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For outsiders, Venezuela is a big unknown. For insiders, the country is a subsidiary of economic hell. Everybody knows Venezuela’s struck with hyperinflation, but that’s like knowing someone with Ebola has a fever.
For outsiders, Venezuela is a big unknown. For insiders, the country is a subsidiary of economic hell. Everybody knows Venezuela’s struck with hyperinflation, but that’s like knowing someone with Ebola has a fever. It is a symptom, not a cause, and the disease is called Bolivaritis.
For those uninitiated, we’re about to learn how naive it is to think that Venezuela is a “normal” country with a bout of hyperinflation, when it faces much bigger problems than that. We need to consider that the country is on the brink of a civil war and experiencing the following “symptoms”:
To many Venezuelans, this is can be lethal as disease as hunger and desperation lead to aggressive riots and looting where many deaths occur among the parties involved. However, there’s no need to be a protester or an angry rioter to be in danger, as 14 year old Kluibert Roa Nuñez found out when a police officer shot him dead while he happened to be near university students running from the ones supposed to maintaining civil order. When consulted by CT about this, a Venezuelan bitcoiner named José Rodriguez said:
“Without exaggerating, my country looks more and more like Mad Max.”
In a place where violence reigns in the streets, a homicide rate 4.3 times larger than Iraq, jailed inmates in control of prisons engaging in such barbarism as gladiatorial fights is of no surprise to anyone. Not to mention crimes such as kidnapping, which have skyrocketed.
All of this contributes to an overwhelming sensation of impunity and helplessness, where people feel betrayed by their government and are already thinking that the worst is yet to come. One Venezuelan said to CoinTelegraph regarding the situation:
“I hope I’m not here when Venezuela explodes.”
And that sums up the thinking that leads us to the next symptom.
According to Florida’s TV Station WLRN, Venezuela has become an “emigration nation” and it sure knows what it’s talking about since South Florida has the largest community of emigrants from that country. Some of which are part of a group called Veppex (Politically Prosecuted Venezuelans in Exile), which happens to be made up of those accused by president Maduro of plotting a coup supported by the US.
As if it weren’t bad enough to be detained for protesting peacefully, add a bit of torture to the mix or an execution at the hands of the government in what is formally known as extrajudicial killing. Venezuela has become a nightmare for organizations such as Transparency International or Freedom House, who have published some grim reports about the current state of the country.
By and large, the reports describe a militarized regime, which has connections and allows the workings of drug cartels, terrorists and other criminal organizations. Any dissidents are readily jailed or politically prosecuted. As the writer of this article, I have no doubt that the Bolivarian Regime will likely add me to their already large blacklist of people who have said anything bad about them.
Our fifth symptom brings us back to one of the many sources of unrest: a generalized shortage of goods. While Venezuela’s Bitcoin adoption is growing rapidly, one Venezuelan told CoinTelegraph:
“What good is money or BTC if you haven’t got any products to spend them on?”
And that’s the real side of the equation and why many financial instruments can’t and won’t take off in this economic war zone of a country: Money is making no sense.
There’s such shortage of goods that the government is installing finger scanners in supermarkets to fend off hoarding panicked consumers. These shortages also translate to services as doctors don’t have the necessary supplies to provide proper healthcare; they resort to sending people to get what they need, however they can. Seven out of ten medicines are not available in Venezuela right now.
Hands down, there is no other way of procuring even basic goods. People with degrees in fields such as medicine or law are resorting to smuggling goods to make a living. Not to mention that Venezuelan cash is now worth more as toilet paper than money. Venezuela is host to many bizarre situations and opportunities, such as selling coins as scrap metal, which has a beautiful return on investment of 2400%.
Only the ignorance and delusion of the militarized Venezuelan Government is to blame for this current outbreak of Bolivaritis. There are, however, other things that often go unmentioned that make this beautiful Latin American paradise more prone to economic disease. This includes:
Venezuela suffers from its abundance of oil (Yes, suffers) as you might know, Venezuela has the largest oil reserves in the world.
