November 16, 2018

A country with the largest oil reserves in the world, a country situated next to the Caribbean, a country blessed with natural beauty, a country with beautiful women (6 Miss. World & 5 Miss. Universe wins). Now, this seems like the perfect situation to live in paradise. Imagine investing or working in the oil industry, getting married and having a family with a beautiful Venezuelan woman, then escape on the weekend to spend time with your wife and kids at your beach house, overlooking the Caribbean. The dream and reality are two different things; currently (on the date of publication), according to the Numbeo quality of life index, Venezuela scores exactly a 0.00 (Numbeo Venezuela), the lowest rating possible, for a country (for comparison on the date of publication: rating of Cuba – 68.68 – low, Brazil – 99.75 – moderate, South Africa – 135.92 high, Norway – 181.11 very high). This index measures factors such as purchasing power, health care, and commute times to work. Seeing such a low quality of index, I decided I must visit! NO, let’s speak the truth, the only thing that drew me to the country was a woman. I visited for five weeks, being July-August of 2018. In this blog post, I will give a very brief history and then, relay from my observations, the overall suffering of the Venezuelan people. As I had the unique experience of being a Westerner, living with a Venezuelan family, I will relay the struggles, from the viewpoint of the people, the challenges they face, day to day, and the psychological toll incurred from living in a country with an almost 20-year dictatorship. I will both summarize and describe how starvation, hyperinflation, and lack of essential supplies are affecting the country and the people. I’ll give my personal viewpoint, from a purely biased Western opinion of socialism, and the Maduro dictatorship. I will admit that this article may not be for the faint of heart, as I will express my opinion about the current situation, without any reservations.

PART 1. HISTORY

1999 to present:

1999: Hugo Chavez was elected as president. Chavez appeals to Venezuelans with a socialist platform (Chavismo), promising reductions in poverty and universal health care. Lured with state benefits, government housing, and free essential supplies, the Venezuelan citizens took the bait. As the president of the country with the largest oil reserves in the world, Chavez promised a socialist revolution similar to his idol, Simon Bolivar, who liberated Venezuela from imperialist Spain. However, Chavez has no knowledge about his wealth resource (oil) and is extremely corrupt despite his socialist facade. Pedro Burelli, a former PDVSA (state-run oil company) board member, who left the company when Chavez took over, described his incompetence pertaining to oil as follows:

“He was ignorant about everything to do with oil, everything to do with geology, engineering, the economics of oil. His was a complete encyclopedic ignorance.” (Burelli quote)

Despite his incompetence and mismanagement, Chavez has luck on his side as Venezuela is still successful economically. The average yearly oil price went from a low of $12 per barrel, in 1998 to a high of $109 per barrel, in 2012 (chart of average OPEC oil price per barrel from 1960 to present). As Chavez is handling unprecedented oil profit, he diverts the money to social programs, and into making himself and his cronies rich, without reinvesting in oil. What Chavez also does is establish a kleptocracy, defined as a government with corrupt leaders (kleptocrats) that use their power to exploit the people and natural resources of their own territory, in order to extend their personal wealth and political powers. Typically, this system involves embezzlement of funds, at the expense of the wider population. If anyone chooses to doubt this, they will see that Chavez was worth a reported 2 billion by Forbes, at the time of his death, while his daughter (Maria Gabriela Chavez) has a current accumulated wealth estimated at 4.2 billion. Stolen directly from Venezuelan oil profits, making her one of the richest women in South America. In comparison, Donald Trump’s net worth is estimated at 3.1 billion.

As oil profits were at record highs during his rule, Chavez essentially had, at his disposal, a cash cow of money from the oil boom, and he chose to appeal to the poor, to gain popularity, with his social programs providing money, food, government housing, and health care. Just how much his rule benefitted the poor, and how much was due to the oil boom, will always be questioned. Francisco Rodriguez, an economist who served as the head of the Office of Economic and Financial Advisory of the Venezuelan National Assembly, from 2000-2004, summarized the effect that the presidency of Hugo Chavez had on the poor.

