June 25, 2016:
In the news business good news is no news at all. Thus Colombia is rapidly fading from the headlines because of the recent signing of a peace deal with the FARC rebels and continuing declines in crime rates. Colombia is now the most robust economy in South America while next door in Venezuela there is plenty of news and that does not seem likely to change anytime soon. Venezuela has the worse economy in the region, the highest crime rates in the world and faces the very real threat of civil war and widespread chaos. This will be a problem for Colombia because millions of refugees are likely to head across the border to Colombia.
The Tragic Headlines From Next Door
In Venezuela the problems are numerous and include a collapsing economy and rulers who threaten civil war if their power is seriously threatened (legally or otherwise). Unlike Colombia, after World War II Venezuela prospered and was at peace mainly because of massive oil income. But now shortages of essentials (food, medicine fuel and electricity) in Venezuela are widespread and getting worse. The electricity problem is made worse by a three year long drought which has reduced production at many of the hydroelectric dams that normally supply 60 percent of the electricity. Current ruler Nicolás Maduro and his patron and predecessor Hugo Chavez deliberately diverted cash for maintaining and upgrading infrastructure (like power plants and oil production facilities) to support their program of free stuff for political allies at home and abroad. A lot of foreign loans were taken out as well. All that is now coming due and Maduro has put a higher priority on maintaining the national credit rating than in coping with the growing hunger and chaos. Defaulting on foreign loans is seen as creating a long-term problem for whoever rules Venezuela in the future. At the moment no one will sell Venezuela food on credit. It’s cash up front or nothing.
Inflation is running at 500 percent a year and that is expected to more than double by the end of 2016 if nothing changes. While the unemployment rate is only about 20 percent, most people do not have enough money for food. The socialist government tries to control prices and the means little food is available at the lower legal prices. People must wait in line twelve hours or more to buy a few days’ supply of basic food items. There is more food on the black market, but the prices are more than over 80 percent of the population can afford.
The shortages have led to growing anger towards the leftist government and the resolutely socialist president Maduro. As a result the crime rate, already the highest in the Americas, has gotten worse because the security forces have been ordered to concentrate on protecting the government from the people. This is particularly true when it comes to food supplies. Criminal gangs are increasingly active in trying to steal available food for resale on the black market. Meanwhile mobs of hungry, and angry, people are more frequently showing up near where food is stored or distributed and while police are under orders to avoid lethal force, the number of deaths are increasing. Polls show over 70 percent say Maduro should quit before the end of 2016. Many of the socialist true-believers are losing patience and a growing number are quietly urging the military (now run my “good socialists”) to do the country and themselves a favor by stepping in and removing Maduro and his unpopular (mainly for being inept and corrupt) government from power. That offer is apparently still being considered in part because opposition politicians are discreetly giving the same advice.
The newly elected (in late 2015) opposition Congress wants to remove president Maduro legally. The favored, and very popular effort, employs a legal (it’s in the constitution) recall referendum that would remove Maduro and allow new elections by the end of the year. Despite the obvious popularity of such a referendum the government seems intent on preventing the recall vote anyway it can. Maduro’s current term does not end until 2019 and Maduro wants until then to make things all better. Most voters believe he will only make things worse and the growing popular unrest has, in some parts of the country, already morphed into what looks and feels like insurrection. Most Venezuelans understand that government incompetence and corruption are the main causes of all their economic woes but these are two items the government will not even discuss, much less admit are a problem to be solved.
The current mess is not the work of Maduro but of his predecessor. In 1999 Venezuelans elected a former army officer (Hugo Chavez) who proposed to solve all existing economic and social problems via radical socialism. This did not work. Chavez died in early 2013 and was succeeded by vice president Nicolás Maduro, a lifelong socialist and former union official who was an early supporter of Chavez. Maduro rigged the 2014 presidential vote to get himself elected and then made it clear he was determined to exploit the Chavez “legend” and do whatever else it took to remain in power. Maduro is as clueless as Chavez about how an economy works and was determined to continue the Chavez policies that have killed economic growth and the prosperity Venezuela had long enjoyed. Maduro does understand power and in an effort to maintain control of an increasingly hostile population Maduro turned to police state methods. He now openly threatens armed resistance to any efforts to remove him from power. So far the opposition controlled Congress has been blocked from removing Maduro legally by Supreme Court rulings that these actions are unconstitutional. This comes as no surprise because in 2015 Maduro realized he could lose control of the legislature and just before the elections that did just that ordered the outgoing (and leftist controlled) Congress to appoint enough additional leftist Supreme Court judges to enable the government to block an opposition majority in Congress from doing anything legally to remove Maduro from power. So far the new leftist Supreme Court has performed as expected and even granted Maduro the power to rule by decree (without any involvement by the legislature) in order to deal with the economic crisis. Now the opposition legislature must either find legal ways to deal with an outlaw president and Supreme Court or see the country slide into anarchy. Some in the opposition believe that a majority of justices can be persuaded to do the right thing. Less optimistic opposition leaders are trying to convince leftist generals to solve the crises by illegal (but very popular to a majority of Venezuelans) means.
