Myth vs Reality: What is happening in Venezuela?

Yet another piece of reporting in the mainstream media – this time The Guardian –has failed to acknowledge the wider political and economic context of Venezuela’s current condition – while at the same time presenting a distorted, negative picture.


What follows will look at:

  • the lack of any serious analysis of the impact of US policies on Venezuela – particularly US sanctions

  • the article’s concurrence with the ‘once rich, now an impoverished country’ narrative

  • the state in crisis’ accusation

  • has chavismo lost popular support?

  • is there a ‘migration crisis’?

In his recent Guardian article (‘A slow-motion catastrophe’: on the road in Venezuela, 20 years after Chávez’s rise’, 6 December 2018), reporter Tom Phillips has graphically illustrated the conclusions of Glasgow University academic Alan MacLeod about media misrepresentation of Venezuela:

“I found almost all mainstream media reporting on Venezuela post-Chavez’s election, seemingly irrespective of the apparent ideological inclination of the newspaper, offers a massively limited viewpoint, heavily focused on the negative end of the spectrum”. (Bad News from Venezuela)


The viewpoint offered in the article suffers from adopting a ‘travelogue approach’ of touring the country speaking to a few individuals instead of examining in detail the political and economic reasons for Venezuela’s current challenges.


Thus there is only a passing reference to Venezuela’s biggest challenge – the hostility of the United States. Venezuela’s Foreign Minister is quoted as claiming – a significant choice of word implying that it lacks a basis in fact – that Venezuela’s plight is due to the actions of the “extremist, supremacist, racist” government of Donald Trump…. It’s not just an economic war, it’s an all-round war – a political war, a media war and a trade war”.


But no effort is made by Tom Phillips to explore exactly what the US government is currently doing to realise its stated policy objective of ‘regime change’ in a sovereign state. This is despite there being a wealth of evidence by academics and non-mainstream journalists of the deep, harmful effects that economic sanctions are having on Venezuela’s economy.


As a largely oil-based economy, Part of Venezuela’s economic difficulties clearly stem from falling oil prices. These were deliberately pushed down by President Obama’s fracking drive, part and parcel of an explicit geopolitical strategy aimed at harming the economies of Russia, Iran and Venezuela, all dependent on oil exports.


While harmful to Russia and Iran, the consequences were devastating to Venezuela: a barrel of oil went from US$148 in 2008 to US$29 in February 2016. Venezuela obtains 96% of its revenues from oil exports. By 2016, in less than two years, its total export revenues plummeted from US$79bn to US$36bn. Although market forces have raised the price oil more recently, this has not been sufficient to recoup lost revenue.


Venezuela has also suffered from the effects of ‘economic warfare’ that is reminiscent of what was done to Salvador Allende’s Chile back in the 1970s.


In essence this has involved a tight squeeze on its economy through choking off credits and the co-operation of private firms and international financial institutions, exacerbated by private sector hoarding of basic necessities and food, black market racketeering, organised contraband activity and inflationary price speculation.


Taken together, the loss or revenues and the economic warfare have wreaked devastation on Venezuela’s economy and caused huge harm to its citizens.


The article further omits to record the impact of US financial sanctions on Venezuela. These were first approved by President Obama in 2015 in the wake of the failure of economic warfare to bring down the elected government. Subsequently stepped up enormously by President Trump, they are comprehensive and aim at financially asphyxiating Venezuela’s economy. They include:


  • the prohibition to make dividend payments or other profits to Venezuela’s government or government agency (US Executive Order 13808 of August 24, 2017);

  • all transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela (US Executive Order 13827 of March 19, 2018);

  • the absolute prohibition for individuals, companies or entities to purchase Venezuelan bonds of any kind, any debt owed by the Venezuelan government, the sale, transfer, assignment, or pledging as collateral by the government or government agency (including the Central Bank and the state oil company, PDVSA) of Venezuela of any equity interest (US Executive Order 13835 of May 21, 2018); and

  • sweeping new sanctions on Venezuela’s gold exports. 


The prohibitions apply to US persons, entities or companies and those resident or operating within US territory or any jurisdiction within the US (i.e., foreign individuals, entities or companies).


Two simple examples illustrate the extraordinary impact that sanctions are having on the economy and the Venezuela people. In the twelve months since August 2017, sanctions have cost Venezuela $6bn, or 6% of its GDP. Part of that sum, at least US$1.2bn, which the Venezuelan government wishes to use to purchase food and medicines, is being withheld by the Euroclear financial services company under the sanctions regime. The disruption to supplies of food and medicine is particularly iniquitous.


Yet despite all this evidence of the debilitating and harmful effects US sanctions and other policies have been inflicting on the economy of Venezuela and its citizens, Marshall’s article presents sanctions as excuses for a “self-inflicted” crisis that was started by Hugo Chávez.


