The current situation in Venezuela is about as bad as it gets for a country that is not
at war.
El Nino and climate change have brought severe drought, and years of corrupt and incompetent
leadership have ruined the economy--a two punch combination that has this tropical nation
of 30 million people reeling.
The drought means water is only arriving in the capital, Caracas, once a week.
And when it does come, it’s brown and makes people sick.
With no rain, the water level is critically low at the Guri hydroelectric dam that normally
provides about 60 percent of the nation’s power demand, but without enough water to
run it at full capacity, the government is shutting off electricity for hours every day.
This energy crisis is coupled with an economy in shambles.
Inflation is above 700 percent, that’s the highest rate in the world.
All this is due to the poor decision making of an extremist government that’s been led
by Hugo Chavez and his successor Nicolas Maduro.
They’ve been gradually killing business with a tsunami of regulations, price controls
and government takeovers, which has eliminated the private production of many goods and services.
So people have bags full of cash, but nothing to buy.
Grocery store shelves are bare, and hunger is spreading rapidly.
The most tragic part of this story is that Venezuela is sitting on the world’s largest
reserves of black gold, so with all that oil it should be on the opposite end of the spectrum--it
should be one of the healthier economies in the world.
To understand why it’s not, I think two points are worth highlighting: 1) Venezuela
has a tumultuous modern history, with constant - and often violent - struggles for power,
so Venezuelans have had to put up with a lot of turmoil and don’t expect much stability
from their government, and 2) the country is still suffering from the aftermath of the
rule of Hugo Chavez, a charismatic firebrand who rose through the military and led two
failed coup attempts before becoming President.
After himself surviving a coup attempt, Chavez ruled Venezuela during the Bush years, and
constantly portrayed himself as a socialist counterweight to Bush’s imperialism.
Chavez: “Yesterday the Devil came here.”
He also took advantage of record high oil prices during the 2000’s to spend lavishly
on his people while running irresponsibly-high budget deficits year after year.
But the oil money kept flowing in, so the damage Chavez was doing wasn’t obvious until
after his death from cancer, in 2013, when his hand-picked successor - Nicolas Maduro
- took power in a fraudulent election and continued Chavez’s policies.
In 2014, Venezuela suddenly found itself ranked fifth in Latin America in GDP per capita--falling
from first place when Chavez took over in ’99.
And as oil prices plunged, so did revenues, but the government couldn’t scale back because
its spending on social programs and employment was propping up the entire economy.
To put this in contrast, our budget deficit here in the United States reached a high point
of 10% during the worst year of the great recession, but has been brought down to just
3.3% this year.
Fed up - especially over moves like jailing the leader of the opposition - Venezuelans
showed their displeasure at the ballot box and earlier this year, Maduro’s United Socialist
Party lost control of the legislature in a landslide, but he packed the courts with judges
who so far have defeated lawmakers’ efforts to remove him from office.
Maduro’s also following the dictator playbook by declaring a state of emergency and revving
up the military that will be his last line of defense if large numbers of Venezuelans
take to the streets in revolt.
And of course, he’s blaming his country’s problems on outsiders, specifically a conspiracy
of economic warfare at the hands of the American CIA.
But now, even his former allies in Latin America are starting to abandon him.
After he gave a rambling, Trump-like speech where he urged women to stop using hair dryers
to save electricity, the former president of Uruguay called Mr. Maduro “crazy like
a goat.”
Given Maduro’s slumping popularity, there are doubts over whether the army would even
obey his orders to use force against protesters.
There’s also the possibility of a military officer taking matters into his own hands
and leading the removal of Maduro’s regime in yet another coup.
So what happens next is anybody’s guess, but given Maduro’s stubbornness, Venezuela
seems headed toward conflict sooner rather than later.
Thanks for watching.
And a special thanks to Lynda, an online video learning platform.
Among the thousands of courses it offers are tutorials and advice on leadership.
They’ve definitely helped me, and it seems whoever rules Venezuela next should probably
sit down and watch them too.
Follow the Lynda.com/TDC link below to start your 10 day free trial and explore all they
have to offer.
Make sure you subscribe to The Daily Conversation to get my next video.
Until then, I’m Bryce Plank.