Venezuela: Political or Environmental Crisis?
Venezuela has been suffering recently. Is it a political, economic or environmental crisis though?
Venezuela has the world’s highest inflation rate at 180% and there are shortages of basic goods as well as power shortages. The country is resource rich with the highest proven reserves of oil. The export of oil accounts for 95% of the country’s export revenues. During the period 2014 to 2015 the price of oil has halved deeply affecting the country.
The crises also can trace its roots back over several years: President Hugo Chavez (1999 to 2013) introduced price controls on some basic goods in 2003. The essential goods prices (e.g. sugar, coffee, rice, flour) were capped and then producers could not afford to remain in production: sometimes they made a loss whilst others gave up selling the goods altogether. This resulted in further goods being imported.
Power outages have been caused by the lack of rain across the country with hydro generated electricity “drying up”. As a result of the severe shortage of energy the country has had to take drastic action. Measures have included moving clocks forward by 30 minutes to ease the peak load on the electricity system in the evening: the effect of changing the time means more daylight at the time of peak demand. In May the government, led by President Maduro, made government employees work a two day week and prevented school children going to school on Fridays. See this Independent news article for further details.
President Maduro has been under much political pressure to leave office. His current term runs until 2019, but the opposition have suggested a change of government through a referendum. See this BBC report. In June the referendum was beginning to look more likely according to this report.
At the country’s main hydro plant, the Guri Dam, there has been a severe drought affecting electricity production. The plant produces two-thirds of the country’s power and had fallen to near its minimum operating level. The country has no real reserve power generation capacity. This Independent report highlights some of the measures that were being taken to prevent even more power blackouts in the country than had been common over a number of years. The main blame for the lack of power and water supplies has be attributed to the El Nino weather phenomenon. It has caused long drought periods and much lower than average rainfall. Others blame the lack of investment over the years.
Ultimately the El Nino weather, with the drought, has hit Venezuela hard and highlighted a number of the issues that were perhaps caused by political and economic factors such as the drop in global oil prices. It could be argued that the underlying resilience of Venezuela has been impacted by political and economic factors along with under investment in core infrastructure over the years. Either way the cost of food for a population is rising and triggering unrest and much upheaval. The weather event currently affecting the country is certainly not helping matters and the country’s over reliance on oil exports has not helped.