By Matt Purple, April 20, 2016
The South American country, long slapped around by the very visible hand of Hugo Chavez-flavored socialism, is in the midst of a crisis. Inflation there will explode to 720 percent this year, according to the IMF. Supermarket shelves have gone bare, forcing the government to declare a “nutritional emergency” and President Nicolás Maduro to harangue his largely city-dwelling country on the upsides of personal gardening. Essential goods like toilet paper are also in short supply. And last year, Venezuela had the highest homicide rate in the world as residents resorted to crime to stay stocked.
If you haven’t been meticulously following Venezuelan news lately (and why haven’t you?), then this might come as a surprise. During the 2000s, Venezuela was frequently in the news thanks to the antics of the now-deceased Chavez, who called George W. Bush a “devil” and a “donkey,” among other stinging burns. Back then, Venezuela defied the stereotype of the impoverished and authoritarian socialist hellhole, with relative prosperity and a government that was amply supported by its people.
So what happened? Venezuela is largely a petro-state, relying on oil for 95 percent of its export earnings and 25 percent of its GDP. When the price of oil came tumbling down thanks to an American fracking boom that precipitated a worldwide glut, the money that had long funded Venezuela’s socialist benefit system dried up.
The government responded by printing more money, but this only served to inflate the currency and deepen the economic pain. These problems were compounded by Venezuela’s hostility to foreign investment—especially from the United States, which it’s long derided as a rapacious hemispheric colossus—and its own technocratic incompetence. Saudi Arabia is also suffering from (ahem) bottom-of-the-barrel oil prices, but its open attitude to the world has helped it better navigate the crisis. Venezuela, meanwhile, has earned the nickname “the sick man of OPEC.”
Venezuelans, long supportive of Chavez who’s become tied up in their concept of nationalism, responded late last year in a historic election that swept the United Socialists from power for the first time since 1999. They were replaced by a governing coalition called the Democratic Unity Roundtable (MUD) that consists of centrists, democratic socialists, and even a few conservatives, all of whom are united in their contempt for Chavismo socialism. Maduro, not content to let the leftist dream die, responded by granting himself emergency economic powers, but it may be too late. The MUD has protests planned for this weekend, and is mulling over both a referendum to recall Maduro and a constitutional amendment to abbreviate his term. And while previous attempts to limit socialist power have failed, the anemic economy means this time around could be different. The MUD is determined to privatize certain government services, like the housing mission.
Venezuela is a perfect case study for how economic power backed up by patience for incremental reform can be far more effective than military intervention. It also demonstrates that the best change is derived from within rather than from without. Despite being a constant thorn in our side, the United States didn’t invade Venezuela, overthrow its government, or occupy its capital. And despite the constant fulminations from socialists about American “economic warfare,” we didn’t target Venezuela with economic measures until last year when President Obama imposed some (probably ill-advised) sanctions. Instead, we sat back, managed the threat, enhanced our own economy, and let Caracas suffer the consequences.
Whatever change occurs in Venezuela will likely take decades. But it will also be implemented by Venezuelans, and thus far more durable than anything we’ve tried to engineer from on high—like, say, in Iraq. As Ronald Reagan proved with the Soviet Union, sometimes pressuring a country yields far better results than blowing it up.
Matt Purple is a fellow at Defense Priorities and deputy editor at Rare Politics.
Image courtesy Cancillería del Ecuador and Wikimedia Commons.