Home Business From heaven to hell, what happened to this once the best welfare country in Latin America?
From heaven to hell, what happened to this once the best welfare country in Latin America?

From heaven to hell, what happened to this once the best welfare country in Latin America?

by YCPress

From heaven to hell, what happened to this once the best welfare country in Latin America ?

Perhaps in everyone’s impression, the dilapidated streets, the long queues of people waiting for relief, the banknotes worth less than toilet paper, and the cities surrounded by waves of looting should appear in impoverished Africa or the war. Middle East. 

But, in fact, all this happened in the fertile Latin America, a country with abundant resources and national welfare that was once comparable to Europe and the United States. This country was once the country with the highest per capita GDP in Latin America-Venezuela.

“The rabbit is not a pet at home, but 5 catties of meat!”

According to a CNN report on September 14, 2017, Venezuelan President Maduro and the country’s Minister of Agriculture, Freddy Bernal (Freddy Bernal) announced in a meeting held on September 13, 2017. A “rabbit plan” was established to deal with the country’s increasingly severe food crisis, Bonnard made the above call at the meeting. The conference was broadcast live on Twitter’s Periscope platform.

Bonnard also said with a smile that US President Trump’s attack on the Venezuelan people is an opportunity to change the country’s cultural consumption pattern. Maduro agreed with the former statement and added that some rabbits have been distributed to some communities as part of the pilot project. “The first step of the Rabbit Project is moving forward.” Maduro said.

The above report is, but a real report. For the Venezuelan people, there is no tradition of using rabbits as food. Perhaps for others, rabbit meat is one of their recipes, but for Venezuela it is a helpless move, because their food crisis is already very serious. And rabbits have strong reproductive capacity, maybe the rabbit program can alleviate part of the food crisis.

The “Abundance” in Latin America

The “Abundance” in Latin America In fact, Venezuela has a unique geographical advantage. Venezuela is located in the northern part of Latin America, with the Caribbean Sea to the north, the Brazilian plateau connected to the Latin, and Colombia and Guyana on the east and west sides. 

Moreover, Venezuela’s land of less than 1 million square kilometers seems to be favored by God. It is like a cornucopia on the ground and underground, and contains countless treasures.

Venezuela’s most important and main mineral resource is petroleum, which accounts for about 4% of the world’s reserves, ranking first in Latin America. The potential oil reserves are 221 billion barrels. As of the end of 2000, the proved reserves were 76.685 billion barrels, ranking fifth in the world and first in the Western Hemisphere. Venezuela is the most important oil producer in Latin America. 

The country’s main oil deposits are located in Lake Maracaibo in the northwest of Venezuela, which is also the largest lake in Latin America. In addition, Venezuela has discovered new oil resources in the Orinoco heavy crude oil belt, which has increased Venezuela’s oil reserves by 41% to 297 billion barrels. 

Therefore, Orinoco has become the most important oil storage area in Venezuela. The exploited oil fields are mainly concentrated in the three states of Lake Maracaibo and Guarico, Anzotegui and Monagas.

Venezuela is the world’s largest country in terms of oil reserves

In addition, Venezuela is also very rich in other minerals. Its iron ore reserves and resources are 14.678 billion tons, with high grade and low impurities. Among them, the proven ore volume is 3.644 billion tons (iron grade>55%) and the controlled ore volume is 2.323 billion tons.

It is estimated that the amount of ore is 8.711 billion tons, and the iron metal reserve ranks eighth in the world. There are rich gold mines near the city of Bolivar, Caglio and Guassipati. The existing reserves available for development and utilization are 792 tons, the possible reserves/resources to be verified by exploration are 4353 tons, and the ore reserves are more than 2 million tons (the average gold grade is 12 g/ton), ranking 13th in the world and 6th in the American continent.

 At the same time, a large amount of coal is stored in the northwestern shore of Lake Maracaibo, and the country’s coal reserves are about 9 billion tons. In addition, Venezuela’s natural gas reserves are as high as 3.6 trillion cubic meters, mainly distributed along the east coast of Lake Maracaibo. 

