Why Venezuelans are in the dark

The hashtag #MaduroEsOscuridad, translated as Maduro is darkness, has been trending on twitter this week as Venezuelans have taken to social media to display their continued frustration with President Nicolas Maduro. The hashtag alludes to the increasingly desperate energy crisis that has beset the South American nation, causing lengthy power cuts and drastic government measures to reduce energy consumption. The Government response to the crisis, in which measures such as a change in time by half an hour, a 2 day working week for public sector employees and a four day week for the general workforce have come into place have been met with derision from the opposition, suggesting the measures will exacerbate the economic problems in the country, and a degree of perplexity from the public. So this begs the question; why is an energy resource rich country unable to generate the power it requires?

When Maduro was campaigning for the presidency, in early 2013, he claimed that his campaign had been blessed by deceased former President Hugo Chavez, who had appeared to him, from beyond the grave, in the form of a bird. If Mr Maduro still has the capability to communicate with Mr Chavez he may want to ask him if he could borrow some of his luck. While Chavez’ domestically popular 14 year presidency was charmed with booming crude oil prices (a 466% increase from February 1999 — January 2013) Maduro’s shorter tenure has thus far seen a general downturn in the price (a 54% decrease from April 2013 — April 2016). This reduction in the oil price, causing a severe reduction in government revenue, has highlighted the dependence of the Venezuelan economy on oil and the mismanagement that has occurred under both the Chavez and Maduro administrations.

While Venezuela enjoyed a trade surplus and steady levels of economic growth throughout the 2000’s, the Chavez regime, often accused of a high level of corruption, used the revenues of the state-owned oil exporter, the PDVSA, to fund a string of social programs rather than either diversify the country’s economic base or invest in energy maintenance and diversification. The domestic power production is, somewhat bizarrely, over-reliant on hydro-electric power generation. Therefore if there is a drought, as there is currently, there is a big problem. Since the drop in the global crude oil price post-Chavez the lack of investment and diversification has been highlighted as the economy has crumbled. The terms of trade which are in place with oil importing nations mean that the goods that Venezuela can import in return for the oil it exports are reduced. This combined with a lack of foreign currency reserves results in inflation or, as in Venezuela currently, hyperinflation. The economic problem, in turn, exacerbates the issue of power generation as it reduces the ability for any quick fix solution. The energy crisis itself then contributes to further economic woes and there is an unbreakable cycle.

The consequences are that the people suffer from mass unemployment and the real possibility of starvation. Politically, Maduro, as head of a government that is failing its people, is highly unpopular, and while his party have already lost control of the National Assembly to the more technocratic opposition, no presidential election until 2019 means a political deadlock; this deadlock is highly unhelpful in a time when strong and effective governance is required. The Venezuelan people are without hope, without jobs and without proper leadership. They are, literally, stuck in the dark.

Jack

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