Populism is destroying Venezuela: power, elections, the decline, hyperinflation

Популизм разрушает Венесуэлу: силовые выборы, упадок, гиперинфляция

Популизм разрушает Венесуэлу: силовые выборы, упадок, гиперинфляция

Venezuelan President Nicolas Maduro on Thursday officially received the powers of the head of state on new 6-year term.

He was sworn in the Venezuelan Supreme court, not in the National Assembly (unicameral Parliament), which is under the control of the President’s political opponents since December 2015.

At the inauguration of Maduro was attended by officials from Russia, Abkhazia, Bolivia, Cuba, Nicaragua, El Salvador and Belarus. During the ceremony, Maduro read out the oath and the consolidated results of the elections held in may, and have not allowed any of the opposition candidates.

These elections were declared as illegitimate not only the United States and the European Union, but the overwhelming majority of Latin American countries.

On the same day, 10 January, the government of Paraguay announced the severance of diplomatic relations with Venezuela.

In the Parliament — the National Assembly — the day before the ceremony released its latest assessment of inflation in the country: it was 1698000%. Over the last three years inflation in the country accelerated more than a million times.

Problems in the economies of any countries, as a rule, aggravated in the periods of the reign of the populists. And it became chronic when some populists replaced the other. The rhetoric of some politicians who intend to come to power in Ukraine is purely populist. Once in power, they will pursue the economic policies appropriate. What is the result? A good illustrative example Venezuela, Argentina, Turkey.

Venezuela — the oil-rich country in the world – which for many years is in deep crisis. Because of corruption and inefficient management of the economy she has almost exhausted foreign exchange reserves. In November 2017 Venezuela defaulted on its foreign debt, the amount of which reached 140 billion dollars, which is 14 times higher than the depleted foreign reserves of the country.

These factors caused a mass migration of people from the country. More than three million people were forced to emigrate to escape from a lack of medicines, food and basic necessities, the distribution of which is from the summer of 2016, the army is doing.

In August 2018, the President of Venezuela, Nicolas Maduro announced a package of radical economic reforms, which promised to overcome the crisis. Under these reforms, Maduro announced the increase of salaries in the country. The increase was the fifth in a year. The announcement took place on the eve of the denomination of the national currency. The official rate of the Bolivar fell 25 times, and the currency is subject to a denomination with cutting off five zeros.

After 6 years of President Maduro of the national currency of Venezuela is the Bolivar has depreciated by 44 000 times, the economy contracted by 32%,

At the same time the value of the Bolivar decided to adhere to national cryptocurrency — “Petro”, which, in turn, had to get a reference to the price of Venezuelan oil.

But expectations of investment did not materialize: according to the Reuters, “Peter” was able to raise only $ 800 million is 12 times less than Venezuela needs to make payments to foreign creditors in 2019, and 9 times less the amount of payments for the overdue debts to the national oil company PDVSA.

The company, meanwhile, sinks deeper into a crisis, blocking the only channel through which the country receives hard currency by the end of 2018, oil production in Venezuela fell to half-century low of 1.2 million barrels a day, and with 2015 almost halved.

Save mode Maduro Russian money: according to Reuters, since 2006, the Russian government and Rosneft lent Venezuela $ 17 billion. 6 billion dollars Russia will invest in the coming years in the production of Venezuelan oil and gold, said Maduro after a visit to the Kremlin in December.

We will remind that earlier the head of one of departments of the IMF, Alejandro Werner warned that the financial policy of the government of Venezuela, is reduced to the constant printing of money, and this will inevitably lead to cosmic inflation. He compared the situation in Venezuela with the hyperinflation that occurred in Germany in 1923 or in Zimbabwe in the late 2000s.

Venezuelan authorities for many years does not publish economic indicators of the country.

So, to give the populists a chance to win in the elections means to deprive the future of not only themselves but also their children and possibly grandchildren. So you need a very cautious attitude to the political forces that promised us “rivers of milk and honey” immediately after coming to power. And those who offer simple recipes of our problems — simple solutions are usually complex and heavy consequences! Go to better economy and higher standard of living, Ukraine will be able only through painstaking work over many decades.