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T&T shares Venezuela’s fate

Sunday, September 17, 2017

An ignored and or insufficiently probed element of the Venezuelan crisis is the economy’s historic dependence on oil, and this to the detriment of the non-oil economy, especially the food-producing sector.

Figures gleaned from papers of economists from the IMF and elsewhere (the IMF says Venezuela has not engaged in its regular Article 4 consultation for 139 months) indicate that revenues from oil have accounted over the last few decades for between 85 and 95 per cent of Venezuela’s forex earnings.

The reported food crisis and widespread starvation of large segments of the population stems in the first instance from the shortage of foreign exchange to import food in the quantities as in the period when oil peaked at US$100-plus per barrel.

Venezuela once produced 70 per cent of the food it consumed. Today, it imports 70 per cent of what its population eats.

In the recent past, Venezuelan presidents have come to Port-of-Spain with requests for food exports to Caracas. President Maduro set a budget of US$50 million to pay for imports from T&T manufacturers.

Why should a country such as Venezuela, 30 million people, vast acreages of land, billions of dollars in US currency, a large business sector, and holding what is said to be the largest deposit of oil in the world, be seeking basic food imports from T&T or anywhere?

Ivan Ogando of Flacso–Dominican Republic, at a discussion last week on Venezuela at the Institute of International Relations at UWI, answered the question: “The lack of capacity to turn around the economy, and being totally dependent on the oil boom,” stand in the way of change.

Ideology and political contentions apart, the Venezuelan crisis is being fuelled by segments of the population being desperately short of basic food items.

The so-called “Dutch Disease”, identified by economists as an infection that plagues especially oil-rich countries which come into multiple billions of oil dollars when the price is high, acts as a disincentive to building a strong domestic economy.

The commercial business sector thrives in such conditions as almost all is imported with the US dollars received by the Government/Central Bank.

With exchange rates low and with the Central Bank flush with foreign exchange, which it sells to the business community, and citizens hooked on foreign tastes, there is little interest in developing industries to produce for local consumption, far less to export.

It’s a disease which saps human energy and enterprise, and cripples the imagination and the will to indigenous production of the basics for life.

T&T shares that fate with Venezuela. Our colonial history bred us to produce a narrow range of exports and import everything else.

Fortunately though, the local farming and agro-industrial sectors here have sprouted encouraging shoots.

Colin Granderson, assistant secretary general, Foreign and Community Relations at the Caricom Secretariat, made the important point at the IIR conference that the solution to the Venezuelan crisis has to be internal and not external.

I take that to mean that the US, the OAS secretary general and anyone else with ambitions to impose a solution should forget it.

One element of that internal solution must be the construction of a vibrant and diversified economy. The difficulty though is that the politics of the times stands in the way (as it always does) of economic development.

To begin the transformation of an economy and society so steeped in import consumption needs long periods of peace, stability and reasonableness among the political protagonists.

A number of panellists at the conference expressed the view that a neutral Caricom can perform the role of honest broker. President Maduro is reported to have accepted the offer however, the Opposition Democratic Unity Roundtable (a coalition force) is yet to respond as a group.

Caricom/T&T, with a stake in peace and stability in Venezuela, needs to pursue the offer to assist.


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