Who is to blame in Venezuela?

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The latest crisis is the fault of a corrupt and increasingly authoritarian regime that doesn’t deserve the support of the left

The recent political crisis in Venezuela has led many on the left to jump to the defense of Venezuela’s socialist government led by Nicolas Maduro. As marches from both sides of the political spectrum have erupted into violence, and several people have been killed, many insist the crisis is the result of an undemocratic opposition that is hell-bent on overthrowing the government by any means.

They point out that the opposition seeks to impose neoliberal policies on the country and destroy the gains of the last two decades of socialist policies. Meanwhile, they argue that the grave economic crisis that has been affecting the country in the last few years is the fault of the opposition-aligned private sector that has been engaging in an “economic war” by hoarding goods and creating widespread shortages. Therefore, progressives should be standing up in defense of the Maduro government, and against the onslaught of right-wing forces.

The problem with this argument, however, is that it is based on a series of half-truths that leave out crucial details about what is really happening in Venezuela. As I argue below, the reality is that it is the Maduro administration that is primarily responsible for the economic crisis that plagues the country. Shortages and hoarding of goods are due to inept and corrupt government policies that Maduro has simply refused to rectify, even as the economy has plunged to unprecedented depths and hundreds of thousands have fled the country.

Meanwhile, the government has increasingly engaged in undemocratic and downright dictatorial actions in recent months in an attempt to cling to power. This has created a situation in which a supposed “socialist” and “leftist” government has actually become an embarrassment for socialism, and a disaster for the left — something leftist forces in Venezuela will not likely recover from in quite some time.

To understand what is going on, we should begin with the economic crisis and so-called “economic war” that is so often evoked by Maduro and his supporters. According to this argument, the crisis is the result of a carefully orchestrated plan being carried out by forces opposed to the government in an attempt to overthrow it. Shortages of basic goods are the result of private sector companies aligned with the opposition, who hoard goods in an attempt to sabotage the economy and destabilize the government.

There is some truth to this argument. Private companies have long been engaged in trafficking goods and other illicit activities. However, this is not the primary reason for shortages, nor is it due to a conspiracy to overthrow the government. Rather, shortages are a result of policies put in place by the Chavez and Maduro governments that have created growing incentives for economic agents on all sides of the political spectrum to engage in illicit activities.

We know this because the shortages have gotten worse as government policies have gotten more and more distorted in recent years, thus creating greater incentives. And the shortages have continued despite the government’s increasing control over food production and distribution. Nowadays, even government officials are engaged in trafficking goods.

One of the primary causes of the problem are government imposed currency controls. These controls set a fixed exchange rate between Venezuelan and foreign currency, and require Venezuelans to access foreign currency through the state. This policy was put in place by Hugo Chavez in 2003, and did not create major problems for several years. However, when rampant inflation began to create major distortions between the fixed exchange rate and the informal black market rate, it created enormous incentives for anyone with access to fixed-rate dollars to sell them on the black market instead of using them for their intended purpose — such as to import goods.

Thus, both Chavista and opposition-aligned companies would acquire dollars from the government at the official rate in order to import certain goods, and then, instead of importing the goods as they were supposed to, they would sell those dollars on the black market for an extraordinary profit. This created shortages, as importers were not importing many goods that were intended for local consumers.

Price controls also generated shortages as they became increasingly distorted. The purpose of the price controls was to keep food affordable, and combat price speculation by retailers. However, just as with the currency controls, rampant inflation led Venezuela’s local currency to become rapidly devalued, making the difference between government-set prices and black market prices ever greater. This created, once again, huge incentives for economic agents all along the distribution chain to channel goods into the black market, or out of the country to Colombia, in order to avoid price controls and make higher profits.

And the problem got worse precisely when the distortions in Venezuela’s currency began worsening in late 2012 (see Figure I), proving that the problem has little to do with an “economic war” by the private sector, or even the drop in oil prices in late 2014. Rather, it has to do with the incentives created by the government’s dysfunctional policies. Since last year, the military has taken over much of the distribution chain, and, just like the private-sector companies before them, they too are now involved in widespread trafficking and price speculation.

Source: Banco Central de Venezuela

At the root of the distortions is rampant inflation. Venezuela has one of the highest inflation rates in the world, and this is also primarily the fault of the Chavez and Maduro governments. Inflation rates have been driven by a number of factors over the years, including an inability of the local economy to generate enough supply to meet demand. This is caused by a shortfall of local food production, which has declined rapidly since 2010, when the Chavez government began a major offensive in agriculture and food industries (See Figure II).

Source: Fedeagro

By 2013, the government had expropriated a significant amount of the country’s farmland, as well as a number of private companies involved in the food industry. Government mismanagement of these assets led to a major decline in domestic food production, thus driving shortages, inflation, and the need to import greater amounts of food. Meanwhile, the government’s endless printing of money in an effort to keep spending and maintain popular support has further fueled the devaluation of local currency and worsened the economic distortions.

All of this has created a very serious economic crisis that has made daily life a grueling struggle for average Venezuelans. Food shortages have become so severe that many are forced to dedicate much of their waking hours to searching for stores that have the goods they need, and then stand in unfathomably long lines just to get those goods. This has caused many to skip meals, as essential ingredients often cannot be found. Last year, the vast majority of the population lost weight — about 20 pounds on average — as their caloric intake was significantly impacted by the shortages.

