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3 August 2024

Venezuela

Tag(s): Politics & Economics, Leadership, Foreign Affairs
There has been considerable interest this year in the fact that so many democratic nations are holding elections. There has of course been massive interest in the UK's General Election and the upcoming one in the USA. However, one of the most significant is possibly the one that took place last Sunday in Venezuela where a presidential election that was clearly fraudulent has plunged the whole country into chaos. The only country in Latin America that has recognised the re-election of Nicolas Maduro is communist Cuba. Even Chile, which now has a socialist president in Gabriel Boric, has refused to recognise Maduro. The UK is facing widespread violence probably stimulated by the falsehoods circulating on wretched social media, but this is nothing like what has happened in Caracas where there have been massive protests which are being suppressed violently by the security forces.
During the 20th century Venezuela, which had been one of the poorest countries in Latin America, became the richest. Indeed 50 years ago it was among the 20 richest countries in the world. Its per capita level of GDP exceeded European countries like Spain and Greece and was not much lower than the UK.

This wealth was based primarily on the fact that Venezuela had and still has the largest oil deposits in the world. But unfortunately, policies were followed where the state interfered in the economy and massive over-regulation was introduced. Labour market regulations were tightened to heights that have seldom been seen anywhere. What tends to happen when an economy declines so badly is that in a democracy voters choose politicians who make it even worse. Hugo Chavez emerged as someone who promised to deliver the country from poverty, corruption and economic decline with his socialist policies. When he was elected president in 1998 this was welcomed by many left-wing leaders and intellectuals around the world.

Chavez took advantage of the oil wealth but then his socialist tendences took over and his policies would lead to hyperinflation, famine and economic disaster. The oil was partially owned by the Venezuelan state owned oil and gas company PDV SA but also by the usual range of foreign oil companies. The Chavez government compelled these foreign oil companies to accept minority stakes or face nationalisation. When Chavez came into government the government took just over 50% of oil production profits. By 2013 when he died that had increased to over 90%, one of the highest in the world.

This tendency to nationalise important industries extended to firstly iron and steel, then cement and food, then power utilities and the ports. In just three years around 350 businesses we're nationalised. At the same time the executive positions in these nationalised companies were given to loyal party members. The consequence was that all of these public enterprises were badly managed but they received excessive subsidies and thus retained an excessive number of employees.

The country's prosperity had depended on the oil industry but now investment in that ceased and instead any available monies were spent on social spending. Chavez died in 2013 but his former second-in-command in Nicolas Maduro took over and he only increased the programme of nationalisation taking over supermarkets and dairies, manufacturers of fertilisers and shoes, and coffee producers. The Central University of Venezuela conducted a survey in 2016 which reported that 80% of Venezuelans lived in poverty. Over 70% had lost considerable weight and over the next five years those who lived in poverty now lived in extreme poverty.

Under Chavez separation of powers had been gradually abolished, Maduro has taken that on much further so that now Venezuela has become a classic socialist dictatorship just as the Soviet Union and China had before and remember in the Soviet Union under Stalin and China under Mao  that led to widespread famine and the deaths of millions. In Venezuela corruption is widespread and the norm. There is no such thing as freedom of the press or freedom of assembly. Venezuela is close to the bottom of the Transparency International's Corruption Perceptions index. Various United Nations institutions have found evidence of crimes against humanity by the Maduro government. In 2020 and 2021 UNHCR reported that almost 8 million people, a quarter of the population, have left Venezuela. This is certainly the largest refugee and migration movement in the recent history of South America but there can be hardly any other region where so many people have left their country since the Second World War.

Many of these refugees have fled to Chile which I know well and I regret to say that they are not particularly welcome. There has been a huge rise in crime as a result and we can only expect this migration to increase if Maduro is not forced to back down. We know from history that  the only way socialism can be made to work over the long term is to build a wall as the Soviet Union did to stop East Germans fleeing to the West. I remember seeing that wall just a few months before it came down and I stood on it and said aloud “This wall must come down”.

Jeremy Corbyn who led the British Labour Party from 2015 to 2020 praised Chavez as “an inspiration to all of us fighting back against austerity and neoliberal economics in Europe”. How do people like him now react when they see the total failure of Venezuela’s “Socialism for the 21st century”? They do what they always do after every failed socialist experiment. They say that wasn't really socialism at all. But next time they say it will work, But, of course, it was absolutely socialism. Everything that Chavez and then Maduro have done has been inspired by their understanding of socialism and this has destroyed lives, businesses, prosperity, food production and everything else. It cannot work because it is against human nature.

Source: “Venezuela: from socialist experiment to failed state”. Rainer Zitelman, Article  August, 2024



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David's Blog

The Election of a King
5 October 2024

Venezuela
3 August 2024

Cryptogram Quotations
27 July 2024

BLOG The End of History?
23 March 2024

Democracy Under Assault
27 January 2024


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