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The Fall of Venezuela’s Oil-Based Economy
Currently, Venezuela is in an economic crisis. According to the International Monetary Fund (IMF), Venezuela’s inflation rate will exceed 10 million percent by the end of 2019. This high inflation has destroyed Venezuela’s economy, causing poverty and unemployment rates to rise. In turn, it has also created mass food and medical supply shortages across the nation. Venezuela was not always in a state of crisis; it was once a thriving country backed by a booming oil-based economy. If one understands the fall of Venezuela’s oil-based economy, they will know how Venezuela’s current crisis came to be.

Fruitful Origins

Back in the 1920s, people found some of the world’s largest deposits of oil in Venezuela. Upon this discovery, Venezuela embarked on the path of a petrostate.

As a petrostate, Venezuela’s economy relies almost entirely on oil exports. The government overlooked domestic manufacturing and agriculture, choosing to import basic goods instead of producing them within Venezuela. With strong support for an oil-based economy, Venezuela rode on its economic boom until the end of the worldwide energy crisis of the 1970s.

The 1970s energy crisis involved international oil shortages due to interrupted supplies from the Middle East. In place of the Middle East, Venezuela became one of the top oil suppliers worldwide. Oil prices thus skyrocketed due to limited suppliers and oil production in Venezuela increased to meet rising demand.

Venezuela added about $10 billion to its economy during the energy crisis, providing enough wealth to cover the importation of basic goods. It was even able to begin more social welfare programs.

The Fall

Once the energy crisis ended in the early 1980s and oil prices stabilized again, Venezuela’s economy saw its first notable decline. Oil production did not decrease in spite of lowered oil prices and demand, resulting in a capital loss for Venezuela’s economy. The production of oil is an expensive endeavor which requires high capital investment in the hopes of that even higher sales can offset the investment. Therefore, while oil production remained high, Venezuela failed to build off of the investment, losing capital immediately.

This loss of capital marked Venezuela’s oil-based economy’s initial fall, as Venezuela risked its well-being on the unstable oil market. Just prior to the drop in oil prices, Venezuela went into debt from purchasing foreign oil refineries. Without investing in domestic agriculture or manufacturing, the Venezuelan government became economically strapped; it could no longer pay for its imports and programs, and especially not its new refineries.

In order to pay for its expenses, Venezuela had to rely on foreign investors and remaining national bank reserves. Inflation soared as the country drilled itself further into debt. It was not until the early 2000s that oil prices began to rise again and Venezuela could once more become a profitable petrostate — in theory. Under the regime of Hugo Chávez, social welfare programs and suspected embezzlement negated the billions of dollars in revenue from peaked oil exports.

By 2014, when oil prices took another harsh drop worldwide, Venezuela did not reserve enough funds from its brief resurgence of prosperity. Ultimately, the country fell back into a spiral of debt and inflation.

Lasting Effects

The fall of Venezuela’s oil-based economy sent shockwaves throughout its population, affecting poverty and unemployment rates and causing mass food and medical shortages. Estimates determined that in April 2019, Venezuela’s poverty rate reached nearly 90 percent nationwide. A notable factor of its widespread poverty, some suggest that Venezuela’s unemployment rate was 44.3 percent at the start of 2019.

Unemployment is rapidly increasing in Venezuela as both domestic and foreign companies lay off workers — with some companies offering buyouts or pension packages, and others just firing workers without warning. As Venezuela falls further into debt and its inflation rises, there is not enough demand within the country for foreign companies to stay there.

As previously mentioned, the earlier Venezuelan government chose to rely on imports rather than domestic production for its basic goods. Now, in 2019, the country suffers from its past mistakes. Unable to afford its imports, food and medical supply shortages are rampant across Venezuela. According to recent United Nations reports, over a 10th of the nation’s population is suffering from malnourishment. In addition, malaria — which the country virtually eliminated several decades prior — is reappearing as there are more than 400,000 cases nationwide.

A Way Out

While the fall of Venezuela’s oil-based economy may be detrimental to the nation’s overall stability, there is a way out of ruin: the International Monetary Fund, an international agency that exists to financially aid countries in crisis. In the fight against global poverty, the IMF is a vital tool that can prevent countries from reaching an irreparable state.

