Category Archives: Venezuela

Bringing Venezuela’s Economic Crisis Into Focus | Stratfor

Summary

Satellite images of Puerto Cabello, Venezuela’s main port of entry for imported goods, show just how far the country has fallen into economic disrepair. Reliable economic statistics are difficult to come by, so comparing imagery taken years apart can provide some insight that the government does not, particularly as legislative elections draw near.

Analysis

The images below were taken in February 2012 and June 2015, respectively. The first image came as Venezuelan imports, financed in part by high oil prices, were almost as high as they ever were in recent years. In February 2012, Puerto Cabello was bustling with activity. Container yards were stacked high, a result of the government’s oil-fueled spending spree ahead of the November presidential election.

But in 2013, the pace of Venezuela’s imports began to slow. When global oil prices plunged in the latter part of 2014, Venezuelan imports dropped precipitously, a trend that has continued to this day. The second image, taken only a few months ago, shows a much different picture: Container yards are far emptier because the government simply has much less money to import goods.

Bringing Venezuela’s Economic Crisis Into Focus | Stratfor via Google Search

Venezuela’s Food Shortages Trigger Long Lines, Hunger and Looting – WSJ

LA SIBUCARA, Venezuela—Hours after they looted and set fire to a National Guard command post in this sun-baked corner of Venezuela earlier this month, a mob infuriated by worsening food shortages rammed trucks into the smoldering edifice, reducing it mostly to rubble.

The incident was just one of numerous violent clashes that have flared in pockets around the country in recent weeks as Venezuelans wait for hours in long supermarket lines for basics like milk and rice. Shortages have made hunger a palpable concern for many Wayuu Indians who live here at the northern tip of Venezuela’s 1,300-mile border with Colombia.

Venezuela’s Food Shortages Trigger Long Lines, Hunger and Looting – WSJ

Russia, Venezuela Hold Anarchy at Bay | Stratfor

Unless Venezuela and Russia get an economic lifeline from a willing sponsor or the price of oil significantly rebounds, both Caracas and Moscow are likely heading toward a very rough period of unrest and subsequent crackdowns in the months ahead. We will have our eyes peeled and our ears to the ground for the early warning signs.

Trouble on the Horizon for Russia

The second country on our radar is Russia. The Russian economy has slipped into its second recession in six years, leaving the Kremlin with no choice but to slash the budget by 10 percent (save for defense). Tensions with the West have led direct foreign investment to drop by 50 percent over the past year, while capital flight from Russia is set to follow a similar course as last year, when the country was sapped of $151 billion. Hundreds of Russian banks across the country are in danger of collapsing. Of the country’s 83 regional governments, 63 are estimated to be nearing bankruptcy or defaulting on their debts. In addition, hundreds of towns throughout Russia, where populations are specifically trained for one industry, now face industrial collapse and bankruptcy. And with their now unemployed residents unable to move anywhere else, economic downturn is planting the seeds for social unrest.

In Venezuela, a Glimpse of Popular Discontent

The first is Venezuela, where even the most optimistic of government-manufactured statistics should give observers a feeling of deep foreboding. Venezuela burns through its oil reserves at a dizzying rate of roughly $1 billion per month. Not only that, but the country is actually down to about $16.9 billion in total reserves, with only a fraction of that amount — estimated at less than $1 billion — held in liquid reserves. Given the country’s heavy dependence on oil revenue, it hardly takes an expert statistician to see that Venezuela is in an untenable financial situation. The lack of foreign exchange to finance imports has led to severe food shortages. And the Dec. 6 legislative election only complicates matters, as an already hamstrung government is going to be all the more resistant to imposing structural economic reforms that are as unpopular among voters as they are necessary to the country’s financial viability.

Russia, Venezuela Hold Anarchy at Bay | Stratfor

Why Venezuela wants to annex two-thirds of the country next door – The Washington Post

It might come as something of a surprise, then, to see that the Venezuelan president’s most pressing concern in recent days is not a shortage of milk, surgical supplies or contraceptives. It is a vigorous and noisy campaign to take control of a large swath of South American savannah and jungle, known as the Esequibo, that belongs to neighboring Guyana.

For the past several days, Maduro has been assuring Venezuelans, many of whom are busy queuing up for groceries and basic goods, that his government is working to achieve a “great victory” and take control of the disputed Esequibo, an area equal to two-thirds of Guyanese territory.

