Maduro Sacrifices Venezuelas Economic Stability for Political Projects The day after Obamas State of the Union, Nicolás Maduro addressed belatedly a Venezuelan audience more than anxious to hear what he had to say after spending the better part of January abroad while the country slowly realised how deep in trouble it was. The result was disappointing, to say the least. For starters, none of the biggest economic issues -let alone social ones either- were addressed head on in his three and a half hour speech to the nation. Sure, he did bring them up, but he might as well not have, because what he had to offer falls too short of what is needed for the country to stop bleeding money and actually start saving some. It didnt help either that Maduro couldnt spend ten minutes without verbally assaulting the opposition and the bourgoisie, parasitic businessmen; only to grudgingly admitting later on that theyre a key part in the economical transformation of the country. Since the beginning of the oil crisis -as it has been christened by media outlets in Venezuela-, the tone has shifted from Venezuela: land of promise and socialism to the economic model must be redefined, implicitly acknowledging an old saying that refers to planting oil back into the coutry, or better reinvesting the profit from the oil economy back into the creation of a more diversified working market. It is by no means the first time that this discussion has taken place in the South American nation. Ever since oil began to pump there has been a need to avoid the temptation of depending only on this source of income, albeit it is possible for it to single-handedly sustain Venezuela as a country. He didnt apologize for previous wrong doings, nor did he admit that the greatest economic bonanza in the countrys history was stolen, missinvested, or simply laid to waste. The income that Venezuela received in the 21st centurys oil boom was estimated at about one trillion dollars; an amount that if invested properly could have transformed the countrys infrastructure, health care system, education system, oil exploration and refining system, and turned the capital, Caracas, into a buzzling hub for culture, sports and entertainment, as well as made the rest of the big cities -namely Maracaibo (whose port exports most of the oil produced in the country), Valencia (the countrys second largest industrial park), Barquisimeto (a promising comercial center) and Puerto Ordaz (the largest industrial park/ the southern-most city that borders with the worlds largest oil reserves)- interesting destinations worthy of investment. Maduros new tone merely centered on how the economy must shift towards a more sustainable and diversified economy. Of everything said during Maduros speech to Venezuelans, this was the only promising thing heard. Enough foreplay and contextualizing. This is what was said about the state of the economy: First off, the distortion created by the restricted currency exchange rate that consisted of three officially recognized and a 4th black market rate, will still be there. Official rate number 1 will still be at a very overvaluated 6,30 bolivares per dollar. The second one would replace both SICAD I (priced at 12,30 bolivares/dollar) and SICAD II (at 52,02 bolivares/dollar) with a rate yet to be announced -although it all seems to point towards a rate nearer to the 50s than the 15s-, and a plan to rail in public demand for dollars in the black market, by installing a system that wasnt even described; but that ought to replicate the barter-swap exchange system that used to exist prior to the forced closing of private bonds and currency exchange banks. So there will still be a giant loophole in the dollar trading aspect of the economy. Keep in mind that oil accounts for 97% of all dollar income Venezuela has. And that is the largest source of income; even more than taxes. Secondly, the price of the worlds cheapest gasoline seems to stay that way for the time being. Maduro did admit that it was too cheap and that gasoline production must be made affordable. Reading between the lines, one could conclude that gas prices will be raised in the near future to at least finance gasoline production, but nothing was more than a mere suggestion, since the wanted the collective concience of the nation to be the moral judge of what ought to happen with gas prices. So no changes there either, and PDVSA, the State-owned oil company- still has to literally gift its gas prodution to Venezuela. The main reason behind this coy shaking of any responsibility lies in a very dark episode in modern Venezuela history: the infamous Caracazo: riots in the capital as well as several main cities in 1989 that ended with over 300 dead and several hundreds arrested. The people rioted after the then president Carlos Andrés Pérez applied a series of economic meassures demanded by the International Monetary Fund to help with financing Venezuelas crippling debt crisis of the 80s. Gasoline prices were raised, and that spiraled onto the price of transporting goods, which led to everything being twice or thrice as expensive as it was. Ever since then, the price of gasoline has turned into a taboo. More time was spent addressing future purchases and payments that on how the country will be able to finance its expenditures. One of the most urgent ones was in regards to the rampant shortage of basic goods. A total of 8,6 billion dollars was to be spent on the import of basic goods. Besides that, funds were made available for 200.000 grants for high school students, and a raise in 30% on grants for college students, which was aimed to reach about 250.000 students. A sum equivalent to 32 billion dollars (calculated at a 6,30 bolivares/dollar rate) was to be invested in the construction of 400.000 houses. 9,5 billion dollars plus another 911 million was to be destined to infrastructure: finishing the 5th subway line for Caracas metro, extending the number of stations in Valencias subway system, one new station for Los Teques metro, a metrocable funicular line that would service an impoverished neighborhood, as well as 57 interventions on the countrys highway system. And to add the cherry on the top, he announced the financing of 300.000 pensions and a 15% raise to the minimum wage. He did address his recent trip around the globe, visiting China, Qatar, Russia and Mexico. It was brief and the details were better fitted for tales of a family vacation (his wife, mother and children flew along with him) than an official visit to the nations. He brought nothing back to show for his time away from home other than the certainty that Venezuela is no longer a relevant country anymore. What can be made of all this? How can neglect run so rampantly and a speech meant to explain what hed been up to in 2014 as well as announce how the economy was going to be safe ended up with more new engagements and no solutions whatsoever? The answer is very simple: this government will spend what little is left on the survival of their political project, not on saving the country. This year Venezuela will have to go again to the ballots and elect new parliamentary representatives. Given the circumstances, chances are the pro-Maduro candidates of the PSUV party might lose considerable ground. The polls reveal that over 80% of Venezuelans blame Maduro and the lot for the countrys problems. And just this last weekend the opposition Board of Democratic Unity held its first rally of the year, meaning that the protests and street agenda will be alive and kicking as soon as February; a month where the economical impact of the crisis will still be felt harshly by consumers, thus worsening sympathy for the PSUV candidates. The goal of Chavism is to claim at least 60% of all seats in Parliament, which could allow them to make structural changes to the handling of the country. A simple majority isnt good enough for most of the meassures theyd want to implement. Besides, crushing the opposition is a must for moral reasons. BDUs target is to take over the Parliament. The plan goes that once they control the majority of the legislative branch a process of undoing wrongs can begin. Also, it would force the government to sit down and actually negotiate with them in order to avoid a complete dismantling of the socialist apparatus. In a heavily presidentialistic country, it might end up being the battle for Parliament what proves to be a breaking point for Maduro. Losing control of it would mean to curb expenditure and submit his power to a set of individuals whose mission is to give things a 180 degree turn. For a totalitarian regime, this isnt an option.
Posted on: Tue, 27 Jan 2015 21:26:49 +0000
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