If Venezuela defaults on its debt and seeks funding from the IMF, Venezuela would be able to invest in domestic agriculture and other infrastructure. Therefore, if the oil industry continues to decline, there will be a fallback for supplies and potential exports. While this is not a panacea to the fall of Venezuela’s oil-based economy, it is a way for the nation to prepare for any future declines in oil prices and prosperity.

– Suzette Shultz
Photo: Flickr

Venezuelans Fleeing
As the beneficiary of the world’s largest oil reserves, Venezuela was once the wealthiest nation in Latin America. However, in 2014, the economy began to collapse. The Bolivar, its currency, has gone into free fall, leaving millions unable to afford even the most basic necessities. According to Bloomberg’s Café con leche index, a cup of coffee today costs the same as 1,800 cups in January 2018. As food and health care become more difficult to come by, many Venezuelans are faced with the decision of struggling to get by or fleeing the country.

Why Flee?

Every day, thousands of Venezuelans leave their country in search of safety and stability, many of them arriving in Colombia. The International Rescue Committee has been supporting families in need in Cúcuta, a border city, since April 2018.

Venezuela is millions in debt while the only commodity that the country relies on is oil. Unfortunately, the value of oil has plummeted. In 2014, the price of oil was about $100 a barrel. Then several countries started to pump too much oil as new drilling technology could dredge up what was previously inaccessible, but businesses globally were not buying more gasoline. Too much oil caused the global price to drop to $26 in 2016. Today the price hovers around $50, which means that Venezuela’s income has been cut in half.

At the same time, Venezuelan President Nicolas Maduro’s hostility towards foreign business has created a corporate exodus. Companies such as United, General Motors and Pepsi have left entirely and unemployment in Venezuela could reach 25 percent this year. To try and keep up, Maduro has raised the minimum wage three times in 2019 in order to provide a little short-term relief to the poor. Currently, the minimum wage is at 18,000 bolivars per month, which is around $6.70 U.S.

How Many Venezuelans Have Left?

According to the U.N., more than three million people have already left Venezuela since the crisis began, and that number is increasing at a rapid rate. Approximately one million people, several lacking official documentation, have gone to neighboring Colombia. However, Peru is the second most popular destination country for Venezuelan refugees, with over 500,000. Ecuador follows, with over 220,000, Argentina with over 130,000, Chile with over 100,000 and Brazil with 85,000 immigrants.

By the end of 2019, the number of Venezuelans fleeing the country should reach 5.3 million. Nearly 300,000 children have fled the homes and lives they once knew, and approximately 10 percent of the country’s total population has already left.

The Way Out

The majority of those fleeing Venezuela do so on foot, and the road begins close to Cúcuta. Many people pay smugglers to use a trocha, which is an illegal border crossing through a river. On the Colombian side of the border has become a huge open-air market for all the things that people cannot get in Venezuela anymore. Vendors advertise medicines and cigarettes, candy and phone minutes for people to call home.

Sadly, some do not make the journey on foot. In Cúcuta, the temperature can hit 90 degrees Fahrenheit. However, on other parts of the route, the road climbs to 10,000 feet above sea level and temperature can drop below freezing. Walking this route takes approximately 32 days. The mountain pass, La Nevera, translates to the Refrigerator. Aid groups and residents have opened their homes and set up shelters along the path. However, the number of Venezuelans fleeing the country has surpassed the number of shelters available along the way, making space for only the lucky few.

The Impact

The emotional wellbeing of children who have fled Venezuela is of high concern. Sometimes traveling alone, boys and girls disrupt their education and are in great danger of falling behind in school and never catching up again. On the contrary, some parents leave their children behind when they leave the country. These children often gain material benefits from their parents’ migration, because sending hard currency to relatives provides greater access to food, medicine and other lacking necessities.

Furthermore, tensions between Venezuelans fleeing the country and citizens of other countries is often high. Colombia has had to reach out to the international community for help in dealing with the influx of migrants. Hospitals and elementary schools in Cúcuta have been overwhelmed, and administrators complain about the central government’s failure to reimburse them for the cost of caring for migrants. The national government has suspended the issuance of temporary visas, and the U.S. Agency for International Development, or USAID, has promised $30 million in assistance.

