Venezuela’s dream of a socialist utopia is quickly disintegrating. How did it get to this point? Will religious liberty survive?
The economy of Venezuela, which sits on some of the largest oil reserves in the world, is completely dependent on the extraction and sale of oil. In the 1940s Venezuela tied its tax revenue to the process of extracting oil. By the 1950s oil producing countries around the world were operating at maximum capacity and the resulting oversupply drove prices down. The United States, with its own competing oil production companies, imposed import quotas making it even harder for Venezuela to sell its production.
In order to gain some control over global oil prices, in 1960, Venezuela joined other nations to form the Organization of Petroleum Exporting Countries (OPEC). Soon after, the Arab members of OPEC with the addition of Egypt and Syria formed the Organization of Arab Petroleum Exporting Countries (OAPEC). In 1973, Egypt and Syria attacked Israel and to counteract the attack, the United States supplied Israel with weapons. Egypt and Syria and the rest of OPAEC reacted by imposing an oil embargo against the United States and several other western countries causing an oil shortage and causing the price of oil to rise from $3 (US) per barrel to $12.
Venezuela, which was not part of OAPEC continued to sell oil to the United States, but sold it at the higher market prices. As a result, Venezuela’s oil-dependent tax revenues quadrupled and President Carlos Andrés Perez nationalized the oil industry and planned to use the funds to fight poverty, control consumer prices, increase education, and increase individual incomes.
While it seemed like a good use of the increased funds, when the embargo ended and oil prices began to fall, the president’s economic changes remained and the costs and consumer prices continued to rise leading to chronic inflation and tremendous amounts of national debt.
By the 1980s, OPEC began to lose its strength as member nations of the “oil cartel” failed to honor their agreed-upon production limits and prices fell to the 1973 US equivalent of $3.19 per barrel. The boom was over and the overextended Venezuelan economy was left holding the bag.
When he was elected in 1998, President Hugo Chávez wanted to make OPEC powerful again with the goal of maintaining prices of $22 to $28 per barrel. He argued that the country’s oil company, PDVSA, had become too powerful as a separate entity and needed to be brought back under national control.[i]
Chavez, a self proclaimed socialist who admired Marx and Trotsky, wanted to implement a “humanist” rather than “Soviet” model of socialism. When oil prices started to increase around 2005 to five times its 1999 price, Chavez decided to use the increased revenue to improve health, provide cheaper food, and increase education. He nationalized the universities and took over sectors of the industry and even set up a TV station to promote his socialist views.
In a 2005 speech, Chavez said he wanted to build a national workers’ cooperative that “generates collective wealth through joint labor, going beyond the capitalist model which promotes individualism.” He offered low interest credit to business owners so long as they would give workers participation in the management of the companies, and took over 700 companies that had closed but still had the assets and machinery to produce goods. The result was a massive government takeover of the private sector with labor unions benefiting the most.
The U.S. made it clear that it was skeptical of Chavez’ intentions. So Chavez worked out a deal with impoverished Cuba to provide then-embargoed Cuba with oil in return for tens of thousands of Cuba’s professionals including doctors, dentists, sports trainers, to help with the development of Venezuela. Venezuela also bought helicopters and weapons from Russia and Brazil.
Bartering for expertise and weapons cannot feed the people, and with an economy riding the downward rollercoaster of decreasing oil prices of the last couple years, and severe financial mismanagement, it was inevitable that Venezuela’s economy would go into a downward spiral. Where the economy had been able to bounce back in the past with private sector employment and the involvement of international corporations, this time international corporations are afraid of losing their businesses to government control again and are not willing to invest in the struggling economy.
The result of hyperinflation and lack of available investments is driving Venezuela into the economic catastrophe that is currently unfolding. To illustrate, this week, the exchange rate is 1 Bolivar is equivalent to $0.10 in U.S. money. This is down from 15 cents just a few weeks ago and 24 cents in 2012. President Nicolas Maduro is resorting to raising the minimum wage, 30% increase in May following another 25% increase in March just to allow people to eat. The minimum wage increases do not mask the faltering financial fundamentals that make them necessary.
The devaluation of currency means that financial savings are essentially worthless and the nation is unable to import or manufacture basic necessities. People are standing in line for food and basic toiletries for hours with only a faint hope that they will be able to take basic staples home to their families. Over the weekend several newspapers reported that the price of a hamburger in Venezuela is now $170.
As a result of the economic turmoil, crime is increasing with increased demand, lack of supply, and lack of public security services. As a result Venezuelans now face the world’s second-highest murder rate.
So how is religious liberty faring in the midst of all of this? In Venezuela, 90% of the citizens are Catholic and the church has been actively involved in the political process for decades. In 1992, the church provided physical security to Chavez during his failed coup. Then in 2002 when a political enemy tried to take down the Chavez government, the Church protected him again. By 2012, the Church felt abandoned by Chavez whose government was taking away churches and schools and denying government reimbursement for services performed by the church, something the Catholic church had negotiated as part of a 1964 agreement between Venezuela and the Vatican. In response to the Catholic critique of the administration, the government was electronically surveilling church leaders and interrogating critical church officials for “lengthy periods.” (See United States Conference of Catholic Bishops document.)
According to the 2013 United States’ Council on International Religious Freedom (USCIRF) report, the relationship between the Chavez administration and the Catholic Church began to decrease when Chavez was diagnosed with cancer and “sought increased spiritual guidance from Catholic religious leaders.” However, a 2016 report from FreedomHouse.org finds that the tensions between the government and the Catholic Church remain high.
The Seventh-day Adventist Church in Venezuela, with 12 conferences and missions and nearly 250,000 members as of 2010, has stayed away from involvement in the political structure in Venezuela. However, members have been affected by the general economic condition. Recently the Adventist Review published an article about a woman who had not been able to buy food for more than a week because her designated day to purchase food fell on the Sabbath, the twenty-four hour period between sunset on Friday and sunset on Saturday.
The Review also reports that Pastors have also faced financial problems as their salary has dropped from an equivalent of $1,400 several years ago to $25 because of the devaluation of the currency.
Venezuela remains on the USCIRF “Watch List” where it has been since 2009 due to increasing anti-Semitism and government actions targeting the Catholic Church.
Venezuela’s deep distrust of the international community has led to the adoption of laws requiring that organizations receiving at least 10% of funding from foreign sources must obtain government approval of their activities and funding sources and provide information about their organizational leadership to the government. Venezuela also continues to impose strict limits on freedom of speech and the governing party has imprisoned opposition leaders.
In general, freedoms in Venezuela remain in tension. Given the rapid economic disintegration, the survivability outlook for substantial freedom is unstable at best.
[i] For more information on the impact of oil on Venezuela’s economy, check out Gregory Wilper’s economic analysis.
