Again, thanks for the insights! I tried searching for their press release, but couldn’t seem to find anything relevant in English.
Not selling them in US dollars, not selling them through US companies, trying to use the proceeds of oil sales to help their own impoverished citizens (maybe by nationalizing them), or some combination of the above.
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Of course, that was back then.
Unemployment was forecasted to reach 44% for 2019; the IMF stated that this was the highest unemployment seen in the world since the end of the Bosnian War in 1995. [2]
Venezuelan’s unemployment rate hit 17.4% at the end of June 2017, with the jobless total having doubled over 12 months, when two million people lost their jobs.[65] In January 2016 the unemployment rate was 18.1 percent[66] and the economy was the worst in the world according to the misery index.[67] Venezuela has not reported official unemployment figures since April 2016, when the rate was at 7.3 percent.[68]
Add to this the constant shortages, hyperinflation, and the breaking down of the infrastructure, and Venezuela of today is significantly worse off than when Chavez died, or even when he took office. Maduro and the Chavistas have run the country into ground with general mismanagement and ham-fisted nationalization attempts that have wrecked the industry and agriculture, compounded with reality-denying fiscal policy feeding into the hyperinflation.
Basically, nobody should make the error of thinking that just because Trump and America hate Maduro, he and his cronies are any good for Venezuela and the Venezuelan people.
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At no point did I defend Maduro. I was pointing out why people still support the revolution as a concept.
Which they do, clearly more than they support Guaidó.
ETA: the link @jproffitt71 provided gives a pretty good rundown of the Venezuelan economy
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I don’t think any of those has any significant effect on reasons for US or Euro actions. When the price of oil was higher, they were happy to buy Venezuelan oil. They stopped trading in the dollar years after the troubles began as a response to the sanctions. Which were a response by the Obama administration to human rights abuses. Your point would be valid if sanctions were made after they refused to trade in dollars.
Citgo is the US based refinery company that is a US company, though controlled by the state owned PDVSA. So not sure about your 2nd point either.
Venezuela put all their eggs into the oil basket. When the price of oil tanked, their sales dropped because Venezuelan crude is heavy and costs more to refine into usable products. Thus they can’t compete at the lower prices. Instead of making policies to deal with this challenge, they pretended everything was ok and just printed more money, resulting in hyperinflation, while becoming grossly indebt to China and Russia.
You can certainly point to some US and Euro policies that aren’t helping things get better, but most of the bed was made by Maduro and Chavez’s bad policies and corruption of their administration.
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Why things are bad there is a totally separate question from why we intervene militarily. Things are terrible in a lot of countries, but somehow we only invade countries with huge oil reserves. If you think that’s due to chance, I’ve got a bridge to sell you.
Also, Iraq and Libya are both far worse off now than before we invaded them. How many times do we have to do the same thing, with the same result, before you would start ascribing it to malice, rather than incompetence?
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OK, well your initial statement was the reason for an “airdrop of democracy” all happens to be countries with oil reserves and “not be doing what the US and Europe want with those reserves”.
When asked what they were not doing, you kinda gave weak rationalizations to back up your first statement, which I still feel is pretty week.
I still don’t think there is a very clear reason of “why” we would get involve military wise. Making sure oil flows is only one reason, but not necessarily the only reason. And it ignores all the times we have poked our nose into areas that doesn’t have a lot of oil. But I am dropping that point, as to not get lost in the weeds.
I don’t disagree oil is a factor for our involvement. I do disagree that it is because they were “not be doing what the US and Europe want with those reserves”.
At the time, the Crimeans were heavily infiltrated by unmarked Russian infantry while the Ukraine was powerless to do anything about it. You may as well be arguing for the legitimacy of a shotgun wedding.
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Not that you need me to butt in, but while reasonable people can disagree on interpretation and view, facts ought to remain reasonably unambiguous.
Venezuela is a more balanced economy than say KSA or Kuwait. It exports (exported) Aluminum, Gold, Sugar, Diamonds etc. It was no more or less concentrated in oil by Chavismo than either before or compared to some other countries.
