Venezuela's inflation on track to top 1 million percent, IMF says

CARACAS, Venezuela -- Economists say inflation in Venezuela could top an astounding 1 million percent by year's end as the country's historic crisis deepens. The International Monetary Fund predicted the decline Monday.

The once wealthy oil-producing nation of Venezuela is in the grips of a five-year crisis that leaves many of its people struggling to find food and medicine, while driving masses across the border for relief into neighboring Colombia and Brazil.

Shortages in electricity, domestic water and public transportation plague millions of Venezuelans, who also confront high crime, the IMF noted.

Socialist President Nicolas Maduro often blames Venezuela's poor economy on an economic war that he says is being waged by the U.S. and Europe.

IMF economist Alejandro Werner says that if the prediction holds, Venezuela's economy will contract by 50 percent over five years.

Werner says it would be among the world's deepest economic falls in six decades.

"The collapse in economic activity, hyperinflation, and increasing deterioration ... will lead to intensifying spillover effects on neighboring countries," Werner wrote in a blog post.

Venezuela Decides to Hold Presidential Elections, the Opposition Chooses to Boycott Democracy

- The Venezuelan opposition is seriously divided and cannot agree on an electoral tactic much less a platform other then getting rid of Maduro.

Venezuelan President Nicolas Maduro gave a media conference on Feb. 15 that brought us to date on the Venezuelan government’s position to several important events that have occurred recently.

The openness of the media conference could be inferred by the fact that Maduro gave a very short introduction and immediately allowed questions from reporters. The first two reporters to ask questions were one from the Washington Post and another from Reuters. At the time of writing I have not seen reports from those outlets. But the content of what Maduro had to say was more important.

Some observers have reacted to Maduro’s announcement that he will attend the Summit of the Americas in Lima in April “come rain, thunder or lightning!" despite the unwelcome message by Peru. That is sensational news that has gained him the label of “party crasher.” However, Maduro’s confirmation of holding early elections is more deserving of attention for its relevance to all Venezuelans, for the immediate future of the country and possibly the region, and for all those who believe in democracy.

The stalled dialogue by the Venezuelan opposition in the Dominican Republic did not stop Maduro from unilaterally signing the agreement with the terms agreed on. This allowed the National Electoral Council, CNE, to announce the date established in the agreement for April 22 of this year.

Maduro has announced his candidacy for a second term 2019-2025. He stressed that he offered to achieve peace with the National Constituent Assembly and peace was achieved. “Now,” he said, “I offer to get out of the economic war and achieve [economic] recovery after the elections.”

But the Venezuelan opposition is seriously divided and cannot agree on an electoral tactic much less a platform other then getting rid of Maduro. Seemingly, they are caught between two not edifying alternatives. One is participating in the elections with the fear of being defeated by what appears to be a large support for the governing party, and then having to claim electoral fraud repeating the pattern of past elections. The other alternative is not participating and pre-empt the whole process with claims that the elections will be fraudulent. This can only be construed as a boycott.

Trump Warns of Potential U.S. 'Military Option' in Venezuela

via bloomberg.com - President Donald Trump said he’s considering a military option in response to the political and economic crisis in Venezuela, raising the specter of a U.S. intervention in Latin America that could spread turmoil in the region.

Trump’s statement on Friday suggested the U.S. may get more deeply involved in Venezuela, which has been subject to increasing sanctions since President Nicolas Maduro convened a national assembly designed to rewrite the country’s constitution and consolidate his power.

“Venezuela is not very far away, and the people are suffering, and they’re dying,” Trump said during a brief news conference Friday at his golf club in Bedminster, New Jersey. “We have many options for Venezuela, including a possible military option, if necessary.”

The president declined to say whether the U.S. would seek to overthrow Maduro. He gave no specifics on what the U.S. would do militarily or whether it would act unilaterally. Vice President Mike Pence is heading to South America this weekend, with stops including Colombia, Argentina and Chile over several days.

Trump’s comment on considering a military option in Venezuela prompted a negative response from a fellow Republican, Senator Ben Sasse of Nebraska, a member of the Armed Services Committee.

“No, Congress obviously isn’t authorizing war in Venezuela,” Sasse, a regular critic of the president, said in a statement. “Nicolas Maduro is a horrible human being, but Congress doesn’t vote to spill Nebraskans’ blood based on who the Executive lashes out at today.” (ontinueReading

Is Venezuela Becoming a Cuba-Style Dictatorship?

