The Venezuelan Economic Crisis: Facts vs. Propaganda

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Venezuela is facing an economic crisis. This is known to anyone who pays even the slightest attention to geopolitics.

However, the actual material conditions that facilitated the economic crisis are often disregarded. Widespread misinformation campaigns by the mainstream media (MSM) have largely affected the discourse surrounding the situation. With this article I would like to present a historical analysis of the Venezuelan economic struggle, as well as point out the blatant falsities of mainstream liberal perspectives.

It is necessary to realize that the economic hardships that Venezuelans faces today are nothing new. The South American country was once an outlet for colonial exploitation, and up to modern times ripe with oligarchical corruption.

There can only be a rational and objective analysis of the situation once the bias originating from neo-liberal propaganda has been purged. It goes without saying that the anti-socialist rhetoric that has been prevalent since the ‘60’s must also be disregarded as irrational. The conception that “socialism doesn’t work”  is but a crafty humanitarian guise trying to sway vast swathes of the Western population into frenzied distrust of developing nations.

First in foremost, let’s take a look at Venezuela’s economic history. The Bolivarian revolution broke the chains of colonial exploitation in 1830, and in 1845 Venezuela was officially recognized as a nation. However, even with the chains of colonial exploitation broke, Venezuela was still poor, agrarian, and underdeveloped.

The turn of the 20th century would usher in pivotal change to Venezuela’s economic conditions. Formerly reliant on agricultural exports, the discovery of oil would bring Venezuela to the stage of the world economy. The export of petroleum quickly became the country’s most vital economic asset. And, while the country suffered from political and corporate corruption, they enjoyed approximately half a century of economic stability and growth.

In 1960, Venezuela would be a founding member of the Organization of Petroleum Exporting Countries (OPEC), marking the ascension of the Latin American country onto the world economic stage. OPEC is made up of countries who at this time controlled vast amounts of the world’s oil. For those in need of more detail, OPEC is an intergovernmental organization whose formation was meant to coordinate and unify the petroleum policies of member countries. In 2018, it is estimated that the member countries control 81.5% of the world’s “known” oil reserves.

Characteristic of any intergovernmental organization, and characteristic of the development of the economy in general, is a perpetual cycle of ‘crisis’. That is to say that international conflict can stimulate the economy of one nation, while the results may vary for the other. This is the nature of the global capitalist economic system.

The Arab-Israeli war set off in 1973. This event precipitated the 1973 “oil crisis,” in which OPEC member states launched an embargo in retaliation against countries supportive of Israel. The embargo would tighten the oil supply and there would be an upsurge in the global price of oil.

This experience created an “economic bonanza” within Venezuela. The GDP and national revenue had soared, all with the rising price of oil. Oil prices peaked in 1979 during the Islamic Revolution in the Islamic Republic of Iran, only for the bubble to “burst” between 1980–1983 as global oil prices began to plummet.

Just before this decline of value in global oil commodities, and leading up to the economic crisis, private corporate sectors managed to illegally “spirit” approximately $90 billion (USD) out of Venezuela. This is the largest case of insider trading in Latin American history.

In just 2 years, Venezuela’s revenue from oil exports basically halved.

By 1983, with crippling commodity trade rates and with huge amounts of Venezuelan capital literally stolen, the Venezuelan government declared insolvency. In an effort to stem the looming crisis, the Venezuelan government began a currency devaluation. It wouldn’t work.

The Venezuelan government would continue to attempt to appease the plutocrats and attract foreign investment, even in the midst of a declining economy. As such, no attempt was made to adjust the exchange rates to corporations in debt. This effectively meant government subsidies were being handed out to the super-rich Venezuelan class. This subsidization would be sucked from the toiling Venezuelan taxpayers.

Most of the reforms and policies introduced by the government in the coming years would be half-measures and would only appease the Venezuelan bourgeoisie and foreign investors. Venezuela continued to economically decline and struggle throughout the remainder of the 80’s and 90’s.

In 1998, after nearly 2 decades of economic hardship and failed government reforms (resulting in an almost complete destruction of the Venezuelan middle-class), a movement gained traction which resulted in the election of a socialist party into power. Enter Hugo Chavez and the United Socialist Party of Venezuela (formed in 2007). Chavez would continue some of the same policies of the previous government, such as attempts at easing economic stagnation through currency devaluations and economic reforms. Unfortunately, these efforts did little to improve the material conditions of the majority of the country, which suffered from lack of diversification due to the dependence on foreign imports and centralization around oil exports.

Dollar-dominated oil sales accounted for the vast majority of Venezuela’s exports, but much of the profits from oil exports were lost due to corruption or failed government projects.

Economic reprieve was experienced in 2001 with America’s invasion of the Islamic Republic of Afghanistan and in 2003 during the invasion of the Iraqi Republic. The conflicts resulted in a global spike in international oil prices. This spike in oil prices created a miniature “boom” in Venezuela. Venezuela reaped a new wave growth from its oil production. Revenue from oil production once again filled government coffers, enabling the Chávez government to pay for social programs which cut poverty rates by more than half.

It must be noted that it was the socialist government that inherited these economic struggles, not the one who perpetuated them. Under Chavez, the government would enact socialist policies that included redistribution of wealth, land reform, and democratization of workplace activity.

The “boom” enabled Chavez and his socialist government to enact “Bolivarian Missions” which aimed at providing public services and improving the economic, social, and cultural conditions of the people.

This growth would be short-lived, however. By the early 2010s, tanking oil prices once again drug Venezuela’s recovering economy back into remission. Shortly after Chávez’s death in 2013, and despite multiple economic reforms, Venezuela again devalued their currency to address growing shortages.

In 2014, Venezuela entered an economic recession. The economy has been floundering under similar conditions ever since. It is a country trying to stay afloat under the administration of President Nicolás Maduro, a leader who has continued many of the policies of Chavez and kept straight along the socialist line of the PSUV.

The Maduro Administration has faced numerous existential threats since his ascension to the presidency. Venezuela has been rife with CIA-backed terror campaigns and the looming of a “color revolution.” There has been a consistent effort at upheaval on the part of the US-NATO axis. One may be reminded of the violent protests that wreaked havoc throughout the streets in 2017 – a Western backed attempt at a color revolution.

The socialist government has inherited a nation rife with corruption and impoverishment all the while under Washington’s gun.

American media have successfully convinced swaths of liberals to wholly ignore the multifaceted, nuanced history of Venezuela’s current condition, and chock it entirely up to “socialism” and the direct results of the government’s policies over the last 18 years.

However, this is nothing new. The ferocious propaganda campaign by the liberal MSM to deride the administrations of developing nations falling under economic hardship goes back to McCarthyism and the ‘Red Scare.’

The fact of the matter is that Venezuela’s economic stagnation cannot be attributed to the Socialist government, who implemented policies of wealth redistribution and land reform; improving the material conditions of millions. Rather, the crisis can be attributed to declining oil prices, lack of economic diversification, and plutocrats literally robbing the country of resources. It is precisely against these forces that the Bolivarian Revolution is courageously fighting.

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