Meanwhile Maduro’s political subordinates and allies are upset. These supporters grew rich from stealing and dealing since 1999. It’s widely known that the family of the late president Chavez became fabulously wealthy (over $4 billion). There are many ways for people with the right connections to get rich. Bribes from drug gangs keep the cocaine flowing through Venezuelan ports and air fields plus simply stealing much of the money under your control. Maduro has been trying to build a popular militia loyal to him and the ruling party, but the country is running out of money to pay for enough loyalty. A lot of these corrupt, but now wealthy, officials are fleeing the country and hoping they can find sanctuary (from eventual prosecution) somewhere.
Efforts to get help from abroad have been largely unsuccessful. The problem is the notorious corruption in Venezuela. Sending in food aid risks seeing most of it stolen by government officials and sold off to the black market or smuggled to neighboring countries. OAS (Organization of American States) officials admit that the Venezuelan government has misbehaved to the extent that it should be expelled from the OAS. But enough of the 34 members of OAS still hold out hope that the Maduro government will find a solution that action on expulsion has been halted, for now. This “wait and hope” group largely consists of countries headed down the same socialist path as Venezuela and really would like to see a solution that works. These OAS supporters are themselves too broke to help Venezuela so they do what they can to “protect” the reputation of the Venezuelan leadership.
June 24, 2016: Another foreign airline, Aeromexico, shut down its operations in Venezuela. This is something that began in 2014 because the government won’t let the airline get money out of the country to pay for operating foreign flights into and out of Venezuela. The extreme foreign currency restrictions were deemed necessary because the shrinking economy was providing less foreign currency to buy essential imports of food and consumer goods. Air Canada was the first of many foreign airlines that halted operations in Venezuela until foreign firms could again move cash out (mostly to pay for foreign goods and services, not profits). Cuba, since the 1960s, has cheated foreign companies out of billions of dollars by never letting them get their money or assets out of the country and, in most cases, eventually simply stealing the company assets in Cuba. Many companies operating in Venezuela have lost money in Cuba years ago and have not forgotten, so Venezuela won’t have the opportunity to steal as much as Cuba did.
June 22, 2016: In Colombia FARC and the government finally singed the ceasefire that begins the implementation of the larger process to demobilize FARC and end a rebellion that went on for half a century and left over 220,000 dead and millions homeless, unemployed or otherwise harmed. Many felt such a deal could never be reached. In part this was because of all the deaths and other losses most Colombians made it clear they did not trust FARC to honor any peace deal. Face it, if you start (as armed leftist reformers) and perpetuate violence on that scale and then become partners with drug cartels and other gangsters you lose a lot of credibility and create a lot of bad feelings and mistrust. The FARC leadership also had problems getting all their followers to accept a deal and comply with the terms. Both FARC leaders and government officials admit (at least in private) that there will be some FARC “fringe groups” that will have to be declared outlaws for not observing the terms of the peace deal. These groups will have to be taken down violently. The Colombian government and the security forces want peace with both FARC and ELN so they can concentrate on the drug cartels, who have long been the major source of all crime in the country. The drug gangs have nearly as many members as FARC (6,500) and ELN (1,500). The three largest drug gangs have 3,000 members, many of them former FARC and ELN. The drug gangs are not interested in peace negotiations. For this reason in early 2016 the government authorized the military to work with the police in going after the three largest drug gangs. This includes air strikes, something the police appreciate because the drug gangs often operate in large armed groups that sometimes outnumber and outgun the police sent to get them in remote areas.
Implementing the FARC peace deal is complicated, time consuming and not a sure thing. The final peace deal, listing all the details of demobilization, liability, compensation and protections for all involved is supposed to be signed by July 20th. After that there is one final hurdle; a national referendum. FARC opposed having all Colombians vote on the peace deal, in part because FARC understood the degree of hatred many, if not most, Colombians feel towards the leftist rebels and all the damage they have done. It wasn’t until May that FARC agreed to going along with the referendum, mainly because it became clear that the current Colombian government depends on voter support to keep going and a majority of voters had made it clear they wanted, or would go along with, a referendum. By agreeing to the referendum FARC leaders agreed that they now had to do whatever it took to get most of their members to agree with all the terms of the final agreement (especially the extent of amnesty, which is currently not as generous as many FARC leaders demanded).