Most of the natural gas is associated with oil fields, and only offshore gas fields are found in the Paria Peninsula in the northeast. Venezuela also has bauxite reserves and resources totaling approximately 3.479 billion tons, of which reserves are 1.332 billion tons and resources are 2.147 billion tons. Other metal minerals include nickel, vanadium, titanium, copper, manganese, chromium, lead, and zinc.

Laterite-type nickel deposits have also been discovered in the Caribbean Coastal Mountains. Primary and secondary ilmenite-magnetite deposits have been discovered in the northern part of Yarraque State.

Titanium reserves are 39 million tons and contain 6.55% of titanium oxide. The Bailo Dores polymetallic sulphide deposit in Mérida State has an estimated ore reserves of 3 million tons, containing 11% zinc, 3% lead and 1.5% copper. There are sedimentary copper deposits in Sevoruko in the Mérida Mountains.

In addition to energy and metal minerals, Venezuela is also one of the few countries in Latin America that produces diamonds. Its resources are about 41 million carats, with an estimated reserve of 21.71 million carats and a geological reserve of about 6.96 million carats. 

Moreover, Venezuela’s phosphorite reserves rank among the top in Latin America, with a total resource of 254 million tons. Other non-metallic minerals mainly include asbestos, bentonite, gypsum, limestone, feldspar, various clays, silica sand and salt.

In addition to being extremely rich in underground resources, Venezuela is also very rich in above-ground resources. Its forest area accounts for about 56% of the country’s area, mainly in the southeast. 

Lake Maracaibo and the coastal areas, especially near Margarita Island, are rich in aquatic products, and the northeast coastal area is rich in pearls.

Such a wealth of resources should bring great wealth to Venezuela, but in fact there was a period of time. In the 1970s, rich resources, especially huge amounts of oil, made Venezuela from a small and anonymous country to the richest economy in Latin America. 

In that era, Venezuela’s per capita GDP was the highest in Latin America. Venezuela’s middle class drove Cadillacs and even traveled to Europe and the United States for vacation. Even more exaggerated is that Venezuela has even become the world’s largest consumer of whiskey. This luxury life of drunken gold fans even extended to a few years ago.

A reporter from the Wall Street Journal recalled: When I came to Venezuela in 2013, the party continued. At that time, the price of oil was US$100 per barrel, and the government sprinkled oil and US dollars on everyone. The Caracas skyline is dotted with magnificent architectural projects. Steak restaurants buy old-fashioned Scotch whisky in containers. Hotels must be booked weeks in advance. Everyone is drinking, dancing and laughing.

From heaven to hell

Prosperity must decline, happiness generates sadness. Oil has given Venezuela huge wealth, making Venezuela’s domestic economy almost entirely dependent on oil. It is for this reason that Venezuela has caused a severe economic crisis due to the plunge in oil prices and the sharp drop in oil exports, which has also caused Venezuela to fall from “paradise”. Into hell”.

Since Venezuela discovered oil, although it is the most important oil exporter in Latin America, in fact, Venezuela’s oil extraction technology has been controlled by the United States. Moreover, about 50% of Venezuela’s annual oil production is exported to the United States. Therefore, it can be said that Venezuela’s economic lifeline is almost controlled by the United States.

And because the Venezuelan economy is too dependent on oil, when oil prices are high, a large amount of foreign exchange income can be easily obtained through oil exports. Coupled with the impact of a large number of cheap commodities brought about by economic globalization, the entire Venezuela has become more important Industry and agricultural construction are indifferent, and almost all rely on imports for agricultural and industrial products. 

This has caused many workers and farmers to lose their jobs, forming slums one after another.

Especially since the second half of 2010, the breakthroughs in U.S. shale oil extraction technology not only caused the U.S. oil imports to plummet, but even became an oil exporter in one fell swoop. This is undoubtedly a heavy blow to a country whose economy depends on oil exports to the United States. From then on, Venezuela’s economy has begun to take a sharp turn.