Why is this bad? To start with, there’s a certain thing called “The Dutch Disease.” In a nutshell, it is when a country’s abundant and well priced export kills other economic activity, mainly because everything becomes much pricier to export. Not to mention that exporting things such as oil do not require as much manpower as other activities; it needs more money than people.
Venezuela must’ve been suffering from one of the worst cases of Dutch Disease in the world, as according to the World Bank, oil represents over 96% of the country’s exports; and generates almost 50% of the government’s income. Venezuela is incredibly oil dependent. The recent developments in shale oil production have increased the world’s accessible oil reserves, thus decreasing the price of Venezuela’s main cash cow.
This country’s violence is not new. There have been riots and looting as early as 1989, in what was known as the Caracazo. A week-long affair related to price controls where hundreds of people died, mostly at the hands of governmental military and police forces. According to Amnesty International, people were buried in common graves back then, and 68 bodies were exhumed by forensic scientists as of 1991.
This is not new, and according to Miguel Angel Pérez, the executive vice president of the Institut d’Etudes Avancées:
“They would like us to believe that insecurity is a product of Chavism. They’re forgetting how terrible it was in the late 80s and early 90s: you couldn’t go out in the street.”
On the same page, the same article by Le Monde Diplomatique quotes:
“With an average of 80 people shot dead each weekend, violence on public transport a daily occurrence, poverty growing exponentially and an economic crisis that has been gnawing away at the country for over 15 years – inflation is at more than 1,000% – Caracas has become one of the most dangerous cities in the world, perhaps the most dangerous.”
If you believe the report is new, the date on it is December 1996. Two years before President Chavez was elected.
Poverty rates of about 50% go back as early as 1998. Don’t get it wrong. This is not the same level of poverty as in a foreign first world nation; being poor in Germany means that you have income 60% below the average. What’s calculated are “relative poverty rates” and those poor can eat every day with access to proper infrastructure and services.
Unfortunately people such as Argentine President Cristina Fernández de Kirchner fail to realize this as she claimed in June of this year that Argentina has lower poverty levels than Germany and Scandinavia. As you can see, Bolivaritis is not only a Venezuelan disease.
The regime has a knack for expropriating things, whether it is farmland in the name of “food security”; oil, right from the hands of Exxon Mobil; steel, from Sidetur; and the list continues. Having any kind of private property is a sin under the regime. The only owner allowed is the government, and don’t get it wrong: The government owns everything.
Imagine the magnitude of this government’s power when 95% of the country’s exports are oil. The oil company is state-owned, the telephone companies are state-owned, the steel-companies are state-owned, and the supermarket chain is state-owned. It is more of a kingdom than a nation.
The kingdom of Venezuela features an army of about 320,150 soldiers with a GDP expenditure of 6.5%, almost twice of the United States based on proportion. The army has been involved in 13 coup d’états throughout the nation’s history, 9 of them in the twentieth century. The military has admitted its excesses during protests, with 97 officers being investigated for “cruelty and torture.”
It is almost nonsense to talk about the impact of financial technologies in Venezuela, people are in the brink of a socioeconomic total collapse. They are already resorting to primitive systems as taking justice by own hands and bartering. What good can financial tools provide to those who live in the kingdom of the ruling party? In other words, what good is an iPhone to a kid in the middle of the jungle?
Of course, bitcoin can prove to be incredibly “stable” and worthwhile compared to the failed Bolívar. However, this is not the US where even some homeless have smartphones. Here the people are in dire need, make queues to get basic items and protest at the risk of being shot.
Where is the infrastructure for a tech-based currency here? Will an entrepreneur give away smartphones or trezors to the population? No, you won’t be seeing Santa Claus at this latitude. Only time will tell just what Venezuela’s fate will be.
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