Bloomberg - True to his threat, Venezuela’s president, Nicolas Maduro, will proceed with an election on July 30 that will start the process for convening a constituent assembly to consider changing the country’s constitution. His adversaries oppose the move as an illegal power grab, predicting that Maduro will stack the assembly with his supporters and move the country closer to a dictatorship. International opposition is building. U.S. President Donald Trump warned of “strong and swift economic actions” if Maduro proceeds with his plans. The head of the Organization of American States has called for fresh presidential elections and Spain’s former prime minister has tried to broker a compromise.

1. How is this expected to work?

Unless Maduro withdraws the proposal at the last minute -- either because of pressure from within his own party and the military or an agreement with the opposition -- voters will be asked to select 545 delegates who will make up the constituent assembly and re-write the constitution. But what’s not on the ballot is just as important as what is. Voters are not being asked if they even want the assembly, which polls say only about 20 percent of Venezuelans support. With the opposition boycotting the process altogether, all the names on the ballot presumably are Maduro supporters, and only about 25 of them are known politicians. If the vote goes forward, the government can’t lose.
2. What does Maduro most want to change in the constitution?

Since announcing his plan to convoke “la constituyente” in May, Maduro has been vague about what he wants to achieve or why the country needs it, other than to say the body will be a “grand dialogue,” an “encounter,” and an opportunity for Venezuelans to “live in peace and end the violence.” He’s also said the opposition will be defeated once and for all. Just three days ahead of the vote, Maduro called on the opposition to open a new dialogue, but his adversaries aren’t likely to go along: Past offers to engage in talks have resulted in the government refusing to make any concessions. Finance and oil officials, meanwhile, have hinted that they want to use the process to increase the already heavy role of the state in the country’s economy. The only thing certain is that, once convened, Venezuela will wake up to a different country, and no one really knows what comes next.

3. Does this mean Venezuela could soon be a dictatorship?

The constituyente would certainly represent an escalation of recent steps in that direction. Once convened, it will preside over all other branches of government, and it alone will be able to determine how long it should remain in power. Analysts expect Maduro to quickly use the body to force out Luisa Ortega Diaz, the public prosecutor who has emerged as his fiercest critic from within the ruling socialist party. Critics also worry that the new assembly could delay scheduled regional and presidential elections that most polls show the government couldn’t win. (ontinueReading

PropagandaWatch: Venezuela crisis: A starving country is fed up with Maduro and the miserable failure of socialism

Venezuela to withdraw from OAS, denounces campaign by Washington

CARACAS (Reuters) - Venezuela said on Wednesday it was withdrawing from the Organization of American States, deepening the diplomatic isolation of the socialist-run nation that is already out of step with Latin America's steady shift to the right.

Critics of President Nicolas Maduro have said Venezuela could be expelled from the group, accusing his government of eroding the country's democracy by delaying elections and refusing to respect the opposition-led Congress.

Venezuela said the move was a response to a Washington-backed campaign against the ruling Socialist Party that is meant to trample on the sovereignty of Venezuela, the United States' principal ideological adversary in the region.

"Tomorrow, as ordered by President Nicolas Maduro, we will present a letter of resignation from the Organization of American States, and we will begin a procedure that will take 24 months," Foreign Minister Delcy Rodriguez said in a televised statement.

The announcement came after the OAS agreed on Wednesday to hold a meeting of foreign ministers to discuss the situation in Venezuela. Maduro had warned on Tuesday that Venezuela would quit the group if the meeting were called.

The decision extends Venezuela's drift toward the fringes of international diplomacy. But the limited influence of the OAS means its exit will have few economic implications for the OPEC nation that is already struggling under triple-digit inflation, chronic product shortages and a crippling recession.

More than 15 years of diplomatic tensions between Caracas and Washington have done little to disrupt the flow of oil and fuel toward U.S. shores.

The OAS, once dominated by influential leftist governments from countries such as Argentina and Brazil, has clashed for months with Venezuela. Recent changes in governments in both countries brought in leaders openly hostile toward Maduro.

OAS chief Luis Almagro has said Venezuela should be suspended if it does not hold general elections "as quickly as possible."

Maduro's government calls the OAS a pawn of U.S. policy and dismisses Almagro, a former Uruguayan foreign minister once friendly with Venezuela's socialists, as a turncoat working for Washington.

Maduro's adversaries accuse him of delaying elections to avoid suffering ballot-box defeats, disregarding the country's opposition-led Congress and overseeing an economic crisis that has left the many in the country unable to eat properly. (ontinueReading

Venezuela military trafficking food as country goes hungry

PUERTO CABELLO, Venezuela – When hunger drew tens of thousands of Venezuelans to the streets in protest last summer, President Nicolas Maduro turned to the military to manage the country's diminished food supply, putting generals in charge of everything from butter to rice.