Neither official statistics, nor independent estimates, show any evidence that Chávez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement, beyond that which is normal, in the midst of an oil boom. (An Empty Revolution)

2005: Chavez’s policies and incompetence were beginning to foreshadow the demise of the country; he had fired more than 18,000 workers at the PDVSA (state-run oil company) and in 2005, a top energy ministry official admitted privately that it would take at least, 15 years to rebuild the technical skills lost by the mass firings

Chavez was slowly bleeding the country dry, as he was siphoning the profits from oil into his social programs, for votes and popularity, rather than reinvesting in oil production, the wealth source of Venezuela. In a simple analogy, Chavez’s rule can be compared to a rich father leaving behind his legacy and wealth to an ignorant son, who doesn’t understand simple concepts about managing and growing the legacy of wealth his father left behind.

2013: Chavez died of cancer, and appoints Nicolas Maduro (a former bus driver) as his successor. Rather than dealing with the economy’s underlying structural problems, Maduro pledged to finish Chavez’s socialist revolution, further weakening the Venezuelan economy. Chavez left a gaping open bleeding wound for Venezuela, and Maduro has taken a knife and opened this wound further, rather than stitching it up.

2014: After reaching average monthly highs of $112 per barrel (bbl) in June, crude oil fell to $62/bbl in December and subsequently, the country collapses. The price of oil has stayed low until now. The result: the worst economic collapse seen anywhere in the world in recent years, getting worse every year since 2013, and often described as the largest recession in Western Hemisphere history. In 2017, Venezuela’s GDP had fallen 35%, which is a sharper drop than the one seen during the Great Depression in the US. This double-digit drop in GDP continues as the projected drop is 18% in 2018.

2018 (present): This recession, combined with kleptocrats leading the country and ignorant economic mismanagement of your wealth resources, has resulted in one of the largest economic crises to date, anywhere in the world.

I’ll spend the next part of this post talking about this gaping wound that has resulted in hyperinflation, poverty, mass migration, citizens left without basic supplies, and dying of hunger. I’ll provide anecdotes of the history that lead to the current situation and then, provide examples of the effect this has had on the Venezuelan citizens based on my experience visiting the country.

PART 2: THE CONSEQUENCES

LIVING IN A COUNTRY WITH LIMITED IMPORTS AND POOR SERVICES

Essential supply shortages and in particular, food shortages, started to become dominate complaints of Venezuelans around 2005, during the Chavez’s regime. Due to price controls, a general lack of funds, and an over-reliance on imports, the country found itself without essential supplies such as toilet paper, rice, tires and other essentials. One of the keys that started shortages of food was land expropriation. Between 2004-2010, the Chavez government expropriated over 3 million hectares of land for their socialist agenda, that was previously used for food production. Combined with devalued currency (hyperinflation-see below), it became cheaper to import, rather than produce food, which was a recipe for disaster. Along with a corrupt thieving government and disastrous economic mismanagement, imports reportedly fell to $9.2 billion in 2018, down from $66 billion in 2012 (imports falling). As the government was forced deeper into debt, the supply of imports diminished, and Venezuelans found themselves without food, starving to death and without essential supplies such as medicines, toothpaste, and toilet paper.

The first thing I observed, relating to a lack of supplies, was the number of empty shelves in the supermarkets. Most of the supermarkets were at least, one third to half empty. This meant that to do a complete shopping trip to load up on groceries involved visiting at least, 4-5 different locations, in order to get an incomplete fill of groceries.