In Ecuador, anti-immigrant sentiments reached a highpoint when a Venezuelan allegedly stabbed to death his pregnant Ecuadorian girlfriend, Diana Ramirez Reyes, in front of police and scared residents of the city of Ibarra. Since then, President Lenin Moreno decreed a tougher immigration policy that requires incoming Venezuelans to present a document certifying they had a clean criminal record in Venezuela. However, such documents are costly to obtain in Venezuela.

Similarly, Peru and Chileans have developed hesitation toward Venezuelans fleeing the country. People cannot renew work permits in Peru and as of 2018, the country decided to stop issuing them. A recent survey in Chile found that many natives disapprove of the number of immigrants coming in. Seventy-five percent of those responding to the survey thought that the number of immigrants was excessive.

Who is Helping?

Since April 2018, the IRC has been working in Cúcuta supporting Venezuelans and vulnerable Colombians with specialized services for women and children, cash assistance and health care. Aid organizations and families are also working to help immigrants along the route. The Colombian Red Cross has a small aid station on the outskirts of Pamplona, a city in Colombia’s Norte de Santander region.

The U.S. government has also helped by providing about $200 million in humanitarian aid to address the crisis in the region. Most of this money has gone to Colombia as do the majority of Venezuelans fleeing the country.

UNICEF has appealed for $69.5 million to meet the needs of uprooted children from Venezuela and those living in host and transit communities across the LAC region. It is working with national and local governments, host communities and partners to ensure access to safe drinking water, sanitation, protection, education and health services for Venezuelans fleeing the country.

– Grace Arnold
Photo: Flickr

 

Venezuela
What began as an economic recession in Venezuela has quickly escalated into a humanitarian crisis where one must fight to survive. Venezuela is steadily becoming the most violent country in the world. At least 28,479 deaths of a violent nature occurred in 2016, and the nation currently holds a homicide rate of 91.8 for every 100,000 people. The hunger crisis and the fact that 82 percent of its population is living in poverty could be linked with the growing rate of crime and violence in Venezuela.

Conditions Leading Up to the Violence

In 2014, Venezuela was struck by an economic recession caused by the decline in oil prices – Venezuela’s primary export. Its biggest shortfall came with the collapse of Venezuela’s currency when the price of imported goods swelled and the country was forced to limit the number of goods brought in. Staples like toilet paper or rice were often impossible to find, and when one did locate them, such essential products were often too expensive to buy. A shortage in even basic medicines and medical supplies began causing serious concerns.

The Borgen Project was fortunate enough to interview Venezuelan national and Ph.D. student, Maria Alemán. She described the scene, “Picture a supermarket or a grocery store when there is a snow storm in one of the southern states. You go in and everything is empty. There is nothing. That’s how it is there 24/7.” This lack of imported goods has created panic and a hunger crisis in Venezuela. With the widespread panic, Venezuela was faced with having to put strict regulations on many goods available for purchase. “If you get to the store and they are regulating an item, let’s say you want to buy two gallons of milk because you have a big family. Well no, if they are only allowing you to buy a gallon, then that is all you get,” Maria explains.

Lack of Jobs and Resources is Creating Chaos

The collapse of Venezuela’s economy affected the job market. Many businesses’ closed or took their business out of the country, leaving families to struggle with the cost of rising food prices with no source of income or not nearly enough income. “People are starving because the price of food is too expensive, even with a monthly salary,” Maria defends. As conditions grew dire and many were met with the challenge of feeding themselves and their families, crime in Venezuela rose at an epidemic rate. The Venezuelan Observatory on Violence (VOV) reported a 14 percent increase in violent crimes from 2012 to 2013. In 2015, 17,778 people were murdered in Venezuela; however, the VOV revealed that those numbers were as high as 27,875.

Maria recalls a shift in the nature of the crimes as desperation fueled robberies with the threat of violence. “Thieves started to go find knives and guns because there was no other way people were going to go and give them their stuff. People got so upset that they had no choice but to start killing people to actually feel threatened. It’s even worse now because people are having to kill to survive.” With no other resources available, the population turned to violence, either in an effort to attain resources or to protect oneself from others trying to take resources.

