PB has chronicled the shocking decline of Venezuela’s economy that began with the crash in oil prices in 2014. Coupled with President Nicolás Maduro’s (and his predecessor’s) socialist policies, the crash has sent Venezuela into a death spiral.
This Thursday, General Motors announced that it would be pulling out of Venezuela after authorities took over one of its car plants there. GM says the “illegal judicial seizure of its assets” included cars from a facility in Valencia.
“[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside Venezuela, to defend its rights,” said the car company.
GM accuses local officials of causing “irreparable damage” to the company and its 79 dealerships and 2,678 employees in Venezuela. The company, which has operated in Venezuela for seven decades, has promised “separation payments” to employees following the incident.
It is not clear why authorities seized the car plant. Large areas of the nation’s economy have been nationalized following Hugo Chavez’s rise to power in 1999, including private oil, energy, telecom, and cement businesses. Current President Nicolás Maduro has continued the tradition, repeatedly blaming the US and its companies for his country’s political and economic crises.
GM isn’t the first company to abandon Venezuela. In 2007, ExxonMobil suspended its operations after Chavez tried to nationalize one of its projects. Kleenex pulled the plug in 2016, citing “escalating inflation” and the “continued deterioration of economic and business conditions.”
Venezuela is in a state of emergency following years of food shortages coupled with rising unemployment, hyperinflation, and economic turmoil. The nation’s economy shrank by 18% in 2016. Unemployment is close to 25%.
The turmoil in Venezuela has been further exacerbated by three recent incidents:
1. March 29th: Venezuelan Supreme Court dissolves Parliament, in effect giving full legislative control to the ruling United Socialist Party. The decision was overturned a few days later, but the protests had already erupted. At least 9 people were killed.
2. April 7th: Opposition leader Henrique Capriles is banned from political work for 15 years; he says the government is “again acting like a dictatorship.”
3. April 10th: A 20-year-old student is fatally shot by police during a demonstration.
Meanwhile, opposition parties claim the government is dragging its feet and insist that state and local elections should have taken place months ago.
“We are concerned that the government of Maduro is violating its own constitution and is not allowing the opposition to have their voices heard, nor allowing them to organize in ways that express the views of the Venezuelan people,” said Sec. of State Rex Tillerson.
Editor’s note: Venezuela sinks deeper and deeper, losing more and more productive capacity. This is right on schedule for a socialist spiral into anarchy.