The economic policy of the right: Giving away oil to have power (3)

Published at: 12/07/2024 06:27 PM

To conclude this series of investigations on the use of oil revenues for the benefit of an oligarchy that allowed the plunder of our resources, we will review what happened in the 90s.

During the long-awaited “ golden age” to which the right wing wants to return to the political, economic and social scene of our country, we bring what was described by one of the leaders of Latin American capitalism, the economist Pedro Palma, who published the book “The Venezuelan Economy: From One Crisis to Another 1994/1998” in which he wrote that “by that time, the country was characterized, among other things, because of an acute fiscal imbalance, the outbreak of a financial crisis that had been brewing for several years, the reduction in international oil prices, a significant inflationary uptick, and a recession in economic activities other than oil. In addition, there was high social tension caused by the intensification of the impoverishment process that the population had been suffering since the late 1970s.”

Palma also said, in his book, that “among the reasons that explain that worsening in 1993, we can mention: The inflationary uptick, the adjustment of wages and the greater unemployment and underemployment resulting from the recession that occurred in that year. In addition, there was a deep political crisis that had erupted with the coup attempts in 1992, followed by the dismissal of President Pérez in mid-1993 and by the interim government of Ramón J. Velásquez between June 1993 and February 1994.”

He also referred to the financial sector, commenting that “in that decade, in 1994, the banking crisis never experienced in the country occurred, which was created by repeated mispractices in the management of multiple banks, practices that could proliferate due to the absence of precise legal and regulatory regulations, as well as the absence of adequate supervision. This environment of turbulence and crisis created a climate of uncertainty and negative expectations, which became more acute throughout 1993. This led economic agents to seek protection through the transfer of financial resources abroad, and the withdrawal of deposits from banks that were suspected to be in trouble, thus generating increasing pressures on interest rates and the exchange market, further aggravating the crisis of confidence, accentuating the flow of deposits by some banks and the flight of capital.”

Agenda Venezuela 1996/1997

In the second quarter of 1996, during the administration of Rafael Caldera, the Venezuela Agenda was implemented, which was a macroeconomic stabilization program basically aimed at reducing inflation, correcting the profound imbalances affecting the country's economy, restoring the confidence of productive agents and creating the basis for sustained economic growth that would contribute to the continuous and progressive reduction of poverty.

The professor and liberal economist, Asdrúbal Baptista, made estimates regarding the benefits that the application of the Venezuela Agenda would entail, in an article called “Rentistic Capitalism: Quantitative Elements of the Venezuelan Economy”, published in the CENDES Notebooks of the University Central Venezuela (UCV) in 2005, where he also referred to the national economic problem at the end of the 90s.

The professor explained, in detail, that “as a result of the release of the prices of the largest branches of public services and domestic fuel prices, the inflation rate will reach just over 98% on an annual average, total exports will exceed 21 billion dollars, while imports will reach 12 billion dollars, which will result in a 9 billion dollars in surplus of the trade balance. A surplus of 3.5 billion dollars is estimated in the current account balance of payments, which together with the positive balance of the capital account will increase international reserves to around 20 billion dollars by the end of that year.”

Even Teodoro Petkoff, who opposed the first Caldera government, stated that “in 1997, the privatization process of companies that have traditionally been in the hands of the State will be completed, and that, together with the investment of transnational corporations in the oil sector, other mechanisms will be activated to allow greater participation of the private sector in the provision of services to the community, through the concession system and the program of converting public debt into investment”.

It should be noted that these quotes are basically from right-wing references, with the exception of Petkoff, who at the time he made that statement was supposedly a left-wing militant.

However, all these forecasts did not prevent an external debt of almost 10 billion dollars from being maintained with the International Monetary Fund and the World Bank, and despite not being a sanctioned or blocked country, the decisions of the right-wing governments only managed to deepen, even more, the situation of poverty and oblivion in which the Venezuelan people were plunged into when they received the presidency of Commander Hugo Chavez.

AMELYREN BASABE/Mazo News Team