If things couldn’t seem any worse, the increase in crime and violence running rampant in the streets of Venezuela was a catalyst for the formation of several crime organizations who have taken to exploiting the hunger of young people to get them to participate in criminal activities, which is only adding to the rising crime rate.

Efforts to Decrease Crime and Violence in Venezuela

While Venezuela has implemented a subsidized food program that benefits 87 percent of Venezuelans, it hasn’t done much to slow the hunger-induced crime sprees. Maria says, “people receive boxes from the government with some food products like rice, flour, etc., but not everyone gets the same products in their boxes. The contents of a single box aren’t enough for a family of four.” Clearly, the government needs to find other solutions than providing a small amount of food per family.

Other attempts to alleviate the situation were raising the minimum wage to 34 times the previous amount and minting a new currency (the “sovereign bolivar”) to replace the “strong bolivar.” Unfortunately, new currency or no, businesses cannot afford to pay the new minimum wage set by the government and are laying off employees or, in the worst case scenario, closing down. There have been attempts by the Union of South American Nations (UNASUR) to act as a mediator between the people and the government amidst the protesting, but no demands have been met. Although the situation is bleak, the hopes for successful negotiation may be the only way to end the crisis in Venezuela.

Although crime and violence in Venezuela have been commonplace in the past, current living conditions in Venezuela have escalated the crime to new heights, creating a harsh reality many are facing in order to survive. Without the basic means of survival such as a livable wage, job security and even access to basic resources, Venezuela will continue to see a steadily climbing crime and murder rate.

– Catherine Wilson

Photo: Flickr

malnutrition in venezuelaA humanitarian hunger crisis has struck the country of Venezuela. The economy has hit rock bottom and moderate to severe child malnutrition in Venezuela has reached 11.4 percent for children under the age of five. The World Health Organization states that a threshold of 10 percent must be surpassed in order to declare a crisis, and Venezuela has well exceeded that threshold. Venezuela’s continuously unstable economy is to blame for the decrease in food and the increase in hunger.

When Venezuela struck massive amounts of oil during World War I, its economy skyrocketed. Its success with oil reserves led to a blossoming economy that assisted in providing its people with what they needed to thrive. However, Venezuela had only relied on the income from the oil industry to fuel its economy. With no economic backup plan, Venezuela was heading down a path of economic destruction.

Venezuela’s economy began its dramatic decline in the 1980s. After the oil price collapse and the accumulation of internal and external government debts, it became apparent that the country had a major financial burden to address. Economic policies to solve this issue were failing and the government was falling deeper into corruption, causing more economic instability.

The coming years would not be any brighter for Venezuela. Ongoing economic mismanagement led to increasing poverty levels. Venezuela went into a recession in 2014, invoking more worry for the country and putting more pressure on the government to make the right economic decisions. The government’s dysfunctional way of solving the country’s money problems eventually led to the worst economic decision to date.

Venezuela’s inflation levels became one of the highest in the world, reaching a record high of 800 percent in December 2016. This hyperinflation came after the Venezuelan government’s decision to enact an internal embargo on food imports, completely cutting off outside sources of food and causing massive food shortages. These food shortages caused an increase in food prices to an unattainable amount. People could not buy food anymore, as a basic food basket could cost up to 16 times the amount of minimum wage.

A popular food item bought in Venezuela is cornmeal. Used to make an arepa, the previous cost of a two-pound bag of cornmeal was 190 bolivars. Now, the cost is 975 bolivars per two-pound bag. This astronomical increase in price hinders the ability to purchase the essential ingredient to make a wholesome meal.

Food shortages directly affect child malnutrition in Venezuela. In just four short years, child malnutrition has gone from three percent to as high as 13 percent in some parts of Venezuela. Families are scavenging the streets to find any morsel of something edible, or standing in line all day only to receive two to three morsels of food to feed their entire family. Today, eight in 10 families eat less than before, and six in 10 families go without food on a regular basis.

Business Insider conducted an interview with Venezuelan resident Lilian Tovar. She weighed in on her personal experience with hunger, stating “If we eat breakfast, we don’t eat lunch, if we eat lunch, we don’t eat dinner, and if we eat dinner, we don’t eat breakfast.” Compromise has become a mindset of the Venezuelan people, deeply affecting both themselves and their children.

