Lately, plummeting oil have opened Pandora’s Box in quite a few nations; years of reckless spending in Saudi Arabia is giving way to an era of austerity spearheaded by the young Prince Muhammed Bin Salman. Russia; another major oil exporter is finding it hard to continue with its large military expenditure on various modernization programs ostensibly for a defense against an increasingly belligerent NATO. However, none of these match up to what is unfolding in Maduro’s Venezuela.
The huge debt, nearly $120 billion that the country owes is finally beginning to wreck havoc on the national economy. Escalating inflation has precipitated panic buying among consumers. This has further aggravated the situation as inflation soars even more. Unofficial exchange rates for Bolivar; the national currency are many times higher than the official exchange rate. This effectively means the Maduro government has lost all control on the national currency.
The public healthcare system is in shambles & power crisis has intensified as the country finds it harder to keep the bare minimum running. Under such circumstances, it isn’t far fetched to assume that Venezuela may soon default on its debt. Another Greek- style bankruptcy is in the offing but, this time the crisis may unfold in the politically turbulent South America, in the US’s own backyard. With Brazil; South America’s largest economy barely out of its political disaster which saw the impeachment of President Delma Rouseff another troubled spot in the region would surely make the great powers take notice. The possible fall of one of the world’s last socialist relics is too sweet an opportunity for the US to let go so easily; for the failure of socialism in Venezuela would bear testament to the fact that ‘capitalism fuelled by unfettered trade’ is the only way forward for nations in the developing world.
Hugo Chavez, Maduro’s popular predecessor consolidated Venezuela’s commitment towards socialism. Sky rocketing oil prices meant Chavez could support subsidies for the poor & pursue his policy of state- ownership without significantly straining the national economy. With Chavez dead & oil price fast plummeting under surplus production by Gulf monarchies hell bent on subduing the US’s shale industry, Venezuela’s free spending finally began hurting the already precarious economy over dependent on oil revenues.
With an united opposition gaining momentum before it’s required to show 4 million signatures that would trigger a recall vote on Maduro government, the divisive President tries every trick to quash the recall vote. It is assumed that the President might resort to using the Supreme Court to rescind the popular exercise. However, if the recall vote goes through then, the sun would finally set on the Chavez era.