But instead of fighting hunger, the military is making money from it, an Associated Press investigation shows. That's what grocer Jose Campos found when he ran out of pantry staples this year. In the middle of the night, he would travel to an illegal market run by the military to buy pallets of corn flour — at 100 times the government-set price.

"The military would be watching over whole bags of money," Campos said. "They always had what I needed."

With much of the country on the verge of starvation and billions of dollars at stake, food trafficking has become one of the biggest businesses in Venezuela, the AP found. And from generals to foot soldiers, the military is at the heart of the graft, according to documents and interviews with more than 60 officials, business owners and workers, including five former generals.

As a result, food is not reaching those who most need it.

The U.S. government has taken notice. Prosecutors have opened investigations against senior Venezuelan officials, including members of the military, for laundering riches from food contracts through the U.S. financial system, according to four people with direct knowledge of the probes. No charges have been brought.

"Lately, food is a better business than drugs," said retired Gen. Cliver Alcala, who helped oversee Venezuela's border security. "The military is in charge of food management now, and they're not going to just take that on without getting their cut." (Continue reading)

Venezuela seizes Christmas toys to distribute to the poor

(BBC) Venezuelan authorities have arrested two toy company executives and seized almost four million toys, which they say they will distribute to the poor.

Officials accused the company of hoarding toys and hiking prices in the run-up to Christmas.

Last week, the government issued an order to retailers to reduce prices on a range of goods by 30%.

Business owners say the order is a populist political move, and pushing them towards bankruptcy.

Venezuela's consumer protection agency, Sundde, said toy distributor Kreisel had stockpiled the goods and was reselling them at a margin of up to 50,000%.

"Our children are sacred, we will not let you rob them of Christmas," it said in a tweet, along with photos and video of thousands of boxes of toys. FullText

Venezuela confirms bigger bills amid world's highest inflation

Reuters - Venezuela will introduce six new notes and three new coins starting in mid-December to help alleviate practical problems in doing business with the world's most inflationary currency, according to the central bank.

Currently, the OPEC nation's largest note is worth just 2 U.S. cents on the black market, meaning cash transactions are extremely cumbersome.

The bolivar currency has suffered its most dramatic monthly fall in history, down 60 percent since early November against the dollar on the black market, as the country struggles with a major economic crisis that is leaving millions hungry and the medical sector in crisis.

The largest new bill, according to a central bank communique, will be worth 20,000 bolivars, just under $5 on the streets. It will be accompanied by notes of 10,000, 5,000, 2,000, 1,000 and 500 bolivars and three coins of smaller value.

"(This) will make the payments system more efficient, facilitate commercial transactions and minimize the costs of production, replacement and transfer ... which will translate into benefits for banking, trade and the general population," the central bank said.

Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, even getting cash at ATMs in recent months has proven difficult.

On Friday, the country's point-of-sale machines suffered chronic malfunctions. Unable to process transactions, businesses asked customers to use cash, transfers or pay later.

President Nicolas Maduro blamed the problems on a cyber attack, but he did not provide any evidence. He attributes the country's economic crisis to an "economic war" led by the opposition with a helping hand from Washington.

Strict currency controls introduced in 2003, which pegged the bolivar to the dollar, coupled with heavy reliance on oil are seen as the root of the crisis by most economists.

Venezuela's central bank has failed to publish any inflation data for 2016. The International Monetary Fund estimates that price rises next year will surpass 2,000 percent.

The money supply, the sum of cash and checking deposits as well as savings and other "near money" deposits, was up a staggering 12 percent in the two weeks to Nov. 25 and the curve is literally exponential since Maduro's predecessor Hugo Chavez came to power in 1999.

The Recall Movement Against Venezuela's President

The US already has his replacement..

(TheAtlantic) - Venezuela opposition lawmakers collected 1 percent of voter signatures in all 24 of the country’s states, completing the first step in the process to recall President Nicolás Maduro.

The country’s National Electoral Council approved the effort on Monday, which means opposition leaders can move on to the next step: gathering 20 percent of the country’s vote in favor of a referendum to recall Maduro.

As the BBC notes, timing is crucial:

... because if Maduro were to lose a referendum this year, as polls indicate he would due to an economic crisis, that would trigger a new presidential vote, giving the opposition a chance to end 17 years of socialism.

But should he lose a referendum next year, Maduro, 53, would be replaced by his vice president, maintaining the Socialist Party in power until the OPEC nation's next presidential election scheduled for the end of 2018.

