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xxx Day 7 – Venezuela, the Worlds Poorest Rich Country

xxx Day 7 – Venezuela, the Worlds Poorest Rich Country

When Venezuelan President Nicolas Maduro took over after the death of Hugo Chavez he inherited Chavez’s socialist policies as well.  These unwise policies have created a dysfunctional economy, spiraling downward into a dangerous and fragile environment.

The crime rates and inflation is at an all-time high. 70% of the country’s residents now live in poverty. Companies have been forced to shut down because they are no longer profitable. Venezuelans have to wait in line for hours to get household essentials and food.  

Since the country has been in a state of emergency, desperate Venezuelans have turned to raiding food trucks prior to dropping off shipments at grocery stores. Gang lootings of shopping malls and pharmacies are an everyday occurrence.  

Because of the lack of resources and extremely low prices of the goods mandated by Maduro’s government, this has created a successful smuggling network. The limited resources, especially the cheap oil in Venezuela is being taken to the nearby Colombia. Here the gas is being sold for much higher prices.

Sadly, the country itself is sitting on a vast fortune and it should be one of the richest countries in Latin America.

Venezuela is one of the world’s largest exporter of oil and has one of the largest oil reserves on the planet. Oil is almost 95% of the country’s export revenue and unfortunately PDVSA, the only company producing the resource, is almost out of business.

According to the Organization of the Petroleum Exporting Countries (OPEC,),  PDVSA’s oil production declined by 4.8% in May due to the electricity crisis.  Oil has become the mainstay of the country. As PDVSA’s situation worsens, so does the economy.

“Given the consecutive decreases in recent months, the steepening of the decline rate is a worrisome trend for Venezuela’s government. It can use the money from oil revenue. The lack of new output from the Orinoco basin oil fields shows an acceleration in the decline rate from the country’s biggest wells. PDVSA has no money right now to look for more oil. Nothing gets drilled in Venezuela without PDVSA,” wrote Forbes.

Experts predict an even less successful summer and rest of the year. In a recent report by Barclays, the country’s oil production output is expected to drop by at least 300,000 barrels a day.

And because of the drop in oil revenue, Maduro’s government sets more limits on basic goods and food products. The government has mandated two rates, one for foodstuffs medicine and another for everything else.  This is in accordance with the policies set by Chavez, who introduced socialism to the country. He vowed to distribute the wealth amongst the poor. Now the country is mostly poor.

“Chávez also used Venezuela’s oil wealth to artificially depress prices on over 40 products, largely as a tool to maintain support among the country’s poor. It worked well enough when oil prices were high and the government had the cash to import goods and subsidize consumption. But when oil prices plummeted by over 50 percent last year, chronic shortages of food, medicine, and spare parts became acute, as the government slashed imports to conserve dollars to make foreign debt payments and avoid default. Now, the government doesn’t have the dollars to sell to importers, who, in turn, can’t buy goods abroad,” wrote the Chicago Tribune.

Even previous supporters of both Chávez and Maduro are blaming them for the pathetic state of Venezuela. “I am doing this because I have children,” said William, a 44-year-old farmer and father of two after waiting 18 hours for cornmeal and pasta, to the Chicago Tribune. “How can this be happening? We have the world’s largest oil reserves, but we don’t have food.”

Maduro’s approval rating has dropped to 25%, but socialists continue to block any attempts to remove the president in a referendum. Maduro has stated that the plan to replace his government has been “activated in Washington, requested and pushed by elements of the fascist Venezuelan right, emboldened by the coup d’etat in Brazil.

It’s safe to say that with Maduro still in control, the country’s future looks bleak. 

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