Vene crude is heavy and sour, but there are refineries specifically built to handle it in the US and on a Caribbean island nearby ( I forget the name). Indeed the sanctions caused a serious problem for these refineries because there is no obvious alternative source of the heavy sour type of oil for these refineries to use. Citgo own one of these refinery facilities, but others are owned by third parties. This all makes perfect business sense because Vene crude is very close, and specifically to the Crude pipeline Hubs in Cushing etc.
Mismanagement of the economy has certainly been a problem. But so have sanctions, and commodity price declines and extended drought - which has impacted hydro generation. The blocking of access to the financial markets was by far the most significant of these. It effectively forced a default on the Venezuelans, because they cannot rollover their debt. These pressures have greatly increased the cost of debt as well. And if mismanagement of the economy meant a government should be removed by foreign powers, wouldn’t the US have experienced such an intervention in 2008?
Corruption has been an ever present of the Venezuelan body politic. My father gave me countless examples of it from the 80s and 90s. And frankly default and disastrous economic management also predated Chavez. Its amusing watching people who have forgotten about the defaults of 1994/95 and the economic problems in the 80s, blaming everything on “socialism”. Or rather the Chavismo form of it cos formally, Venezuelans always had access to free healthcare and free college. Of course in practice this was not true for many poorer people until Chavez.
Things are particularly bad in this iteration, but then there were never sanctions before.
Finally the Venezuelans would never have done the deals they did with the Chinese or Russians had they had access to international financial markets. Not that these deals are large compared to the ridiculous sums owed the Western private sector creditors. They represent a trivial proportion of total foreign currency debt owed.
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Trinidad (my brother in law is Trini)
The previous referendum in '91 didn’t have that problem, and was also very positive (94%) about joining Russia. The '94 attempt to hold a new referendum was blocked by the government in Kiev which declared it illegal. Every indication suggested it would also have been highly positive about joining Russia. None of this is surprising, because prior to the Soviet Union Crimea was in Russia not Ukraine. And in 1921 it was considered an autonomous republic within the Russian element of the USSR.
It was transfered to Ukraine in 1954.
I would guess this is the 20th time someone on BB has posted this. It doesn’t mean the Russians were within their rights or that a reasonable person would have to concede the annexation reasonable, but its silly to say the annexation was not popular within Crimea. Its pretty obvious that it was.
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Ah of course! The Trinidadians have their own heavy crude.
Im Guyanese by birth.
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There are two issues that make these two different.
The main is, as you said, the Vene (is that a known shorter, easier way to say Venezuelan?) oil does require extra refinement. And because of this it costs more to refine into a usable product. This means the price of oil is required to stay at X level to be profitable, and the price of oil fluxes.
Arabian oil is lighter and cheaper to refine, thus they can sell their oil at a lower price per barrel. But they also had a lot of their oil wealth stock piled, and could absorb the costs with the crash of oil prices. IIRC at one point the Saudis were losing money on some barrels.
Also under Chavism they dramatically increased the number of jobs in the oil industry - which could be good, but the production of oil didn’t increase proportionally with those increases. (There is also the issue that the way he handled the PDVSA, including a general strike by workers and the eventual loss of 80% of the work force in 2002.)
The 2nd big issue:
Like I said, the sanctions haven’t helped, but they were after things started to go south. IMO this didn’t help the situation, but what CAUSED the situation was:
Too much forced privatization which lead to outside investment to dry up. The issue of outside investment declining predates the sanctions. (Though this isn’t to say they should privatize their oil company, despite some mismanagement.) This moved also reduced the output of the non-oil industries that were doing exports.
When the price of oil fell they didn’t adjust, they just kept printing money like everything was OK and lead to massive inflation. They may have been able to adjust better had they managed the previous oil money better, but while some of it was used to uplift the poor, they also lined the pockets of the people in power.
The price controls were kept in place despite this massive inflation which means anyone trying to make things couldn’t make money selling to anyone. Which lead to less and less things being made in Venezuela, and then a massive black market/smuggling network with Columbia (and I assume other neighbors, but the stuff I read focused on Columbia).
