Venezuela’s shortages and the Maduro administration

From the controversy and protests that attended the outcome of the April 19 general elections that won him the country’s presidency, to the current consumer goods shortages that have brought his administration the kind of domestic and international criticism that it could have done without so early in its tenure, Nicolas Maduro’s six-month old political administration has been experiencing a bumpy ride. True, there was always the likelihood that he would have had to work hard to remove himself from the shadow of his predecessor, though the challenge now appears to be much weightier than he might have imagined. There is, too, a sense in which he may have been unlucky.

Maduro may have other concerns but Venezuela’s current serious scarcity of consumer goods is his most immediate one. The fact that he inherited this particular problem from Chavez makes little difference to a political opposition that probably believes that Maduro is not as formidable a political foe as was Chavez. The criticism and the protests are unlikely to go away.

Sections of the western press have also seized upon the shortages as good reason to sustain their criticism of a political administration which they still regard as being driven by the policies of Hugo Chavez. The New York Times has described the shortages as “chronic” while CNN  has reported that “basic goods and foodstuffs…have been disappearing from store shelves since earlier this year.” USA Today chimed in to the effect that “cooking oil, milk, chicken and other staples are often in short supply at supermarkets”. Most of the media reports emanating from the United States have seized upon the scarcity of toilet paper to lampoon Maduro’s socialist administration.

The external comments on Venezuela’s current travails reflect the continuity of a less than endearing western posture towards a political administration that has embraced Washington’s arch-enemy, Cuba whilst demonizing the Obama administration. It is one of the west’s customary ways of ‘running down’ its ideological enemies. Maduro himself is said to have described the current condition as ‘a CIA plot’ though that appears to be something of an exaggeration.

Under Chavez, Venezuela had faced an earlier wave of shortages of basic goods including in  2008 when consumers had cited hoarding by business proprietors designed to pressure the administration to remove the price controls which it has imposed, as the reason. This time around the shortages have persisted for well nigh a year and some items have disappeared from the shelves altogether.

Critics of the government in Venezuela are alluding to the paradox of an oil-rich country with serious food shortages. While it is Maduro who must ‘carry the can’ for the current shortages, it will be recalled that his predecessor had also come under criticism for an over-reliance on imports sustained by petro-dollars and driven by Chavez’s populist subsidies for the country’s poor.   The price has been high. These days, by the government’s own admission, Venezuela imports 50 per cent of its food, a less than salutary comment on what was once Chavez’s highly touted agrarian reform programme.

Mindful, it seems, of the mounting potential for political unrest arising out of the shortage of consumer goods, the Maduro administration appears to have decided to bite the bullet. In what is, in effect, a concession that the country has earned low marks for food security, the government has announced that it will pump significant amounts of the country’s petro-dollars into food imports to counter the shortages.  Vice President for the Economy and Oil and Mining Minister Rafael Ramirez says that the country is gearing to import large volumes of food for its population of around 29 million. Maduro himself announced on Monday that Caracas and Brasilia had reached an agreement over the importation of several food items including soya beans and meat. In September, the country acquired US$600 million in various products from neighbouring Colombia.

Removing the scourge of shortages from a nation that is quick to take their social concerns to the streets is critical to the stability of the Maduro administration which still relies on a combination of the popular support of the country’s poor and the continued support of the military, a holdover from  the Chavez era that may well not be extended to Maduro indefinitely.

The immediate-term economic prognosis for Venezuela varies, depending on who you ask. According to the International Monetary Fund, inflation is running at 27.3 %. During Chavez’s final year in office the country’s economy grew by 5.5 per cent – second only to Peru’s in South America. Barclays estimates that during the first year under Maduro GDP will contract by 1.4 %.

The Maduro administration will presumably be relying on the far more upbeat prognosis tendered a week ago by the country’s Finance Minister Nelson Merentes in his 2014 budget presentation which sees inflation slowing to about half the current rate. Merentes told the National Assembly of the proposed US$87 billion budget, GDP growth of 4 percent and an inflation rate of between 26 percent and 28 percent as against the current 12-month rate of nearly 50 percent. This is a decidedly better prognosis for Maduro, whose long-term political prospects may well rest with how his government handles the consumer goods scarcity in the short term.

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