Venezuela: unwise economic policy led to the political crisis.


Venezuela: unwise economic policy led to the political crisis.

The economic crisis in Venezuela has led to the continued deterioration of the political system. It is an oil economy and was one of the largest exporters of petroleum in the past. Venezuela is the sixth largest oil exporter and the member of OPEC by oil production, but it has evolved itself in the heavy industry product manufacturing over the time. 50 percent of its GDP is still accounted from petroleum exports, so the irregularities and collapses in the oil price profoundly impact its economy. It had experienced the worst economic crisis of the 1980’s and 1990’s, and the crisis has been revisiting again.  The world oil powers are now going through another phase of the oil crisis, the price of oil has hit another low in this decade, and it impacted Venezuela too. The economy got shrunk by 5.8 percent in the first 3 months of 2009 itself, from where the economy has never recovered, and kept on deteriorating with falling oil price, after 2014 it took a face of political turmoil in Venezuela. This leads to the country wise demonstrations by the opposition.
Venezuela is now under the severe economic crisis, all the indicators are negative, and hyperinflation, food crisis, and medication shortage are imminent. Inflation is reaching 800 percent in 2016, as a result, the food crisis and medication shortage have been leading as the humanitarian crisis in Venezuela. UN has been frequently warning its government for economic reform. Although it has the oil’s largest reserve in the world, it fails to establish the oil diplomacy with the friendly country due to the political instability. Venezuela has traveled a long way to the highest US $ 509 billion GDP (PPP) in 2014 from US $ 8.61 billion in 1960, but thereafter the GDP shrunk by 19 percent in 2016 revealed by IMF report. In 2015, it was shrunk by 5.7 percent, and the inflation reached 180 percent, claimed its central bank. The economic gap between proletariat and elite group has increased with unprecedented pace, the socialist government led by late president Hugo Chavez did a number of reforms in the country, he signed the land reform bill for redistribution of land to the rural people, nationalized the key energy sector and telecommunication, and subsidized the food price so that the poor can afford it. The socialist reform had hurt the elites, and the capitalist felt threatened with the government. Later the hostile Maduro policy against the foreign business led to the corporate expulsion, which results in soaring 25 percent unemployment among the youth. The failed agriculture policy results in an apocalyptic food shortage, the subsidized food price is less than the cost of its production, so the farmer stopped cultivating on the rich farmland. Now the government is importing it from neighbors, they are now struggling to pay the bill. The foreign exchange reserve of Venezuela is decreasing, is heading towards a great danger, it was US $ 30 billion in 2011 which is reduced to US $ 10 billion in 2017, which results into the complete failure of the monetary system. Exports are following a downward trajectory, which has reached to US $ 8.4 billion in 2015, and petroleum products contribute 50 percent of it. Falling oil price and the entry of new players like the USA in this have disrupted its export. This decade has experienced the lowest oil price and was hit to new low US $ 26 per barrel, it is now somewhere US $ 50 per barrel, which is half of the last decade average, as a result, all the oil economy in the world has been hurting.
The conflict between government and opposition have led to the political crisis in Venezuela, the oppositions are blaming the Maduro administration and previous administration for the ongoing economic crisis, they blame their socialist policies, but the government has been refusing to accept the allegations. President Maduro has its own view, as he is blaming oppositions for the ongoing political crisis, and he has been accusing them of making his government unstable with the help of foreign forces. He accused the opposition calling them the mouthpiece of the United States and its ally. On the other hand, the opposition is also making allegation over government about the democracy deficit in the country, they are saying that since the PSUV (United Socialist Party) came into power in 1999, the socialist government has eroded the democratic institution of Venezuela. Meanwhile the pro governments' Chavistas are also unhappy with the Maduro administration, due to the falling oil revenue, the government is failing to finance some of the generous social programmes meant for its vote base, and this has been leading to the erosion of support from its core backers.
The series of events has further intensified the bitter relationship between government and opposition, the crisis deepened when the president Nicolas Maduro made the announcement of dissolving the democratically elected congress and rewriting of the constitution of Venezuela, the Supreme Court announces the taking over of the opposition-controlled National assembly, so the protest erupted across Venezuela, gunfight was reported in some part of the country, which results into the house arrest and even arrest of the key political opponents. The Supreme Court later reverses its decision. The controversial National Constitutional assembly election was held on 30 July 2017, it was criticized by the domestic and international critics, and the opposition called it unconstitutional, and they fear that it might help the Mauro administration to neutralize the National Assembly. The fear of opposition was true, all democratic institutions are forced to subordinate with the National Constitutional Assembly, which can dictate its decision, and all 545 elected delegates show their loyalty to the president.
The socialist government cut its tie with the United States and gets closer to the Russian and Chinese bloc, the decision was irritated the United States, and the National Constitutional Assembly election 2017 further heightened the tension, US called it unconstitutional. South American neighbors were also unhappy with the undemocratic assembly election. The US announced unilateral sanction on Venezuelan president key Aids, the economy was already suffering a lot from the US economic sanctions on its key business, and Recently president Trump has threatened Venezuela with military intervention. UN is concerned about the deepening crisis in the country. Meanwhile, Russia has conveyed the world to refrain from the Venezuela affairs, and let the Venezuela people solve their problems.
      Fig: Protest against Maduro Administration after unconstitutional New Constituent Assembly Election.
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