For example, one day, when I decided to make pizza to impress my girlfriend’s mother, the shopping took 3 hours to purchase the ingredients. I went to one market for the wheat, for the crust, another market to purchase the vegetables, the butcher shop to purchase the salami, and finally, a specialty spice shop to purchase the yeast. This is not at all unusual, and most Venezuelans are accustomed to this; the weekly grocery time allotted is on average, about 8 hours, of course, that is if they can afford to eat. For those that can’t afford to eat, they rely on government subsidies, which involve waiting in line for hours on end and often overnight, to receive a small amount of basic food supplies, such as a packet of rice and pasta. Everywhere I went in Venezuela, I observed large lineups, often ranging over half a kilometer long. I would ask my girlfriend what they were lined up for, and she explained that they are receiving food subsidies from the government.

Seeing these lineups, and slowly comprehending the magnitude of the shortages of food, I had little to complain about as I was happy to be eating. However, there are drawbacks for the rich or middle class who can afford to eat as well. From my experience, regardless of which family you are from (poor, middle, or upper class), you will be plagued with stories about family members who can’t afford to eat, as all families aren’t equal economically. Concern for that starving and dying aunt/uncle/cousin is a commonplace at the dinner table. What I experienced was that, even for those who had money to afford food, it was a double-edged sword, as the luck associated with this comfort is plagued with guilt for starving family members.

THE EFFECT ON THE PEOPLE

Chavismo, contrary to its claims of economic equality and a hope for the desperately poor, essentially resulted in a population that is poor and starving to death. The poverty rate in 2017 jumped to a total of 87%, with 61.2% of people living in extreme poverty. A shocking 61% of Venezuelans reported going to sleep hungry in 2017. The incidence of anemias and all diseases associated with malnutrition is on the rise, as people only have enough money to buy cheaper carbohydrate sources of calories, such as potatoes and rice. Only 34.3% of families can afford to buy chicken, while a shockingly low 11.4% can afford to buy fruit on a weekly basis (ENCOVI report). As I got to know the residents better, I felt comfortable asking them about the situation and their President’s response to the hunger crisis. They would respond with a disappointed and reserved look, summarizing that their President has failed them. They felt afraid of talking about the brevity of the situation, and it was like talking to prisoners controlled by hunger, with the warden being President Maduro. As they became more and more comfortable with me, they would always ask me how much longer I was staying, and most would jokingly ask me if they could leave with me. Although they were joking, when I looked deep in their eyes, I could feel their melancholy and desperation from being hungry.

Now, President Maduro, like all politicians, will talk a lot without really saying anything. He has obligatory televised broadcasts called cadenas, where he will deny the extent of the crisis, and to distract attention from his own government policy failures; he attributes blame to US sanctions. But to really make it clear how little he cares about the country, you must look at his actions. In a viral social media post, he can be seen eating at a celebrity steakhouse abroad in Turkey, while his citizens are dying of hunger. No other image, more strongly, personifies his total disregard and lack of empathy for his dying citizens.

Food shortages are the most visible of the lack of essential supplies in Venezuela, however, the shortages aren’t limited to just food. Most hospitals lack essential supplies, such as basic medicines, catheters, surgical supplies, and infant formula. Due to the lack of supplies in hospitals, the infant mortality rate has also skyrocketed. In the Ministry of Health’s 2015 annual report, the mortality rate for children, under 4 weeks old, had increased a hundredfold, from 0.02 percent in 2012 to just over 2 percent. The autocratic government denies all shortages, and has severe restrictions in place, preventing any future publishing of hospital statistics.

Personally, my biggest shock was just how the availability of supplies, that we take for granted in the West, are in extreme shortage. For example, if your car’s windshield wipers break or wear out, you will have to drive without them as replacement wipers just can’t be purchased or, it will be extremely difficult or impossible sourcing specific parts. I experienced firsthand, the deplorable state of the cars; most were early to mid 90’s models and in very poor shape. Of course, being in a degraded car was a luxury as the majority of public transport and buses have shut down. Like everything else, the government just doesn’t have the requisite funds to maintain buses. So the alternative is perreras, large cages behind pickup trucks that were formerly used for the transport of animals. These trucks fit as many people as possible, with many hanging outside the cages, and the drivers follow routes that are often made up. As I witnessed this dangerous and deplorable state of public transport each day, it served really as a perfect analogy of how President Maduro treats his citizens. A former bus driver, now President, he has degraded the quality of life for his citizens to the point that they are being transported like animals. Again, this was consistent with what everyone told me when I asked about their President…”No le importa una mierda!” “He doesn’t give a f***!”

