McDonald’s has ceased the sale of the Big Mac in Venezuela citing the shortage of bread. The country is experiencing a deep economic turmoil and is on the brink of a humanitarian crisis as citizens cannot access basic commodities such as food. The massive influx of Venezuelans into Colombia last week when the country opened its borders, albeit temporarily, is a testament to things falling apart. Crime rates have soared with mass looting in shopping malls and petty armed robberies being the order of the day.
Venezuela and Zimbabwe: reading from the same script
Two countries, two continents but similar problems, so what’s the common denominator? The current crises that these two economies find themselves in can be traced to ‘strongman leadership’ whose populist policies become unsustainable and turn against them. In the case of Zimbabwe, the incumbent; Robert Mugabe has clung to power since the country’s independence in 1980 and is currently the world’s oldest president in office. In terms of influence, the man is a mere shadow of his former self having reversed Zimbabwe’s economic gains of the 80s and 90s to overseeing the country’s hyperinflation in 2008. Mugabe’s obsession with indigenization policy became the country’s major undoing especially when land was seized from white settlers and redistributed to the natives.
For Venezuela, the problem can be traced to the socialist policies of former president, Hugo Chavez, who ruled the country from 1999 to 2013. Chavez depended largely on revenues from oil to subsidize basic goods and services and introduced price controls – this endeared him to the masses but the private sector was not amused. Chavez was a beneficiary of good times as his tenure was characterized by consistent oil price rises but as we all know, good times never last forever. Fast-forward to 2013 and Hugo Chavez passes on and is succeeded by President Maduro.
Good times don't last forever
While Maduro would have wanted to continue with the socialist policies, the dynamics have changed significantly. Since mid-June 2014, oil prices have plummeted from highs of over $110 to the current levels of about $46. Venezuela has seen revenues dwindle at an alarming rate, dollar reserves depleted, and inflation is at an all-time high, hitting highs of over 180%. For a country that was Latin America’s powerhouse, per capita income now lags behind countries such as Cuba.
For Venezuela and Zimbabwe therefore, the script is the same, only that one leader has lived to see the fruits of his bad policies while the other died leaving his successor bearing the brunt of equally lousy policies. #News #World Politics