VINCE ON QUORA: WHY 2 OIL-EXPORTING SOCIALIST COUNTRIES, NORWAY AND VENEZUELA, HAVE SUCH DIFFERENT ECONOMIES
Vince answered a question on (Spanish-language) Quora. Here is the English translation of the question and what he wrote:
Unlike Norway, Venezuela’s government has not run afoul of Washington, which has adopted the ideology of Neoliberalism and Neoconservatism, both of which do not tolerate the presence of a country in the Western hemisphere that labels itself as “socialist.” The problem is not so much with Venezuela’s socialism as it is with Chavismo’s blatant and open antagonism to what it perceives as Washington’s Neocolonialism.
Norway has not attracted the ire of Washington and has therefore not been subject to sanctions and boycotts.
I had previously posted at Quora an analysis of the reasons for the Venezuelan economic crisis:
Also, unlike Norway, Venezuelan oil is relatively difficult to extract and process. It is highly viscous and its extraction and processing require special equipment. Unfortunately, the Chavistas have apparently failed to maintain their equipment properly and it is operating at low efficiency.
However, Venezuela has had some bad luck. In 2015, world oil prices dropped drastically and Venezuela lost a lot of money. Further, that same year, Obama declared Venezuela a “threat to the national security” of the US. This was a fabricated charge but based on this pretext, he imposed sanctions on several Venezuelan persons. There were also coup attempts against Chavez and Maduro, starting in 2002 which damaged the country’s reputation and hurt investment. All of these things had a destabilizing effect.
Meanwhile, the Bolivarian governments made little attempt to diversify the economy. The most serious error was the lack of investment in agriculture, which made the country dependent on food imports, which became extremely expensive and contributed to the hyperinflation that continues to plague the country. This hyperinflation problem was compounded by Maduro’s refusal to float the bolivar against the dollar.
Russian intervention is helping to ease at least 2 of the problems. After a conference with Putin, Maduro decided to float the value of the bolivar and allow banks to exchange bolivars against the dollar at rates similar to those of the black market. Further, just last week, on Friday April 5, an intergovernmental conference was held between Venezuelan and Russian officials in Moscow at which conference 11 joint investment projects were signed. One of these investments was in the area of agriculture, and if this project bears fruit, it will greatly ease the problem of food availability and prices.