The economy is collapsing like a nation at war. The government is to blame
“HE WHO leads must listen even to the hardest truths,” said Simón Bolívar, who liberated much of South America from Spanish rule. The leaders of Venezuela today, who claim Bolívar as their inspiration, ignore his dictum. Venezuela’s economy shrank by nearly 19% last year, according to a leaked early estimate by the central bank (see article). That would be bad even for a nation at war, which Venezuela is not. Inflation was 800%. Shortages of food and medicine are causing hunger and looting. Infant mortality is soaring. Caracas is the capital city with the world’s highest murder rate.
The leaders of Venezuela’s “Bolivarian revolution” shut their ears to such truths. The central bank has not formally published data on growth or inflation since the beginning of 2016. After the leak, Nicolás Maduro, who took over as president from the revolution’s leader, Hugo Chávez, in 2013, sacked the head of the central bank. His successor must “fight against the domestic and foreign mafias that attack our currency”, Mr Maduro said. No such mafias exist; Mr Maduro’s government is to blame for Venezuela’s plight.
Alas, he will not heed Bolívar’s second commandment: to “right the wrongs that lead to errors”. His controls on the prices of foreign exchange and basic goods have created shortages, rationing and inflation. On the black market the bolívar is worth less than one three-hundredth of its strongest official rate. The armed forces, which oversee the distribution of food, are the biggest profiteers from scarcity. The halving since 2014 of the price of oil, almost the only export, makes these problems more acute but is not the underlying cause.
The dismantling of democracy worsens the consequences of deafness. The regime’s last democratic act was to hold parliamentary elections in 2015. The opposition won, and thereby in theory ended the Bolivarians’ 16-year monopoly of power. Since then Mr Maduro has sidelined parliament and blocked attempts to remove him from office by constitutional means. The compliant electoral commission thwarted a referendum to recall him, which he would surely have lost. This month he delivered his annual state-of-the-nation speech before the puppet supreme court rather than the national assembly.
Venezuela needs both economic rescue and political renewal, but it is hard to imagine where these will come from. The best hope had been talks between the government and the opposition, which are mediated by the Vatican and by Unasur, a regional body. But they broke down in December after the opposition accused the government of reneging on promises to free political prisoners (though it released a few) and restore parliament’s powers. The most useful thing outsiders can do is to urge the resumption of the talks. Their aim should be to return Venezuela to constitutional rule and prepare emergency economic reforms, backed by money from the IMF.
The toughest messages must come from Venezuela’s neighbours and regional bodies. Mercosur, a South American trade bloc, suspended Venezuela last month for violating its democratic principles; the Organisation of American States should do the same. The United States must act with restraint. Rex Tillerson, its nominee for secretary of state, clashed with Venezuela as boss of Exxon Mobil. In his new job he must champion democracy without directly calling for regime change.
The hard truth is outsiders’ influence is limited. Change may eventually come when one army faction or another decides that the risk of social collapse outweighs the chance to profit from the crisis. Even that is unlikely to be a good thing. Soldiers with political power are rarely good listeners either.