... And Run Venezuela

In the 1960’s there was a Harry Belafonte hit song called “Matilda”, and some of the lyrics goes: “Matilda, Matilda she takes me money and run Venezuela.” This was a lively song about a guy who fell in love with a girl who eventually ran off with his money to Venezuela, which does not have an extradition treaty with other countries. In the 1960’s, Venezuela had a population of less than 10 million, and the years up to the early 1970’s was a period of relative political and economic stability.

Venezuela is a beautiful semi-tropical country in the northern portion of South America with lush forests, beautiful beaches, and “Angel Falls,” the highest natural waterfall. It was a Spanish colony before its independence in the 1930’s and the population is a mixed breed of Europeans.

The women are beautiful and have dominated many international beauty contests since the 1960’s. The bounty and the bane of Venezuela was the discovery of oil in the 1940’s which dominated its economy, government revenues, and exports. This also worsened government corruption that led to political upheavals and erratic and plummeting economy.

In 2016, with a population of 30 million and per capita GDP of $15,000, it was a newly developing country. But by 2018, their economy had collapsed with negative GDP growth, with per capita GDP falling below $10,000, hyper-inflation, and food and medicine shortages. More than 2 million Venezuelans left for neighboring countries and almost all private companies have ceased operations.

Even the airlines have stopped going to Venezuela and beer had to be rationed. And this country, with one of the biggest oil reserves in the world, was a founding member of the Organization of Petroleum Exporting Countries (OPEC) in 1960.

The fractious political and social environment in Venezuela was somehow massaged by the oil revenues that supported most of the government’s annual budget and allowed the population decent income. But the oil glut in the 1980’s and 1990’s brought in populist/socialist politicians that mandated subsidies for fuel and other commodities, and welfare payments (including universal healthcare) which later become unaffordable.

There were also waves of nationalization of industries that left very few private industries and companies. From 1999 to 2013 Hugo Chavez was president and there were more socialist/populist experiments. Then Chavez anointed a successor, Nicolas Maduro, who took over in 2013 in a contested/protested election.

Then oil prices dropped again in 2013 making all populist social programs unsustainable. The 100% inflation in 1996 was nothing compared to the inflation from 2014 up to today which is now at 2,000%, two-thirds of the population slipped below poverty level. That Maduro has lasted for more than four years surprised many countries.

The authoritarian and repressive regime of Maduro which led to the banishment and persecution of opposition leaders, stifling of dissent, plus the tolerance of the Venezuelans who had always lived with political instability are the main reasons for Maduro’s staying power. But events in the past few weeks and the next few weeks may be the endgame.

Guaido, the head of the Venezuelan parliament, protested the last election of Maduro for another six-year term as bogus and proclaimed himself interim president with the backing of the US, the European Economic Community, European countries, and most of the South American countries. Russia, China, and Cuba are siding with Maduro.

The US is imposing economic sanctions on Venezuela on its oil exports and US assets. Russia and Maduro are now calling for dialogue and negotiations. Meanwhile, there are daily demonstrations in Venezuela mostly against Maduro, and the military is divided between Maduro and Guaido. Even if this is reminiscent of the Philippine People Power revolt in 1986, the outcome in Venezuela is hard to call.