Future of Venezuelan President’s “Economic War” Uncertain

Nestor Rojas Mavares (dpa)

Nicolas Maduro. Foto: telesurtv.net

HAVANA TIMES — Though the Venezuelan economy began showing signs of crisis when Comandante Hugo Chavez was dying at the beginning of 2013, his successor Nicolas Maduro has attributed current difficulties to a supposed “economic war” being waged by unscrupulous business people, DPA reported.

A year after Chavez’ death, Maduro faces high economic inflation, shortages and low growth indices, coupled with the political unrest that was sparked off this past February by a series of anti-government protests.

In his 14 years in office, Chavez rode the high oil prices to push his political project for social justice forward and hit only a mere bump on the road in 2009, when the global crisis hit.

Chavez had sufficient money at his disposal to cover up any holes in the economy and his speeches convinced Venezuelans that the turbulence they were experiencing was a temporary storm that would soon blow over.

Things, however, began to change at the end of 2012, when oil prices settled at around 100 dollars per barrel and the economy began to register lower growth.

In 2013, the country reported a startling 56.2 percent inflation rate and a GDP growth of merely one percent. This was coupled with a drastic devaluation of Venezuelan currency, a phenomenon the government chose not to address (creating a multiple exchange system instead).

Maduro’s “economic war” theory has prevailed and the government’s response has been to establish more control mechanisms, operated by high military officers tasked with monitoring stores and markets and ensuring they sell products at “fair prices.”

According to Venezuela’s Central Bank, the most severe shortages experienced in the last five years were reported this past January. Nearly one third of the 100 products with the highest demand in the country have disappeared from the market.

Maduro implemented an additional law which limits the profits of business owners, a measure he says will pave the road towards lower inflation.

The government has been deaf to the warnings of experts. Ministry of Planning Jorge Giordani shows no signs of reconsidering any measure, even though his theories concerning poverty are considered models typical of the 1960s.

The country had to wait for the so-called Peace Conference, called by Maduro to put an end to the protests which began on February 12, in order to hear the first warnings within the walls of government.

Hugo Chavez. Foto: Caridad

“The country’s not well, Mr. President,” president of Fedecamaras Jorge Roig said. “You have to listen to voices other than those of your party. The country is now facing a number of legitimate protests,” he added.

“Our country isn’t well, Mr. President. Its economic indicators show one of the highest inflation rates on the planet. It has severe shortages and people can’t find essential products. Today, finding a job is practically impossible and our workers have to beg for a position,” the businessman pointed out.

Roig stated businesspeople face “an economic policy that isn’t making the right decisions. The way we see it, you continue to implement a (socialist) model that has failed in several other countries around the world.”

Experts have warned about the prolonged dollar draught, which has turned hard currency into an elusive prey. The government has accrued multi-million-dollar debts with importers, airline companies and food and medical equipment suppliers, undermining confidence in the country.

Experts disagree as to the causes of the shortage of “greenbacks” in a country whose oil sales brought in 96.8 billion dollars in 2012, where the average per-barrel price hasn’t dropped much below 100 dollars and a severe exchange control mechanism is in place since 2003.

Controlled exchange markets are part of the economic legacy left behind by Chavez, who once affirmed control mechanisms would be in place “forever.”

Venezuela’s reserves are chiefly made up of gold. Of the US $27 billion total, around 4 billion are liquid reserves that are enough for a little over a month of imports.

According to economist Jesus Cacique, hard currency shortages are explained in part by the fact that PDVSA, Venezuela’s State oil company, transfers only half of its profits to the Central Bank and destines the rest to development funds and import priorities.

During the Economic Peace Conference, parallel negotiations that also seek an end to the protests, Venezuelan Vice- President Jorge Arreaza (who is married to Chavez’ daughter) met with a group of businesspeople.

Arreaza gave them a copy of the Plan de la Patria (“Plan for the Homeland”), the government platform Chavez proposed in 2012 when he was reelected for the third time.

“Our project has a name: Bolivarian socialism of the 21st century. Our socialism is made up of the private, State and cooperative sector, in contrast to previous projects. We are confident we can all co-exist,” he said.