Protests in Venezuela
Months of goods shortages, allegations of corruption, a sky-high inflation rate of 56.2 percent and rising crime have left thousands of Venezuelans dissatisfied with the government of Nicolás Maduro, the successor of the late Hugo Chávez of the United Socialist Party of Venezuela, (PSUV.) This dissatisfaction culminated in violent protests in Venezuela against the Maduro administration that took place in many large cities across Venezuela, including the cities of Maracaibo and Caracas, the capital.

On Thursday, three protesters were killed and dozens more were injured in clashes between the disgruntled and disaffected youth and the police and troops from the National Guard. Around 1,000 protesters lit bonfires and blockaded the streets in an effort to draw attention to their demands. It is relatively unclear what the protesters want, however. Some are calling for Maduro to resign; others simply want an end to the uptick in the crime rate.

In an effort to quell the protests, on Saturday Maduro called for a “ban” on further protests and prohibited media coverage of the protests. After promoting a position of “peace and tolerance,” Maduro denounced the protesters as “fascists” who sought to overthrow the government. He further attempted to maintain his grasp on his power by suggesting that “the people are in power.”

One leader of the opposition, Leopoldo Lopez tweeted support for non-violent protests, and addressed Maduro in a message in which he called the president “a coward…who cannot make me or my family submit to you.”

Proponents of the peaceful protests in Venezuela have stated that government-sponsored motorcycle gangs known as colectivos seek to incite further violence in order to thwart the legitimacy of the movement. Since Wednesday, 99 people have been arrested and released, with 13 remaining in jail.

Maduro has found it increasingly difficult to continue riding the wave of the Chavista movement following the death of Hugo Chávez in March of last year. After narrowly winning a presidential election in April 2013 that the center-right opposition leader, Henrique Capriles, denounced as fraudulent, Maduro has struggled to appear as a legitimate successor to the charismatic Chávez. As such, he has blamed the opposition movement for the country’s economic woes, which includes a high inflation rate and a shortage of basic goods such as toilet paper.

– Jeff Meyer

Sources: Reuters, The Daily Beast, Reuters, AlJazeera, BBC
Photo: Tempo

Woman_Venezuelan_Protests_
Venezuelans took to the streets to protest against the successor government of the late Hugo Chavez led by President Nicolas Maduro. The oil-rich Bolivarian Republic, many citizens feel, is failing to provide them with an adequate living standard. Inflation of the Venezuelan bolívar is going up at an astronomical rate, the highest in Latin America at 56 percent. Basic commodities as well as absolute necessities are scarce and the murder rates are getting higher.

Struggling with capital flight—a consequence of the currency’s devaluation—and the enormous loss of its foreign reserves, authorities have done little to try to salvage the bolívar.  The poor state of the Venezuelan economy has an acute impact on the country’s political climate. Not only have the left-wing party’s populist policies deeply polarized the society. This deep polarization in the society—already plagued with a gargantuan disparity gap—is manifesting itself on the streets of Caracas as both supporters and opponents of the current government are staging rival rallies.

With already four casualties at the hands of the authorities, the violent Venezuelan protests on the streets of Caracas are a direct result of years of accumulated policy mistakes and economic woes that Venezuelans have endured. Shortages of the most basic necessities such as toilet paper, rice, coffee and corn flour, the lastest of which is a crucial ingredient in the Venezuelan daily diet.

Years of over-reliance on imports, price controls, unsustainable petroleum money coupled with the lack of cash in general and the government’s obstinacy to not deliver United States dollars to importers have made many common and vital items to be absent from Venezuelan markets. Many industries that used to provide these basic resources for the country have also all been greatly diminished.

However, many Venezuelans still support their government. The populist regime created—arguably with the oil revenue—during Hugo Chavez’s administration has seen the power of the elite substantially curbed and the state’s roles exponentially expanded. The policies that follow the government’s egalitarian and anti-imperial discourse (which had caused an abrasive verbal duel between the King of Spain and the late Hugo Chavez) have generated a short-term but unsustainable well-being for the Venezuelan people.

However, the aforementioned price control, decreed wage raises, the notorious nationalization of foreign capitals (a measure taken by many Latin American governments of the same political camp as Venezuela,) the reduction of interest rate as well as the inorganic credit manipulation all contribute to the present hardship facing the people of Venezuela. However, it is because of these policies that so many people, especially those from the poorer sectors of the society, are still in favor of the government.

Thus, the student-led Venezuelan protests and the deadly clashes in Caracas is an archetypal manifestation of the political paradigm that is appearing across the developing world. It is a paradigm that presents a discourse that puts into question the very principles of democracy.

In places where there is wide disparity in terms of material development and education, should good governance take precedence over popular support? Is democracy a panacea for all malaises, a one size fits all model to which every society should aspire? These are not simply rhetorical questions; they are vexing dilemmas that will necessitate answers as Western hegemony yields.

