Opinion – Latinoamérica21: Venezuela and the irresponsible narrative of recovery

In recent months, the narrative of an alleged recovery in the situation in Venezuela has gained momentum.

Nicolás Maduro and his collaborators, including national and international allies, as well as the media, have started to spread the idea that conditions in the country are improving and that Venezuelans are starting to return.

This despite warnings from various international bodies and civil society organizations that the causes that led to the complex humanitarian emergency still remain.

Despite this, the promotion of this narrative has continued and, in some cases, is confused with other attempts to normalize the current political regime.

However, it is important to contrast these views with reality.

The dimensions of economic collapse and its social consequences

According to the International Monetary Fund (IMF), from 2013 to 2021 the Venezuelan Gross Domestic Product (GDP) fell by more than 80%.

According to the same organization, Venezuela closed 2021 with an average GDP per capita of US$ 1,685, the lowest value among countries on the American continent.

This reality was the consequence of almost two decades of erratic policies such as price controls on products and services, excessive public spending, nationalization of a hundred companies and exchange controls on foreign currency.

In addition, the scandalous cases of corruption, the collapse of the oil industry due to the bad management of the state-owned PDVSA and, as of 2019, the imposition of sectoral sanctions, must be considered.

During the same period, the national economy experienced one of the longest hyperinflation cycles in history, destroying the value of the bolivar and family savings.

Further complicating the situation, a general collapse of public services occurred in those years.

As a result, according to the Encovi survey, from 2013 to 2021 the income poverty rate rapidly increased to over 90%. In 2019, the dramatic situation led the UN human rights chief to describe the situation as a complex humanitarian emergency.

The humanitarian crisis has caused irreparable damage to society as a whole, as shown by the documented cases reported in recent years.

In 2020, the World Food Program ranked Venezuela as the fourth country in the world with the highest proportion of the population in a situation of acute food insecurity (9.3 million Venezuelans, equivalent to 32% of the population).

In addition, more than 6 million people left the country, causing the largest migration crisis ever seen in the Americas.

The government’s response was to deny the crisis, prolong the political decisions that caused the economic collapse, blame others, and turn its back on a population desperate to survive.

Starting in 2018, in an implicit acknowledgment of the failure of economic policies, Maduro lifted price controls and tariffs on the import of food and other products, allowed goods and services to be transacted in foreign currency, began to collect inorganic money from the streets to control hyperinflation and began to offer expropriated and bankrupt companies to their former owners, the “boligurguesia” or international allies.

Bottom-up stabilization?

In the last quarter of 2021, according to the regime’s own data and estimates from various analysts, the Venezuelan economy again showed signs of growth. Since the end of last year, inflation has also shown signs of slowing down.

In this new context of disorderly economic liberalization and in which legal certainty is conditioned to the will of the political regime, some economic sectors began to show signs of partial recovery, especially those associated with the commercial sector and services oriented towards final consumption.

Different analysts agree that the economy should grow at rates of 5 to 20% compared to the size of the current national GDP. However, they also point out that the sectors that show signs of recovery are of little productive depth and low added value.

The partial samples of prosperity in the new crony capitalism are also limited to a small proportion of the population with access to foreign currency, deepening the exclusion of the majority of citizens.

According to estimates by the consulting firm Anova, in 2020 and 2021, while the average income of the economy has increased by 65%, the income of the poorest 30% of the population has fallen or stagnated.

Meanwhile, the country has serious structural problems that impede its recovery and perpetuate the path of widespread impoverishment that began in 2013.

The unemployment rate remains at over 40%, equivalent to almost 9 million people of working age who are out of the job market.

In July, according to calculations by Cendas-FVM, the minimum wage was US$ 23.04 per month, while the cost of the basic food basket is estimated at US$ 460.

In 2022, Venezuela was excluded from the report on acute food insecurity, presented by the World Food Program and FAO, due to difficulties in accessing data by these organizations.

However, according to recent estimates by respected protection and humanitarian aid expert Susana Rafalli, 10 to 11 million Venezuelans have urgent humanitarian needs.

In this context, the migratory flow continues. According to the latest update of the R4V platform, the number of Venezuelans abroad is 6.8 million people, and various analyzes confirm that more Venezuelans are leaving than returning.

As the evolution of socio-economic indicators shows, the current situation in Venezuela is far from a recovery. It is difficult to speak of stabilization, considering the dimensions of the collapse suffered.

What is certain is that the vast majority of the population still lives in poverty, and a third of them are hungry.

Therefore, it must be said that the recovery narrative is irresponsible and does nothing to encourage the international community to continue supporting efforts to address the humanitarian emergency inside and outside Venezuela.