Let's continue by adding Venezuela to the series of countries that is one the radar of the Donald Trump administration. As a matter of fact, events in the Latin American country have been escalating recently. Unfortunately, the lines I dropped under the title "As Venezuela suffers" in this column last summer are still largely valid. And the country that left behind the elections at the end of July is being increasingly criticized by the U.S., while simultaneously being rattled by violent protest and democracy debates.
One of the recent developments in this regard was Trump's statement that the “option of military operation to Venezuela is on the table.” Along with this idea, which has also attracted reactions, especially from some Latin American countries, new sanctions, which have been decided by Washington, have greatly occupied the agenda.
So, let's take a look at the economic aspect of the matter now.
The growing list
Venezuelan President Nicolas Maduro has long been in a criminal position in the eyes of the U.S. After the events that followed the July elections, we witnessed the expansion of sanctions and the addition of new names to the list. The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) froze the U.S.-based assets of the individuals whom it listed last week and barred its citizens to trade with them. According to news, the list of names can be further extended.
These, along with related decisions are emerging as a fierce and rapid reaction by the U.S., but may be inadequate for those who advocate that Venezuela should be punished. Indeed, there must be some Venezuelans who have long reasoned to break their ties with the U.S. Even if they have not broken their ties, it is another question to what extent the sanctions will bring the expected effects.
At this point, it appears that oil automatically flashed into Washington’s mind as a more painful threat element, given that the U.S. is discussing whether to suddenly cut oil import from Venezuela. After all, the Latin American state’s economy is overwhelmingly dependent on oil, and one of the main partners that it exports this commodity to is the U.S. It is known that Venezuela imports light oil from the U.S. due to the heavy nature of its own oil. In other words, there is a considerable exchange of oil between the two countries.
Based on this, the U.S. must be thinking that the idea of cutting oil exports and imports with Venezuela will bring major challenges to the already embroiled country. Of course, while the possibility that “what if such an attack serves Venezuela’s customers in the Asian market?” is worrying; it is certain that the frustration of people will further intensify if things go even worse.
When we look at the economic development in the last three-to-four years, we are facing a grave picture that the country’s per capita income is increasingly melting away. I have already mentioned the problems of hunger, famine and misery in this context. In such an environment, we are watching with pain that the inflation in the country is also at the peak among other countries. No one will be surprised if Venezuela’s consumer inflation, which is around 800 percent according to the current data of the year, reaches four-digit figures. In the economy where inflation is going crazy, the currency has become almost dirt cheap.
And, in the framework of all these developments, there is a debt crisis in the country which is heading toward misery. Given the bill payment schemes, it is not possible to worry about where this disastrous situation will reach. Of course, it should be added that the debt is largely on the shoulders of the state-owned oil company PDVSA.
On the other hand, the country has cooperation with China and Russia from the past. In effect, it seems that the credits given by its Asian partners (in exchange of oil) do not have a future now. However, there are rumors that Russia is in negotiations for further cooperation with PDVSA for a while. There is no doubt that the U.S. will consider these and relevant ties that concern itself in its plans on Venezuela.
As a result, the country with the world's richest oil fields is almost miserable today. As the Venezuelan people sadly suffer the result of a lack of diversification in the economy, the country needs to stabilize as soon as possible.