How Deep Does the Crisis Cut?

VA's Z.C. Dutka analyzes the roots of the current economic crisis in Venezuela and calls on the Maduro government to assume responsibility for the acute difficulties faced by the country's popular classes, which she identifies as a crucial step for further deepening the Bolivarian Revolution.


Last Tuesday would have been Hugo Chavez’s 61st birthday. In the barrios of Venezuela, the late socialist leader was mourned like family, with community vigils and stirring messages posted to social media.

In remembering Chavez, chavistas recall the beginning, the force of a revolution being born, and the deep commitments made all around to build a better future.

Now, in it’s teenage years, the Bolivarian revolution finds itself in a vice. Inflation rates are at an all-time high and president Maduro is visibly struggling in the face of sliding oil prices and mountainous debts levied by IMF courts.

But the real enemy is on the inside, Maduro reminds television audiences daily, pointing to the corporate elite and the foot soldiers of the economic war; hoarders, speculators, and smugglers.

For those paying attention, there is little doubt that a coordinated effort to destabilize the country’s economy exists. However, the government actively controls important industries- meaning the explanation for straggling production is more complex.

Still, years of social investment have created a buffer that continues to shield the country’s most vulnerable sectors from the brunt of the recession, despite budget cuts.

Even as the country’s income was halved by December’s plummeting oil prices, the 2015 official budget was laid out with three clearly marked priorities; elderly pensions, housing projects and higher education. Military spending was cut, as were the salaries of senior government officials, starting with the president.

At the time, Maduro urged Venezuelans to “deepen strategic methods of saving… [and] take advantage of the crisis.”

Since then however, the government has avoided making any reference to a real crisis. As hyper-inflation began it’s upward spiral in January, the Central Bank suddenly stopped reporting statistics. (Independent analysts have estimated a 110% increase in consumer prices to date.)

The decline of the bolivar has inevitably given way to a sense of panic in Venezuelan families, as wage-workers find their salaries depressingly devalued at the end of each month.

As Maduro calls out the “parasitic bourgeoisie” for waging economic war against the working class, community media forums such as aporrea.org respond; “if this is an economic war, we’re getting our asses kicked.”

These days, the largest bill in circulation- 100 bolivars, worth about USD 15 cents on the black market- won’t even get you a candy bar, and there’s no talk of notes of higher denomination. Until then, Venezuelans will continue using rubber bands to organize the bricks of colorful cash needed to buy groceries.

Looking Back

In the last quarter of 2014, the government used the enabling law to introduce a parade of “economic measures” meant to combat the crisis. But since January, not a peep.

Yes, inaction is sometimes a very deliberate political strategy, but at this point it seems like the government is hoping if they ignore the crisis, it will go away.

Not only is this unlikely, but the tight-lipped approach has alienated a large part of the rank and file. People feel the government is avoiding the hard decisions that need to be made in order to save the economy.

In April, while inaugurating a new metro line in Caracas, president Maduro made a veiled reference to the National Assembly elections in December. While admitting that the price of gasoline is “disproportionately” low, he said, the time was not right to raise it, because “first we must guarantee victory in 2015.”

Aside from the absurd price of gasoline (1/5 of a cent to fill a tank), analysts at home and abroad have cited the country’s complicated forex controls as a source of economic imbalance.

In its early stages, the government created important access for foreign travel and imported goods by permitting citizens and importers to purchase subsidized dollars at preferential rates. But over the years, people found endless ways to hijack the system for personal profit- resulting in an accumulated $300 billion dollars in capital flight.

Once the buying and selling of subsidized dollars became the most profitable business in the region, the black market boomed and websites such as dolartoday.com gained outrageous power. At this point, dolartoday is able to set off nationwide surges in consumer prices just by raising the dubiously calculated “street value” of the dollar on its twitter feed.

Victor Alvarez, an economist and former minister under Chavez, argues that the currency controls made up a “temporary measure” which the country was obligated to adopt in 2002, but there was “no justifiable reason” to maintain the controls beyond 2006.

The misadventure in foreign exchange has played an immense role in the country’s recession. And while it is true that the “parasitic bourgeoisie” are the engine of this downward trend, the Venezuelan state provided the wheels.

Looking Forward

Where I write this, in a small city bordering Brazil, the mayor is pulling his hair out trying to fill a dozen empty posts in his office. The once-coveted salary of the public functionary is now a laughable sum, comparable to what a smuggler earns in one day of carrying food across the border, or a week’s profits from an empanada cart.

To combat inflation, residents are caught in a constant cycle of consumption. We buy now what we need next month. If we have money left over, we buy Brazilian reais and stash them under the mattress. Those with means buy gold and bury it. Three of the city’s four banks have closed. The only one remaining has strict limitations on withdrawals, causing cash itself to become a commodity, to be sold in the street at 10%.

But from my perspective, the worst part of the crisis is a failing sense of unity. There’s an every-man-for-himself attitude, more prevalent each day, as people scramble to inflate personal capital at the blistering rate of the black market.

The very essence of Bolivarianism- what has inspired so many peoples’ movements in the region and beyond- is the community organizing that keeps the revolution in motion even when there’s trouble brewing.

In 2002, when the coup d’état and subsequent oil lockout saw shortages across the country, the rallying cry for chavistas was bold: “With hunger and disemployment, I stand behind Chavez!”

Chavez himself once threatened, in response to US aggression, that he would cut off oil export to the US, “Even if we have to eat rocks!” The pronouncement was met with cheers, by a people who have proven many times over they hold their dignity above all.

The chavistas are no strangers to struggle, and even now there are sectors who continue organizing, producing, and pushing forward in spite of the difficulties.

Maduro could help them by admitting there is a problem. By playing the victim of an economic war he is backing his supporters against a wall. If the president is a victim, what does that make us?

Diosdado Cabello, the president of the National Assembly, has further alienated grassroots sectors by calling out “traitors” among the ranks; pointing to members of the Trotskyist party Socialist Tide, and other “doomsayers” who contribute to the cathartic aporrea.org.

In his iconic 2012 “Strike at the Helm” speech, Chavez seized one of his last moments as a leader to be self-critical. He lamented not putting more faith in the Venezuelan people, and instructed his cabinet to learn from his mistakes. He even asked that the Ministry of Communes be dissolved shortly because, he explained, the principle of the commune was self-government.

President Maduro has not acted on this advice. The gap between the state and its people has only widened as people confront a daily reality very different than the one shown on state TV.

We know Maduro doesn’t have Chavez’s way with words, but if he’s really intent on deepening the revolution- not just getting through December’s elections- he must be real.

He must take responsibility for the government’s role in the failing economy, and ask Venezuelans to help by helping their neighbors, by thinking as a community.

Because, by the looks of it, things will get harder before they get better. And if we in Venezuela allow ourselves to turn inwards, to grow more individualistic, then the right wing will have won.

And those people who stand in solidarity with Venezuela from abroad may want to consider complicating their narrative. By avoiding the challenges being faced by working people, we’re encouraging corporate media to co-opt these struggles to suit their script.