From bad to worse

By bogotapost March 7, 2015
Venezuela unrest, Nicolás Maduro

Venezuelans protest against the Nicolás Maduro government

Economist Carlos Rangel analyses the situation in Venezuela, from economic woes to political problems

George Friedman, CEO of Stratfor (a private intelligence consulting firm), wrote a remarkable book a few years ago, entitled The Next 100 Years, in which he tried to map out possible shifts in geopolitics in the 21st century. Its argument relies on an important premise: that “unexpected things are expected to happen” in justifying possible geopolitical trends.

In February 2014, no one in Venezuela would have guessed that nationwide street protests would erupt against the government the way they did. The resulting months of civil unrest ended with 43 deaths, as well as the imprisonment of dozens of students and opposition politicians, including prominent opposition leader Leopoldo Lopez.

A year on, similar protests are kicking off again in many areas of the country, most notably in Tachira, a state that borders Colombia. The latest flare-up happened last week, when a 14 year-old student was shot dead by a 23 year-old policeman during an anti-government protest in the city of San Cristobal.

Venezuela unrest

Protest signs on the street in Caracas

Venezuela is submerged in dire economic troubles, compounded by the recent drop in the price of oil. While announcing a series of steps to counter these economic woes, President Nicolás Maduro said that “God will provide” in 2015.

According to the International Monetary Fund, between 2003 and 2012 Venezuela’s economy received windfalls from oil profits to the tune of 300 percent of GDP, the biggest oil boom in the country’s history. Oil accounts for 97 percent of Venezuela’s exports and is the main source of green- backs for sustaining its public finances.

The oil windfall has gone, and sadly, the Venezuelan economy is now in the doldrums. Despite its oil boom, between 1998 and 2011 Venezuela saw the lowest per-capita growth rate in the region after Haiti. It also suffers from the highest inflation rate in the world, at 70 percent, according to Venezuela’s Central Bank. This year alone, the economy could shrink by as much as five percent, according to some estimates.

These numbers are hitting ordinary Venezuelans hard. People are having to spend hours in line at grocery stores to get whatever they can find on the shelves due to Maduro’s price controls. The scarcity of basic goods ranges from food to medicines and even spare parts for cars. Tyres and car batteries are almost impossible to find.

The gloomy economic forecasts do not end there. This year the country must meet an $11 billion USD payment to service its foreign debt, and the state coffers are thread-bare. As some economists have pointed out, the country either has money to continue to import basic goods, or to meet its foreign debt repayments, but not both.

Many Venezuelans have lost confidence in their government’s ability to cope with the economic crisis. Eight out of ten Venezuelans blame the government for the worsening situation, and the vast majority do not believe in the government’s narrative, which blames a so-called ‘economic war’ for the shortages of basic goods.

As parliamentary elections come closer, Maduro’s current polling numbers and those of his governing party, the PSUV, leave ample room for the opposition to take the National Assembly. This would mean a morale boost in the opposition camp and possibly pave the way for a presidential recall referendum in 2016.

Maduro has countered that the opposition is backed by Washington and is plotting violence against his socialist government. Photo: Joka Madruga CC BY 2.0

Maduro has countered that the opposition is backed by Washington and is plotting violence against his socialist government. Photo: Joka Madruga CC BY 2.0

Fearing exactly this, the government has cracked down on the opposition, most notably by locking up the mayor of Caracas, Antonio Ledezma. Maduro’s justification for this? Ledezma and others were plotting a US/Colombia-sponsored coup against his government.

In a normal, functioning democracy, the institutional framework includes a provision to alleviate tensions and instability. Normally this is done by holding elections to resolve differences among opposing parties. The problem in Venezuela is precisely the lack of such an institutional framework.

It’s not quite clear what will unfold in Venezuelan politics, but it’s a safe bet that there will be little respite from the desperate economic pressures faced by ordinary people every day. All we can know for sure, as Friedman’s book tells us, is that “unexpected things are expected to happen”.

Carlos Rangel is a Venezuelan economist who writes for the Caracas Chronicles Blog (, which focuses on Venezuelan politics, economics, public policy and social strife within the country. Find him on Twitter: @CarlosRangel87