I mean there are many other cases of countries surviving under US sanctions and not committing these same errors. Cuba being a nearby example.
I am not sure how that would have saved them. Or maybe I need you to explain what you mean by that. Which markets and how? It seems to me most places feel that Venuzula is too much of a gamble. I know China is willing to take risks, though. They also are investing in Eastern Europe and Africa where stability is less, but the chance for greater reward is there.
And to make it clear, I know a lot of the right wing pundits wants to make Venezuela the poster child as a failure of socialism. But I don’t think socialism is what doomed them. I’ve been careful to not even mention it in these posts.
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Refineries have been specifically designed to deal with heavy grades of crude. These refineries cannot switch to lighter grades without significant changes. Its true that it is more expensive to construct a refinery designed to refine heavy crude. However the operating costs are not a significant decision variable. The cost is a sunk cost.
Management of PDVSA has been poor. But PDVSA was also a key employer, and its employment practices looked discriminatory to many people inside Vene. Substantial investment was required and not made as other policy choices were preferred. Clearly these were errors.
One might argue that the error the Chavismo made was in nationalizing assets when they should have followed a more Russian play-book and noted environmental failings and canceled extraction contracts. Exxon would be welcome to keep its equipment and investments. Thats how the US government took BP to the cleaners for what it did in the Gulf. And thats what the Ecuadorean courts attempted to do to Chevron after it destroyed thousands of acres of amazon rain-forest and poisoned god knows how many indigenous peoples.
As for money printing and price controls, well I think the core problem was capital flight. Without capital flight Vene would have been healthy in the 70s, 80s and 90s. Which was my main point. If socialism is the problem (not that you said socialism was the problem but others have) can one explain why the economy was so crap before Chavez?
The biggest single problem in the sanctions is the removal of access to dollar financing. Which means the Maduro government/regime cannot borrow more money. However it still has to repay its existing borrowings. How many companies or countries would be able to pay their existing financial or foreign exchange obligations if they could not rollover debt? By analogy, if you had to pay off your mortgage without being about to find a new lender, would you be able to do it?
If the same sanctions were imposed on Mexico or Columbia, they would immediately go into a recession because of the shortage of foreign exchange.
That said, I am aware of a particular small hedge fund that made a surprisingly good living operating out of a Caracas shopping mall. For some reason they acted like they knew for sure certain bonds would get repaid by the government, when logic might have suggested the government would not pay those bonds. Funny the range of ways in which you can make money.
Yes and no. But mostly yes. Mismanagement and corruption. But different people getting paid compared to the previous lot.
Before the corruption would have been wealthy Venezuelan families self-dealing to help friends and family. After Chavez the corruption was leaders of the Bolivarian revolution self-dealing to help friends and family. I guess the main difference was that their friends and family were not US educated.
And Generals. Lots of Generals. A really weird number of Generals. Which makes me think Bolton and Abrams are idiots. How are you gonna get so many Bolivarian Hero Generals to change sides when everyone in the country knows how they made their money?
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Yeah, Venezuelan economy has been mismanaged for decades, that by itself is nothing new.
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perhaps correct, but not in the sense he would prefer
My point is - it costs more to refine, so you have to sell it at a higher price point to make a profit.
As an example, if it costs $80 to pump and refine Arabian oil, and $118 to pump and refine Venezuelan oil and oil is selling at $130 a barrel, ok great. Both can compete at that level. If that price drops to $75 or lower, well then suddenly the Arabian oil’s margin is much less and they need to tighten their belts, and the Venezuelan oil costs more to pump and refine than it is worth. Current prices are around $60 a barrel. This shows why the down turn in oil has hit them harder. Also a factor, they went from the 9th largest producer in 2009 to 16th in 2018 with production going from 2520 to 1484 thousands of barrels per day.
What caused the capital flight? No one wants to invest in large infrastructure projects spending millions to make a factory or establish a company when in 3 years it might get nationalized.
