Today, Explained - The poorest rich country in the world

Episode Date: May 25, 2018

Venezuela has been crippled by poverty, starvation, five-figure inflation, and on Sunday, an election that many countries didn’t recognize as legit. Bloomberg’s Patricia Laya shares reactions to Nicolás Maduro’s new term from her base in Caracas before NYU’s Alejandro Velasco explains how having the most oil in the world got Venezuela into all this trouble. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Johnny. Sean Ramos from. Where are you? I am on the bay. I'm looking over Victoria Harbor, which is named after a British queen, at what is the most stunning skyline of my life. Wow. And I hate the word iconic, but I'm like blown away. And this is like totally iconic.

And like I'm just giving into it. And I'm like taking selfies along with every other human on earth that is also at this site. You don't happen to have your quip electric toothbrush with you for those selfies do you? No I actually don't bring it out with me I think that would be a little extreme. Venezuela is falling apart. Inflation might reach 13,000% this year. Babies are dying of starvation. Malaria is soaring. Some say that a tenth of the country has already bailed.

And in the middle of all of this misery, a presidential election. The polls have closed in Venezuela. And with almost all of the votes counted, the incumbent president, Nicolas Maduro, will be re-elected with around 68%. Sunday was a very odd day for all of us covering the elections, because we visited dozens of voting centers on Sunday, and it was just amazing how empty they were. Patricia Laia is the bureau chief at Bloomberg News in Caracas.

For so many of them, I was the only person there apart from the people working at the voting centers. It was the first time I had ever seen anything like it. The streets were almost eerily quiet. Maduro was re-elected for another six-year term, but the national electoral authorities said voter participation was at about 48%, and that would be the lowest for a presidential election since Hugo Chavez was elected in 1998. Why was the turnout so low? So it's unclear whether people sat out the vote because they're disillusioned government supporters or because they were following the main opposition coalition's call to boycott the vote. What's a normal day in Caracas like at this point? On one hand,

you have so many Venezuelans dealing with just the daily plight of doing almost anything at this point, right? Being able to find food or medicine and then even if you find it, just being able to afford it because you have a rampant inflation that's set to reach 13,000% this year. On the other hand, you have collapsing public services, like running water has become a luxury in Caracas and most of the country nowadays. You have power outages going on for hours. Public transportation is also difficult to find. You have a lot of people that have to worry about a lot of other things other than voting. And it doesn't sound like Nicolás Maduro would be a very popular candidate then. How did he win this election?

I think the need on behalf of the people is the worst it's been in years, right? Malnutrition is rampant in Venezuela. So many people go through garbage cans on a daily basis just to find something to eat. People have reduced their meals from three to two to one a day. So people rely on government programs for basically all they eat and all the money they receive on a monthly or weekly basis. So they're more relying on the government than ever. So that's why Maduro was reelected? Because they feel like they need him? Basically, yes. The government has created a machine for everything that people need,

right? From the work, their food, their medicine, everything. Did Maduro have real opposition? Was there some candidate running against him that had a platform of some credibility? So the main opposition coalition was the one who decided to boycott the vote. But then you also had two opposition candidates that still decided to run despite the boycott. The main challenger, his name is Henry Falcón. He's a former governor and he used to be a Chavez supporter back in the day, but he struggled to gain a lot of support because the opposition accused him of legitimizing what they called the sham vote or election. And then you also had Javier

Bertucci. He's a televangelist who had never held public office. And he did gain some momentum in the past weeks. But in the end, I think he only managed to split up the opposition even more than it was. And so does the opposition have any legs going forward? Or is Maduro the only game in town? So far, Maduro is the only game in town. The opposition hasn't really even come out with a unified message at this point. It seems really confused. There's no straight direction for the opposition going forward. So you've got this handicapped opposition and people are depending on Maduro for food. Is there any way these elections were legit? Well, as you know, the UN refused to certify Venezuelans polling.

Government supporters set up kiosks called Red Points near polling stations where they asked people who voted to show something called the Fatherland Card, a card that's required to receive subsidized food and money, and where they also question them about where they work and what government programs they use. I don't know if you can call that fair conditions for all candidates. The United States has had a pretty rocky relationship with Venezuela. How is it getting better or worse with the results of this election? Earlier this week, Maduro expelled the top two diplomats in Venezuela.

That was in retaliation of the sanctions that the U.S. imposed. We also had U.S. Deputy Secretary of State John Sullivan saying that the U.S. would have oil sanctions under active review. We have sanctions in place to pressure those in the regime who are most responsible for the gross abuses we have witnessed. And yesterday, we added three more names to the list. That would be sort of the last deadly blow for Venezuela's economy that's already in crisis. Are people feeling even more hopeless after Sunday? Or is there some resolution ahead that people are hoping for? I think the feeling is of complete dissolution. Venezuelans are struggling with so much on a

daily basis. It's hard to explain what it's like to live with inflation at, you know, quintuple digits. Everything that you pay for in a single day, you know it's going to cost more, you know, the following day. I just went to the doctor earlier this week, and the doctor gave me a list of sort of seven alternatives for medicine because you can't find anything anywhere. earlier this week and the doctor gave me a list of sort of seven alternatives for medicine because you can't find anything anywhere. Of course, the first couple of pharmacies I went to, they had nothing, not even any of the seven options the doctor had given me. And people are just struggling so much to get by. The feeling when you walk outside is just a complete dissolution and enchantment with the government and even the opposition at this point.