Malnutrition can have a lasting effect on a child’s life. When there is limited access to food, children can become deficient in nutrients needed for proper body development. Some of the 20 essential nutrients needed for a healthy body include calcium, vitamin D, magnesium, vitamin K, boron and manganese. These nutrients are found in many plant-based foods and grains. Unfortunately, these products are not easily found, and if found they are at a price that no family can afford. Therefore, a child who is lacking these essential nutrients has a higher risk of bone growth problems and will likely never reach their full growth potential. Inadequate nutrition can also lead to a weak immune system, allowing the body to become more susceptible to diseases and infections later in life. In the worst cases of child malnutrition, normally involving gastrointestinal infection, death is imminent.

Caritas, a crisis-centered organization whose work is now heavily dedicated to Venezuela’s malnutrition crisis, states that “The response to the food crisis must be a social and economic priority, taking the politics out of protecting the most vulnerable people and facilitating the relief work of all those who, officially or unofficially, have direct contact with those most in need throughout the country.” Caritas’ thorough research studies across the four Venezuelan states of Distrito Capital, Vargas, Miranda and Zuliahave have led to their decision to put their full foot forward in rehabilitating the country.

Caritas’ main priority is children under five. They supply malnourished children with food supplements that include protein and iron. Children are brought into Caritas’ makeshift facilities for regular nutrition check-ups in order to provide them with nutritional and medical attention.

Caritas is sending out a desperate plea for the sake of child malnutrition in Venezuela. Their efforts cannot be accomplished alone. Families are suffering and every day more children are being diagnosed with malnutrition. This is now a worldwide cry for help, a call to action and a need for involvement. To eradicate child malnutrition in Venezuela, this call must be answered. Children are the future and with the help of the people, the future is what these children will see.

– Brianna Summ

Photo: Flickr

Venezuela Poverty RateIn a country locked the throes of a terrible economic crisis, the Venezuela poverty rate continues to rise. Eighty-two percent of the population now lives in poverty, and inflation rates are estimated to reach 680 percent by the end of this year. To make matters worse, this number is projected to rise to a whopping 2,069 percent by the end of 2018. Medicine and medical equipment has become increasingly scarce, as the public health system cannot afford to treat patients, and poverty and violent crime are reaching record levels.

So, how did a country that experienced not insignificant economic growth under Chavez, become embroiled in an unprecedented bout of hyperinflation? Rampant governmental corruption and a drop in oil prices are the major contributors. Venezuela boasts the world’s largest proven oil reserves, and, under Chavez, leveraged high gas prices to create nationwide economic growth.

According to historian Greg Grandon, Chavez saw high petroleum prices as “a way to tax the First World, and then redistribute that revenue through equitable social programs, solidarity and support for poor energy-importing nations.” However, since oil prices began falling in 2013, the nation’s dependency on oil as the center of its economy has left the country in the depths of economic collapse.

Yet another factor in the collapse, and the source of much of the corruption in government, stems from the coexistence of different currency exchange rates and the ever-growing gap between the official rates and the black market rate. The lower official rate is set at 10 bolivares/dollar. This rate is used for “essential imports” such as food, medicine and materials for domestic production of necessary goods.

In addition to this standard currency rate, there is a fluctuating black-market rate, which has risen enormously over the past several years. This rate is currently well over 1,000 bolivares/dollar and was last measured at 1,567 bolivars/dollar on Nov. 1. This yawning gulf between exchange rates has wildly devalued currency. It also provides government, business and military officials, who are provided dollars using the lower official exchange rate, to change this money on the black market to rake in obscene profits.

As the economic crisis intensifies and the Venezuela poverty rate increases, President Nicolas Maduro’s popularity has plummeted. He has responded to popular protests by removing the Congress’s legislative power, and has taken on increasingly authoritarian policies. The opposition-led Congress is understandably outraged, and has led efforts to remove Maduro from power and to substantially privatize Venezuela’s socialized industries — most notably the national oil company PDVSA.