Possession of the Esequibo — named for the big jungle river flowing through it — was granted to Guyana, then a British colony, by an arbitration judge in 1899. Venezuela challenged the ruling as unfair in 1962, and the dispute has been quietly simmering ever since.

Why Venezuela wants to annex two-thirds of the country next door – The Washington Post

Oil Prices Pushing Venezuela To Economic Collapse?

According to OPEC’s estimations, the global supply of oil will exceed demand by more than a million barrels per day in the first half of 2015, with demand slightly growing by less than 1 percent. This could result in extreme scarcity in Venezuela in 2015, resulting in further political and economic unrest and instability, especially since OPEC’s decision is unlikely to change and there are no indications that oil prices will increase back to the June 2014 levels.

Oil Prices Pushing Venezuela To Economic Collapse?

Wall Street bets on Russia and Venezuela defaults

Wall Street is betting that Russia and Venezuela are getting closer to defaulting on their debt.

Plunging oil prices have slammed the economies of both countries, which are highly dependent on oil revenue.

On Wall Street currently, the cost to insure Russia’s five-year bonds have surged to the highest levels since 2009.

The fears stem from the fact that the Russian government gets half of its revenue from oil and gas exports. Recently, the ruble has gone into a tailspin and the Russian central bank has hiked interest rates five times this year in an attempt to prop its currency.

Wall Street bets on Russia and Venezuela defaults

Venezuela: The Protesters’ Power Is Rising | The National Interest

It’s hard to know just how long it will take for Venezuelans to rid themselves of this fifteen-year tyranny. But the process has begun. The government is desperately on the defensive and the opposition has finally reached critical mass. The economy is in free fall, with inflation at more than 60 percent, GDP growth at zero and acute shortages affecting nineteen basic products. As a result, whatever faith the people of the barrios had in the Chavez mystique is quickly eroding.

These are the hallmarks of a “fin de siècle” in Venezuela.

Venezuela: The Protesters’ Power Is Rising | The National Interest

Venezuela crippled by 56% inflation and social unrest, but filling a car with gas still ‘cheaper than a bus ticket’ | National Post

One undeniable reason for Venezuela’s dire straits is the way that oil windfall has been used — or misused. Much of the fuel is, in essence, being given away.

Domestic subsidies make filling a car with gasoline “cheaper than a bus ticket.” This deprives the state-owned oil firm of billions, while Venezuela is indirectly underwriting the cost of oil it sells to Cuba, Jamaica and a host of other Caribbean countries, to the tune of billions more dollars.

“The guy with an unstabilized economy is subsidizing the guy that has better roads, better inflation and better fiscal figures,” said Alejandro Grisanti, an oil analyst with Barclay’s Capital in New York.

“This does not make any sense. The economic and political cost for Venezuela … is huge.”

Venezuela crippled by 56% inflation and social unrest, but filling a car with gas still ‘cheaper than a bus ticket’ | National Post

El Salvador Could Be the Next Venezuela | Washington Free Beacon

El Salvador could morph into another Venezuela if the current ruling party retains control in presidential runoff elections next month, a leading expert on the region tells the Washington Free Beacon.

Roger Noriega, former assistant secretary of state for Western Hemisphere affairs in the George W. Bush administration, said in an interview that the Farabundo Martí National Liberation Front (FMLN), which currently has control of the country, reportedly has ties to regional drug traffickers, violent gangs in the country, and Venezuela’s regime.

El Salvador Could Be the Next Venezuela | Washington Free Beacon

Is This the End of Hugo Chavez’s Venezuela? – The Daily Beast

“I want to get out of here. I want to leave this country as soon as possible and never come back.”

The text from my friend Luis surprised me. A lawyer by training, he got his masters in urban planning from an elite Manhattan university, and had returned to Venezuela full of hope. He was hired by a local NGO working on poverty abatement issues. But now, he’s fed up.

“Nothing works. There are lines to buy everything. Prices have gone through the roof. You can’t go out at night for fear of getting shot. If you want to get married, finding a place to live is impossible. The country has become unlivable.”

Is This the End of Hugo Chavez’s Venezuela? – The Daily Beast

Whatever you subsidize you get more of. Whatever you tax you get less of. If you want to subsidize failure, then you will get more failure. And you will continue to get more failure until the whole thing collapses. It looks like Venezuela just might be at the end of this road.