– Peewara Sapsuwan

Sources: La Tercera, Rumbo, The Guardian, Financial Times, Bloomberg
Photo:
Washington Post

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Eudomar Tovar is the Central Bank President in Venezuela and has taken the spotlight most recently for blaming a nation-wide blackout on sabotage. Accusations have been made that the Central Bank has been using their gold supply in a deal with Goldman Sachs and Bank of America to increase hard currency.

Tovar vehemently denies that the Central Bank is doing any sort of business with either Goldman Sachs or Bank of America. Henrique Capriles, an opposition leader, claims that Central Bank was involved in a value swap with Goldman Sachs for the equivalent of $2 billion dollars (USD) in gold ounces. Central Bank has also been accused of dealing with Bank of America to pay off debts owed to foreign governments. Tovar denied any such deals and claimed they were unofficial proposals, but did not elaborate or further explain the Bank’s position in regards to these claims.

The main problem is that Venezuela is experiencing a shortage of basic goods, and could potentially use its huge reserves of gold to procure a loan from such companies such as Goldman Sachs or Bank of America. Main Central Bank officials have complained that they are due a huge amount of hard currency from Washington, and that the red tape and delay in receiving this currency is causing inflation and product shortages.

Furthermore, a decrease in oil supply has caused tension on the dollar value, making some think that Venezuela is in desperate need of cash. The value of gold has decreased as well, putting a dent in the net worth of the country’s enormous gold reserves. As it stands, only government channels have access to the dollar due to harsh capital requirements, which often causes delays and bottlenecks day-to-day cash flow.

Leaders of the South American nation do not believe in free market capitalism and have tightly controlled the cash flow for decades. Consequently, the country falls more deeply into poverty every year, while the tyrannical government is not improving the situation.

President Maduro replaced the recently deceased President Chavez, who had a reputation for spending funds that could not be liquidated. Shortages have increased, inflation has risen to 55% and an inside Bank official claimed that Venezuela was indeed conversing with Wall Street. However, all three parties involved had no comment to offer on these claims. The economy is in a downward spiral, encouraged by the fact that stores cannot buy new inventory due to the cost of goods being higher than the retail price.

Questions are circulating about methods of intervention and whether American aid is appropriate, as well as questions regarding the depth of corruption in the Venezuelan government. Basic economics further show that public spending is good for the economy, when business have the right to compete with each other for capital gain.

The absence of a free market suggests that if Bank of America or Goldman Sachs loaned Venezuela the cash they need, it would just be reinvested into a corrupt system and exacerbate the problem. Solutions must involve correcting the dishonest practices of the government and its leaders so that the citizens will not continue to suffer, but instead thrive.

– Kaitlin Sutherby

Sources: Reuters, The Wall Street Journal: The Pope, State and Venezuela, The Wall Street Journal: Blackout
Photo: Vintage 3D

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The inflation in Venezuela has caused significant social turmoil. In September, after the toilet paper shortage, which was preceded by food shortages and electricity blackouts, an occupation of the Paper Manufacturing Company took place.

Troops were sent to monitor “fair” distribution of available stock. Earlier in November, President Nicolas Maduro jailed electronic vendors whom he accused of price-gouging, stating that this was only the beginning of what he was willing to do to protect his people. He has expanded this occupation to a variety of goods stores.

The inflation also led to the handing out of Christmas bonuses in November. While many saw this as political theater meant to sway people’s votes just prior to the December elections, it was thought necessary by some in a country with a 54% inflation rate. It is this climate that necessitates paychecks being distributed prior to prices having time to rise.

Like Chavez, Maduro has blamed speculators and the “parasitic bourgeoisie” however, his accusations will not be able to stop the collapse of the economy especially given the continued monetary expansion and debilitating price controls. Furthermore, his emergency measures might be too late given that Venezuela has been in steady economic decline since Hugo Chavez instituted his trademark socialism in Venezuela.
The nation has a massive social spending program, and when one combines this with costly prices and labor controls along with an ambitious foreign aid strategy, the oil revenues that have been keeping Venezuela afloat no longer seem to be enough.
Mari Sahakyan

Sources: Wall Street Journal, Market Place, National Post, Market Oracle, Trading Economics

isler_miss_universe
Last week, Venezuelan Gabriela Isler became the sixty-second Miss Universe. The twenty-five-year old won the title during the greatest economic downturn in her country’s history.

Venezuela possesses the largest known oil reserves in the world but nearly 60 percent of its population is considered poor. Inflation continues to plague the country, rising to over 50 percent in the last year alone. And the current exchange rate has fallen to 6.3 bolivars for each U.S. dollar.

In an effort to combat the economy, President Nicolás Maduro mandated that prices be lowered in stores around the country. The mandate is the result of the government’s recent decision to grant Maduro power to rule by decree without legislative support.

Moreover, the country’s national debt has increased in recent years. Recent figures estimate that Venezuelan business owners owe between $700 million and $1.2 billion to their Panamanian suppliers.

In spite of its economic woes, Venezuela has continued to lend support and resources to maintain its participation in the Miss Universe pageant. Isler became the seventh Venezuelan to win the coveted title on November 9.

