Why is Venezuela in crisis?
Venezuela is a country located on northern coast of South America with a population estimated to be around 32 million people. You most likely have heard something about how bad things are there. In this presentation I will try to explain what caused this situation in Venezuela.
Crisis
Venezuela has been in deep socioeconomic crisis for years now. Its beginning is said to be on 2010 during Hugo Chávez presidency. Right now, Venezuela is facing multiple issues such as: hyperinflation, economic depression, shortage of basic goods and significant increase in unemployment. This sounds just as bad as it is. For example, hyperinflation caused prices of products to double every 18 days and the unemployment rate is estimated to be around 33.5% .
Source : https://www.businesstoday.in/current/world/oil-falls-a-bit-as-saudi-and-russia-quietly-agree-output-rise-us-stocks-swell/story/283740.html
Oil
To understand what caused such a bad situation to occur in this country we have to know what the most exported good in Venezuela is. That thing is oil. This country is known to have the biggest reserves of oil in the world. In 2014 oil export accounted for 95% of Venezuela's export earnings and 25% of its GDP. In 2015 it was estimated that in order to balance its budget Venezuela needed a price for oil barrel to be around 200$. At that time, it dropped to 70$ per barrel. It is worth mentioning that Venezuela exported and still exports mostly crude oil, not refined petroleum. However, despite all of that, how could one country be so dependent on only one of its resources? That was mostly caused by Venezuela’s government actions.Mismanagement
Both governments of Hugo Chávez and Nicolás Maduro didn’t manage money they earned on oil exports properly. They didn’t invest in infrastructure, technology or other sectors of economy. They spent enormous amount of money on social spending in order to make their parties more popular among people. Social subsidies instead of reinvestment into energy infrastructure is one of the biggest mistakes made by President Maduro. However, still there is no sign of change in his policy. Moreover, corruption is a serious problem in this country. Many argue that huge part of oil income ends up in pockets of officials connected with the ruling party and Mr. Maduro. Those things had happed long before the crisis. However, with prices of oil sinking, Venezuelans could really feel the consequences of such policies only in last 8 years.Summary
Venezuela’s economy was and still is based on oil. Decrease in its price led to catastrophic consequences. Lack of reinvestment, pumping funds into other sectors of economy, huge spending were all extremely irresponsible. The government of Venezuela with Mr.Maduro as its leader still seem to be out of touch with reality. Such moves like introducing petro (new cryptocurrency) which got immediately banned by U.S., introducing new currency or setting social spending at 70% of the country’s budget are only making things worse.Questions to discuss:
⦁ Have you heard about the situation in Venezuela before? Are you interested in such topics?
⦁ Can you name countries that are large exporters of oil? Do you know how the change of oil price affected them?
⦁ What in your opinion could have been done in order to prevent the Venezuelan crisis?
⦁ How would you respond if the government of your country acted like the one in Venezuela? Do you care what the government spend money on?
Sources: https://w HYPERLINK "https://www.cfr.org/backgrounder/venezuela-crisis"ww.cfr.org/backgrounder/venezuela-crisis
https://www.ceicdata.com/en/indicator/venezuela/forecast-unemployment-rate
https://timesofindia.indiatimes.com/business/in-ve HYPERLINK "https://timesofindia.indiatimes.com/business/in-venezuela-prices-double-every-18-days/articleshow/65172863.cms"nezuela-prices-double-every-18-days/articleshow/65172863.cms
https://www.cnbc.com/2014/12/01/falling-crude-oil-prices-crush-venezuelas-ailing-e HYPERLINK "https://www.cnbc.com/2014/12/01/falling-crude-oil-prices-crush-venezuelas-ailing-economy.html"conomy.html
https://en.wikipedia.org/wiki/Venezuela
https://www.forbes.com/ HYPERLINK "https://www.forbes.com/sites/judeclemente/2017/11/05/venezuelas-oil-problems-abound/"sites/judeclemente/2017/11/05/venezuelas-oil-problems-abound/#47aa661a6104
https://venezuelanalysis.com/news/12703
Comments
⦁ Iran, Iraq, UEA? Dunno, not big expert here.
⦁ Better politics maybe?
⦁ It's really important to know some lenguage other than your native one and to have job that can be done in every country. If you can do both, you are no longer slave of some country, you may work everywhere you can.
I know that one of the biggest exporters of oil are eastern countries such as Iran, Iraq, but I'm not sure about their politics. There is one more country, which we all know, and with current behavior there is gonna be something not good.
People. But the main problem what those people think about their government. Unfortunately, most countries can control peoples mind through various types of propaganda. And if there is no competition in government, the citizens of those counties are doomed.
I can name only two countries, Russia and USA. As I mentioned before I have never been interested in such topics so I have no idea how the change of oil prices affect them. I can only imagine how much it can change if any country exports so much as Venezuela.
In my opinion any country can’t rely only on one resource. Government should invest in other sectors like technology. I can’t say my opinion about any politics, but I do care about any actions they do.
To be honest, I don't know about oil export a lot but I have heard about Russia. I can't say anything about affects because it's not similar topic for me.
Yes, do you know that we have a special website for country debt - http://www.dlugpubliczny.org.pl. Have you ever heard about it? I hope that politics are working hard and situation like in Venezuela is not possible in my country.
Yes, I was watching one youtube channel of polish guy that lives there. I think that he is a badass considering what’s going on there lately.
⦁ Can you name countries that are large exporters of oil? Do you know how the change of oil price affected them?
From what I know Saudi Arabia is a big player in that game. But they are friends to US so probably that haven't touched them much
⦁ What in your opinion could have been done in order to prevent the Venezuelan crisis?
I’ve read that big problem was also importing everything from outside. Basiclly they have just killed national business
⦁ How would you respond if the government of your country acted like the one in Venezuela? Do you care what the government spend money on?
I think from actions of Polish government some may deduce, that they also have no idea what they are doing. I wish I wouldn't care or look what government spend money on
Yes, I heard. I watch YouTube series called "Borders", and there were episodes that cover the current situation in the country. Also in this series was mentioned that a lot of people are escaping from Venezuela, to Columbia, and Colombians help this people to overcome this crisis. Money in Venezuela nowadays is just a papers, from which people make bags and other stuff.
⦁ Can you name countries that are large exporters of oil? Do you know how the change of oil price affected them?
I know about Russia, Norway, Saudi Arabia, UAE, all this countries leverage their economics funding with money from oil selling. And they invest a lot in renewable energy.
⦁ What in your opinion could have been done in order to prevent the Venezuelan crisis?
I think that there is a lot of countries that could help establish governmental system in Venezuela, and help to figure out how to manage resources better.
⦁ How would you respond if the government of your country acted like the one in Venezuela? Do you care what the government spend money on?
If I could impact the situation I probably should try it out. But if it is clear that system cannot be changed, I rather wouldn't try to fight the system and spend my life on that, I just will move to place where government is thinking about people and will improve that society and pay taxes there.