Venezuela: Economic/Social Perspectives for 2022

By Pasqualina Curcio on December 20, 2021

The recovery of Venezuelan oil exports in 2022, whether due to increased oil production and/or higher international crude oil prices, could be reflected in an increase in domestic production, if and only if at least two conditions are met.

First, that the foreign currencies received from the sale of hydrocarbons really contribute to domestic production and are used to import raw materials, inputs and technology required for domestic production processes, instead of going to tax havens, which is why it is necessary to establish a strict control of the administration of such foreign currencies by the national government and the Venezuelan Central Bank (BCV). If, on the contrary, they are used to intervene in the exchange market, that is to say, to sell them in such markets with the illusion that such action will control the depreciation of the bolivar, the final result will be that those few foreign currencies will flee.

Second, that that eventual economic growth in 2022, consequence of the increase in oil exports, will not be counteracted/cancelled by the depreciation of the bolivar, which, since at least 2013, has been induced by an attack against our currency, as was confessed by Republican Senator Richard Black in 2019, who said: “We have demonetized their currency and, through the international banking system, made the Venezuelan currency worthless and then we go and say, ‘Look how bad this government is, their currency is worthless.’ Well, it was not them, it was us who made their currency worthless”.

The attack on the bolivar is one of the main causes, along with the fall in exports, of the slump in domestic production since 2013. In fact, for every 100 bolivars of decline in the gross domestic product (GDP), 60 are explained by the induced depreciation of the bolivar amounting to 5,466,052,934,406% since 2013.

Let’s recall the sequence of such attack: imperialism politically manipulates the value of the bolivar through social networks; this exchange rate, although fictitious, serves as a reference for the prices of all commodities (except labor force) which have increased 727,460,681. 160% between January 2013 and November 2021 which, coupled with the freezing of the legal minimum wage which has only been adjusted 16,867,469,780% since 2013, has resulted in a 99% pulverization of the real wage and a decrease in public spending from 33% of GDP in 2013 to 2% of GDP in 2021, causing a 62% drop in national demand (between 2013 and 2018, we do not have data to date). When demand falls in an economy, the owners of capital have no incentive to increase production, why produce if there is no one to buy? This is how the attack on the bolivar has affected the fall in production.

Most probably, almost certainly, imperialism will not give up its main and most powerful weapon: the attack on the bolivar. Those web portals and social network accounts through which it manipulates the value of the bolivar will remain active, especially if we consider that it took at least 15 years to position them in the Venezuelan people’s imagination (they have been at it since 2006, since the appearance of the “green lettuce”). Perhaps imperialism will lower the intensity of the attack, as in fact has happened in the last few months, but the web portals will not disappear, they will be on the lookout to intensify it at the most opportune moment. This weapon could even remain in force in an eventual scenario in which the right wing governs our country. Let’s take the case of Argentina: the blue dollar was installed with Cristina Kirchner and did not disappear during Macri’s government, despite the fact that he lifted the currency exchange barrier. Today, the blue dollar, under Alberto Fernández, continues to determine prices in that country.

The fact that the intensity of the attack on the bolivar has decreased in recent months, to the point that hyperinflation has stopped, is not because imperialism took pity on Venezuelans, but mainly because they have managed to bring us to the limit of a 99% deterioration of purchasing power and a production that does not exceed a quarter of that of 2013. However, this does not mean that, at any moment, they will decide to lash out.

Let’s look at the case of Sandinista Nicaragua. Within the framework of the war against the revolution, the US government blockaded the Nicaraguan people; programmed a shortage of essential goods and long lines; financed paramilitary groups (La Contra) and also attacked the currency: the córdoba. In fact, in 1988, the hyperinflation induced by this attack exceeded 30,000%. Between 1988 and the beginning of 1990, the attack on the córdoba continued, although with less intensity, despite the fact that the Sandinista government, in the framework of dialogue and very naively trusting imperialism, gave in and implemented a neoliberal package consisting of a wage freeze and the privatization of state enterprises and their reduction. In the meantime, imperialism continued with its plan and it was enough that the presidential elections were brought forward in 1990 for them to launch a new attack on the currency which resulted in hyperinflation during that year and the defeat of the Sandinista revolution at the polls with the victory of Violeta Chamorro, candidate of the right wing. Then, magically, once Chamorro was in power, the daily and manipulated publication of the supposed exchange rate of the córdoba against the dollar disappeared.

A possible scenario is that in 2022 the intensity of the attack on the bolivar will decrease. The purchasing power of the working class is already at a minimum and the economy is de facto dollarized (main objectives of the imperial war). Therefore, and in this scenario, the recovery of oil exports could be reflected in increases in national production, but with serious and great inequalities if the monthly minimum wage is not adjusted, and with it, pensions and retirements, as well as public spending.

Another possible scenario is the activation of the recall referendum by the opposition right wing and, therefore, political polarization. In that case, they will not hesitate to intensify again the attack on the bolivar, as well as other weapons of unconventional warfare, so that any increase in oil exports will be nullified by inflation and by the further deterioration of aggregate demand.

In any of the scenarios, with more or less political polarization, or with more or less concessions given by the government to the big capitals in the framework of the dialogue, these will not stop attacking the currency, unless such concessions are very, very big. To think otherwise would be naïve, which is why it is urgent to neutralize the effects of the political manipulation of the value of the bolivar to the point of rendering such weapon ineffective. It is there where the proposal for the indexation of the economy is justified. Thus, the economic/social recovery in 2022 will also depend on the BCV recognizing, in discourse and in practice, that our bolivar is under attack, as has been confessed by the gringos, and that it does not continue to be mired in monetarist/neoliberal paradigms which, instead of solving the problem, do the work of imperialism.

Source: Ultimas Noticias, translation Resumen Latinoamericano – English