The late Hugo Chávez picked Maduro as his successor in 2013. Not longer after, world oil prices crashed, and Venezuela’s oil prices dropped 50 percent. Oil makes up about 95 percent of the country’s export revenue, and 25 percent of all gross domestic product. That combined with drought has led to massive food shortages, and hospitals have run out of drugs to treat patients. As a result, citizens have held massive protests across the country. Grocery stores have been looted, and some people have snuck across the border into Colombia to buy food. Much of the blame for this has fallen on Maduro and his socialist party.

The date for another vote, which will require 20 percent of Venezuelans to favor the recall before a national referendum can take place, has not yet been announced.

US-Led Economic War, Not Socialism, Is Tearing Venezuela Apart

The following post is for informational purposes only & is in no way meant to express, or support the political views of the LSRBlog & its subsidiaries.

globalresearch.ca/ - Images and portrayals of Venezuelans rioting in the streets over high food costs, empty grocery stores, medicine shortages, and overflowing garbage bins are the headlines, and the reporting points to socialism as the cause.

The Chicago Tribune published a Commentary piece titled: “A socialist revolution can ruin almost any country.” A headline on Reason’s Hit and Run blog proclaims: “Venezuelan socialism still a complete disaster.” The Week’s U.S. edition says: “Authoritarian socialism caused Venezuela’s collapse.”

Indeed, corporate-owned, mainstream media advises Americans to look at the inflation and food lines in Venezuela, and then repeat to themselves clichés they heard in elementary school about how “Communism just doesn’t work.”

In reality, millions of Venezuelans have seen their living conditions vastly improved through the Bolivarian process. The problems plaguing the Venezuelan economy are not due to some inherent fault in socialism, but to artificially low oil prices and sabotage by forces hostile to the revolution.

Starting in 2014, the Kingdom of Saudi Arabia flooded the market with cheap oil. This is not a mere business decision, but a calculated move coordinated with U.S. and Israeli foreign policy goals. Despite not just losing money, but even falling deep into debt, the Saudi monarchy continues to expand its oil production apparatus. The result has been driving the price of oil down from $110 per barrel, to $28 in the early months of this year.The goal is to weaken these opponents of Wall Street, London, and Tel Aviv, whose economies are centered around oil and natural gas exports.

And Venezuela is one of those countries. Saudi efforts to drive down oil prices have drastically reduced Venezuela’s state budget and led to enormous consequences for the Venezuelan economy.

At the same time, private food processing and importing corporations have launched a coordinated campaign of sabotage. This, coupled with the weakening of a vitally important state sector of the economy, has resulted in inflation and food shortages. The artificially low oil prices have left the Venezuelan state cash-starved, prompting a crisis in the funding of the social programs that were key to strengthening the United Socialist Party.

Corruption is a big problem in Venezuela and many third-world countries. This was true prior to the Bolivarian process, as well as after Hugo Chavez launched his massive economic reforms. In situations of extreme poverty, people learn to take care of each other. People who work in government are almost expected to use their position to take care of their friends and family. Corruption is a big problem under any system, but it is much easier to tolerate in conditions of greater abundance. The problem has been magnified in Venezuela due to the drop in state revenue caused by the low oil prices and sabotage from food importers.

The Bolivarian experience in Venezuela

Americans have been trained by decades of Cold War propaganda to look for any confirmation that “socialism means poverty.” A quick, simplistic portrait of the problems currently facing Venezuela, coupled with the fact that President Nicolas Maduro describes himself as a Marxist, can certainly give them such a confirmation. However, the actual, undisputed history of socialist construction around the world, including recent decades in Venezuela, tells a completely different story.

Hugo Chavez was elected president of Venezuela in 1999. His election was viewed as a referendum on the extreme free market policies enacted in Venezuela during the 1990s. In December, when I walked through the neighborhoods of central Caracas, Venezuelans spoke of these times with horror.

Demonstrators gather in Bolivar Square to show their support of Venezuela’s President Nicolas Maduro, in Caracas, Venezuela. The demonstrators gathered as the Organization of American States is meeting to discuss a report from Secretary General Luis Almagro denouncing violations of the Venezuela’s constitution.

Venezuelans told of how the privatizations mandated by the International Monetary Fund made life in Venezuela almost unlivable during the 1990s. Garbage wouldn’t be collected. Electricity would go off for weeks. Haido Ortega, a member of a local governing body in Venezuela, said: “Under previous governments we had to burn tires and go on strike just to get electricity, have the streets fixed, or get any investment.”

