WUNRN
VENEZUELA-CRISIS-INFLATION-SHORTAGES OF FOOD, MEDICINES
& HEALTH CARE-POLITICAL VOLATILITY-INCSECURITIES FOR WOMEN
Direct Link to Full 20-Page International Crisis Group 2015 Study Report:
“The impact has naturally been felt most keenly by the poor, who rely on increasingly scarce supplies of price-controlled food, medicines and other basic goods for which they must often queue for hours, with no guarantee of success…”
REUTERS/Jorge
Silva
The
full briefing is also available in: Spanish
OVERVIEW
30 July
2015 - The accelerating deterioration of Venezuela’s political crisis is cause
for growing concern. The collapse in 2014 of an incipient dialogue between
government and opposition ushered in growing political instability. With
legislative elections due in December, there are fears of renewed violence. But
there is a less widely appreciated side of the drama. A sharp fall in real
incomes, major shortages of essential foods, medicines and other basic goods
and breakdown of the health service are elements of a looming social crisis. If
not tackled decisively and soon, it will become a humanitarian disaster with a
seismic impact on domestic politics and society, and on Venezuela’s neighbours.
This situation results from poor policy choices, incompetence and corruption;
however, its gravest consequences can still be avoided. This will not happen
unless the political deadlock is overcome and a fresh consensus forged, which
in turn requires strong engagement of foreign governments and multilateral
bodies.
As the
12th largest oil producer in the world, with the largest reserves, and a
beneficiary of the most sustained oil price boom in history, Venezuela ought to
be well placed to ride out the recent collapse of the international price of
crude. The oil boom, combined in the early years at least with the government’s
redistribution policies, produced a significant decrease in poverty under the
administration (1999-2013) of the late Hugo Chávez. The economy was showing
signs of strain, however, well before the 50 per cent fall in prices at the end
of 2014, a year in which GDP shrank by more than 4 per cent and inflation rose
to 62 per cent. Expropriations of private land and businesses, stringent price
and exchange controls and inefficient, often corruptly-run state enterprises
undermined the nation’s production of basic goods and services. Having incurred
massive debts, spent most of its international reserves and emptied a
stabilisation fund set up for such contingencies, the government faces a
critical shortage of hard currency and the prospect of triple-digit inflation
this year and can no longer afford to make up domestic shortfalls of consumer
goods with imports.
The
impact has naturally been felt most keenly by the poor, who rely on
increasingly scarce supplies of price-controlled food, medicines and other basic
goods for which they must often queue for hours, with no guarantee of success.
Those with ailments such as cancer, HIV-AIDS or cardiovascular disease can go
months without medicines they require to survive. Hospitals and even private
clinics cannot maintain stocks of medicines and other basic supplies, including
spare parts to repair equipment. The hospital crisis is exacerbated by
government failure to complete a rebuilding program begun in 2007 or fulfil
promises to construct new facilities. Thousands of doctors and other medical
personnel have resigned due to low wages and unsafe working conditions. Surgery
waiting lists are growing, and staff vacancies go unfilled.
Some
economists predict a sudden collapse in food consumption and widespread hunger,
and public health specialists already say that some surveys are showing chronic
malnutrition, although the country is not yet on the verge of famine. The
collapse of the health service, however, can have pernicious short-term
effects, including uncontrolled spread of communicable diseases and thousands
of preventable deaths.
Aside
from purely humanitarian concerns, Venezuela’s neighbours and the wider
international community have pragmatic reasons for acting. If a solid
institutional and social welfare framework can be restored through a negotiated
settlement, and economic measures taken to deal with inflation and scarcity, a
humanitarian crisis can be averted. If not, the collapse of the health and
welfare infrastructure is likely to make political conflict harder to manage
and could lead to a further erosion of democracy and an increasing likelihood
of violence.
This in
turn would have an impact beyond Venezuela’s borders. Potential risks include
large-scale migration, the spread of disease and a wider foothold for organised
crime. Without a change of economic policy, the country is heading for a
chaotic foreign debt default, probably in 2016. An unstable Venezuela unable to
meet its international commitments could destabilise other countries in the
region, particularly Caribbean nations that have come to rely on subsidised
energy from Caracas. It would also have a direct impact in Colombia, along a
border already under multiple threats.
This
briefing is the product of research conducted between April and July 2015,
which included field trips to Zulia state and the greater Caracas area. Among a
wide variety of sources consulted were many grassroots sympathisers of the
government and several mid-ranking officials. Unfortunately, the ministers of
food and health did not answer requests for interviews.
To
forestall the severe consequences of a humanitarian crisis in Venezuela:
·
The government must
acknowledge the problem. Concealing true statistics and harassing those who
publish or demand access to data must cease.
·
Any political
dialogue or agreement must prioritise concerted action to guarantee supplies of
scarce goods, including medicines, medical supplies and basic foodstuffs, for
the neediest, and a social safety net without partisan intervention or manipulation
that incorporates as providers non-governmental actors, including the Catholic
Church and humanitarian organisations.
·
The current
unworkable system of price and exchange controls that fosters corruption,
smuggling and the black market and fuels inflation and scarcity needs to be
carefully dismantled and replaced with mechanisms that provide a safety net for
the poor without stifling production.
·
The government
should seek broad support for an emergency program that restores economic
equilibrium and protects the most vulnerable from the consequences of the
necessary adjustment, rather than blaming the opposition and foreign
governments for an imaginary “economic war”.
·
The opposition
should resist the temptation to score political points, acknowledge there is no
painless solution and present a clear economic and social reform agenda.
·
Venezuela’s
neighbours and the broader international community must abandon their
reluctance to act, and explicitly press for restoration of the rule of law and
of institutional checks and balances, beginning with close oversight of the
December parliamentary elections.
· They should also help alleviate the social costs of the current crisis by offering food and medical aid and helping Venezuela cope with and control existing epidemics and prevent future ones.