability of fertilizers and pesticides fell by 70%; food and other imports fell by 50%.

Within several years, Cuba started to overcome the crisis. The government started to ration food, by giving every Cuban a ration card, gave about a half of the state farm lands (which by the time were about 80% of the country’s lands) to workers’ cooperatives, adopted agroecological farming methods and developed technologies in the country’s universities, as well as the principle of local production, making it cheaper to transport the goods.

According to an article by Lydia Zepeda for Choices magazine, these were the results of such measures: “Production of tubers and plantains tripled and vegetable production quadrupled between 1994 and 1999, while bean production increased by 60% and citrus by 110%. Potato production increased by 75%, and cereals increased by 83% between 1994 and 1998. Calorie intake rose to 2,580 per capita per day—just under the minimum recommended by the World Health Organization. This is despite Cuba being the second poorest country in the Americas.”

Fighting the crisis: Maduro’s challenges

Venezuela is the absolutely opposite case. Cuba had to adopt such measures to overcome the fact the country didn’t have much oil. Venezuela, in its turn, has a lot of oil – in times when it isn’t worth much.

There are some obstacles in Maduro’s path: First, Venezuela has cut down its dependency on the oil production, while investing in other sectors. If the oil market prices increase again, it would help the country’s economy – but that would still make the country depend on the market’s prices, which renders Venezuela very vulnerable. Secondly, Maduro has to fight the shortage of basic goods – that happen at least partly due to business owners’ boycotts. The Bolivarian Revolution has to either create laws aimed at punishing anyone who tries to undermine the economy or to take their properties. And finally, it has to reduce its dependency on the U.S (according to TradingEconomics, 40% of the country’s total exports go to the United States, and 26% of the imports come from there). To do so, the country would have to increase its production and to trade more with other countries.

Maduro seems to understand some of these points, and Venezuela may get out of its political and economic crisis, but there is only one way to assure the revolution will go on: by radicalizing it.

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