No one in Venezuela or abroad can be sure how President Nicolás Maduro's regime will go, but it seems increasingly clear that it will. When it does, Venezuela’s transition to democracy and a market economy will be filled with perils and pitfalls, and much sacrifice will be required.
LONDON – In Ernest Hemingway’s 1926 novel The Sun Also Rises, a character is asked how he went bankrupt. “Two ways,” he replies. “Gradually, and then suddenly.”
That is a good description of the collapse of the Venezuelan economy. The regime of President Hugo Chávez spent vastly beyond its means, just as domestic revenue stagnated and then began to fall as a result of the weakening economy. So Chávez and his successor, Nicolás Maduro, borrowed as much as they could, until private lenders cut Venezuela off after 2013.
In the last couple of years, the decline has accelerated to dizzying speeds. Now that the printing press is the only available financing tool, the International Monetary Fund is forecasting 1,000,000% inflation in 2018; the contraction in GDP dwarfs those of the Great Depression, the Spanish Civil War, and the recent Greek crisis; 87% of Venezuelans live in poverty; and untold millions have left their country.
LONDON – In Ernest Hemingway’s 1926 novel The Sun Also Rises, a character is asked how he went bankrupt. “Two ways,” he replies. “Gradually, and then suddenly.”
That is a good description of the collapse of the Venezuelan economy. The regime of President Hugo Chávez spent vastly beyond its means, just as domestic revenue stagnated and then began to fall as a result of the weakening economy. So Chávez and his successor, Nicolás Maduro, borrowed as much as they could, until private lenders cut Venezuela off after 2013.
In the last couple of years, the decline has accelerated to dizzying speeds. Now that the printing press is the only available financing tool, the International Monetary Fund is forecasting 1,000,000% inflation in 2018; the contraction in GDP dwarfs those of the Great Depression, the Spanish Civil War, and the recent Greek crisis; 87% of Venezuelans live in poverty; and untold millions have left their country.