In the Intensive Care Ward: Hugo Chavez, Venezuela’s Economy
Ray Walser /
Venezuelan Vice President Nicolas Maduro, Hugo Chavez’s likely successor. (Photo: EFE/David Fernandez/Newscom)
The failure of Venezuela’s Hugo Chavez to appear for what was to be his swearing-in for a fourth presidential term in Caracas on January 10 triggered greater doubts about his ability to ever assume his presidential duties.
The true prognosis for Chavez is a secret known only to the doctors treating him in Havana, Cuba; to his inner circle of senior officials; and, certainly to Cuba’s dictator Raul Castro. The entire treatment of Chavez’s illness, noted by The Economist, resembles those associated with an “absolute monarch” rather than an elected and accountable chief executive.
While attention focuses on Chavez’s battle for survival and politics, Venezuela’s economy likewise appears to be on life support.
Predicted Moisés Naím of the Carnegie Endowment for International Peace, “President Chávez has bequeathed the nation an economic crisis of historic proportions.”
Argued Alvaro Vargas Llosa of the Independent Institute, “The economy is dismal: Inflation is running at 25 per cent and an imminent devaluation will fuel it further. There was no economic growth in 2011 and, last year, it was artificially generated thanks to a colossal fiscal deficit (amounting to more than 16 per cent of GDP). Government debt is 10 times larger than when Mr. Chavez came to power.”
Added conservative analyst David Frum, “Despite vast oil wealth, the Venezuelan economy has tumbled into terrible straits. Inflation roars at 25%, unemployment exceeds 8%, the non-oil economy stagnates, electricity flickers on and off irregularly, and basic commodities such as rice and beans have become scarce in the marketplaces and must be obtained as rations from government-controlled stores.”
Hudson Institute’s Jaime Daremblum classified Venezuela as “one of the most economically dysfunctional nations in the Western Hemisphere.”
The 2013 Index of Economic Freedom reveals that “Venezuela’s economic freedom score is 36.1, making its economy the 174th freest in the 2013 Index. Its score has decreased by 2.0 points since last year, reflecting deteriorations in business freedom, labor freedom, and freedom from corruption and an explosive increase in government spending in the run-up to 2012 elections. Venezuela is ranked 28th out of 29 countries in the South and Central America/Caribbean region, and its overall score has recorded one of the 10 largest declines in the 2013 Index.” This puts it virtually at the bottom of the Index’s rankings.
Even if Chavez makes it back to Caracas to be sworn in as president, his prescription for the ailing economy will be a fatal dose of more government interventions, more raiding the national oil industry, and more debt.