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The Collapse of Venezuela
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The Collapse of Venezuela

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VENEZUELA – January 24, 2019

A turning point has come; the process is irreversible and a coup is inevitable. What was supposed to happen is happening. Like any other crazy dictatorial regime, of course, evil imperialists are to blame — the US and the State Department, and who else?

Uncontrollable economic collapse leads to political self-destruction. Venezuela's exports fell from $100 billion in 2012 to $17 billion in 2018, investments in fixed assets collapsed 8 times, the economy shrank by 4 times to the levels of the 60-70s of the last century, per capita dropped by almost 8 times, and inflation is estimated at millions of percent. Only in 2018, according to preliminary estimates, the economy collapsed by 35-40% (and this is the worst year ever).

The financial system is de facto disconnected from the world capital market and the money market and the uncontrolled destruction of the banking system, and funding and settlements in the national currency in the domestic market are blocked. Domestic banks in Venezuela do not lend to anyone (there are no resources for lending because the system of national savings is reset due to inflation; no one interacts with banks); the risks are not calculated in principle due to the catastrophic situation in the economy. Foreign banks closed limits on Venezuela in 2016. The black market and barter trading are flourishing.

There is a widespread bankruptcy (destroyed domestic demand, closed foreign markets, blocked funding channels, supply problems, settlement problems, non-payment of counterparties), and, as a result, there is monstrous unemployment (by some estimates, over 50%).

There is a collapse of state institutions, no one controls anything, and no one is responsible for anything. A collapsing economy leads to a mess on all fronts and the collapse of government revenues, and given that Venezuela’s access to the capital market is closed, it is necessary to operate as if in a “non-deficit format,” distributing what they received. But they received nothing. As a result, all the other state services collapse and, all this accelerates the fall of the economy. Resources remain only with the military-security apparatus and repression against their own people. Nothing else works — neither the control, nor the regulating, nor the statistical state bodies; there is no medicine and education.

In the exponent thrives banditry, looting, and economic and social anarchy.

About 95% of Venezuela's exports are raw materials, especially oil. In 2017, they still somehow kept production. In 2018, production began to collapse. By the end of 2018, it was less than 1 million barrels. About 2.5 million were mined before, from which 1.5 million went for export and 1 million for domestic consumption. The reasons are underinvestment, problems with the supply and access of oil service companies, and the flight of qualified personnel and managers.

The economy that has been wiped into dust no longer consumes 1 million. It’s hard to say exactly--there is no data--but with a production of 1 million or less it’s already difficult to export even 500-600,000. Hence, exporting has seriously collapsed.

Venezuela’s destroyed economy receives 6 times less foreign exchange earnings than in 2012, hence the impossibility of maintaining the minimum amount of imports for life support, because the domestic economy is absent as such. As a result, there were terrible problems with the supply of medicines, essential goods, and food. The country’s level of development fell in a very short period of time to that of 100, maybe even 200 years ago, becoming the poorest country in the world, where over 90% of the population is below the poverty line.

We can talk about the reasons for a long time, as well as what was the trigger. Why has Venezuela has fallen apart since 2013? Probably, the set of destructive factors, which in 2014 were intensified by the fall in oil prices and further snowballed at an increasing rate, when one problem succeeds another. But the problems are certainly internal. The catastrophe is aggravated by the fact that there is a flight of qualified personnel from the country (or the small number that remains). There is no one left to lift the country from the ruins.

The Maduro regime has an unconditional mafia-criminal nature, the purpose, and objectives of which was the usurpation of power, robbery and "nationalization" of everything that can generate profit. But nationalization is not for the people's good, but exclusively for controlling cash flows (and this is important to emphasize), when at the expense of the state administrative and power resources it was possible to subordinate and crush industries by themselves. To do this, the Maduro regime created a circle of loyalists around itself and placed the generals and security officials, tame and loyal to the regime, in senior positions in banks and companies, mainly in the oil sector. In the end, the regime essentially turned into smugglers with oil and drugs. There is nothing else left in the country. Venezuela's state propaganda day and night broadcasts about the "bloody tricks" of the imperialists, the machinations of the State Department, the bad West, the ring of enemies, and the successes of the Bolivarian Republic!

The disaster was imminent, the trigger could be anything, but again, it should be stressed, the key role was played by the convergence of a set of negative factors that strengthened each other. When key positions in your country are filled not by professionals and successful politicians or entrepreneurs, but loyalists, suckups and all sorts of security officials who do not understand anything in the management of the economy, a disaster is inevitable. Negative selection is in action. It's just a matter of time and circumstance. In Venezuela, there simply were no people who, even at the start of the collapse, would give the enchanted elite on the head, directing them to the right path. And when disaster came, there was not enough competence and qualification to put out the fire in time.

There is no sympathy for the outspoken bandits who destroyed the country and there cannot be. They got what they deserved.

For the Venezuelan people, in the present absolutely catastrophic circumstances, even external control would be the light at the end of the tunnel.

The US’s recognition of the transitional government certainly forces things to happen, and this, of course, is a verdict to the current insane regime.

Author: USA Really