A brief guide to (trying to) understand Venezuela

A brief guide to (trying to) understand Venezuela

Venezuela is facing a crucial moment in its political history, where effective measures are desperately needed to put it back on track. Daily life in the Caribbean country is dominated by the total lack of the most basic commodities, astronomical prices for the few available, one of the highest inflation rates and cheapest petrol on the planet, and one of the worst levels of violence in the region.

To understand Venezuela, it is important to look beyond the Chavismo-opposition dichotomy to the key elements that define daily life. In the current political climate, some of these elements have become all the more relevant. Yet they are nothing new.

1. Oil

Venezuela has the biggest reserves of heavy crude oil in the world and of light crude in the western hemisphere. It is one of the world’s leading exporters of this raw material and its economy is almost entirely dependent on this single commodity, to the extent that it is the state’s only source of currency earnings.

According to the OPEC report published in April 2016, oil production amounted to 2.53 million barrels a day, a fall of 4.6 per cent compared to last year. Obsolete or faulty machinery, a shortage of supplies from abroad and a lack of skilled staff are some of the factors that may have contributed this fall in production.

Added to this is the fall in the price of a barrel of oil since 2014. At the time of writing, it was US$37 per barrel (about €35), far below the US$100 that the government based its budgets on just a few years ago, without the backing of a strong tax system.


2. Inflation

Venezuela also tops the list of countries with a high rate of inflation. According to the Central Bank of Venezuela, by the end of 2015 inflation had risen to over 180 per cent. Unofficially, it is known that by June this year the figure had already gone up to 487.6 per cent and several economists forecast that it will reach 500 per cent by the end of 2016.

Although official figures are unclear, prices on the street are rising. This began to make itself felt in 2014, but in recent months prices have been changing on almost a weekly basis.

For example: a journey on an urban bus cost 2 bolivars in 2010 (about US$0.20 or €0.19), but by December 2015 it had risen to 20 bolivars and in 2016 it went from 35 to 60 bolivars.


3. Exchange control

To prevent capital flight, the Chávez government imposed exchange controls a decade ago. Currently there are three forms of currency exchange: two official and one “parallel” exchange, as a result of the black market in dollars, which in turn grew out of the difficulty in getting hold of this currency through legal means.

As oil prices fell, restrictions on the allocation of currencies tightened and the parallel rate disappeared, which in many cases was the one used to display prices in the street.


4. New basic products

Until last September, any talk of basic foods such as rice, pasta or corn flour and staple goods such as soap, toothpaste or sanitary towels was about shortages. Now, two things are happening.

On the one hand, certain items are still scarce, such as toilet paper and feminine hygiene products. This is due to the lack of production in the country and dependence on imports as well as the reduction in imports owing to a shortage of dollars, which in turn is a consequence of the mono-production of oil.

On the other hand, some products have reappeared on the shelves, but their price is prohibitive for most Venezuelans. To give just one example, half a kilo of spaghetti costs about 10 per cent of the minimum wage.


5. Medication

Health Minister Luisana Melo explained during the presentation of the report on Human Rights in Venezuela to the UN that the National System for the Distribution of Medication had distributed 255.39 million medicines (more than nine per inhabitant) and over 32 million medical items, and drew up a list of 230 expensive medicines that are provided free of charge.

The official figures differ significantly from those of the Pharmaceutical Federation of Venezuela (Fefarven) which puts the shortage of medicines at between 80 and 85 per cent.

With regard to medical supplies, the Doctors Network for Health surveyed 130 hospitals in 19 states in the country. The results showed that 61 per cent of hospitals are suffering severe or absolute shortages of surgical materials; in 94 per cent of hospitals the tomographs are damaged, and 44 per cent of operating theatres are closed or inoperative.

Beyond the figures, a scroll through social media shows there is a continual search for the basics: antibiotics, pills for blood pressure, diabetes, etc.


6. Violence

Here too the figures are not clear. The Attorney General’s Office puts the murder rate for 2015 at 58.1 for every 100,000 inhabitants, which would be a fall on the previous year, when it reached 62 per 100,000. Their figure of 17,000 murders however is at odds with the over 27,000 figure given by the Venezuelan Violence Observatory, which would bring the rate up to 90 murders for every 100,000 inhabitants.

The Bello Monte morgue in Caracas has become the unofficial gauge used by the media to take the pulse of violence. In October alone 506 bodies passed through it. The bodies that pass through this institute are of those who died in violent incidents, but also those who died in traffic accidents or in unclear circumstances outside of hospital, only from the capital and surrounding area.


7. Political climate

Since December 2015 the majority in the National Assembly (parliament) has been held by the Coalition of Democratic Unity (Mesa de la Unidad Democrática, or MUD), made up of the many parties in opposition to the government of Nicolas Maduro, the political successor to the late President Hugo Chávez.

At the request of the executive powers, the High Court has annulled several parliamentary initiatives, such as the establishment of a humanitarian corridor to allow medical supplies to enter the country. In this case, the argument put forward was that the proposal amounted to interference in the powers of the government.

Since the beginning of the year the opposition has been pressing for a recall referendum (provided for in the Constitution of Venezuela) with a view to removing Maduro from power.

After several stages in this process had been completed, and just a week from collecting the signatures of 20 per cent of the electoral roll (about 4 million) with the support of the National Electoral Council (CNE) as the last step before the final plebiscite, several state courts used the judicial process to file complaints, on accusations of fraud.

The CNE called off the referendum in October. The MUD’s reaction was to call people out on the streets for various actions, including a mass march in Caracas and the promise that if the government did not restore “due Consitutional process” they would organise a march on Miraflores, the presidential palace.

Within a few days it was announced that the Vatican would mediate in a dialogue between the government and the opposition, which resulted in three meetings (in November and the beginning of December). Various working groups were established and a joint road map agreed on order to reach agreement on various matters requiring urgent action such as the release of political prisoners or the creation of mechanisms to enable the public and private sector to bring food and medication into the country.


This article has been translated from Spanish.