The Trump administration has imposed a full-scale economic blockade against Venezuela. The assets of the state oil company held abroad, including Citgo, its U.S. branch, have been seized and handed over to the puppet Guaidó “government.” Venezuelan bank accounts have been frozen, including $1.2 billion in gold bullion held in the Bank of England.
Venezuela is one of a bloc of three large oil-producing countries not under U.S. domination. The other two are Iran and Russia.
Trump’s sanctions on Venezuela have been economically devastating.
The sanctions have hobbled Venezuela’s oil industry so fully that the country has half a billion dollars worth of oil sitting in ships off its coast, Bloomberg reported Feb. 25.
From August 2017 to August 2018, earlier sanctions cost Venezuela about $6 billion, reports Venezuela Analysis.
“In August 2017, Trump’s sanctions made it illegal for the Venezuelan government to obtain financing from the U.S., which was devastating for two reasons: all the Venezuelan government’s outstanding foreign currency bonds are governed under New York state law; and one of the Venezuelan government’s major assets, the state-owned Citgo corporation, is based in Texas. The sanctions also blocked Citgo from sending profits and dividends back to Venezuela (which had been averaging about $1 billion USD per year since 2015).”
An accompanying chart shows that Venezuelan oil production followed essentially the same pattern as Colombia’s during 2016 and most of 2017 — until August, which is when Trump’s sanctions came into force.
While Venezuela has been having a hard time selling its oil, the rest of the world is struggling to find the premium heavy oil that Venezuela produces. The tightness in heavy oil supply translated into higher prices for Colombia’s oil, which competes with Venezuelan oil in the global market.
The goal of Trump’s sanctions is to starve Venezuela, hoping that that will bring about either a collapse of the government or a coup. But no one thinks that a collapse is near or likely, and the U.S. coup attempt with Guaidó failed.
The economic crisis in Venezuela
Some say that Maduro, a school bus driver by profession, has been a terrible president and economic manager. But, despite what these opponents might be saying, the economic crisis was not caused by Maduro’s presidency or the Chavistas in Bolivarian Venezuela.
Does this mean the policies of Maduro’s government are perfect? Of course not. Perfection is unknown in any sphere of human activity, so it is certain that one could find errors or mistakes in the policies and practices of the Venezuelan government.
However, as a cause of the current crisis, any mistakes made by Maduro or other Chavistas, or even corruption within the Venezuelan government, are not driving forces for the economy. In reality, those who claim that the mistakes of Maduro and the Chavistas or corruption among the Chavistas are the cause of the Venezuelan economic crisis are, whether they know it or not, simply echoing U.S. imperialist propaganda.
How oil prices affect the Venezuelan economy
Venezuela has a monoculture economy, a legacy of colonialism. That means that the world market price of a single commodity largely governs the state of its economy. When the price of oil is high, U.S. dollars flow into Venezuela. The Venezuelan economy booms and employment grows. But when the price of oil drops, money flows out. When this happens, the economy falls into crisis.
Isn’t Bolivarian Venezuela — under both President Chávez and President Maduro — subject to the criticism that they have failed to end Venezuela’s monoculture oil economy? Not at all, because the very name Bolivarian Revolution points to the road out of a monoculture economy. “Bolivarian” refers to Simón Bolívar, who in the 19th century attempted unsuccessfully to unite Latin America into a single nation-state. This points to a road out of the trap of an oil economy that Venezuela finds itself in and that is what they are fighting for.
Under Chávez, the government distributed oil revenues to the working class and poor of the cities and countryside. Massive housing construction programs built more than 2.5 million homes. A crash program to tackle illiteracy was carried out. Health care became available to the mass of poor and working-class people for the first time. Agriculture was developed and 6.6 million acres of land was redistributed to 180,000 landless peasant families.
Chávez also adopted the banner of Simón Bolívar. Making Latin America a single nation-state would go a long way to solving the problem of monoculture economies that lead to periodic extreme economic crises and hyperinflation.
Trump blames the “socialist” policies of Venezuela for the economic crisis, not the colonial monoculture economy or U.S. sanctions. Trump’s message to our movement is clear. If you push for “socialist” policies such as Medicare for all or a $15 minimum wage, the result will be runaway inflation and an economic crisis like is occurring in Venezuela.
In his State of the Union address, Trump pointed to the crisis in Venezuela and boasted that the U.S. would never be a “socialist country.” He did not mean socialism in the Marxist sense — if he had meant that he would have said the U.S. would never be a communist country — but rather “socialism” like Medicare for All, a $15-an-hour minimum wage or the Green New Deal.
Trump is at least partly right. You cannot fully be for Medicare for All and a $15-an-hour minimum wage if you do not support the fight of Bolivarian Venezuela against Trump, Wall Street and Big Oil.