FINANCIAL POST
Everyone realizes too late that Stephen Harper was right about Venezuela
by Terence CorcoranPublished: September 13, 2018 9:33 AM EDT
As beleaguered Venezuela lies in socialist ruins and its people plunge deeper into economic chaos, the country’s president announced Wednesday that he was flying off to China in search of another financial rescue. It is not unreasonable to ask: Will he ever return? Are Chinese leaders crazy?
According to Reuters, Nicolas Maduro made the announcement over state media from Caracas airport just before boarding a plane. His parting words could be interpreted: “I am going with great expectations and we will see each other again in a few days with big achievements.” Was that a promise or a hope?
American media have been abuzz with speculation about a coup d’état in recent days at a time when the Venezuelan economy — in collapse for at least a year — seems beyond rescue. The New York Times reported over the weekend that Trump officials met with Venezuelans plotting the overthrow of Maduro’s dictatorship. Trump rejected the idea, but the news has generated new fever about foreign intervention or of a possible internal coup.
A peaceful overthrow of the Maduro regime would be the best outcome for a country that has been in a socialist tailspin for more than two decades — a reign of economic error that might have ended sooner had it not been for the soft-headed support of the world’s leftists, a collection of ideologues that ranged from Canadian mainstream socialists to international economists and a global media all too willing to downplay the scale and causes of Venezuela’s decline.
National income has cratered. The country’s currency is worthless paper with its estimated annual inflation rate of one million per cent. Disease is spreading, corruption is rampant, rule of law non-existent, crime everywhere. It is estimated that 2.3-million Venezuelan refugees have fled the failed state for better lives in Colombia and other South American nations.
Even CBC’s The National has glommed on to Venezuela’s economic disaster, having dispatched star anchor Adrienne Arsenault to the border between Colombia and Venezuela to file reports this week on the human toll of the refugee flood. It’s a big move for The National, which over two decades has rarely raised a concerned eyebrow as Venezuela slid under the tyranny of leftist populism, first under Hugo Chavez, hero of the Canadian left, and then under Maduro, who took power when Chavez died in 2013.
At the time, left-wingers criticized then-Prime Minister Stephen Harper for issuing a statement on Chavez’s death that rightly offered no sympathy: “I hope the people of Venezuela can now build for themselves a better, brighter future based on the principles of freedom, democracy, the rule of law and respect for human rights.”
At Rabble.ca, official home of leftist Canadian commentary, a writer implied that Harper could learn a lesson from Chavez, who — among other things — was said to be more representative of democracy since he won elections with big majorities that Harper never matched. In 2014, a Rabble headline read: “NDP should use Venezuelan revolution as inspiration for Canada’s labour struggles.”
The list of Canadian enthusiasts for Chavez-style socialism ranged from journalist Linda McQuaig to celebrity author Naomi Klein. McQuaig devoted 20 pages of her 2004 book “It’s the Crude, Dude: War, Big Oil and the Fight for the Planet,” to Chavez as the hero of nationalization after he took over control of Venezuela’s national oil company, PDVAA — a classic socialist takeover that became the single-largest cause for the country’s decline. Chavez used nationalized revenue from the country’s massive oil reserves to set up social redistribution to buy support among the poor and the masses: free housing, virtually free gasoline, payoffs to supporters. As oil hit US$100 a barrel, the ideology seemed to be paying off. But when the commodity-price bubble burst, it all came crashing down.
McQuaig, Klein and other squishy Canadians were not alone in cheering Venezuela’s Chavez/Maduro takeover. Nobel economist and former Clinton adviser Joseph Stiglitz praised Chavez, claiming he “appears to have had success in bringing health and education to the people in the poor neighbourhoods of Caracas, to those who previously saw few benefits of the country’s oil wealth.”
International support for Venezuelan socialism continued over two decades and up till recently. British Labour Leader Jeremy Corbyn hailed Venezuela as a socialist model and Chavez for showing the world there is a better way of doing things. “It’s called socialism,” Corbyn said.
In a commentary last week, Harvard Economist Kenneth Rogoff spread the net of complicity wide:
“Altogether too many left-leaning economists (including some who ultimately worked on the 2016 presidential campaign of Senator Bernie Sanders in the US) were diehard supporters of the Venezuelan regime. There were also opportunistic enablers, including Goldman Sachs (with its ill-considered purchase that propped up Venezuelan bond prices), and some on the right, such as the inauguration committee for US President Donald Trump, which accepted a large donation from Citgo, the US-based subsidiary of Venezuelan oil company Petróleos de Venezuela.”
Are the Chinese crazy enough that they will sink more cash into a destitute and failed economy?
All through the Chavez/Maduro regime, Venezuela has been forming military and financial ties with Russia and China. Russia has supplied billions of dollars to Venezuela while pressuring the country to nationalize industries and mines, including Chrystellex, the Canadian gold operator that last month won another U.S. court case seeking US$1.2-billion compensation for the government takeover.
Russia’s involvement in Venezuela runs deep, leading some to speculate that a new clash with the United States in taking shape over the future of South America. China has also funded Venezuela, based on the assumption that there will in future be cash to extract from the country’s massive oil reserves.
Can Maduro, if he is indeed off to China, secure more stopgap funding from Chinese leaders? Are the Chinese crazy enough that they will sink more cash into a destitute and failed economy in the hope that the investment will be returned once some form of stability is achieved?
Venezuela has a lot of oil, but its current government has so many growing liabilities tied to that oil, sorting out the debts in future will not be easy, especially given the failed nation’s current state of law and monetary policy. It is possible that China and Russia might find themselves coexisting as the backers of a regime that neither would claim is an economic success, even by the miserable standards of Latin America.
Meanwhile, Maduro recently launched a farcical reform of the valueless Venezuelan Bolivar, including the launch of a cryptocurrency called the Petro — described by Johns Hopkins University economist Steve Hanke as a scam.
Whether or not Maduro ever returns from China with his “great expectations” fulfilled may not matter. From what we know of Venezuela’s economic plight, there is more than a good chance that the end is near for the glorious socialist model that never existed.
More info: https://business.financialpost.com/opinion/terence-corcoran-everyone-realizes-too-late-that-stephen-harper-was-right-about-venezuela
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