The worst form of hyperinflation in the global history has hit Venezuela. This is actually a national, political and socio-economic crisis that began during the Presidential rule of Hugo Chavez and has transcended in an amplified version during the presidency of Nicolas Maduro. Exponentially escalating hunger, disease, mortality rates along with crime and violence have become normal in the country. The magnitude of the economic crisis is the worst form of hyperinflation in the history of America.
The roots of destruction
The first ever elected President in the country of Venezuela was Hugo Chavez in the year 1998. Venezuela had the largest known oil reserves in the world as compared to the present day landscape of the country. Currently, the country has the highest inflation rates in the world at 946%. In the year 2012, the inflation rates were merely 19%, which rose to 946% in the year 2017. Food and medicine is inaccessible to the majority of the population and the Consumer Price Index has reached 2146.10. In the span of last five years, the GDP of the country has suffered a negative acceleration of 35% from 2091 to 1355. The acute drop in the GDP is a sharper drop than the one which occurred in the Great Depression in the United States of America.
Crime and murder rates have hiked and the protests against the President have caused the overall crime rates to overtake those of the most dangerous cities in the world. President Hugo Chavez was a charismatic leader who was able to mobilize the crowd through his abilities. His propaganda in the country was praised in the international sphere. However, a stark contrast exists in the image of the country among the poor sections of the society. These people were the reason that he could come to such a position of power in the first place.
The petroleum-based economy of Venezuela bloomed in the years 2004 to 2008, where billions were earned as profits. The President utilized these profits in order to devise several social welfare schemes to benefit all sections of the population, and they were termed as “Bolivarian missions”. Major target areas of such welfare schemes were food subsidies, etc. Improvement in the educational facilities, healthcare sector and all these schemes helped in reduction of poverty by a significant margin of 20% from the year 2002 to 2008.
However, as soon as he got the power in his hands, he couldn’t identify the end point of it. He spent so much money that it created a deficit in the trade balance of up to 22%. The major problem was that the President had not focused on mechanizing sustainable schemes. Thus, they could no longer persist when the oil prices across the world were falling. Another failure of the government was that it failed to create multi-commodity economy for the government. The government relied on the single-product economy of the country, and hence the short-sightedness of the government had to pay a heavy price.
Although, existing problems only intensified during the rule of Nicolas Maduro, economists from all across the world had confirmed that whoever the inheritor of Hugo Chavez would be would have to face repercussions of his populist regime. It is a different matter of discussion that his inheritor had different intentions altogether. Also, he exploited the vulnerabilities of the country to such an extent that he pushed a country to the edge of a war.
A point of difference between the Hugo Chavez regime and the Nicolas Maduro regime is the difference in their popularity among the citizens of the country. Majority of the people of Venezuela are on the streets protesting to remove Maduro from his office, and they put forth the idea that if he doesn’t leave Venezuela, then a war is inevitable in the near future. What is surprising is the shamelessness of the political leaders and their sheer selfishness that made them put their personal interests ahead of billions of citizens, who entrusted him to govern the country.
Picture Courtesy- Wired