It's official....as of yesterday, the unemployment rate in the U.S. is 7.2%, the highest in 25 years. Venezuela, on the other hand, has an unemployment rate of 6.1%. Of course, that unemployment rate will probably rise this coming year, if oil prices remain low. Nevertheless, there's a couple reasons why this is not simply going to be a case of Venezuela falling through the floor this coming year as they can no longer sell their oil. Venezuela is actually in a better situation than one might expect, for a number of reasons.
1) Unlike most commodities, oil isn't a free-market commodity, and there is no "market price" for oil. Oil is an oligopolistic, cartelized industry, and to a large extent the price of oil is whatever OPEC and Russia say it is. So far they haven't agreed on a plan to lower production: but they will, and they will lower it to the point where their earnings are maximized. That will happen, I suspect, sometime early this year. To put it another way, Venezuela and the other powerful oil producers (Russia, Iran, etc.) have a lot of discretionary power over the price of oil.
2) The demand for oil, inevitably, is going to increase again. The earth's population is increasing, there is a rising demand for energy to build industrial economies in India and China, and the proposed stimulus plan in the United States will require an initial investment of fossil fuel energy to build the alternative-energy plants that Obama is talking about. As the supply of oil falls, the price will inevitably go up. Let's remember that the price of oil is still about 33% higher than it was six years ago.
3) Chavez has been investing a lot in agriculture and manufacturing. As Venezuela makes less money from oil, it will be forced to devalue its currency, which in the long term will give a big boost to domestic production. Unlike a country like, say, Saudi Arabia, Venezuela has a plethora of natural and human resources: fertile soils, vast expanses of land, dense and biodiverse forests, rich fisheries, an educated and hardworking people, and a basic industrial infrastructure- roads, factories, transportation networks, processing plants, and the like. It's a far cry from the environmentally barren and socially decadent one-crop economies that are the Persian Gulf states, it's a far cry from the overpopulated ethnic and religious powder keg that is Nigeria, and it's a far cry from the curious hybrid of First World and Fourth World that is Equatorial Guinea. Venezuela is more analogous to Russia or Mexico- oil has been great to her, but she has more to rely on than oil, and she will get through this mess somehow. (Fortunately, unlike Russia, Venezuela isn't flanked by expansionist European globalizers to the west, Jihadists to the south, and an amoral and land-hungry Chinese tyranny to the east).
4) Finally, the Venezuelan revolution isn't going to fall because the economy is bad, it's going to fall if and only if people blame the revolution for their ills. If Chavez is smart, he will blame the economic difficulties on the irrationality of the global capitalist system, and on the amorality and disloyalty of the wealthy who pulled their capital out of Venezuela. And he would speak the truth- not all of the truth certainly, for Chavez has made plenty of mistakes of his own, but he would not be lying. If Chavez is smart, he could even use the economic crisis as a way to get people to band together against the enemy at home and abroad, and as a way to reconstruct the economy along progressive lines. Argentina used the crisis of 2001 as an opportunity to extend state and worker's control over factories that went bankrupt; Cuba used the crisis of the early 1990s as an opportunity to transform their agriculture along ecologically sustainable lines. In both cases, ultimately the countries emerged stronger and more progressive from their ideal. It is to be hoped that Venezuela can do the same.
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