Venezuela has more oil than any country in the world. So how could this happen to the country with more oil than anyone else? It's actually the oil that got them into all this trouble. That's next on Today Explained. Johnny Harris, you've been in Hong Kong for several days now. How have you found the battery life of your Quip toothbrush? Wait, there's a battery? So I dinked around with it when I first got it,

like assuming there was a battery or a charger, and there was like none of that. And so I just inferred by all of this that you don't have to ever charge it. Am I wrong in that? I don't think you ever do have to charge it. I think how it works actually is you replace the batteries once they run out. They're like AA batteries. Oh, that's amazing. Okay. Well, that's good to know.

No, the thing's been, I mean, since I got it, it's been running great. Yeah, no batteries changed yet for me. But you do have some batteries just in case this problem arises? I mean, I'm in, I mean, if you knew where I am, like, this is the center of all electronics and gadgets. There are marketplaces that look like when you go to, like, your food co-op and there's, like, you get, like, raw almonds in bulk. It's that, but, but like circuits and motherboards.

And like I am an electronics central of the entire universe. And so if I need batteries, I'm sure I can find batteries. I got to ask then, have you seen anyone selling a Quip yet? I haven't, no. The things over here tend to be a little bit more mass produced, not as bespoke and high-quality, we might say, as the quip, this, quote, robust piece of gear, as it's been coined. Remember Hugo Chavez? Venezuela's Hugo Chavez melded populist politics, socialism, and his own personality cult with blowtorch rhetoric.

He's the key to understanding the mess in Venezuela. And Alejandro Velasco is the key to understanding Hugo Chavez. I'm associate professor of history at New York University. I work on Venezuela. So Hugo Chavez was first elected in 1998. He first was sworn in in 1999. After what had been another period of deep crisis in Venezuela, really throughout the 1990s, what you had was this increasingly tremendous gap between the rich and the poor, which was augmented in its implications by the response on the part

of the government in 1989 to a huge uprising. At the time, the government responded tremendously violently in what was known as the Caracazo Massacre. As many as a thousand were discovered later in mass graves. The government had really shattered its credibility with the people, and that opened the door for alternatives, one of whom was Chavez. First in 1992, when he tried a coup d'etat, which was unsuccessful, but in a public d'etat, which was unsuccessful, but in a public speech that he gave after he was arrested, he took responsibility for the coup and for its failures, which was something that no politician had been doing at the time, taking responsibility. And after spending a few years in jail, he was pardoned. And then that

started his political career, which he won in 1998, promising a Bolivarian revolution, which would transform Venezuela from a country that had basically been catering primarily to foreign capital to one that now more explicitly turned its gaze towards those who had been marginalized. Chavez was hugely controversial internationally, right? Absolutely. When he came to power, there was this increasing breach between the wealthy and the poor. And he was really the first president in what became a long line of Latin American presidents to say that the script needed to be flipped. That inspired other countries, first Brazil, Bolivia, Ecuador, Chile, Argentina, a long list in what became known as the left turn in Latin know, certainly for the last couple of decades, had been the playground of the U.S. into a very assertive, into a very confrontational continent. Of course, that all famously came together in 2006 when Chavez at the United Nations called George W. Bush the devil. I think that the first people who should read this book are our brothers and sisters in the United States.

The devil is right at home. The devil, the devil himself, is right in the house. And the devil came here yesterday. In response to what, of course, at the time was this disastrous Iraq war, which Chavez in large part helped to strike a tremendous voice of opposition internationally. And at home, he was regarded as a hero for the most part? The majority regarded him as a hero. One of the platforms of his participatory democracy was frequent elections. The idea was that, you know, the referenda and each one of these elections was really a referendum on Chavez's presidency or Chavez's rule.

Routinely, somewhere between 55 to 60 percent of the population voted in support of Chavez and did so very affirmatively. And then, you know, anywhere between 40 to 45 percent of the population with equal amounts of fervor voted against him. And what did Chavez actually do in Venezuela? How was he different than the leaders before him? is that you had this tremendous spike in oil prices, which then allowed Chavez to give content to what had previously been primarily just a rhetorical kind of device about participation. And that's when you started to see a second phase of Chavez and Chavismo come in,

and that was a much more distributionist program to provide economic incentives for these populations that had, again, been left out through these various what were called misiones or missions, social programs, which were extremely popular and grew his base of support, but undermined what had been that previous era of participation and now became far more an era of just being at the feet of the government. What were the programs? What were these social mission programs? The first major social program had to do with bringing doctors,

especially Cuban doctors, especially Cuban doctors, to the barrios, popular sectors of Venezuela. Then came the educational programs, eliminating illiteracy in Venezuela by deploying teachers and others to these areas where literacy was a little bit higher, but then also providing for free access towards higher education at university and also to get people back in school. And at some point, oil prices dip and this all goes to hell? Yes. In 1998, when Chavez was first elected, the price per barrel of oil on average was $8.