And food is not the only good that is missing. Medicines and medical supplies have also been impacted by the shortages, causing a desperate scramble among those who depend on certain medications for their survival, such as epileptics, diabetics, or heart patients. Hospitals often do not have basic supplies, leading many to forgo needed care, or to receive surgery without basic necessities like painkillers. Many now take to social media to ask for help in finding their medications. Countless others have died due to a lack of the medicines they need.

These problems have led to a growing exodus of Venezuelans to nearby countries like Colombia, Ecuador, or Panama, which were once worse off economically than Venezuela, but have suddenly become a last resort for thousands of desperate Venezuelans. Asylum requests in the United States have also skyrocketed among middle-class Venezuelans who have managed to get tourist visas and enter the US legally. Meanwhile, poorer Venezuelans who do not have these options have gotten increasingly desperate, many taking rafts to the nearby Caribbean islands of Aruba and Curaçao. Several countries in the region have now taken measures to restrict the flow of Venezuelans coming in.

All of this should provide some perspective on the sharpening political conflict in recent weeks. Many on the left are keen to paint the opposition as right-wing radicals that are intent on overthrowing the Maduro government so that they can impose neoliberal austerity policies. The recent marches that have led to violence in the streets are characterized as the work of right-wing fascists and terrorists that will stop at nothing to topple Maduro.

Again, these claims are partially true. The principal leaders of the Venezuelan opposition have long been obsessed with taking power, through violent means if necessary, such as the 2002 coup attempt against Chavez to name just one example. It is also true that these leaders are supporters of neoliberal ideology, and would likely seek to make neoliberal reforms if they came to power. However, where the claims of Maduro supporters lose their basis in reality is in portraying all of the opposition as right-wing radicals, and in pretending that the Maduro administration hasn’t also become increasingly undemocratic.

The reality is that the opposition now includes the vast majority of the Venezuelan people. Several polls in recent months have shown that the Maduro government is extremely unpopular, and that most Venezuelans want a change in government. This is hardly surprising, given that Maduro was initially elected in 2013 by a very thin margin, and the economic situation has gotten considerably worse since then.

Indeed, all the polls for last year’s recall referendum showed Maduro would have lost by a considerable margin had the vote actually taken place. In other words, it is inaccurate to portray the opposition as simply right-wing radicals and neoliberals. Other, more popular sectors of society are also involved in the protests, and the vast majority of Venezuelans are clearly opposed to the Maduro government.

This could easily be revealed if the government would simply allow the population to have elections as stipulated by the constitution. But, instead, the Maduro government has decided to cling to power by whatever means necessary.

Last year, the government did not allow a recall election to take place that would have given the country the opportunity to have new presidential elections and decide between the Chavistas and the opposition. The Chavista-controlled electoral council used delaying tactics and stalled the process to ensure that the vote would not happen within the required time period. The result was that the Venezuelan people were simply denied their constitutional right to have new elections.

Meanwhile, regional elections for state governors and legislators were supposed to be held in December 2016, but, once again, the Chavista-controlled electoral council simply did not hold the elections, citing the “economic war” and the economic crisis as excuses. Of course, the government knows they would lose any elections right now, so they have simply prevented them from happening.

Meanwhile, the opposition’s most popular leader has been banned from running for office, with the excuse that he has been involved in corruption. Other leaders have had their private phone calls tapped and then played back on national television. Last month, the government tried to shut down the opposition-controlled congress, but backtracked when it was criticized from within Chavista ranks.

There have also been increasingly desperate attempts to prevent the media from reporting on the deteriorating situation in the country. Since last August, scores of journalists from a number of different countries have been denied entry to the country. Others have been arrested for attempting to report on the situation in the hospitals, or corruption in state agencies.

Visitors from the United States are often not allowed to enter the country if they are suspected of being journalists, as I found out when I tried to visit family last December. The state official responsible for approving my visa told a friend of mine that they “don’t want these foreigners coming in the country to report on what is happening”. Meanwhile, television stations that are critical of the government have been removed from the air in recent months, and programs that are not favorable to the government have been censored.

Given all of this, it is not hard to understand why the political crisis has sharpened in recent weeks, and thousands of Venezuelans have taken to the streets to demand an end to the Maduro government. The economic crisis has reached desperate levels, yet Maduro has done nothing to rectify the grave problems caused by his policies, and has instead sought to hold onto power.

Meanwhile, the state bureaucracy and military are taking over more and more of the local economy, and lining their pockets with profits from the currency exchange and trafficking. This is probably the reason why no significant reforms have been made. Powerful forces within the state are not keen to lose their newly acquired sources of wealth, and removing the currency controls and government monopolies would affect the ability of bureaucrats to get rich off their various moneymaking schemes. Therefore, the needed reforms are not forthcoming, regardless of the suffering that it is causing for ordinary Venezuelans.

It is true that a defeat of the Maduro government would likely be a win for the neoliberal agenda in Venezuela. But supporting an inept, corrupt, and increasingly dictatorial regime will have even worse consequences for the left in the long term. Not only does it reflect poorly on socialism on an international level, but it has thoroughly tarnished the credibility of leftist voices within Venezuela, and thus makes it unlikely they will fare well in future elections. Regardless of what opposition leaders might do, the task of the left should be to build a strong movement that can resist the neoliberal agenda. Defending the Maduro regime as it clings to power is not a good way of doing that, nor is it good for ordinary Venezuelans who have to suffer the consequences.