HYPERINFLATION

Venezuela’s annual inflation rate will surge to 1.37 million percent by the end of the year as the government fails to cover a widening budget shortfall by printing money.

The International Monetary Fund predicts this rate increase for Venezuela, at the end of 2018. In comparison, the inflation rate for the US is currently 2.4%. No! This isn’t a misprint; 1,370,000% versus 2.4%. Venezuela has become one of only 57 countries (half of them Post-Soviet era) to suffer from hyperinflation; the crisis is comparable to that of Germany in 1923, or Zimbabwe in the late 2000s. Due to economic mismanagement, as described above, Venezuela became deeply indebted and chose to service their debt by printing more money which in turn, leads to a devalued currency. The cycle continued, and this has resulted in unemployment, and continued increases in the cost of living. With inflation increasing so rapidly, prices have been doubling roughly, every 2 weeks, and this is further crippling the country. Why would employees choose to work when their wage, from week to week, has no purchasing power? Why would a shop owner sell when he can hoard the goods and sell later for more money? It’s a vicious cycle, and the government response has been to print more money, leading to further devaluation.

As the currency lost value, you would literally have to carry a wheelbarrow of notes to purchase products. As this is unfeasible, all of the exchange for goods and services is now occurring by way of money transfer. As I didn’t have a bank account in Venezuela (being a visitor), I had no way of spending any money to make purchases, despite the fact that I had money. I had money but couldn’t spend it; this was a feeling similar to being with a beautiful woman but being impotent! I was unable to obtain local currency as it held no value; I had come to rely on my girlfriend to make bank transfers, as she exchanged my US dollars on the black market, and had the local currency deposited into her account. However, to try and limit the rate of inflation, the government limits the amount of money you can transfer per day, adding to even more frustration. For example, when I wanted to go away to the Caribbean coast for a few days, my girlfriend had to take 3 different credit and bank cards with her (borrowed from her family), as we could only spend a restricted amount on each card per day.

Despite using bank transfers for transactions, there is still a segment of the population that uses paper money for transactions and of course, the banks have little money as the government can’t keep up with printing money. The results: again, I observed long lineups, all over the city at banks, with people lining up for up to 24 hours to withdraw the equivalent of half a US dollar that may buy them a packet of spaghetti. When I would ask the citizens how they felt about lining up for such a small quantity of devalued money. They simply responded that they had no alternative, the little money they could get was all that they could do to stave off starvation.

The Maduro government has failed to address hyperinflation, or they’ve addressed it with poor solutions, including taking off 5 zeros from the exchange rate. Rather than something costing 5,000,000 Bolivares, it would now cost 50 Bolivares. This has done absolutely nothing, and the inflation rate has continued skyrocketing.

MIGRATION

Facing endless hunger and suffering from malnourishment, a large percentage of Venezuelans are facing a mass plight. To date, 7% of the country, or 2.3 million Venezuelans, have left the country since 2014, making it the largest, forced displacement in the history of Latin America. In comparison, 2.5 million people have left Afghanistan since 2015, and 2.4 million people have left Sudan since 2013. It’s very difficult to estimate the total number of Venezuelans living abroad but from one poll, it’s estimated that there is about 4 million total. From my experience traveling, it was very unusual or rare to meet any family without anyone not living abroad.

