Speaking of poor policymaking, hyperinflation and violence – Venezuela is sliding closer and closer to the brink of collapse, with some sobering consequences.
This was among the topics of conversation this week at the Mining & Investment Latin America Summit in Lima, Peru. While there, I had dinner with a couple of Canadian lawyers who represented a few Latin American oil producers, some of them based in Venezuela.
Things have gone from bad to worse, they informed me. Since 2013, when Nicolás Maduro took power after the death of Hugo Chávez, the socialist country has struggled with skyrocketing inflation, food and medicine shortages, a shrinking economy and rising violence and corruption. (Its capital city of Caracas recently overtook San Pedro Sula, Honduras, for having the world’s highest homicide rate.)
These have only intensified since oil prices fell by half more than two years ago, as oil accounts for 95 percent of Venezuela’s export earnings.
Venezuela's shrinking economy
Now, President Maduro has effectively suspended a scheduled recall referendum, backed by the opposition-controlled National Assembly, despite as many as 80 percent of Venezuelans in favor of his removal from office. The suspension has led to widespread protests in the streets, with accusations of a coup being tossed around on both sides.
Venezuelan President Nicolas Maduro has effetively suspended democratic elections, spurring mass protests.
The fear, the lawyers said, is that if Caracas falls, the vacuum it leaves behind would serve as a prime terrorist base of operations—a Latin American Syria, as it were, complete with the world’s largest proven oil reserves to finance it.
We’ve already seen the country cozy up to fellow OPEC member Iran, recognized by the State Department as the world’s leading state sponsor of global terrorism. According to the Gatestone Institute, a New York-based international policy think-tank, Iran is “partnering with Venezuela’s drug traders and creating a foothold” in the Latin American country.
It’s such a travesty that a nation as resource-rich as Venezuela could allow itself to rot from within. Its descent into chaos should serve as just the latest cautionary tale to other countries that are willing to risk stability and prosperity for even more socialism.