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President Maduro and his hold on power
As Venezuelans continue to cross into Guyana and the border communities seeking help, it seems that President Nicolas Maduro is clinging to power against all odds.
Venezuela has entered its worst phase of economic decline, and with the world’s highest inflation rates in recent years, it has reached the stage of hyperinflation. Earlier this year, the International Monetary Fund (IMF) estimated that inflation in Venezuela could reach one million percent by the end of this year which is compared to what Germany had experienced during the 1930 depression.
The IMF has calculated that Venezuela’s economy will contract by 18 percent in 2018, for a total of 55 percent decline over the past five years. If these forecasts materialize, Guyana should brace itself for a massive influx of Venezuelan refugees.
Venezuela’s economic crisis is acute; it will only get worse. According to economists, when countries reach hyperinflation, money becomes useless and the economy is paralyzed and is thrown into chaos, because of the high cost for goods and services.
Venezuela’s worsening economic problems have led to a decline in living conditions, healthcare and educational services, greater demands for political change at home and increased migration to neighbouring countries.
Since the crisis began, almost three million Venezuelans have migrated to Argentina, Colombia, Brazil and the United States, and many more are expected to follow suit.
Political scientists believe that the Maduro regime may be actually encouraging people, especially the rich to leave the country just like what Fidel Castro did in Cuba in an earlier period so that he can control the impoverished population left behind with government subsidies for food and other basic human needs.
His brutal attack on protestors and his opponents has led to many deaths and his rigging of the last election which is undemocratic may be aimed at convincing his opponents that it is time to leave the country.
The Inter-American Development Bank has stated that while some countries in the past have been able to overcome hyperinflation, there is no political will on the part of the Maduro government to embark on structural economic reforms to combat it anytime soon.
As a result, the cost for food and services will keep rising. It is difficult to know how long President Maduro will be able to cling to power in the country with hyperinflation. However, in countries that had hyperinflation, such as Argentina in the late 1980s, there were riots in the streets which led to a chaotic situation and the resignation of President Raul Alfonsin. So far, this has not been the case in Venezuela.
If history is any guide to the future, then President Maduro’s government could remain in office for many more years as was the case of President Robert Mugabe of Zimbabwe. In 2007, Zimbabwe experienced hyperinflation and instead of embarking on structural economic reforms to combat it, the government printed more money and added zeroes to its currency until it adopted the U.S. dollar as its currency in 2008.
That kept President Mugabe in power for another nine years until he was forced to step down in a bloodless military coup in 2017. Few, expect Maduro would suffer the same fate. Recently, he created a crypto-currency called the Petro, which drew laughter from many financial experts because it is worthless.
Hyperinflation and the brutal repression of opponents by the Maduro government will worsen the situation in Venezuela. Unless the United States and the leaders of Latin American intensify their pressure and force Maduro to resign, they will have more Venezuelan refugees in their countries.
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