The result: broken families, tainted with the stain of a corrupt government. Venezuelans, like all Latinos, have a fierce loyalty to their family. The needs of the family usually come before the needs of the individual, and there is a particularly tight bond between children and their parents. With the migratory crisis, families are left separated. As I was visiting a variety of families, I realized that just about every family I met will start talking, with both sadness and happiness, about their relatives living abroad. They are extremely happy that their relatives are living in better conditions, however, this happiness is accompanied with sadness, as well as the misery and emptiness of having their daughters, sons, cousins living abroad and away from them. In the era of social media, the family members abroad will send back photos of well-stocked store shelves, and overflowing fruit and vegetable markets and in general, photos of supplies that any Western takes for granted. From a Western standpoint, it was quite shocking to see the response of the Venezuelans receiving these images, as it occurred to me that they have been accustomed to supply shortages, for so long, that the mere sight of filled store shelves and abundant food supply is met with awe and happiness.

The other biggest shock for me was how particularly depressing it was to observe communication of the Venezuelans with their family members abroad. In this age of social media, the family member abroad communicates for hours per day, via video chat by WhatsApp, FaceTime, etc. It’s not unusual, during family dinners, to have family members participating in a live chat during the dinner. I was actually at a BBQ where the daughter was on a video chat from Argentina for hours on end, greeting family members, as they arrived at the BBQ. Of course, the internet connection, like everything else in Venezuela, is collapsing and is always on and off. This poor connection, where it may work for a few minutes and then will fail, kind of serves as a constant reminder for the family member abroad, just how shattered their former country is. For any Venezuelan abroad, Chavismo serves as a kind of chronic disease that oscillates between flare-ups and remission. The disease may not flare up for a while, but at the same time, this curse will never leave, and you are constantly reminded of it when communicating with your family members.

RESIGNED, FRUSTRATED AND HELPLESS LOOK AMONGST VENEZUELANS

Anyone who has traveled to South America will talk about the usual look of happiness, accompanied by laughter and joy, of the Latin people. That unexplained passionate energy, accompanied with a positive outlook, is contagious and is one of the main reasons that drew me, as a Westerner, to visit and live in Latin American countries for the past 2 decades. This energy and joy of life are curiously becoming, more and more, absent in Venezuela. In its place, the citizens had adopted a look of resignation, emotionless, and worn. Surprisingly enough, I also became very hostile, resigned and angry towards the end of my stay, bickering and fighting with my girlfriend for meaningless reasons at times. I felt like I was in prison; I couldn’t make purchases, as there were restrictions on the amount that my girlfriend could spend daily. I couldn’t leave the house as it was too dangerous anywhere I went. When we did leave, any restaurant or bar I would go to, would be at the maximum, 1/4 or 1/5th full and often times, we would be the only patrons. I would be constantly reminded, by both my girlfriend and the waiters, how just 10 years ago, the entertainment establishments would be completely full. Going to the beautiful Caribbean coast, I saw empty beaches and very poorly maintained locales. Looking back, I reflect and realize that I was approaching my wit’s end, and was running out of patience in a collapsing country, with a very low quality of life index. And in reflection, I now understand that look on the face of the Venezuelan citizens. Wrought with starvation, living under a corrupt thieving dictatorship for the past 2 decades, having no security financially, and living in one of the most violent countries in the world, their vigor and zest for life have eroded like the walls of a canyon. No longer willing to overcome, complacency now took the place of ambition.

PART 3: THE FUTURE

So, what does the future hold? What can be done? Nicolas Maduro’s dismal approval rating stood at 20% in June of 2018, and as the country further slides, so does his popularity. I would put his approval rating at less than 10% right now. Although it is illegal to publicly talk bad about Maduro, this hasn’t stopped the majority of people that I met. During my entire visit, I asked the citizens about their president and how they felt about him. I was always met with a resigned disappointed response and them telling me that he must go. So that begs the question, why is he still there? Well, the biggest reason is that he is backed by Cuban intelligence. After the fall of the Soviet Union in the ’90s, Cuba was left without a source of oil and turned to Venezuela. In exchange for reduced rate oil, Venezuela was provided with skilled laborers, medical personnel, education and most importantly, Cuban intelligence. As the economy of Venezuela collapses further, most of the Cubans have left, but President Maduro still exchanges oil (up to 50,000 barrels per day), primarily for Cuban intelligence. Antonio De La Cruz, executive director of the Washington-based consultancy firm Inter American Trends, sums up why Maduro continues to leave his citizens dying while supplying Cuba with valuable oil that could be used for imports.

