The Current Crisis And Huge Emigration Rates In Venezuela
When most United States (US) Americans think about emigration, refugees, and asylum, they focus on the Middle East conflict and the emigration out of Syria and other war-torn countries. Most US Americans, are not even aware of the crisis that has reached critical mass in our own back yard, in our hemisphere. Venezuela is embattled in turmoil in consisting of corruption and economic failure due to the bad economic management at the Venezuelan national level. This economic “conflict” has led to over 2.3 million citizens emigrating out of Venezuela and into neighboring and in some cases distant countries, try to find a better life and a chance of survival. The 2.3 million migrants are probably closer to 4 million according to the International Organization of Migration who says that the true number has been underestimated. Many of the countries that Venezuelans are immigrating into have similar stories and methods, but there is also a myriad of different ways that these countries are dealing with this refugee and asylum problem. “This humanitarian crisis and massive scale of the exodus is being compared to the flow of Syrians into Western Europe in 2015. And, just as in that crisis, countries overwhelmed by the flood of new arrivals are beginning to bar their doors.” To fully explain the impact of this emigration, I will first include a summary of the crisis and explain what led to where Venezuela is today.
Hugo Chavez took office, between 1999 and 2015, hundreds of thousands left. Over 1 million people have left their native country of Venezuela just over the last 2-3 years. Why are people emigrating out of Venezuela? It is easy to blame the near-term crisis of lower oil prices. Yet, other countries (like Saudi Arabia) have felt the impact of the oil price decrease and have not had the same impact on emigration. There is a bigger issue at play in Venezuela, exaggerated inflation rates and a huge increase in poverty. While some countries are assisting willingly, other countries are seeing the negative impact it is having on their country. Panama changed their new visa requirements, due to the influx of immigrants they were dealing with. “From 2010 to 2016, Panama deported only 196 Venezuelans in total.” Just in Jan 2018, the Panamanian government deported 308 Venezuelans back to their home. These two statistics give light to the impact this crisis is creating. I have been aware of the crisis in Venezuela, but what really drove home the impact of the government decisions was when I listened to a podcast, episode 731 of NPR’s Planet Money. The episode walked through the time line of the crisis, explaining how it started and why. “It's one of the epic economic collapses of our time. And it was totally avoidable.”
I look at the decisions Venezuela made and compare them to personal finances. While the country was in it boom years it over spent and didn’t save. The resources that Venezuela has, make the country attractive for many reasons. They have tourist appeal with beautiful beaches and mountains. They are in a region that allows for fruitful farming. And to top it all off, they have had an abundance of oil that had made them a fortune. With many new acquired fortunes, like the lottery, it isn’t about how much money you obtain, its more about how you manage it. In this case, Venezuela made poor decisions and decided to spend the money in a myriad of ways without saving it. One of the basic reasons people save, is for a potential emergency or a decrease income (losing a drop, getting laid off, etc.). Saving money is part of what I call “Adulting 101”. It is very easy to over spend and buy more than is required when things are going well and your job and economy are stable. The things people (and countries) need to be cognizant of to not over extend themselves. That is basically what Venezuela did. To appease and gain favor with his populace, the president subsidized exported goods and services instead of creating jobs and products at home. The most critical decision that was made was “The government also kept tight control on the exchange rate between Venezuelan bolivars and U.S. dollars.” This strategy worked while the price of oil was high, but when the bubble burst and prices fell, Venezuela fell into one of the worst economic crises’.
In order to fully understand the current crisis, it is important to understand the history. The focus will be on the economic crisis and not the political turmoil that engulfed Venezuela since Hugo Chavez took power in 1999. In early 2007 after Chavez won took office for his second 6-year term, the “national assembly gives Chavez sweeping powers to rule by decree.” In 2007, the price of oil increased to roughly $100 a barrel. This was a blessing for many countries that based their Gross Domestic Product (GDP) on the price of oil. For Venezuela, oil made up over 95% of the country’s exports. In the same year, due to the oil income “windfall”, Chavez opted to insert a large portion of the oil money into social programs that would give assistance and aid to the poor population in his country. He did this, even against the advice of some of his advisors, as they predicted it would not be sustainable in the long run. In 2009 a referendum was submitted and voted upon, amending the restriction for term limits for the president. After Chavez’ death by cancer, in 2013, Nicolas Maduro, Chavez’ Minister of Foreign Affairs and Vice President, was voted into office. Six months after his assumption to the office of president, Maduro announced that he would be “ruling by decree”. In 2015 the United Nations published their homicide report that reflected the data from 2013. In the report the data showed Venezuela as being “ultra-violent”, and ranked as the world’s “second most murderous nation.” In 2014 the economy began to destabilize, as had been predicted earlier (due to the unsustainable government subsidies), with inflation growing 60% and the price of oil dropping. “Despite having recently been declared by OPEC, the oil exporting nations’ club, as the country with the largest oil reserves — larger even than Saudi Arabia’s — Venezuela is reported to be importing crude. After 15 years of “socialist” Chavista economics, this may be the most telling sign of the shambles the country is in.” In 2015 as inflation continued to increase and the economy continued a downward spiral, Maduro “prohibited desperate shoppers from lining up overnight at supermarkets.” In 2016 Maduro instituted price controls over the Bolivar and fixing the exchange rate attempting to rectify the sinking ship. It did not work and as of early 2018 the stores are empty, violence abounds, and the Venezuelan populace are hungry with over 78% of them in extreme poverty. In 2016, “a single two-pound yucca (a potato like tuber) cost about one-third of the weekly minimum wage.” As bad as it sounds, the economic downturn was just starting to gain momentum. The current inflation crisis is considered to have started in Nov of 2016. To put Venezuela’s hyperinflation in perspective, since 2016 the inflation is doubling every 18 days and the International Monetary fund is projecting that by the end of 2018 it will have inflated to 1,000,000%, comparable to Germany’s inflation after WWII. Some shop owners refuse to accept the Venezuelan currency (the Bolivar) as its black-market exchange with the US dollar soared to 6,000,000 in late August. As of In July 2018, Hyperinflation in Venezuela was sitting 33,151%, "the 23rd most severe episode of hyperinflation in history".
The economic disaster within Venezuela has led to a mass exodus with over 2.3 million citizens leaving (in the last two year) in search of a better life. Over the last two decades close to 3 million citizens have emigrated from Venezuela (roughly 10% of the total population). Venezuelans have resorted to living anywhere they can, including parks and even some on the street and sidewalks. Many of them have decided they would have a better life if they left the damaged country. They aren’t leaving because they wanted to affect the economy of their neighbors. They aren’t looking for a high cost of living or luxurious items. They are moving out of necessity to give them a chance at having the basic requirements of life. This emigration has impacted the countries differently.