U.S. shale oil extraction technology is improving day by day

Since 2014, international oil prices have plummeted, which is the last straw that crushed the camel of Venezuela. Because Venezuela’s previous oil extraction equipment came from the United States, the equipment used to extract oil after leaving the United States is outdated, and the newly discovered oil fields are basically located in the Orinoco heavy crude oil belt, and the cost of extracting extra-heavy crude oil is much higher. Much higher than other types of oil. Therefore, when the international oil price plummets, it will make Venezuela’s oil export profits plummet, and even losses may occur.

International crude oil prices plummeted in 2014

Therefore, Venezuela has to continuously reduce production. When Venezuela’s oil economy is at its peak, the daily output of oil can be as high as 3.1 million barrels.

By July 2020, Venezuela’s average daily crude oil production was 339,000 barrels, which was only one-tenth of that of the year. One or so. 

This has led to a substantial reduction in Venezuela’s fiscal revenue and a worsening fiscal deficit. In addition, since last year, the United States has imposed economic sanctions on Venezuela, which has made Venezuela’s domestic economy even worse.

Then, the rich Venezuelan government, especially President Chavez, implemented a high-welfare policy in order to obtain votes in the hands of voters. The country adopted 12-year compulsory education, comprehensive free medical care, and used oil revenue to import imports.

Commodities are subsidized so that even those living in slums can eat. However, it is easy to change from frugality to luxury, and it is difficult to change from luxury to frugality. 

When Venezuela’s finances lost the cash cow of oil, these high welfare became an important factor that dragged down the Venezuelan economy.

All high welfare has become empty slogans, and these slogans have disappointed the people again and again, and the disappointment in the government has made the country more turbulent and formed a vicious circle. 

In order to fill the financial gap, the Venezuelan government can only turn on the money printing machine and print money frantically, and doing so has made the Venezuelan economy fall into “infernal purgatory.” Because what this brings is terrible inflation.

Venezuelan currency needed to buy a roll of paper

In the past few years, Venezuela has experienced hyperinflation. In 2014, the country’s annual inflation rate reached 69%, the highest in the world. In 2015, the inflation rate was 181%, once again the highest in the world at the time and the highest in the country’s history. 

Venezuela’s inflation has gradually evolved into hyperinflation. In 2016, the country’s inflation reached 800%, in 2017 it exceeded 4000%, and in 2018 it reached approximately 1,700,000%. By the beginning of 2018, the Venezuelan government “has basically stopped” providing official inflation estimates. 

The International Monetary Fund (IMF) estimates that by April 2019, Venezuela’s inflation rate will reach 10 million percent by the end of 2019. The Central Bank of Venezuela (BCV) officially estimates that between 2016 and April 2019, the country’s inflation rate rose to 53,798,500%. And crazy inflation has brought about a long-term food crisis.

CNN reported that Venezuela is experiencing a total shortage: food, medicine, electricity, toilet paper, condoms, etc. Ricardo Cusanno, vice chairman of the Venezuelan Ministry of Commerce, said that 85% of Venezuelan companies are in a state of discontinuation to some extent. Due to a severe shortage of sugar, even the production of Coke stopped. There is a serious shortage of toilet supplies in Venezuela. Many Venezuelans say that people line up for hours to buy some basic toilet supplies, only to get them on the black market to sell them at higher prices. Toothpaste, soap, toilet paper, shampoo, condoms, these things are hard to buy.

Los Angeles Times reported on Maria Linares, a 42-year-old Venezuelan single mother who said that her family had not eaten chicken since December 2015. In December 2015, half of her income would be spent on daily necessities, and now she would spend all of her feeding her two children. In some price-controlled state-run stores, such as Mercal and Bicentenario, things are much cheaper, but you need to wait in line all night to buy things, and even line up all night and the shelves are empty or robbed when they leave the store. When people are hungry, they become crazy and they can eat anything.

During the economic crisis in Venezuela, according to “PanAm Post” reported in a hospital , some people even started catching cats, dogs, and pigeons to fill their stomachs.

Once a Latin American oil country, it has now become one of the poorest countries in Latin America. There are signs of Venezuela’s failure. 

In fact, there are many resource-based countries in the world such as Venezuela.

Once lost, the wealth brought by the sale of resources will be impoverished. Just as the old saying goes, people without foresight must have immediate worries.