Why Venezuela matters
Venezuelan President Maduro claimed that the creation of the new "Constituent Assembly" that will supersede the opposition-controlled National Assembly was approved by more than 8 million votes. He can now abolish the Assembly and the courts and elect himself to another term. The opposition have boycotted and not acknowledged the elections, but Maduro has arrested his opponents and jailed them. Colombia, Peru, Mexico, and other countries have criticized the elections and the US has imposed economic sanctions on Venezuela.
Meanwhile, the economy of Venezuela is on a downward spiral with inflation at 500 percent, with shortages of food, medicines, even toilet paper, and beer. Most of the manufacturing companies have stopped production and airlines have stopped flying as the government has not paid them. The people who have hard currency are crossing the border to Colombia to buy basic necessities. Venezuelans are now the number one asylum seekers to the US. The country, which has one of the biggest oil reserves, has been in a recession since 2014 and its credit rating has been downgraded to "junk" status. Oil production, the source of 95 percent of exports and government revenue, has been going down for the past five years and with the lower oil prices, are not enough to support the government and the economy. It has less than $10 billion in International Reserves and is paying its debt to Russia and China with oil exports. The cause of all of these are: excessive government spending, mismanagement of natural resources, and corruption. When oil was $100 per barrel the government subsidized everything and gave cash assistance to all the people. The GDP per capita of Venezuela in 2014 was thrice that of the Philippines, but by mid-2017 it was only twice and there are only 31 million Venezuelans. It was a very rich country that is now going down.
For the past nine months, strikes happen daily in the major cities of Venezuela. More than 100 people have died so far, and demonstrations are still ongoing. How long this political turmoil will last, and what will be the end result is uncertain. A total economic meltdown may topple Maduro but it could be after a bloody revolution. Or the price of oil could reach over $100 a barrel, then Maduro could stay longer in power.
The economic implications of either scenario are: a possible slight rise in oil prices in the world market as Venezuela pumps 2 million barrels a day which is four percent of the daily oil production, economic pressures in the neighboring countries as refugees and migrants escape from a civil war and violence, and a humanitarian disaster in Venezuela as food shortages worsen.
The political repercussions will be as bad, as the Venezuelan experience may destabilize neighboring volatile countries like Brazil. Then there are the ideological shifts that may occur as totalitarian countries tighten their political grip and control over their population in reaction to events in Venezuela. The happenings in Turkey and Poland are cases in point, and maybe even in Rwanda where their newly-elected president will rule until 2034. Other totalitarian states may also be emboldened to strengthen and perpetuate their power, and these will be at the expense of democratic and human rights.
Since 1986 with the birth of the people power movement which started in the Philippines, followed by Poland and other eastern European countries, then Egypt and other Middle Eastern countries, democratic movements have blossomed for 25 years. Our hope should be that the current contra democratic movement is just a blip in the long-term trend for democracy. But I believe, it is the people's task and obligation to guard and nurture their democracies.
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