Opinion

Venezuela and the curse of oil

December 15, 2017
Venezuela and the curse of oil

Firas Al-Turki

Makkah

Although it has a large oil reserve, Venezuela is today considered one of the world’s most impoverished states. Who would ever have imagined that that would happen? However, there are reasons why it has become a poor country. The most important reason is its heavy dependency on oil as its primary source of income. The slump in oil prices has dealt a strong blow to Venezuela. Moreover, the government did not take advantage of its oil revenues when the price of oil was high, nor did it build a strong and robust economy or invest in development projects which could have created additional sources of income.

The Venezuelan government mismanaged its resources and failed to fight rampant corruption in its government sectors. This resulted in a complete disaster and fiasco. Today, Venezuela is experiencing the worst economic and humanitarian crisis in its history.

There is no sugar, milk, medicine or food available in Venezuela. If someone wants food, they have to queue for at least four hours. Prices have increased by 800 percent, rendering 83 percent of Venezuelans poor. Seventeen percent of people look for food in garbage dumps. Animals went missing from Zulia zoo and the police suspect that people stole them for food. Around 50 animals died in Caracas zoo because there was not enough food.

People remain without power five hours a day. Many use candles while 85 percent of factories have halted production, including a soft drinks factory because it could not find sugar in the market.

The health situation is a disaster. The Zika virus is back while malaria is rampant. Over 260,000 people caught malaria in 2016. Infant mortality among newborn babies has increased by 30 percent. Around 11,400 newborn babies died in one year and 75 percent of Venezuelans have lost nine kilograms due to malnutrition. Despite all of this, the government refuses medical aid because it does not want others to believe that it has failed in managing and resolving its present crisis.

There are protests daily while the security situation is getting out of control. Crime is high with 27,875 criminal incidents registered in 2015. The Venezuelan government is no longer able to control the situation and it is running out of cash. It had over $30 billion in reserves in 2011, which today stands at $10 billion. Total debt has exceeded $150 billion and the country is no longer able to repay foreign debts. This situation is similar to being bankrupt.

The official currency has also collapsed. In the beginning of 2017, $1 used to be equal to 3,200 Venezuelan Bolivars. Today, $1 is equal to 55,200 Bolivars. This is an indication of a major inflation problem. The International Monetary Fund expects inflation to reach 2,300 percent in 2018.

Venezuela is an example of the fact that natural resources have no value if corruption is rampant. The country is living proof that corruption can destroy the richest economies.


December 15, 2017
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