Latin America is full of boom and bust stories from the various nations. There is a lot one can study to see what works and what doesn’t but I don’t think those in power always have the best interests of the people they govern in mind (just like the US!)
But that is a separate issue from price controls and inflation. The “keep printing money” scheme never works and was doomed to fail. That is 100% on the shoulders of the government. The price controls… not a fan of generally, but one could argue when things were going good, they were ok. But when you make it so the value of your money is a fraction of what it was - but the costs of goods MUST remain the same? Well, what the fuck, really?
The original sanctions under Obama were for specific peoples within the government. I assume this hindered Maduro specifically. The newer, tougher ones obviously effect everyone.
Look I am not a fan of the sanctions - but I am also not a fan of Maduro. But this really feels like someone who got a meth habit, racked up 50 grand on credit cards, crashed their car, got evicted from the house, and then say it’s the banks fault because they won’t lend you more money to get your life in order.
And while the US and others aren’t willing to take on that debt, China has, partly because it is oil hungry. But they aren’t paying that back either.
You keep the keys to power placated, so that you can stay in power.
Keys of power concept:
Source on oil costs and production:
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This is completely irresponsible to say this: “I would imagine Trump’s response will be aligned with whatever Putin needs.” Why would Putin want a western supported president in Venezuela? This is the exact danger of this neo-Cold War Russiangate narrative which is uncritically parroted again and again by The Resistance.
Have you people forgotten that just a few months ago at the attempt to bring aid on the bridge, the western media reported that Maduaro’s people lit the trucks on fire BUT then it was shown that the US backed, Elliot Abrams led (seriously, do you people know who Abrams is? What his legacy is?) lit the trucks on fire.
One doesn’t have to be a supporter of the democratically elected Maduro, to know that any US involvement is suspect and NEVER HAS THE GOOD OF CIVILIANS as its goal.
NEVER.
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I’ve been following Boing Boing for years and always appreciate the various topics they cover. But this article seems to uncritically look at who the players are in this US backed Coup.
FAIR has been covering this for the last year, and their conclusion is that western media are not covering this story objectively at all, but accepting the Trump narrative. How can The Resistance people think in anyway that this is a good thing?
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Hello fellow liberals I have been reading this thread since it’s started, observing the several tendencies most of you are displaying in this long and very eye-opening overview of the optics that are applied upon the Venezuelan people and by extension the diaspora that is spared around the world. I have my opinions and experiences on the matter as you may imagine.
Due to Ad-hominem attacks at English-speaking Venezuelans, I want to avoid that So I will risk to break rule number one of internet political discussions; I’ll talk about my private life and identity. You are free to believe it or not, My goal is not to convince you But to leave testimony to others to contrast and ponder upon.
I’m Venezuelan living in Venezuela, Rene Alex is my real name I’m poor I’m Brown and learn English watching TV, playing video games and reading Magazines. My family was the closest thing we got to middle class in our society, even when I grew up in Petare, not IN a barrio per se but surrounded by them, many of my childhood friends are from barrios most of them left the barrio and took several family members with them. As Me most of them no longer live there but got to be constantly going there to take care of the family.
Right now my mom and dad are living of the money My sister and I provide them, but we got our own families to take care of… and they are used to getting by themselves… So, that is provoking weigh loss and illness in them (they are in their late 70s) and theeir only income are their pensions (around $3 US a month) so, it is another thing to worry about. My dad have loss around 20Kg in last couple of years my mom seem to be in better shape but a few weeks ago she fainted on the street waiting for the bus while she when out looking for food without eating breakfast, She needs to go almost every day to get food for that day, she injured her knee (quite bad) and bruised her left eye and forehead mildly, we don’t have money for the xray and/or tac she needs, So now weeks later she keeps going almost daily around her local merchants limping with a bad knee looking for food. Why my dad is not going out with her? You may ask; well, my dad like myself is a cancer survivor, he got a rare non-hodgkin tumor in his brain the intervention and subsequent treatment left him with several motor and coordination impediments that limits his “going around looking for food” skills.
