Pro-Con: Is U.S. foreign policy largely responsible for Venezuela’s crumbling economy?

Pro: U.S. policy chief culprit in Venezuela’s collapse

In 1998, when the late Hugo Chavez was first elected, Venezuela had a poverty rate of about 50 percent — despite having been among the world’s top oil exporters since the 1930s — and had governments that consistently had good relations with the United States.

In the late 1970s, at one of its most prosperous points ever as measured by per capita GDP, Venezuela’s child mortality rate was about double that of Cuba’s and Costa Rica’s.

In April of 2002, Chavez was overthrown for two days in a military coup. The New York Times editorial board said the coup was a victory for democracy and praised the soon-to-be-ousted dictator, Pedro Carmona, as a “respected businessman.”

Prominent opposition leaders Leopoldo Lopez and Henrique Capriles led the kidnapping of a government minister while Carmona was in power.

Sixty people were killed in the uprising that ousted Carmona. The U.S. Office of the Inspector General conceded that the Bush Administration provided “training, institution building and other support” to groups involved in the military coup.

Two months before Chavez was overthrown in 2002, he floated Venezuela’s currency. It was set by supply and demand rather than at a fixed rate or multiple rates set by the government.

In other words, Chavez corrected what would become the government’s most devastating error in economic policy in recent years.

Months after the coup, the U.S.-backed opposition led a two-month shutdown of the oil industry that drove the poverty rate over 60 percent.

The government reverted to a fixed exchange rate system and never again floated the currency.

Unfortunately, the exchange rate system has generally been credited by government supporters with preventing capital flight, and therefore contributing to the rapid growth and poverty reduction Venezuela experienced since the defeat of the oil industry shutdown until about the time Chavez died in March of 2013.

Even before oil prices collapsed in late 2014, Venezuela’s economy went into recession due to an inflation-devaluation spiral that should have been ended by floating the currency.

The oil price collapse made the problem drastically worse. Floating the currency again, as Chavez did before the coup, would require external financing to ensure that the poor are protected during the transition, as an economic team put together by The Union of South American Nations (UNASUR) recommended in 2016.

Torino Capital noted weeks ago that all of Venezuela’s $64 billion in outstanding foreign currency bonds are governed by New York law.

The Venezuelan government’s most valuable non-financial asset abroad is CITGO, a Houston-based corporation. It is obvious that the U.S. has ample financial power with which to harm Venezuelans if it is liberated from any moral or legal constraints by the U.S. media’s coverage of Venezuela.

That’s exactly what has happened. One now is more likely to find articles and op-eds in the U.S. media defending Saudi Arabia’s monstrous dictatorship than Venezuela’s democracy.

Years before President Donald Trump explicitly — and illegally — outlawed Venezuela from borrowing or selling assets through the U.S. financial system, President Barack Obama ludicrously declared Venezuela an “extraordinary threat” to the “national security” of the United States.

Obama’s belligerence, given U.S. financial clout, would scare away rational investors and deter loans — therefore increasing the stress on an economy already in crisis.

Trump, who has even threatened Venezuela with military assault, has simply unmasked the malevolence of U.S. policy entirely. His illegal financial embargo makes it nearly impossible for Venezuela to restructure its debt, an essential part of an economic recovery; and deprives more Venezuelans of food and life-saving medicines.

Since at least 2002, it has always been about putting U.S. allies in power in Venezuela regardless how many innocent people are hurt in the process.

Con: Venezuela has come to resemble a lower level of Dante’s Inferno

On Jan. 24, former major league baseball player Marcos Carvajal died of pneumonia. He was only 33. The common respiratory infection should not have killed him.

But Carvajal was in Venezuela, a country where more than three-quarters of all public hospitals lack basic medicines, and common ailments have become death sentences.

Venezuela’s health care system is supposed to be one of Hugo Chavez’s greatest legacies. But severe shortages of medicines and medical supplies have decimated public health care.

A recent New York Times expose of Venezuela’s mental health facilities found a system in chaos, with patients routinely going without medication, food, hygienic products and even electricity.

The humanitarian crisis can only worsen as Venezuela’s economy continues to crumble. It already suffers the world’s highest inflation rate, and the International Monetary Fund projects it will skyrocket to 13,000 percent by year’s end. IMF also estimates the economy will contract 15 percent during that period.

Food is largely unavailable and unaffordable for many. Long lines into near-empty supermarkets are common, as are stories of the Venezuelan military trafficking food in a starving nation. The daily Basic Food Basket now costs the equivalent of three daily minimum wages.

Oil, Venezuela’s prime source of revenue, can no longer salvage the economy. A crumbling infrastructure and the replacement of industry professionals with party loyalists has led oil production levels to plummet from more than 3 million barrels per day in the late 1990s to only 1.8 million last year.

Public safety is fairing just as poorly. Order breaks down in a dying economy. Venezuela is now Latin America’s most homicidal nation. Last year, 89 of every 100,000 Venezuelans were murdered — a rate 20 times that of the U.S. The capital city, Caracas, registered 130 murders per 100,000 people.

Rather than keep people safe, Venezuelan police and national guardsmen have become political enforcers used by President Nicolas Maduro to squash dissent. Anti-government protests were common last year, with hundreds of thousands of Venezuelans demonstrating throughout the country. In response, government security forces killed 163 protestors and imprisoned thousands.

Finding a solution within the current political system is near impossible. Maduro and his party loyalists control virtually all levers of power. The July 2017 elections were fraudulent to the core.

All 545 candidates “elected” to the National Constituent Assembly — including reputed drug cartel leader Diosdado Cabello — were handpicked members of the ruling Socialist Party. Recently announced snap presidential elections will be just as corrupt and unlawful.

Cabello is not the only narco-affiliated government official in power. Last year the U.S. Treasury Department fingered Vice President Tareck El Aissamid as a Specially Designated Narcotics Trafficker, pursuant to the Foreign Narcotics Kingpin Designation Act. Over $500 million in illicit assets amassed by El Aissamid and his business partner were seized in the U.S.

Last December, a U.S. court sentenced two nephews of Venezuela’s first lady to 18 years in prison for attempting to sell 1,700 pounds of cocaine to undercover DEA agents. Numerous others in the ruling-party orbit have also been sanctioned for similar reasons. Venezuela’s ruling party has essentially turned the country into a narco-trafficking hub for regional cartels.

There is no question that Venezuela’s revolution has failed its people. The big question is: What can the international community do to hasten a return to democracy?

In the past year, the U.S. and various Latin American countries have ramped up pressure on the regime. The U.S. has sanctioned more than 50 corrupt government officials and barred Venezuela from selling its oil debt in the U.S.

These actions have increased the strain on Maduro and his cronies, but more must be done. The people of Venezuela are suffering dreadfully from the socialist thugs in power.

This story was originally published February 1, 2018 at 2:45 PM with the headline "Pro-Con: Is U.S. foreign policy largely responsible for Venezuela’s crumbling economy?."