Although many criticize the socialist policies of Venezuela, the crisis has been born of a complex network of mismanagement of currency, dropping oil prices, authoritarian political crackdown, and rampant corruption. As the crisis intensifies and the Venezuela poverty rate continues to rise, the urgency of aid and comprehensive political reform increases.

Jeffery Harrell

Photo: Pixabay

Education in Venezuela

The 33rd largest nation in the world, Venezuela prides itself on maintaining a thriving educational system. As of 2017, the nation boasted a 96.3 percent literacy rate, with a nearly equal distribution between men and women. Though education in Venezuela has recently suffered as a result of the current political upheaval taking place in the country, the country has also made incredible strides over the past few decades.

Providing students with free and compulsory education, Venezuela’s education system is maintained by its Ministry of Education. This dedication to providing all students with access to schooling has resulted in substantial increases in primary education. Between 1970 and 2015, the rate of primary school enrollment rose from 1.77 million children to approximately 3.5 million. Additionally, 93.1 percent of all female school-aged children are enrolled in school, indicating the substantial emphasis on deconstructing gender disparities and promoting overall equality.

Per a 2010 UNESCO report, the nation’s Education for all Development Index (EDI) has increased substantially over the past ten years. The EDI measures educational progress based on universal primary education, adult literacy, gender equality, and student survival rate to grade 5. From 1999 to 2007, the nation’s results increased by 5.1 percent; over the next two years, they rose by 2.4 percent. This upward trend not only underscores the ways in which education in Venezuela strives to be inclusive and accessible; it also places the nation at 59th out of 128 countries in terms of EDI, a significant jump from its former ranking of 64th.

Education in Venezuela is structured around the “diversified education” program, which culminates in the 9th grade. The diversified education program gives students the opportunity to choose between studying either the humanities or the sciences throughout the next two years of their high school career. Upon graduation, they then can select college majors based specifically on their high school paths.

The nation’s unique system of higher education also illustrates the significance that schooling holds for Venezuelans. Home to nearly 100 colleges and universities, a million students currently study for free. Technical institutions require three years, whereas universities require that students remain enrolled for five years. The largest college in the nation is the Central University of Venezuela, which was declared a World Heritage Site in 2000. The university offers courses in topics ranging from the humanities, communications and law to medicine, engineering and veterinary sciences.

Clearly, education in Venezuela plays a crucial role in defining and shaping the cultural and social experiences that both young people and adults alike undergo throughout their lives. Ultimately, through continued foreign support for these programs, the nation’s schooling systems will continue to perform successfully.

Emily Chazen

Photo: Flickr

Poverty Rate of Venezuela
Venezuela, once expected to be one of the richest countries in South America, has been crippled by socialist dictators and now suffers from widespread poverty. In fact, 82% of the population lives in poverty.  With the largest oil reserves in the world, Venezuela’s economy has become solely dependent on oil.

Venezuela has relied on high oil prices to bolster their exports and pay for importing basic goods, including food and medicine. However, with the price of oil dropping dramatically in the last few years, Venezuela’s economy has taken a major hit and caused drastic inflation. As inflation skyrocketed and political turmoil brewed, investors and businesses drained out of the country.

Currently, Venezuela leads the world with the highest inflation. In December of 2016, it reached a high of 800 percent inflation and has not significantly decreased since. According to the LA Times, it cost $150 to buy a dozen eggs in Venezuela in 2016. This hyper inflation has caused Venezuela’s currency, the Bolivar Fuerte, to depreciate. This has caused the poverty rate of Venezuela to jump to more than 80 percent.

 

Poverty in Venezuela

 

The face of poverty in Venezuela is also changing. With such a staggeringly high poverty rate, poverty now affects citizens with degrees who cannot find jobs and more urban people, in addition to the already rural poor.

Long lines at supermarkets have developed as people seek the most basic and necessary means of survival. According to CNBC, Venezuelans are eating two or fewer meals a day and around three-fourths of the population have watched their weight decrease throughout the years.

In 2016, President Nicolas Maduro increased the minimum wage by 40 percent. With inflation, this means that citizens who receive minimum wage earn just $67 a month. The explosive poverty rate and lack of proper government response have prompted protests, as this issue is now being seen as a clear violation of human rights.