My house hold was a secular very liberal pro worker environment, I grew up listening to Ali Primera and Ruben Blades, my mom used to provided (with several friends from her school) food to Communist guerrilla units that hide in the mountains in the 60s and help with graffiti and PCV and BR rallies, my dad is from Maracaibo came to Caracas in a bike with one of his brothers and after getting money and a proper job when to Cuba for tourism back them in his youth he got a bias toward Cuba and now he still have to this regime. Mom was and still is a house wife, my dad was a representative for Yamaha Motors in Venezuela, he used to travel to the inner parts of the country to get orders from distributors and bring them to the headquarters in Caracas, it was a taxing job, He most travel by himself in his car and take care of his own accommodation in the “Interior” as we call every place that is not Caracas, “El Interior” is not that of a cosmopolitan place, more like the “old town” like stereotype place that is depicted in your movies and TV… even more back in the 70s and 80s And now after 20 years of chavismo is worst, imagine an episode of the Walking dead… well back on topic; He was not an employee but a “private contractor” a crappy way to avoid giving him benefits and such… a common practice still used today and one that I’m sure you know well… So after 30 plus years, 3 cars, several on road accidents, years and countless Kilometers on the road; he was terminated and send home with a promise of been able to purchase parts and other merchandise at a discount price to keep his “private business” going on. He wildly despises corporate entities and the general idea of “every man for himself” capitalism.
So to nobodies surprise they raise a liberal. A liberal that in 1999 Voted for Chavez and also approved his new constitution, I convince my wife, and we all together as a Family voted for him and his promises. In fact, I was randomly selected to be Secretary of one my district’s polling places; I have to get up a 4 AM to be present at the polls opening and then participate and sign the audit at the end of the day. That’s me. Hell I’m listening to Rage Against the Machine while writing this!
I will get into my personal history and adulthood if; due to the nature of the discussion, is needed. For now to illustrate the counterpoint that I’m NOT “a privilege member of the elite” discontented from the life of “the poor Venezuelans that widely support Maduro” I think Is enough.
Now my opinion:
The Venezuelan that still support the regime are not the majority. (please Note that the terminology I used to identify Maduro’s rule is not Government but Regime, Why? I can assure all of you that it have nothing to do with Marco Rubio, my reasoning is that Maduro is NOT in charge of a functioning government, he is at the top of a pyramidal organization that is controlling the power in My country by the use of Force though the Police, National guard and armed militias) You may argue that the reason of that are “X” or “Z” but the nature of his rule is not a government, so I called Regimen. It was the majority 10 or 12 years ago but since then the decline as been keep hidden or not reflected in the Voting results by the manipulation of voting districts, aka gerrymandering, the census and the actual voting machines in PSUV controlled polling places, or by simply negating the realization of electoral events like the referendum of 2016.
Guaidó is vastly popular but stills had to convince the chavista supporter (not Maduro but Chavista) that he is a viable option and not the evil man that is gonna take away the few “benefits” they still can get Either way many former chavistas and still chavistas are more than willing to support ANYONE that can replace Maduro Yes he had been in barrios (Guaidó), Yes He is a middle class Venezuelan, went to a Private but Catholic University (heavily subsidized and filled with middle class and poor kids) later given a scholarship to get a degree in the US in an “establishment” collage.
We are not an ethnic divided society that is the worst elaboration or oversimplification that is We have a divide that derives from income inequality and the social ostracism that comes with it. Back, Brown and Aborigen People can get to every place in our social economical latter, but the money is the barrier not the color of our skin, we used to have tuition free universities with world-class graduates from all the social background and all skin colors the barrier was academic but the social struggle was to get income to live while studying… poor people can get to collage but to the household got to had stability and sustainability, people in the barrios are in quite disadvantage there many broken homes and low paying jobs, in the other hand we got sons of immigrants with stable homes and jobs… their skin color is all over the place… they are not just white. Our culture is not of purity and segregation our diversity is our main asset, and we are more than proud to declare that, been confronted with this kind of falsehood enerva most Venezuelans to hell.
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