The ‘once rich, now an impoverished country’ narrative


Blaming Chávez confirms that the problem of decontextualisation in the article goes deeper than simply not investigating and reporting on how US sanctions have been undermining the elected Venezuelan government’s ability to provide for its citizens.


The thrust of the piece is situated in the dominant narrative about Venezuela that says it was “once one of Latin America’s most prosperous societies” but has been impoverished by the Bolivarian Revolution.


What this ignores is that its wealth was distributed on a grossly unequal basis. While Venezuela is an oil-rich country, during Latin America’s ‘lost decades’ of the 1980s and 1990s it was hit by a wave of economic and social catastrophes.


Up to seven in ten people were left in poverty. Income per head collapsed to the levels of the 1950s. Millions were left to live in barrios dangerously clinging to the mountain sides, often without clean water or sanitation. Many had no proper access to healthcare and education.


This was the state of the nation when Chávez won his first Presidential election in 1998 – hardly a picture of equally shared prosperity.


Under Chávez’s leadership, GDP soared from US$100bn in 1998 to nearly US$500bn in 2013, despite well-documented efforts by the right-wing opposition, supported by the United States, to sabotage his drive to improve the lives of ordinary Venezuelans. So contrary to the article’s assertion, Chávez’s policies in fact reversed 25 years of economic catastrophe throughout his years in office from 1998-2013.


Again, this was ignored in the depiction by the media and many mainstream politicians of his domestic policies as catastrophic and his government as a threat to civilization, as Alan McLeod’s book, Bad News from Venezuela shows.


Even when the Venezuela government was halving the poverty rate between 2003 and 2007 and reducing extreme poverty by 70%, as documented by the Center for Economic and Policy Research, “publications such as Foreign Affairs, Foreign Policy, the Washington Post, the New York Times, the Financial Times, the Miami Herald, and many others all published articles falsely asserting that poverty had increased under the Chávez government”.


The state in crisis’ accusation


While Venezuela faces immense challenges caused by the impact of US sanctions and other policies, contrary to Marshal’s perceptions, it is not falling apart. All state institutions are working, and this includes a functioning government, all ministries, and all other state institutions such as the judiciary, the police, all the country’s mayoralties, and all branches of the armed forces.


The proportion of the state budget going to social expenditure increased from 61% in 2015 to 75% in 2018. Health and education remain free of charge. Education, for example, receives 22% of the budget. About 12 million people are enrolled at different levels of education. No school, university or education institution has been closed down, nor have there been mass redundancies in public services as a whole.


There is also a raft of social policies aimed at protecting people’s standard of living such as the CLAP boxes with food distributed monthly to the poorest at heavily subsidised prices which reach about 6 million families; the Carnet de la Patria, a sort of credit card for social benefits, which currently is received by over 16 million Venezuelans; and regular increases in pensions and wages. On 20 September 2018 the United Nations Food and Agriculture Organisation (FAO) published a report listing 39 countries in need of external food assistance: Venezuela was not among them.


Has chavismo lost popular support?


Are “one-ardent believers…losing their faith”, as Marshall asserts? Not according to the latest election results. In the municipal and parish elections for 2,459 councillors held in early December, the turnout was 27%, up from 22% for the last similar elections held in 2005. Although some opposition parties chose not to stand, twelve opposition parties fielded candidates across the country, but President Maduro’s Socialist Party (PSUV) won over 92% of the positions available.


Earlier in the year, the much higher turnout of 46% for May’s Presidential election, contested by five candidates, saw Nicolas Maduro retain the presidency with 68% of the vote (6,190,612 votes), against his nearest rival opposition candidate, Henri Falcon, with 21% (1,917,036 votes). Both sets of elections were audited to high standards.


Is there a ‘migration crisis’?


Finally, is there a ”migration crisis” as the article seeks to demonstrate? It is true that tens of thousands of Venezuelans, especially sections of middle-class youth, have left Venezuela, but the figures that are banded about of 1.6 to 2.3 million Venezuelans who have left Venezuela are only estimates and are clearly inexact, with different agencies coming up with different figures.


The estimate of 3 million migrants used in the article and in currency elsewhere in the mainstream media seems to have been arrived at by taking the latest UN figure and adding in an estimated 3,000 a day migration flow into Colombia.


But to illustrate the weakness in this approach, which can lead to gross exaggeration, many Venezuelan migrants plan on returning home. Joint research conducted by the Colombia’s Ministry of Foreign Relations and the International Organization for Migration found that only 5% planned on staying in the country permanently, while 23% reported that they would only remain in Colombia for a few months to save money.


What we can say is migration flows from Venezuela are clearly linked to the enormous pressures placed on the country and its people by the United States in its determination to topple the government. This Guardian article does more to conceal than to reveal this inescapable conclusion.