However, opposition leaders Leopoldo Lopez, his wife, Lilian Tintori and Capriles Radonski acknowledge the situation and have been fighting for a better Venezuela. A Venezuela with democratic power, basic goods and luxuries everyone can afford, a Venezuela with jobs for everyone, lower crime rates and better health care.

The high poverty rate of Venezuela has reached the attention of the world. Raising awareness has been part of finding hope for Venezuela. The hashtag #SOSVenezuela has been used over the last few years to protest corruption and has acted as a rallying cry to bring global attention to the people affected by Venezuela’s dire political situation.

Francis Hurtado

Photo: Google

Causes of Poverty in VenezuelaDespite housing the largest oil reserves in the world, Venezuela is experiencing crippling and widespread poverty. The causes of poverty in Venezuela are atypical from other developing countries. The nation has an abundance of natural resources, and, in the 1950s, it had the fourth-highest GDP per capita in the world. For much of its history, the country has occupied a coveted position as the strongest economy in Latin America. Despite frequent political instability–as recently as 2007 poverty was in decline, with the economy riding high off oil profits where the price of a barrel was in the triple digits.

Fast-forward to 2017: 81 percent of Venezuelans live below the poverty line, largely as a result of the economic collapse.

The most severe symptoms of the new Venezuelan economy are ones that make it difficult for the average citizen to simply exist, let alone thrive. Food is either scarce or astronomically expensive, and hospitals are chronically understaffed and have to endure subpar equipment. Schools are increasingly characterized by the need to feed children who arrive hungry and have brought nothing to eat.

The Washington Post describes the situation as an “entirely man-made disaster,” identifying Nicolás Maduro’s government as one of the primary causes of poverty in Venezuela. Corruption is endemic in Venezuelan politics and enormous oil profits are often siphoned off into private hands. Transparency International identifies Venezuela as the ninth most corrupt country in the world, by far the highest in the Latin America region.

Government intervention to address the crisis has also often backfired. An attempt to introduce price controls on foodstuffs led to imports disappearing almost entirely, and for months most Venezuelans were unable to acquire basic items such as milk, eggs and flour. Inflation is expected to rise to 475 percent in 2017. Over the course of the past year, the average Venezuelan has dropped 19 pounds in weight.

The spike in oil prices during better times allowed Maduro’s predecessor, Hugo Chavez, to implement an economic populist agenda. A combination of infrastructure investment and expansion of social services allowed millions of Venezuelans to be lifted above the poverty line. However, this model of poverty alleviation was flawed due to its dependence on a single resource. Following a decline in oil prices, the country now faces even greater challenges than before.

A major fiscal overhaul is the best bet for the millions of Venezuelans who urgently need access to food and medicine. A food-stamp style system for vital goods is currently only a proposal, but the enormity of Venezuela’s government and its subsidiaries means it could be distributed relatively easily across the country.

In the long term, a redirection of the economy away from oil towards privately owned farms could stimulate a self-sufficient food market. If this was achieved, the kind of shortages that plague Venezuela in 2017 would be unlikely to occur again.

Perhaps then, some of the current causes of poverty in Venezuela can be overcome and the nation can begin to rebuild towards its former status as one of the wealthiest in the world.

Jonathan Riddick

Photo: Flickr

Help People in VenezuelaThe South American nation of Venezuela is suffering one of the worst humanitarian crises, not only in its own history, but in the entire continent. There is a severe shortage of medicine, medical supplies, food, and several other goods. Consequently, this has caused families to suffer from hunger, disease and a lack of essential care. However, citizens around the world have started to help people in Venezuela. There is a variety of ways to provide aid.

First of all, it is worthwhile to get perspective on the magnitude of the situation. The figures coming out of the country are dire. Recent surveys found that 76 percent of public hospitals and 85 percent of private pharmacies lack basic medicines. The 2016 maternal mortality rate has increased to 79 percent since 2009. The infant mortality rate is up 21 percent since 2015.

A 2015 survey conducted by leading Venezuelan universities and civil groups in over 20 cities found that 87 percent of interviewees had difficulty purchasing food. Additionally, 11.4 percent of children in vulnerable areas experience acute malnutrition (humanitarian agencies usually declare 10% a food crisis). A more recent study found that 75 percent of the country’s people lost an average of 19 pounds.

