WHEN PEOPLE abandon a country in droves, it is rarely a sign of a healthy economy. 2.3 million Venezuelans (7 per cent of the population) have fled poverty and economic despair, and another 2 million are predicted to leave over the next year and a half. For scale, imagine if half of London’s population left the UK, and the other half were about to leave. And we may be underestimating the crisis, since the situation is rapidly becoming nightmarish.
Hyperinflation has risen above 61,000 per cent and is predicted by the IMF to reach 1,000,000 per cent by the end of the year. When inflation runs this high, the lag between tax assessments and payments means that inflation wipes out the real value of taxes. This forces the government to print yet more money in a hyperinflationary death spiral. The recent botched operation to remove five zeros from banknotes has only caused further panic and confusion among the population.
Escaping Venezuela is increasingly difficult. Public transport has ceased to operate, and private cars lack petrol or can’t be repaired due to an absence of affordable spare parts. Walking to the border is almost the only option, difficult for the old and sick or those with small children. Moreover, neighbouring countries have started to insist that Venezuelans should present passports. However, this is no longer possible because Venezuela’s passport bureau has run out of materials to produce them.
One could say “could the last person to leave please switch out the lights,” but that won’t be necessary as the electricity network is falling apart with blackouts becoming ever more frequent. As public services grind to a halt, so does the country. In Caracas, there is rarely running water available, which Bloomberg’s correspondent has described as “a man-made drought that is arguably the most equalising disaster the government has ever managed to engineer.”
Some Venezuelans suggest that the government would prefer most citizens to leave, as this will help it stay in power. Fewer people means fewer protests, and if political opponents are no longer in the country, they cannot campaign against the regime. The regime’s food distribution network, or CLAP, assures the loyalty of many poor Venezuelans. Meanwhile, the regime’s leaders allegedly siphon off money for themselves from state oil operations, regardless of its effect on the country.
What should the world do when a country’s leadership steers it off a cliff? Must we wait until the country crashes at the bottom? Venezuela is certainly already in free fall. The British Government must be proactive both in addressing the humanitarian crisis and in working with Latin American countries to try and help the Venezuelan people find a new leadership dedicated to the welfare of the people.
Graphic: Minimum monthly salary in latin america in US dollars
More information on The Venezuela Campaign can be found on its website.
This article was first published on the Adam Smith Institute blog.