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| Simon Bolivar's ideological successors have much to answer for. |
There's good commentary from former Peruvian President Alejandro Toledo in the
New York Times on fixing Venezuela for good. But first, let's recount how it got into such a bad situation. Sure, Venezuela can resort to endless
stopgap measures like supposedly borrowing another $5 billion from China just last month. However, China itself may instead be a
cause of Venezuela's current woes since neither the terms of the loans not the uses of this money are known. It's untraceable and therefore hard to attribute developmental outcomes to:
China started to
lend massively to Venezuela in 2007. Since then it has lent more than $45bn, of which about $20bn is still outstanding. After a visit to Beijing on January 8, President Nicolás Maduro said he had won
further “investment”.
What makes China unusual is not just the amount it is willing to lend but the way it lends. First, Beijing has chosen to be opaque: we know neither the terms of the loans nor the uses of the money. The debt is repaid in oil, making Wall Street bondholders junior to China. The Venezuelan public has little information on where the money is being spent.
Gotta love those soft loans if you're Venezuela's leaders, but it breeds complacency that the Chinese will bail them out whenever the coffers are empty. So, they continue with their quite frankly mad governance. This is where Toledo comes in and suggests, how should I put this,
neoliberal reforms:
The recent news from Venezuela has been troubling — and also far from surprising. As the Venezuelan economy continues to struggle and inflation pushes many of the most basic everyday needs out of reach of ordinary working people, President Nicolás Maduro has responded, not with a plan, but with a crackdown. It has included arresting Antonio Ledezma, the mayor of Caracas, and other opposition figures on questionable charges — to say nothing of the jailings of peaceful protesters.
Mr. Maduro’s attempts to deflect criticism by pointing to aggression from the United States and international meddling — even if they were rooted in fact — would do nothing to solve Venezuela’s problems. If he were a serious leader, he would look first at the Venezuelan economy, which, in reality, is at least two economies, separate and far from equal.
Despite its reputation for redistribution, Venezuela has seen rising inequality. Even as ordinary Venezuelans have seen their purchasing power shrink in the face of rapidly rising inflation, the elite has relied on the growing strength of its access to dollars, a dichotomy that throws Venezuela’s ever more unequal economy into sharp relief.
The suggested solutions also sound familiar. Diversify exports, increase their value-added, improve the fiscal situation, etc:
Venezuela’s economic problems extend beyond inequality and poverty. Over the long term, Venezuela must follow the lead of other Latin American nations and reorient its economy away from dependence on the volatile oil export market. It must develop its other resources and capacities across a broad spectrum of more labor-intensive industries like manufacturing or agricultural processing. But that long-term problem is no reason not to attempt to tackle inequality today. The tools for doing so vary in complexity and difficulty, but they offer an array of approaches for a government committed to the issue.
One crucial tool is the combination of tax collection and fiscal policy. Improved tax collection raises revenues without raising rates, and those revenues enable investments in health care, early childhood education, primary and secondary education, job training and agricultural education programs that offer the poor a chance to improve their lives.
What makes Toledo somewhat unique is that he doesn't necessarily say that regime change must first take place for these reforms to be undertaken. Ultimately, they say people get the leaders they deserve. So, I guess it's really up to the Venezuelan people if the self-styled socialists who are actually increasing and not decreasing inequality through their economic mismanagement are finally sent packing.
