Venezuela’s doom has been increasingly predicted in the press as of late, particularly as the price of a barrel of oil plummets to decade lows. The country has been deficit spending for years, which has manifested itself in the skyrocketing inflation of its currency. A rapidly declining bolivar has meant imports have shriveled up and productivity has plummeted, leaving store shelves bare and manufacturing plants idle.
The whole sordid affair started with the socialist policies of populist strongman Hugo Chavez. Once elected, Chavez stayed in office through a combination of political ruthlessness and patronage of the poorest classes of Venezuelan society. Patronage took the form of subsidized goods, energy, and medical care. An increasingly large portion of Venezuela’s oil wealth was diverted to fund this patronage. This worked somewhat while oil was at $150 a barrel, but became rapidly unsustainable as oil fell into the double digits and the output of the government-run state oil company suffered under the management of incompetent party loyalists.
Venezuela is certainly not the only economy in South America suffering from a drop in the price of commodities. Brazil, Argentina, Chile…you name the country and they all are fighting the shrinking of available hard currency from exports and its resulting impact on their economies. The big difference, perhaps with the exception of Argentina and Ecuador, is that only Venezuela is essentially a centrally planned economy without any checks on the predations of the government. This has meant that as the Venezuelan government’s access to scarce resources shrank, its expropriation of resources from the private sector and citizens has increased, further worsening the economic situation.
Opposition parties have retaken control of Venezuela’s parliament, but the control of the executive and judicial branches remain firmly in the grip of current strongman Nicolas Maduro. The resulting political stalemate means that the government’s economic policies are likely to continue unabated. This untenable situation has led many pundits to speculate that the country is about to collapse into chaos.
I find this unlikely. Why? Because of Zimbabwe.
Zimbabwe, a small country in southeast Africa, was formed around 1980 after black African Marxists overthrew the white minority government of Rhodesia. The rebels, draped in the legitimacy of having fought to halt decades-long racial discrimination, economic deprivation, exploitation, and even murder of their countrymen, quickly exterminated political opposition, expropriated the country’s assets for themselves, and cemented their power by building a rabidly loyal following among a portion of the destitute and dispossessed. The rest of the citizenry rapidly found that life under the Zimbabwean government was no better than the Rhodesian government, albeit without the taint of racial colonialism. In fact it was worse, as the currency precipitously depreciated in value as it became obvious that the former revolutionaries were running a kleptocracy that had no interest or ability in managing the country for the benefit of its economy or citizens.
None of the theft, graft, corruption, poverty of the masses, and yes, even murder, by the Zimbabwean government has ever threatened the government’s grip on power. The theme of black empowerment has sufficed to justify all the depravities and to create an atmosphere of plausible deniability in rigged election after rigged election. It is a situation that has endured for almost four decades.
The parallels of Zimbabwe with Venezuela are legion. The privileged classes of Venezuelan society grew rich and powerful while greater numbers of their countrymen descended into grinding poverty. This steaming brew of despair enabled the ascendancy of Hugo Chavez, a former army officer who once was imprisoned for attempting a coupe d’etat. High oil prices cemented Chavez’s legacy of patronage of the poor and prosecutor of the uncaring rich and his death in 2013 insulated him from the consequences of his economic theories and political expediencies. It is an indication of the enduring political effectiveness of Chavez’s policies that Maduro maintains a 25% approval rating even in the face of a complete collapse of Venezuela’s economy and a scarcity of food staples and basics like toilet paper.
So is Venezuela in imminent danger of becoming a failed state? I doubt it. I’m betting on a long and gruesome twilight before the night falls. And for the sake of the Venezuelan citizenry, I hope that even my scenario is wildly pessimistic.