Country sells remaining gold reserves as economy plunges deeper
What could be seen as the final act in Venezuela’s worsening economic crisis, the Latin American country has begun selling its remaining gold reserves. Just three year after the death of its socialist leader, Venezuela — once a leading oil producer — is on the verge of bankruptcy.
It is yet another ‘miracle of socialism’ that a country with the world’s largest oil reserves can go almost broke. Venezuela’s total oil reserves stand at an estimated 296.5 billion barrels, which is higher than Saudi Arabia’s 265.4 billion barrels. But the cash-strapped country is struggling to get investments and technical expertise to convert its oil reserves into revenue.
Socialist leader Hugo Chávez got elected as country’s President in 1999 and introduced the ideology of “Socialism of the 21st Century”. Chávez enacted a new constitution, taking control of the state and the economy to carry out his “socialist revolution”.
Chávez, and later his protégé Nicolás Maduro, managed to win consecutive elections largely due to their policies of social redistribution — but as it always happens — they have finally run out of other people’s money. British newspaper Financial Times reports:
[Venezuela’s] gold reserves have dropped almost a third over the past year and it sold over 40 tonnes in February and March, according to IMF data. Gold now makes up almost 70 per cent of the country’s total reserves, which fell to a low of $12.1bn last week.
Venezuela has larger crude reserves than Saudi Arabia but has been hard hit by years of mismanagement and, more recently, depressed prices for oil. Oil accounts for 95 per cent of its export earnings. Despite the recent price rebound, declining oil output is likely to take a further toll on the economy.
The IMF forecasts the economy will shrink 8 per cent this year, and 4.5 per cent in 2017, after a 5.7 per cent contraction in 2015. Inflation is forecast to exceed 1,642 per cent next year, fuelled by printing money to fund a fiscal deficit estimated at about 17 per cent of gross domestic product.
Democratic presidential hopeful Bernie Sanders might prefer to distance himself from Chávez and his socialist legacy, but admiration for Venezuela’s socialist experiment goes a long way with American progressives and liberals. Sander’s top advisor and his pick for the Democratic Party’s platform committee, Cornel West is a fervent devotee of Venezuelan dictator.
In 2006, on the eve of Venezuelan presidential elections, Cornel West along with the usual suspects like Jesse Jackson and Tom Hayden, endorsed Chávez in an open letter praising his policy of sharing “country’s oil wealth with millions of poor Venezuelans.” West tweeted in 2010 saying “I love that Hugo Chavez has made poverty a major priority. I wish America would make poverty a priority.” Now we all know, how foresighted “El Comandante” was when he made “poverty a major priority” for the Venezuelan people.
But don’t hold your breath if you are expecting liberals to realise the folly of falling for yet another third-world charlatan promising a socialist heaven of earth. Those riding the Bernie Clown Car have long lost touch with the reality.
I love that Hugo Chavez has made poverty a major priority. I wish America would make poverty a priority. #SmileyAndWest http://ow.ly/3rnMN
— Cornel West (@CornelWest) December 18, 2010
The liberals share this strand of insanity with those running the show in Venezuela. Instead of taking responsibility and trying to fix the country’s crisis, President Maduro is busy blaming the U.S. for the economic mess that he and his mentor Chávez have driven their country into.
But who knows? Maybe his friends in Hollywood would buy that story. Sean Penn could direct the movie, starring Michael Moor as the loudmouth Venezuelan dictator.
VIDEO: Venezuelan Economic Crisis
[Cover image courtesy TeleSUR, YouTube]