“Without the Cuban support, Maduro would have been gone a long time ago. Havana today is supplying him with the instruments of repression and the intelligence apparatus that allows him to stay in power, despite the tornado he faces.”

So, Venezuelan lives by starvation, in exchange for Cuban intelligence, hence, opposition repression, and continuing dictatorship.

It occurred to me, during the end of my stay, that Venezuela had become stuck in the late 90’s early 2000’s; everywhere I went, things had become outdated, from the cars to the gym equipment, including basic household goods. Everything was old and of very poor quality. It finally struck me what was happening; Venezuela was becoming Cuba! With Cuba being stuck in poverty and in the past since the 1950s’s, Venezuela had become stuck in the late ’90s and early 2000’s. Every aspect is a mirror of Cuba; from the poverty to being stuck in time, to the repression of dissidents, and the migration of its citizens. So the future, well, it’s quite bleak.

After winning a fraudulent election in May 2018 that can keep him in power until 2025, Maduro hangs onto power by buying out the military. With preferential government treatment, military leaders run the food and oil industries and control the region where gold, diamonds, and coltan are mined. However, as hyperinflation and starvation continue, it has started to affect the ranks of the military, leading to distension. Amplified by hyperinflation and starvation, what follows is military dissent, followed by arrests and purging of possible dissidents. This will continue until the government starts running out of money, and democracy becomes a more viable solution for the military. Socialism and this kleptocracy will run its course, but not until the once oil, rich country bleeds dry and totally collapses. This is the best outcome, the alternate outcome will be that the rule of successive dictators will continue, and what you will have is another Cuba under dictatorship for almost 60 years. As a visiting foreigner and seeing the collapse of the country, my initial reaction was anger and then thoughts about how to start a revolution to overthrow President Maduro. Talking with the Venezuelans, I heard little about starting any rebellion against the government or any ideas about an overthrow. Daily, I heard endless complaints and stories about starving citizens, people eating out of the garbage, endless lineups for a small quantity of subsidized food but I heard very little about any sort of rebellion or revolution. The most I heard was that President Maduro is purposefully using starvation as a weapon to control the citizens. The citizens explained to me that if the majority were starved, all their time and mental energy would be expended searching for food as the need to overcome daily hunger would be the priority. Of course, my thoughts and initial anger were from a Western viewpoint, I couldn’t understand the psyche of the Venezuelans living under an almost 20-year dictatorship. After witnessing their country collapse under 2 successive socialist presidents and experiencing the psychological toll incurred with all the suffering, many had lost hope became resigned and forced to accept this suffering without questioning or searching for alternatives. A lot of the citizens also expressed the point that their country is at a critical point right now, as multiple generations (both parents and children) will start being born, both living under a socialist dictatorship. If their parents endured the dictatorship, the values passed onto the children will be that of tolerance, submissiveness and accepting what is given to them as they don’t know that an alternative exists, and that is when the dictator would really have full control. There is only one upside I can see to Maduro’s rule and the collapse of Venezuela; it serves as a great example of how a purely socialist country has never functioned, and will never function. For as the saying goes, “The problem with socialism is that you eventually run out of other people’s money.”

I dedicate this blog to my girlfriend and her sister, you inspire me to write to help promote awareness and change. Thanks for reading and please leave a comment as this will help stimulate discussion of this topic. If you have written a blog post about the Venezuela crisis or any other blog post that you would like to contribute, please submit it for review.