In spite of the terrible crisis, the state is doing little to aid its citizens. Since March 2017, the deterioration of the political, economic and social situations have led to the outbreak of intense protests against the government. Several international organizations such as the Human Rights Watch, have criticized the current Venezuelan government for continually downplaying the presence of a humanitarian crisis and doing little to seek international assistance. The lack of government action means that the help of the international community is necessary now more than ever. Below are six different ways to help people in Venezuela at this critical time.

 

Ways to Help Venezuela

 

  1. Read about Cuatro Por Venezuela. This organization seeks to provide medicine, medical supplies and food to those in need. Additionally, if you are shopping on Amazon, shop through smile.amazon.com and list Cuatro Por Venezuela as your charity of choice. A percentage of all your purchases will go to that cause.
  2. You can help raise funds for ‘Alimenta La Protesta’ (Feed the Protests). This group gathers food and water for the protesters who are risking their lives to help better conditions in the country.
  3. Read, learn about and consider helping the Chamos organization. Chamos seeks to improve the living standards of the most deprived children in the country.
  4. Purchase basic medical supplies through this Amazon link and choose the option to send them to a center in Miami. Without additional cost, they will go to Caracas and the ‘Cruz Verde’ at the Central University of Venezuela, which is giving first-aid to injured protesters.
  5. Call your representatives and express your concern regarding the crisis in Venezuela. Demand a stronger response to the humanitarian crisis and the abuses perpetrated by the Venezuelan government. If you live in the United States, ask for representatives to support legislation such as this one.
  6. Raise awareness by sharing links and information through social media or any other outlet available to you.

Government negligence and the continual refusal to ask for international assistance means that helping people in Venezuela may not be easy. Because of political hurdles, large international NGOs have very small or nonexistent operations in the country. Thus, raising awareness and calling for a stronger response from the world’s governments is a crucial key in how to help people in Venezuela.

Alan Garcia-Ramos

Photo: Pixabay

Why Venezuela is Poor
Venezuela is a country in South America with a population of over 31 million. With such a large population, it may come as a surprise that 82 percent of its citizens live in poverty. Why is Venezuela poor? There are many reasons, and following are a few of them.

  1. Economic crisis: Venezuela is in its third year of recession, which is the main answer to the question ‘why is Venezuela poor?’ Its economy is expected to contract by 10 percent this year according to the International Monetary Fund. Consequently, while the economy shrinks, the prices of goods are skyrocketing. This year, inflation is expected to rise 475 percent, and Venezuela’s currency has plummeted in value. Consider this: one dollar equaled 100 bolivars exactly two years ago. Today, one dollar is equivalent to 1,262 bolivars.
  2. Venezuela’s broken engine: Oil prices began to plunge in 2014. The oil prices contribute to Venezuela’s list of reasons for being poor. Venezuela has the world’s largest oil reserves, but the problem is that oil is the only game in town. It makes up more than 95 percent of Venezuela’s revenue from its exports. If it doesn’t sell oil, the country doesn’t have money to spend. Oil prices were over $100 per barrel in 2014. Today, they hover around $50 per barrel, after dropping as low as $26 earlier this year.
  3. Soaring food prices and broken hospitals. The food shortages became extremely severe this year, contributing to Venezuela’s poverty. Venezuelans went weeks, in some cases months, without basics like milk, eggs, flour, soap and toilet paper. Despite a crashing currency and dropping oil revenue, the government continued enforcing strict price controls on goods sold in the supermarkets. Only recently has the government stopped enforcing price controls, and food has returned to supermarket shelves. However, prices are so high that few Venezuelans can afford the food.


These points scratch the surface of the question ‘why is Venezuela poor?’ Venezuela is poor and running out of cash quickly. In the near future, it won’t have the money to pay its bills. Venezuela will owe $15 billion by the end of 2017, while the nation’s central bank only has $11.8 billion in reserves. The state-owned oil company is pumping less oil and risking default. Most of its reserves are in the form of gold. So, to make debt payments this year, Venezuela has shipped gold bars to Switzerland. China used to bail out Venezuela and loan it billions of dollars. However, even China has stopped giving its Latin American ally more cash.

Paige Wilson

Photo: Google