Venezuela circles the drain...

[EX500rider]

"Venezuela is still in the midst of growing unrest and economic suffering on a massive scale. It has gotten so bad that Venezuela refuses to issue an economic forecast for 2016. There was a similar refusal for 2015. This is believed related to the negative reaction the government got when they admitted that GDP had shrunk four percent in 2014. Foreign analysts like the IMF see a ten percent GDP decline in 2015 and about six in 2016. Inflation is officially 80 percent for 2015 (and 70 percent in 2014) but unofficially more like 200 percent this year. Not much change is seen in 2016. The Venezuelan currency (the bolivar) buys less and less. Price controls in Venezuela make food and other items much cheaper to buy than the market prices prevailing in neighboring countries. Smugglers point out that it is often more profitable to smuggle Venezuelan food into Colombia than to move Colombian cocaine into Venezuela.

Many Venezuelans note that they are suffering a lot more than the worst GDP declines would indicate. There is still a lot of wealth in the country and people wonder where it has gone. It is no secret that a lot of it has been stolen. Government officials take bribes, steal when they can and have taken the lead in plundering government reserves of foreign currency. The biggest offenders in exploiting the official (far below the black market) exchange rate between dollars and the local currency are government officials. The shortages created by all this and the increased printing of Venezuelan currency have pushed inflation up to more than 500 percent a year. Thus since May the Venezuelan currency (the bolivar) has collapsed in value against the dollar (the most common foreign currency used in Venezuela). The black market rate for a dollar is now over 800 bolivars, way up from 400 in May. In 2013 it was under 30 bolivars. Before the 1999 socialist revolution inflation was about 20 percent and you could buy a dollar for six bolivars. The average inflation in neighboring countries in 1999 was under 15 percent. The official exchange rate is 6.3 bolivars per dollar but that is only available to government officials and well-connected businessmen. The Venezuelan government seems paralyzed.

The December 6th elections are going to be interesting because the current government has the support of less than 20 percent of the voters and is believed planning to rig the vote to deal with that. President Maduro recently announced that he would abide by the results of the election but at the same time he has prohibited foreign voting observers. Actually the government invited foreign voting observers but banned anyone they thought “unsuitable”. The government is cracking down on opposition political parties and leaders but that may not be enough to avoid a vote that would either remove the current government or trigger a coup and imposition of a leftist dictatorship. The government appears aware of the risks but it is unclear how far they would go to hold onto power.

The low oil prices are threatening the special relationship Venezuela has with Cuba. As part of that deal Venezuela sells Cuba at least 100,000 barrels oil a day at low prices. In return Cuba provides “security advisors” and some 40,000 other professionals (most of them doctors and nurses) to replace the many Venezuelan professionals who have fled the country because of the worsening economic and political conditions. This was a very profitable deal for Cuba until the oil price collapsed. Not only did Cuba get much needed foreign currency by selling some of that oil at world prices, but the Cuban professionals in Venezuela were paid according to the price of oil. The low oil prices mean little foreign currency for Cuba and very low pay for Cubans sent to work in Venezuela. Some of these Cubans have already fled (and not back to Cuba) and more are expected to follow if their compensation problems are not taken care of. The problem is that neither Venezuela nor Cuba have the cash to do that. If Venezuela losses a lot of these professionals what is left of the medical care system will collapse and the economy will suffer even more because of the lack of technical experts."

http://strategypage.com/qnd/colombi/articles/20151029.aspx

[COLGATE4]

1. Cuban 'volunteer' doctors in Venezuela are defecting

to Colombia and other countries in droves. Not only is the compensation they receive an issue. The Cuban government also insists that they not 'fraternize' with Venezuelans and must keep to themselves. If they're caught 'violating' this order their entire compensation (which is being held in escrow in Cuba until they return) is forfeited, as in the case of one young Cuban doctor who fell in love with a Venezuelan and got pregnant. Bye bye two years of pay. She's now in Colombia, trying to get to the US (as are many others). You are right - the entire healthcare system is on the verge of collapse,

[Marksman_91]

2. I assume you meant to say "one young Cuban doctor"

But yeah, the country's growing economic decline plus rampant crime and lack of infrastructure is starting to make Cuba look like a paradise by comparison. Hell, in certain aspects one is better off in Cuba as it is. At least in Havanna you can walk around the streets during nighttime without fear that some common street thug will shoot you just for your cellphone.

[COLGATE4]

3. Yeah - my fingers got ahead of my brain (not

an uncommon occurrence these days!). I meant young Cuban doctor. Thanks. And you're right on - Cuba looks positively giddy by comparison to Venezuela these days.

[Judi Lynn]

4. DU is the last place one would normally find articles from US pro-war sites. n/t

[EX500rider]

5. StrategyPage covers military affairs...that doesn't make them "pro-war"

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