Chavez took office on a platform advocating a path between capitalism and socialism. He restructured the government-owned oil company so that the profits would go into the Venezuelan state, not the pockets of Wall Street corporations. With the proceeds of Venezuela’s oil exports, Chavez funded a huge apparatus of social programs.

After defeating an attempted coup against him in 2002, Chavez announced the goal of bringing Venezuela toward “21st Century Socialism.” Chavez quoted Marx and Lenin in his many TV addresses to the country, and mobilized the country around the goal of creating a prosperous, non-capitalist society.

In 1998, Venezuela had only 12 public universities, today it has 32. Cuban doctors were brought to Venezuela to provide free health care in community clinics. The government provides cooking and heating gas to low-income neighborhoods, and it’s launched a literacy campaign for uneducated adults.

During the George W. Bush administration, oil prices were the highest they had ever been. The destruction of Iraq, sanctions on Iran and Russia, strikes and turmoil in Nigeria — these events created a shortage on the international markets, driving prices up.

Big oil revenues enabled Chavez and the United Socialist Party to bring millions of Venezuelans out of poverty. Between 1995 and 2009, poverty and unemployment in Venezuela were both cut in half.

After the death of Chavez, Nicolas Maduro has continued the Bolivarian program. “Housing Missions” have been built across the country, providing low-income families in Venezuela with places to live. The Venezuelan government reports that over 1 million modern apartment buildings had been constructed by the end of 2015.

The problems currently facing Venezuela started in 2014. The already growing abundance of oil due to hydraulic fracturing, or fracking, was compounded by Saudi Arabia flooding the markets with cheap oil. The result: massive price drops. Despite facing a domestic fiscal crisis, Saudi Arabia continues to expand its oil production apparatus.

The price of oil remains low, as negotiations among OPEC states are taking place in the hopes that prices can be driven back up. While American media insists the low oil prices are just the natural cycle of the market at work, it’s rather convenient for U.S. foreign policy. Russia, Venezuela, Ecuador, and the Islamic Republic of Iran all have economies centered around state-owned oil companies and oil exports, and each of these countries has suffered the sting of low oil prices. (Full Story)

How Venezuela Fell Into Crisis, and What Could Happen Next

- Supermarket shelves in Venezuela are chronically bare, and power shortages are so severe that government offices are now open only two days a week. The health care system has collapsed, the crime rate is one of the world’s worst, and inflation is rapidly eroding what remains of the currency’s value.

“The economy has gone from bad to worse to horrific,” said Jason Marczak, director of the Latin America Economic Growth Initiative at the Adrienne Arsht Latin America Center, part of the Atlantic Council, a Washington-based research organization. “The Venezuelan government is doing a good job of leading itself into chaos.”

Here are some basic questions and answers on how Venezuela got to this point under President Nicolás Maduro and what could happen next.

From Venezuela to Iraq to Russia, Oil Price Drops Raise Fears of Unrest

(nytimes) - Oil, the lifeblood of many countries that produce and sell it, appears to be rapidly turning into an ever-cheaper economic curse.

A year ago, the international price per barrel of oil was about $103. By Monday, the price was about $42, roughly 6 percent lower than on Friday.
Continue reading the main story

In oil-endowed Iraq, where an Islamic State insurgency and fractious sectarian politics are growing threats, a new source of instability erupted this month with violent protests over the government’s failure to provide reliable electricity and explain what has been done with all the promised petroleum money. In Russia, a leading oil producer, consumers are now payingfar more for imports, largely because of their currency’s plummeting value. In Nigeria andVenezuela, which rely almost completely on oil exports, fears of unrest and economic instability are building. In Ecuador, where oil revenue has fallen by nearly half since last year, tens of thousands of demonstrators pour into the streets every week, angered by the government’s economic policies.

Even in wealthy Saudi Arabia, where the ruling family spends oil money lavishly to preserve its legitimacy, the government has been burning through roughly $10 billion a month in foreign exchange holdings to help pay expenses, and it is borrowing in the financial markets for the first time since 2007. Other Arab countries in the Persian Gulf that are dependent on oil exports, including Kuwait, Oman and Bahrain, are facing fiscal deficits for the first time in two decades.

While the price has been declining for months, forecasts have always been hedged with the assumption that oil would eventually stabilize or at least not stay low for long. But new anxieties about frailties in China, the world’s most voracious consumer of energy, have raised fears that oil, now 30 percent lower than it was just a few months ago, could remain depressed far longer than even the most pessimistic projections, and do even deeper damage to oil exporters. Full Story