World Economy

Venezuela Economy Nearing Total Collapse

Venezuela Economy Nearing Total CollapseVenezuela Economy Nearing Total Collapse

The Venezuelan economy is facing turbulence and rising inflation, and growing demonstrations against the government are becoming an everyday scene.

Long power outages, medicine shortages, and a lack of basic food are intensifying social discontent that are taking the country to the verge of total collapse, Anadolu Agency reported.

Since April 25, Venezuela has been left literally in the dark. The country is experiencing one of its worst electricity crisis in its history and power cuts planned by the government that initially would last four hours have been extended in some cities to more than 15 hours.

The country is also facing a major drought that has dramatically reduced water levels at its main hydroelectric dam, the Guri, which supplies 60% of the country's energy.

The government has implemented desperate measures to alleviate the crisis, but far from being effective, some moves have provoked the anger of citizens and an unusual social effervescence in the country.

Chavism Extended

 The main opponents of the government have accused President Nicolas Maduro's administration of mismanaging the crisis and also of continuing with a problem they say is driven by more than 17 years of Chavism: a poor maintenance of the electrical installations and the misuse of the public funds because of corruption.

In response to right-wing efforts to depose him, the leftist head of state has called on workers to rise up in a "popular constitutional rebellion" in the event of his ouster and initiate an "indefinite general strike until victory is won".

Beside this, the government blames the situation on an "economic war" waged against the country by capitalists and has vowed to press on with the socialist "revolution" launched in 1999 by the late president Hugo Chavez.

According to Maduro, the opposition has artificially induced food shortages. He claims they form part of a wider plan by the United States' foreign intelligence service, the CIA, to destabilize his government, sabotage the oil industry and trigger power cuts.

In Venezuela, different situations of violence have occurred because of power cuts and a shortage of water and food.

The city of Maracaibo, the second most important city in the country, has become the main symbol of social rage.  Last Wednesday, more than 1,000 military personnel were sent to restore calm.

Demonstrators protested not only because of rationing, but because more than 70 supermarkets and local businesses were robbed.

Opposition Tactics

The opposition that controls Congress is advancing a process that could lead to a recall vote against Maduro.

The national electoral council last week authorized the collection of 1% of registered voters within 30 days to begin the process of a referendum.

If the opposition succeeds with the process, it could create something called a "citizen group" that could request a referendum against Maduro.

Commerce Minister Jesus Faria, referring to the process for a recall referendum that has already collected more than 2.3 million signatures in favor of Maduro’s ouster, has said: "We face the recall for various reasons, including the economic crisis, exhaustion of the renter model, and the economic war.

"The opposition is taking advantage of these factors and have every constitutional right to do so, but we are ready for them, in the streets, in the electoral arena, even in armed struggle."

Future at Stake

Economic data show a difficult scenario for Maduro's future. According to International Monetary Fund forecasts, inflation this year could reach 481% and 1,642% in 2017.

According to different analysts, the shortages in food are the same as that of a country during war.

The widespread shortage reached 29% in 2014, and this year's scarcity of some food and medicines could exceed 80-90%.

Even with the 30% rise in the minimum wage that Maduro announced Sunday, resources are scarce.

Although the minimum wage now is 15,000 bolivars ($15 or $40 higher than the official exchange rate), a basic alimentary basket—the United Nations Food and Agriculture Organization's 2,200 calories a day standard—costs 190,000 bolivars.

In January, Maduro said the country's economy is in a state of emergency as oil prices fell to around $30 a barrel, the lowest rate in more than a decade.

The oil crisis has had a direct impact in the country economic stability. The situation has also affected international relations with Venezuela’s usual allies.