In past few years many times we all have heard about the Venezuela Crisis.
World’s largest oil reserve in Venezuela now facing the highest inflation rate in the world and it could hit 13,000% this year in 2018.
This is not an inflation it’s HYPERINFLATION.
What is this crisis all about? How it took place? Who are behind the biggest ever economic collapse?
It didn’t happen in a day or in a year. It took several years of incompetent and self-obsessed governance which gradually led to the crisis.
Officially Venezuela known as the Bolivarian Republic of Venezuela. And it’s capital is Caracas.
The country has extremely high biodiversity and is ranked 7th in the world’s list of nations with the most number of species.
Venezuela is a Federal Republic (“a country i.e. governed by elected representatives and by an elected leader (like a president) rather than by a king or queen”).
Nicolas Maduro is present president of Venezuela.
Currency of Venezuela is Bolivar. And in 2018 1 bolivar = $0.000040
Venezuela is on the northern coast of South America.
It is bordered by Colombia on the west, Brazil on the south, Guyana on the east.
The Dutch Caribbean ABC islands to the north and the islands of Trinidad and Tobago to the north-east.
In August 1499 an expediter Alonso de Ojeda visited the Venezuelan Coast.
The stilt houses in the area of Lake Maracaibo reminded expediter, the city of Venice.
So he named the region Veneziola, or “Little Venice”. The Spanish version of Veneziola is Venezuela.
Sighted by Columbus in 1498, Venezuela was formerly a Spanish Colony.
Venezuela became independent in 5th July 1811 and a Republic in 1830.
It was ruled by Military Strongmen during most of the 20th century.
Venezuela has democratically elected government since, 1959.
And it was the richest Latin American nation at some point in time.
DISCOVERY OF OIL DEPOSITS
Massive oil deposits were discovered in Lake Maracaibo during World War I (28 July 1914 to 11 November 1918).
And these oil deposits played a vital role in the transformation of Venezuela and its economy.
By 1935 Venezuela’s per capita gross domestic product was Latin America’s highest.
It prompted an economic boom that lasted into the 1980s.
RISE OF THE VENEZUELA CRISIS
We can’t say that the Venezuela Crisis began during the presidential tenure of Hugo Chavez or Nicolas Maduro.
But it was framed years ago when Venezuela ruled by Military dictators.
Juan Vicente Gómez Chacón
He was a military general and ruler of Venezuela from 1908 until his death in 1935.
At first, only the British and Dutch are allowed to take part in oil production in Venezuela.
But soon Gómez allowed the US for its participation in oil production.
Gómez benefited handsomely from this, as corruption thrived.
But at the same time, the new source of income helped him to centralize the Venezuelan state and developed its authority.
Gómez allowed those countries to explore the oil in Venezuela. In exchange these countries allowed Gómez to become rich.
He remained the most powerful man in Venezuela until his death in 1935.
The gomecista dictatorship system largely continued under Eleazar López Contreras.
This was not a single incident when higher authorities of Venezuela used these natural resources for their own and personal benefit.
The loop of corruption and self-obsessed governance was on till the country became bankrupt.
In the 1950s another dictator took charges of Venezuela Marcos Pérez Jiménez.
To consolidate the young democracy, the major political parties (with the notable exception of the Communist Party of Venezuela) signed the Punto Fijo Pact.
And Pérez Jiménez was forced out on 23rd January 1958.
Punto Fijo Pact
This pact was a written guarantee that the signing parties of Venezuela would respect the election results.
Prevent single-party hegemony, work together to fight dictatorship, as well as an agreement to share oil wealth.
In the 1960s, Venezuela established OPEC (Organization of the Petroleum Exporting Countries) with Iran, Iraq, Kuwait and Saudi Arabia.
And in the same year, substantial guerilla movements occurred in Venezuela.
Including the Armed Forces of National Liberation and the Revolutionary Left Movement, which had split from Democratic Action in 1960.
Most of these movements laid down their arms under Rafael Caldera’s presidency (1969–74).
Caldera had won the 1968 election for COPEI.
COPEI also called Social Christian Party or Green Party is a Christian democratic party in Venezuela.
COPEI stands for Comité de Organización Política Electoral Independiente (“Independent Political Electoral Organization Committee”).
Being the first time a party other than Democratic Action took the presidency through a democratic election.
The election of Carlos Andrés Pérez in 1973 coincided with the 1973 oil crisis.
In which Venezuela’s income exploded as oil prices soared.
This led to massive increases in public spending but also increases in external debts.
It continued into the 1980s when the collapse of oil prices during the 1980s crippled the Venezuelan economy.
As the government started to devalue the currency in February 1983 to face its financial obligations, Venezuelans’ real standards of living fell dramatically.
A number of failed economic policies and increasing corruption in government led to rising poverty and crime, worsening social indicators, and increased political instability.
Economic crises in the 1980s and 1990s led to a political crisis in which hundreds died in the Caracazo riots of 1989.
Hugo Chávez: 1998–2013
Chávez elected as president in December 1998.