In 2012, the price per barrel of oil was $100. In a country that was producing an average of 3 million barrels of oil per day, huge astronomical figures of money were coming in, which were nevertheless not enough to keep pace with what was being promised and what was being spent. By 2014, when you do see a big dip from about $120 to about $40 a barrel, that's when crisis really begins to hit hard. And it's just before this huge oil crisis that Chavez dies. So how does Nicolás Maduro end up taking over? Maduro was Chavez's foreign minister for about eight years, and he was seen by Chavez as somebody who could promote the Bolivarian revolution abroad.

Maduro also came from trade unionism. He was a public bus driver. And when Chavez died, he said, I entrust the revolution and I entrust all of your support to Nicolás. I entrust him the care of the revolution. So how badly do falling oil prices hit the Venezuelan economy? Venezuela is an oil country. And what I mean by that is that it relies almost exclusively, somewhere upwards of 94% of its revenues come from oil, which means that its fortunes ride on the price of oil. So this crisis, in a sense, doesn't really have much to do, unlike so many other crises we've seen in Latin America, with like United States interference. This one had to do with just market

valuation of oil. Well, it doesn't, it doesn't. I mean, its primary motivator is the behavior of oil, but the United States has made it worse. I mean, it did support a coup attempt in 2002 against Chavez. It did try to, you know, scuttle many efforts to create regional integration that Venezuela was promoting. And, you know, over the last four years, it's executed a series of sanctions that have made the possibility of Venezuela turning around far less likely than more. The oil prices falling is the detonator of the crisis, but the U.S. is certainly adding tremendous fuel to it. Hugo Chavez had these ideas of these sort of social missions, and they succeeded on some level, right? Absolutely. It succeeded on a huge level. I mean, all kinds of indicators show that.

Poverty rates dropped from somewhere upwards, I think, 45% to 25%. Caloric intake, for instance, rose by a thousand calories on average. People's lives were improving unquestionably. And so the retreat of that has been a significant tragedy. Is that to say that this was like an unsustainable mission or was it just a flawed execution? That's a great question. I mean, certainly a little bit of both, but I think the primary culprit there is a failed execution. So Chavez wanted to have it both ways. On the one

hand, he talked about creating a new socialist Venezuela, by which he meant changing the way that people valued consumerism. He wanted to establish a society in which people thought more about the collective than themselves. But at the same time, he was doing that by flooding the economy with money, which fueled more consumerism. You had people for the first time, you know, rising from extreme poverty to poverty and from poverty to middle class status, just at the time when somebody's telling you that those things are not something you should be desiring, right? So it was always this contradiction between the larger vision of socialism that Chavez was trying to promote for Venezuela and the reality of a country awash in petrodollars,

where people were rapidly having much more spending power than they had before. Is there a chance that this dire economic situation might lead to Venezuela being less reliant on oil? No, partly because every solution always contemplates oil as the centerpiece of any turnaround for Venezuela. To some extent, that makes sense. I mean, Venezuela does sit atop the world's largest proven oil reserves. The problem, again, has been that the only thing that matters in Venezuela is who wins, not what happens the day after you win. Especially in the opposition, there's never been that reckoning that we need to plan for the day after.

We can't just say we need to get rid of Chavez or we need to get rid of Maduro. We need to say what comes the day after? How do we govern after get rid of Chavez or we need to get rid of Maduro. We need to say, what comes the day after? How do we govern after Maduro or Chavez? And when you have so many elections coming back to back, then, you know, you never, you can always postpone until the next election having to talk about the future. Alejandro Velasco teaches Latin American history at NYU. I'm Sean Ramos from This Is Today Explained. We're taking Memorial Day off. You'll hear from us again Tuesday. Johnny Harris, it's been an adventure.

It started at getquip.com slash explained. You got your toothbrush, your refill's on the way, you got all your gear together, you took the toothbrush to Hong Kong, you're standing in an incredible place, and someday soon we'll be able to see all these adventures in video form. Oh yeah, as soon as I get back I'm going to be feverishly editing these things and publishing them, you know, mid to late June. So stay tuned on Vox's webpage, aka YouTube channel. And in the meantime, go to Instagram and look at my stories if you want to see the real time experience. Johnny W. Harris on Instagram. And if you want to brush like Johnny, go to getquip.com slash explain. Brush like Johnny. There's the tagline.

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