Along with the other contestants, Isler stayed at the Crowne Plaza World Trade Centre in Moscow whose accommodations cost between 6,500 to 95,000 rubles or $197 to $2,900 USD per night. Several candidates arrived as early as October 21 to prepare for the event.

The 86 participants also enjoyed products from a variety of luxury sponsors including IMAGE skincare, Yamamay swimsuits and Chinese Laundry shoes.

As the newest Miss Universe, Isler was asked to unveil a $1 million swimsuit designed by Yamamay for the occasion.

– Jasmine D. Smith

Sources: The Guardian, BBC, IB Times, Miss Universe

 

maduro_venezuela_social_happiness
Venezuelan President Nicolas Maduro announced the creation of the new Vice Ministry of Supreme Social Happiness last week. Rafael Ríos, a former lawmaker and military official, will head up the ministry, which will begin its happiness endeavors December 9. This date coincides with the newly named “Loyalty and Love to Hugo Chavez Day.”

After 14 years of rule, former president Hugo Chavez died March 5 of this year. Maduro succeeded him on April 14 as his chosen replacement.

The new ministry is intended to honor the late president and the country’s revolutionary figure Simon Bolivar with the purpose of ensuring “supreme social happiness” and alleviating poverty. Upon its unveiling, Maduro announced that “the supreme happiness office will look after our handicapped brothers and sisters, those who are homeless, our old folks, our children.”

Maduro also termed the new ministry’s work as a “social advance in the struggle against the perfidy of capitalism.”

Venezuela has a history of doling out huge amounts of money toward “supreme happiness.” Just last year, Hugo Chavez contributed 38% of the national budget to that end, spending more on “happiness” than the military or energy.

Indeed, the Earth Institute’s 2013 Happiness Report did rank Venezuela highly. The country was rated the happiest in South America and twentieth happiest worldwide.

Not all of Venezuela’s rankings are positive, however. Out of the 176 countries in Transparency International’s 2012 Corruption Perceptions Index, Venezuela ranked 165. Freedom House only ranks Venezuela as “partly free,” citing its Internet as “partly free” and its press as “not free.” The country also faces crippling inflation, which currently hovers around 50 percent. The inflation is driven by a weakened currency and goods running out in stores across the country. The oil rich nation is chronically short of basic goods and medical supplies.

Thus, reactions to the happiness ministry’s establishment have been skeptical. From the Venezuelan capital of Caracas, fruit vendor Victor Rey said he was awaiting a “vice ministry of beer,” saying “that would make me and all the drunks happy.”

On a more sober front, housewife Liliana Alfonzo stated her preference for being able to buy milk and toilet paper over a Supreme Happiness agency. On attempting to purchase food, which vanishes from stores within minutes of arriving, she said “it’s a Calvary getting the ingredients for any meal.”

Kelley Calkins

Sources: NBCBuzzFeedWall Street JournalFreedom House

Venezuela_Food_Shortages
For residents of Venezuela, food and grocery shortages have become a part of daily life. Outside of many government-subsidized grocery stores, people line up before dawn hoping to purchase what they can before supplies run out. Items such as milk, meat and toilet paper are bought up quickly. The shortages have lasted for more than a year, prompting calls for President Madura to reevaluate the economic policies of his predecessor, Hugo Chavez.

Though Venezuela is one of the most oil rich nations in the world, it is struggling to mitigate inflation and keep subsidized grocers stocked with products. Many experts say that strict price controls are to blame for the country’s economic problems, while President Maduro insists that it is all part of an effort by the opposition and CIA to destabilize the government and sabotage Venezuela’s oil industry.

Asdrubal Oliveros, an economist at one of Venezuela’s leading consulting firms, told the Guardian that the current crisis is the result of several factors, which include the country’s overreliance on imports and the government price controls. Another factor is the decrease in agricultural production due to the government’s recent land expropriations. “It’s cheaper to import than it is to produce,” Oliveros said. “That’s a perverse model that kills off any productivity.”

Many economists echo Oliveros analysis, saying that the Venezuelan government is not helping the problem by fixing prices so low. When prices are set low, companies and producers are not able to make a profit—this, in turn, leads to a cessation of farming, manufacturing, and production. Originally designed to help Venezuela’s poor and working classes afford food and staples, the price-fixing program has instead led to empty shelves and long queues.

After becoming President of Venezuela, Hugo Chavez and his ministers sought to reduce the growing wealth disparity in their country. To achieve this, they implemented price controls on certain goods so as to make them cheaper for individuals and families with lower incomes. This step and increased spending on social programs, however, may be contributing to the country’s current economic crisis.

Aggravating the problem is the fact that inflation is increasing at an alarming speed. In August, 12-month interest rates rose to 45.4 percent. This is the highest since Venezuela’s hyperinflation crisis in the mid-1990s. Officials in Maduro’s government have said that they will be considering changes in the country’s economic policies in an effort to combat the rising prices and food shortages in Venezuela.

– Daniel Bonasso

Sources: The Guardian, New York Times, Wall Street Journal