Venezuela: A Drizzle, then a Storm

VENEZUELA

A Drizzle, then a Storm

Venezuela hasn’t bottomed out just yet – but it’s close.

Last week, the country failed to make about $280 million in loan repayments, triggering Standard & Poor’s to categorize Venezuela as a nation in “selective default,” the Washington Post reported.

That’s just a fancy way to say it’s broke.

“This is the first drizzle in a huge thunderstorm,” Jose L. Valera, an international energy lawyer, told the New York Times. “The whole country of Venezuela is bankrupt.”

Venezuela’s rapid decline over the past 20 years from the rich man of South America to one of the world’s most troubled economies is a tale of two factors, tanking oil prices and excess government spending, writes Henkel Garcia U., a financial instructor at Venezuela’s Andres Bello Catholic University, for the Conversation.

It’s a deadly combination for a country whose economy depends on the oil business. Since 2006, the nation’s debt has increased nearly ten-fold, and inflation is expected to rise to 2,300 percent in 2018, CNN Money reported.

Venezuela’s economic crisis was only exacerbated by the nation’s political one. Hugo Chavez and his successor, current President Nicolas Maduro, chipped away at Venezuela’s last vestiges of democracy by consolidating power, fixing elections and silencing defectors, the Wall Street Journal reported.

This summer, Maduro moved to rewrite the nation’s constitution to dissolve any formal institutions that may stand in his way, something citizens have described as embodying the “worst style of Mussolini and Hitler.”

Both the EU and the United States have sanctioned and embargoedMaduro and his henchmen in attempts to buckle the regime through economic pressure. But with Russia and China – Caracas’s largest foreign backers – allowing Maduro’s regime breathing room in its debt repayments, a new lifeline has been extended, the Wall Street Journal reported.

The question now is how long the regime can endure.

The nation’s dire economic situation has caused Caracas to cut the nation’s imports of vital food and medicinal supplies. As a result, 54 percent of children are malnourished and curable illnesses are metastasizing into deadly diseases, CNN reported.

“It really hurts knowing that you bring your son (to the hospital) for one thing, he gets worse from others, then you get him back in a box,” said Sandra Galindez, whose son died recently in a poorly equipped hospital in Caracas.

For now the military, which remains loyal to Maduro, is preventing restless citizens from ousting him, writes Ozan Varol for the Washington Post.

But with wages slashed even within their own ranks, a coup may be imminent – either pushing this crippled nation over the brink, or ushering in a new era of democracy, Varol opined.

“The Venezuelan military is the levee that’s keeping the democratic movement at bay to protect the Maduro regime,” wrote Varol. “Only if the military breaks can the river of democracy jump the banks.”

That’s highly likely. As the government starves its people, and there is no chance of comeback – because of no change in policy – desperation will only grow.

And that leaves people who already have little with even less to lose.