VENEZUELA’S ECONOMY IS a basket case.
This week, a state of emergency was decreed in the south American country as President Nicolas Maduro brought in sweeping new powers.
The measures give his government and security forces broad authorisation to ignore most constitutional safeguards in a bid to keep order and supply basic food and services, and to counter a crippling energy shortage.
But the opposition, which controls the national assembly, tested Maduro’s resolve with nationwide marches on Wednesday.
Police and soldiers used tear gas to break up similar protests last week.
Crisis
The developments threaten to deepen the crisis in the oil-rich South American country, whose oil-dependent economy is teetering dangerously.
Hyperinflation, three years of recession, shrinking oil revenues, electricity rationing, and now rising political confrontation in the nation have sent alarm bells ringing across the Americas.
“The conditions for the Venezuelan population are terrible,” said a spokesman for the White House in Washington, Josh Earnest.
The country has already moved its time-zone forward a half an hour, allowed rolling blackouts and reduced public sector work weeks to two days a week, as well as ordered schools to close on Fridays.
The socialist Maduro government says the El Nino weather phenomenon has dried up the nation’s hydroelectric dams.
How did we get here?
So, how does a country with the 50th largest GDP in the world get to this point?
While it is a complex web of problems, it comes down to a lack of investment, a lack of trust and a floundering oil market.
Maduro is the hand-picked successor to Venezuela’s former leader Hugo Chavez. While Chavez was popular with the country’s poor and working-classes, many middle-earners and particularly the rich resented his sweeping reforms.
Maduro has carried that legacy, as well as a faltering economy, since his predecessor’s death in 2013. Now, seven in 10 Venezuelans say they want a new government.
Maduro has responded by attempting to use the army to stabilise the country.
Soldiers are to help police keep order, backed by the local civilian committees, and are to be deployed to distribute and sell food.
Individuals, companies or non-governmental organisations in Venezuela with links to foreign entities are to be put under scrutiny and their finances frozen if deemed to be political or destabilising.
The text also opens the way to expropriations of businesses not seen to be doing enough to supply staple foodstuffs, and other steps as needed as long as they don’t violate constitutional protections on human rights.
The measures are to last for 60 days with the option of being renewed for further periods of 60 days.
What’s next?
Maduro has said the state of emergency could be renewed to extend through 2017.
The company seizures could notably affect the Polar group, Venezuela’s biggest food and beverage company, which halted beer production on 30 April, saying it had run out of barley.
Venezuelan businesses say they are currently operating at less than 45% capacity because the government will not allow them to buy increasingly scarce dollars to pay foreign suppliers.
The opposition won legislative elections in December, but its agenda in the National Assembly has been stymied by the Supreme Court, which it condemns as beholden to Maduro.
It is now seeking to organise a recall referendum, and says it has collected 1.8 million signatures to launch the process.
But the vote must be held by the end of the year to trigger new elections, and the opposition accuses the authorities of stalling.
After 10 January – four years into Maduro’s six-year term – a successful recall vote would simply transfer power to his hand-picked vice president, Aristobulo Isturiz.
Isturiz said last Sunday there would not even be a vote, alleging irregularities in collecting signatures.
With AFP reporting
To embed this post, copy the code below on your site
have your say