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Tulane University

David Smilde speaks to PRI about Venezuela'€™s economic crisis

Listen to PRI’s The World speak with Tulane University professor David Smilde who lives in Caracas, where he also works with the Washington Office on Latin America, an NGO. Smilde believes the immediate cause of the current crisis in Venezuela is the decline in oil prices. But he says at least 10 years of economic mismanagement are to blame, too.

July 06, 2016
By Daniel Ofman

Not too long ago Venezuela was an oil-rich nation, with a seemingly bright future filled with economic prospects and great potential for growth.

Now Venezuela has an 180 percent inflation rate ‘€” and there are shortages of food, basic goods and power.

Tulane University professor David Smilde lives in Caracas, where he also works with the Washington Office on Latin America, an NGO. He believes the immediate cause of the current crisis in Venezuela is the decline in oil prices. But he says at least 10 years of economic mismanagement are to blame, too.

‘€œNicolas Maduro inherited a set of policies from Hugo Chávez that were created during the good times. These were policies that were completely unsustainable, they were based on continual growth of income from oil,‘€ Smilde said.

According to Smilde, when oil prices were high in the early 2000s the national revenue was mismanaged through the so-called “Bolivarian missions,” a series of government-funded social programs which Chávez started and Maduro has continued.

The Bolivarian missions included anti-poverty initiatives, the construction of free medical clinics, educational campaigns, and the enactment of food and housing subsidies. Critics have called these initiatives irresponsible handouts that didn‘€™t account for potential recessions.

‘€œNow oil revenues have dropped and Venezuela has very little productive capacity, so it can‘€™t produce its own food really and it doesn‘€™t have enough money to import what it needs,‘€ Smilde said.

Venezuela is also suffering because it lacks economic diversity. During the years when oil prices were high, the country relied on oil revenues and imported most of its food. Declining oil prices took down the nation‘€™s economy as a whole.

Venezuela has also accumulated large debt, which is making it even more difficult for the country to climb out of the current crisis.

So far the government has been “making sure to pay its foreign creditors but it has really been reducing the number of dollars that are assigned to importing food and other basic goods. People are really suffering,‘€ Smilde said.

People are standing in lines for hours just to buy food at the grocery store. Others go to the streets and protest, carrying signs demanding food. “Bachaqueros,” nicknamed for carpenter ants which carry big loads on their backs, sell black-market goods to fill the void and turn a profit.

They may be making the crisis more tolerable, but the government doesn‘€™t approve of them.

‘€œThe government sees this as sabotage,‘€ Smilde said, ‘€œsees these people as traitors and so it has tried to clamp down on this bachaquerismo.‘€

Instead the Venezuelan government has promoted committees on local production and supply that are charged with taking bags of food directly to people. However, the system is incredibly inefficient.

‘€œThe real problem is that there‘€™s just not enough food,‘€ Smilde said. “It‘€™s not a distribution problem, it‘€™s a production problem.”

And Smilde says the committees makes supermarket lines worse by pulling merchandise from their shelves. Looting is becoming an increasing threat. Since May there have been an average of 10 lootings a day.

Smilde is fortunate to be able to visit the United States frequently, where he can pack suitcases full of goods to live on. Most Venezuelans do not have that luxury.

‘€œMy heart really goes out to them and it‘€™s one of the reasons that keeps me working on this issue,‘€ Smilde said. ‘€œThere‘€™s not a night that I don‘€™t think about this: ‘€˜What‘€™s going to happen in the next six months?‘€™ Because things are really ugly right now, but they can get significantly worse.‘€

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Markets, the State, and Democracy in Latin America
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In the 2019 fall series, Markets, the State, and Democracy in Latin America, speakers will discuss emerging issues that have surfaced as the result of the opportunities and challenges to democratic governance that markets have brought to the region. Latin America experienced a major influx of investment, particularly in the resource sector, over the past several decades. While this foreign investment helped hasten economic development, it also brought a backlash of resource nationalism and increased calls for redistribution. Moreover, Latin America is now a model in its own right, with other countries in the Global South adopting its state-sponsored development strategies in the resource sector. These presentations will also explore how Latin America is navigating a sea change in geopolitics, with China emerging as a challenger to the United States as the region’s main trade partner and ally.

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Latin American Writers Series: Alberto Barrera Tyszka

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Ecuadorian writer and Tulane Visiting Scholar Gabriela Alemán interviews Venezuelan writer Alberto Barrera Tyszka about his life, interests, and influences. Their discussion will be followed by an open Q&A and an informal reception. This event will be held in Spanish.

About the Latin American Writers Series

This series brings together Latin America’s most representative creative voices and the editorial entrepreneurs that publish them. By way of interviews conducted by renowned Ecuadorian writer Gabriela Alemán and presentations of various editorial missions, the guests will shed light on a literary world shaped by the contemporary issues of the continent. Moving forward, their conversations will comprise the centerpiece of a digital archive that introduces their ideas to a global audience.

Este serie reúne a los autores más representativos de la escritura continental y los editores que los publican. A través de entrevistas con la reconocida escritora ecuatoriana Gabriela Alemán y presentaciones de proyectos editoriales, los invitados explorarán los vínculos entre el mundo literario y la realidad continental. Sus conversaciones se convertirán después en el eje de un archivo digital que busca llevar estas ideas a un público global.

About the Author

Born in Caracas, Alberto Barrera Tyszka has published over a dozen works of poetry, short story, chronicle, novel, and biography. His most recent publications include the novels Patria o Muerte (2015) and Rating (2011), the poetic anthology La inquietud (2013), the collection of chronicles Un país a la semana (2013), and the short story collection Crímenes (2009). In 2005, he collaborated with Cristina Marcano to write the definitive biography of Hugo Chávez, Hugo Chávez sin uniforme: una historia personal (2005). Patria o muerte won the 2015 Premio Tusquets de Novela, and his novel La enfermedad, translated into English as The Sickness (2010), received the 2006 Herralde Award. Barrera also writes for television and has scripted soap operas for Venezuelan, Mexican, Colombian, and Argentinian networks.