Hugo Rafael Chávez Frías was a Venezuelan politician and the President of Venezuela from 1999 until his death in 2013. He was the leader of the Fifth Republic Movement from its foundation in 1997 until 2007, when it merged with several other parties to form the United Socialist Party of Venezuela (PSUV), which he led until 2012.

Following Chavismo, his own political ideology of Bolivarianism and Socialism of the 21st Century, he focused on implementing socialist reforms in the country as a part of a social project known as the Bolivarian Revolution. He implemented the 1999 Venezuelan Constitution, participatory democratic councils, the nationalization of several key industries, and increased government funding of health care and education and made significant reductions in poverty with oil revenues. The Bolivarian Missions have entailed the construction of thousands of free medical clinics for the poor, the institution of educational campaigns that have reportedly made more than one million adult Venezuelans literate, and the enactment of food and housing subsidies.

Hugo Chávez – Wikipedia

Venezuela’s labour market: Labour’s love lost | The Economist

The regime has contrived to make both bosses and workers unhappy

NICOLÁS MADURO, a former bus driver and trade-union activist, is fond of styling himself “Venezuela’s first worker-president”. Like his mentor and predecessor, Hugo Chávez, Mr Maduro believes the primary role of the labour movement is to help the regime crush capitalism and install “21st-century socialism”.

Employers predictably bemoan the rigidity of the labour market, saying that it cripples business and leaves Venezuela trailing in terms of productivity. But as the country prepares for a visit by the International Labour Organisation (ILO), the bosses are not the only ones complaining. Many workers are not happy either.

Venezuela’s labour market: Labour’s love lost | The Economist

A country is marked for revolution when it runs out of this one thing:

Now Venezuela’s in REAL crisis as country runs out of toilet paper | Mail Online

First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities – toilet paper.

Blaming political opponents for the shortfall, as it does for other shortages, the embattled socialist government says it will import 50 million rolls to boost supplies.

That was little comfort to consumers struggling to find toilet paper on Wednesday.

‘This is the last straw,’ said Manuel Fagundes, a shopper hunting for tissue in downtown Caracas.

‘I’m 71-years-old and this is the first time I’ve seen this.’

Now Venezuela’s in REAL crisis as country runs out of toilet paper | Mail Online

Those that are able to flee Venezuela either have done so, or are thinking about it. They would be the most successful, or Group A. The government takes from Group A and gives to Group B – the less successful. Over time Group B swells in size while Group A shrinks.

For many Venezuelans, time to leave may be close – Sun Sentinel

According to the U.S. 2010 Census, the number of Venezuelans living in South Florida increased by 150 percent in the first decade of the new century — from 41,000 in 2000 to 102,000 in 2010. Many more have come in the last two years. That number is likely to increase exponentially in the next few months, particularly if Chávez continues his socialist policies and is unable to control violence in the country — one of the highest per capita in the Western Hemisphere.

I don’t believe my long-time acquaintance will be among those making the Caracas to Miami trip. She is depressed, but by early in the week she was busy working on a new personal endeavor.

Others, however, will not hesitate.

Those leaving will continue to be the cream of the crop. As was the case in the early years following the Castro revolution in Cuba, those who came as exiles, only to establish new lives in the United States, were the best their country had to offer.

For many Venezuelans, time to leave may be close – Sun Sentinel

As Venezuela Professionals Leave, Foreigners Move In – NYTimes.com

On this booming continent, oil-rich Venezuela is the exception: South America’s only shrinking economy this year. Officials are rationing hard currency. Government takeovers of private businesses are increasing. One prominent financial analyst recently had just two words of advice for investors here: “Run away.”

Many middle-class and wealthy Venezuelans have done exactly that, creating a slow-burning exodus of scientists, doctors, entrepreneurs and engineers. But wander into the bazaar in the shadow of Santa Teresa Basilica in this city’s old center, and the opposite seems to be happening as well.

Merchants murmur in Arabic, Urdu and Hindi. Haitians pushing ice cream carts chatter in Creole. Street vendors selling DVDs call out in Colombian-accented Spanish. Sip coffee in Naji Hammoud’s clothing shop, where photos of Lebanon’s Bekaa Valley grace the walls, and the outlook is downright bullish.

As Venezuela Professionals Leave, Foreigners Move In – NYTimes.com

Related articles:

Jews flee Venezuela amid security fears – Israel Jewish Scene, Ynetnews
Venezuelans leave the country for Ireland | Voxxi