Venezuelan President Nicolás Maduro acknowledged his responsibility in the severe economic crisis that is going through Venezuela. Analyst Viktor Jeifets commented on this statement and explained its possible reasons.
Maduro assumed responsibility for the economic crisis in the country during the Congress of the United Socialist Party (PSUV), where he was re-elected president of the party.
“The productive models that we have tested so far have failed and it is our responsibility, it is mine. We need to take forward the economic power we have,” Maduro said on July 30 during a session of the IV PSUV Congress. Its new plan, will take two years to “achieve a high level of stability.”
Viktor Jeifets, from the Faculty of International Relations at St. Petersburg State University, commented on this statement by the president.
“I believe that by making this statement President Maduro acknowledged what everyone already knew: that the economic model created by Hugo Chávez, partially based on those of the governments of his predecessors, does not work,” he explained.
This statement requires careful examination and should not be misconstrued. The governments of Chavez’s predecessors were more market driven when compared to the subsidy system of Chavez, that made use of markets and subsidies together, at a time when oil was priced higher than it is today.
At the same time, Jeifets statement appears not to include the reality of the oil market’s devastating effect on the Venezuelan economy.
In general, there has been an overall suppression of oil prices, a factor that helps economies such as the EU, China, and the US, but hurts oil export economies such as Russia and Venezuela, among others, as well as OPEC countries.
For Jeifets, “Maduro finds himself in a situation where neither China nor Russia lends him the money he wants to get to save the Venezuelan economy. Obviously he needs a lot of money and neither Moscow nor Beijing is ready to do so.”
Moscow and Beijing appear to be carrying out a plan which sees a mutual agreement, wherein the US unwinds its commitments in Eurasia, and in exchange, returns to a policy of continental hegemony in North and South America. FRN’s chief editor, Joaquin Flores, several years ago wrote specifically about this in an academic journal, in a peer reviewed publication known as the ‘Journal of Eurasian Affairs‘ produced by a highly esteemed Russian geopolitical consultant, author, and analyst, Dr. Alexandr Dugin.
In that article’s abstract, Flores explains:
“The United States has the opportunity to respond to its waning global hegemonic status by transforming into a regional hegemon as a land-power across both American continents, and in so doing will recognize spheres of influence of other regional hegemons.
There are numerous prospects that will lead to greater harmony in the relations between spheres, as well as continue along a course of cultural transformation across the Americas.
The debate around the future of the US as a global hegemon is one of utmost importance for every nation-state.
The related debate surrounding viable alternatives to the present form of the US global power, which is the focus of this article, must naturally include those alternatives which are not only realistic but, in the interests of all other actors, also most conducive to peace and de-escalation of the present global crisis in which Total War is a serious possibility.”
To save the Venezuelan economy, Maduro’s government needs about 20 billion dollars a year. Perhaps Maduro wanted to show neighboring countries that he acknowledged his mistakes and that other countries could negotiate with him. But the current Venezuelan financial situation is very serious and could take years to restore the country’s economy.
“Venezuela has a great potential for development… To begin the reconstruction of the Venezuelan economy, society must be ready for dialogue,” said the analyst.
On July 25 Venezuelan President Nicolás Maduro announced that the country will remove five zeros off its currency to contain runaway inflation. In addition, Caracas plans to link the Venezuelan Bolívar to the Cryptocurrency called the Petro, backed by oil.
The International Monetary Fund (IMF) expects inflation in Venezuela to reach 1,000,000% by the end of this year. The international organization compares the Venezuelan situation with that of Germany shortly after the end of the First World War or that of Zimbabwe at the end of 2010.
The roll of sanctions placed on the Venezuelan economy also must not be overlooked, and so Maduro’s taking responsibility is not so much an admission of ‘guilt’ as it is an exercise in duly established and respected authority.