The subsequent launch of a “Bolivarian Revolution”, beginning with 1999 Constituent Assembly to write a new Constitution of Venezuela.
To maintain the esteem and presidency era Chávez introduced several social welfare programs in favor of poor but disfavoring Venezuelan economy.
PDVSA an oil extracting company of Venezuela and the largest company in South America.
It is the Venezuelan state-owned oil and natural gas company.
PDVSA has activities in exploration, production, refining and exporting oil, as well as exploration and production of natural gas.
Between 2004 and 2010 PDVSA contributed $61.4 billion to the government’s social development projects.
Chávez and his political leaders started dominating PDVSA and its employees.
In 2006, Rafael Ramírez, the energy minister, gave PDVSA workers a choice: Support President Hugo Chávez, or lose their jobs.
The minister also said: “PDVSA is red [the color identified with Chávez’s political party], red from top to bottom”.
Chávez defended Ramírez, saying that public workers should back the “revolution”.
He added that “PDVSA workers are with this revolution and those who aren’t should go somewhere else. Go to Miami”.
PDVSA continues to hire only supporters of the president, and PDVSA revenue is used to fund political projects.
Chávez ordered PDVSA to do more and more recruitment despite not having the need of employees.
Because they have enough money to pay without letting them work.
Chávez started many other pension schemes depending upon the funds of PDVSA to help poor or we can say to hold the esteem of his tenure.
During Chávez presidency era people started benefiting through different social schemes, the poverty rates became low.
Finally, he became a charismatic leader for Venezuelans.
He maltreated PDVSA and banned the Privatization of any other sectors.
According to him every sector should only state-owned.
Venezuela under Hugo Chávez suffered one of the worst cases of Dutch Disease.
(Dutch Disease in economics the apparent causal relationship between the increase in the economic development of a specific sector (e.g natural resources) and a decline in other sectors (like the manufacturing sector or agriculture)).
Due to the Bolivarian government’s large dependence on oil sales. Poverty and inflation began to increase in the 2010s.
As a result, Carcass became perch of the highest crime rate in the World.
Daily there is a kidnapping, murder and robberies are happening in Venezuela.
People started black marketing to fulfill the essential needs for their survival.
Poverty rate became high, inflation increased, there was no availability of food, no medical facilities, no electricity and no gasoline.
The government stopped the all pension and social welfare schemes.
Chávez was suffering from cancer so picked Maduro as his successor and appointed him vice president in 2013.
He died on 5 March 2013 after a nearly two-year fight with cancer.
Nicolás Maduro: 2013–present
Maduro was elected President in a shortened election in 2013 following Chavez’s death.
And this was the time when oil prices started collapsing.
Starting off as a bus driver, Maduro rose to become a trade union leader before being elected to the National Assembly in 2000.
He was appointed to a number of positions within the Venezuelan Government under Chávez, ultimately being made Foreign Minister in 2006.
Maduro has ruled Venezuela by decree since 19 November 2013.
(Decree is a style of governance allowing quick, unchallenged creation of law by a single person or group, and is used primarily by dictators, absolute monarchs, and military leaders. It also allows the ruler to arbitrarily create law, without approval by a legislative assembly)
As a result of Chávez’s policies and Maduro’s continuation of them, Venezuela’s socioeconomic status declined, with crime, inflation, poverty and hunger increases.
He also started generating state currency beyond the limit which resulted in the devaluation of Bolivar.
Opposition leaders and international media consider the government of Maduro to be a dictatorship.
The Highest inflation rate, poverty, the highest crime rate, black marketing, devaluation, food shortage, worsen the social situation, malnourishment in children due to insufficient food and milk.
Death rates are going higher day by day due to the lack of the medical facilities.
Colombian border crossings have been temporarily opened to allow Venezuelans to purchase food and basic household and health items in Colombia in mid-2016.
In September 2016, a study published in the Spanish-language Diario Las Américas indicated that 15% of Venezuelans are eating “food waste discarded by commercial establishments”.
The world’s largest oil reserve is now facing the condition of Hyperinflation only because of few Narcissists.
They made Venezuela Bankrupt and Venezuelans a victim.
I am a blog enthusiast, an innovative thinker, and self-driven individual. I would like to describe blogging as an art. It’s not something which will turn overnight into a profession. A well-nurtured passion will surely become a profession and that’s where I am heading to. Join along. Read. Like. Share. This blog is all about motivating and spreading awareness. An online platform to share information and opinion on sensational topics involving National and International issues. If you introduce me as a founder, a CEO or an entrepreneur, it will be modest. Naaah… Yes, I am all that by myself.
I am a blog enthusiast, an innovative thinker, and self-driven individual. I would like to describe blogging as an art. It’s not something which will turn overnight into a profession. A well-nurtured passion will surely become a profession and that’s where I am heading to. Join along. Read. Like. Share.
This blog is all about motivating and spreading awareness. An online platform to share information and opinion on sensational topics involving National and International issues.
If you introduce me as a founder, a CEO or an entrepreneur, it will be modest. Naaah… Yes, I am all that by myself.