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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.
