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NEWS / VENEZUELA

What brought Venezuela's

economy to ruin?
Venezuela's political crisis has laid bare competing
narratives over what is to blame for the country's economic
crash.
by Patricia Sabga  
1 Feb 2019

An opposition demostrator waves a Venezuelan national flag, during a protest against the government of
President Nicolas Maduro [File: Federico Parra/AFP]

"Dire" is a word no country - and no people - want

MORE ON BUSINESS &
associated with their economy. And yet it feels
ECONOMY
inadequate when describing the economic crisis
in Venezuela. Living inside the world's worst
economy, Venezuela
today
A lack of macroeconomic transparency on the part
of the government of President Nicolas Maduro has Saudi Aramco: The Company
and the State
made it difficult to accurately gauge the extent of the yesterday

country's woes.
US marks 100th straight
month of job gains
According to the IMF, Venezuela's economy is yesterday

thought to have contracted by more than one-third

A third of UK firms considering
between 2013 and 2017. Last year, itis estimated to post-Brexit overseas move:
have shrunk 18 percent. Compounding the pain is Survey
yesterday
hyperinflation, which the IMF says could top 10
million percent by the second half of 2019.

Beneath that almost unfathomable number is a procession of profound human misery.

Some three million people have fled Venezuela since 2015, according to the UN. The
public health system is in ruins. Life-saving medicines, electricity and clean water are in
short supply. Food is scarce. Malnutrition is widespread.

Now the country is in the grips of a political crisis that has divided the world's major
powers and highlighted competing narratives over what drove Venezuela's economy to
ruin.

Western nations, led by the United States, have thrown their support behind self-
proclaimed interim President Juan Guaido. Russia, China and Turkey are standing by
Maduro who has vowed to remain in power for a second, six-year term despite
accusations of widespread election fraud.

Maduro has accused the US of waging economic war

OPINION
against his socialist government. But many
Venezuela's slow coup
economists and energy experts fault Maduro's
continues
policies and those of his predecessor, the late
by George Ciccariello-Maher
President Hugo Chavez, for destroying the economy.

One thing that is not in dispute is the pivotal role oil has played.

Resource curse
Venezuela has the largest proven oil reserves in the world and the government depends
on crude exports for the lion's share of its income and foreign currency.

Like many petrostates, Venezuela has struggled to diversify its economy, leaving it
vulnerable to boom-bust cycles.

When oil is expensive, government coffers overflow. When it's cheap, they empty.

Rising crude prices in the 2000s helped the late president, Hugo Chavez, make good on
his pledge to harness the nation's oil wealth to fund welfare programmes aimed at
redressing inequality and poverty.

But when oil prices started to plummet in 2014, the new government of his successor,
Maduro, was ill-prepared to absorb the blow.

"They didn't' save up for a rainy day," Atlantic Council deputy director Paula Garcia Tufro
told Al Jazeera. "They didn't make the long term investments."

That was especially true of the country's oil sector. When Chavez took power, Venezuela
pumped roughly 3.5 million barrels of oil per day. Production has since collapsed to less
than one-third of that.

Oil is a capital-intensive business. To secure future production, Venezuela needed to

reinvest an adequate portion of windfalls from flush years into its state-owned oil
company, Petróleos de Venezuela, or PDVSA.

Chavez failed to do this. His policies also gutted the

READ MORE
sector of vital expertise.
EU parliament recognises
Venezuela's Guaido as interim
"If you talk to experts who have long worked on and president
followed the oil sector in Venezuela they will tell you
there was significant technical expertise in the past and those experts are just not there
any more," said Garcia Tufro.

Ratcheting up sanctions
The economy was already on a downturn when Maduro took power, leaving him with the
unpalatable option of either dramatically slashing welfare spending or running fiscal
deficits.

He chose the latter.

When inflation and shortages led to mass protests against his government, the violent
crackdown he unleashed in response led the US to impose sanctions in 2014 targeting
individuals accused of human rights violations.

In 2017, the administration of US President Donald Trump turned up the heat with
sanctions designed to restrict trade in Venezuelan bonds, which effectively locked the
country out of credit markets.

Venezuela has since defaulted on various debt instruments. Restructuring is unlikely to

happen anytime soon and Moody's Investor Service noted in its latest report that US
sanctions have undermined the Maduro government's "ability to renegotiate its
obligations".

In 2018, the Trump administration took aim at Venezuela's gold sales. But the most
significant escalation to date took place on Tuesday with the announcement of sweeping
sanctions on PDVSA.

US National Security Advisor John Bolton said the new measures would, "help prevent
further diversion of Venezuela's assets by Maduro, and will preserve these assets for the
people of Venezuela where they belong".

A UN report published last year by former UN

READ MORE
Special Envoy Alfred de Zayas blamed US sanctions
Venezuela prosecutor moves
as well as measures by the EU and Canada for to place travel ban on Guaido
aggravating shortages of food and medicine and
contributing to "many deaths".

But some argue the US has carefully deployed sanctions to deny Maduro a scapegoat for
the country's economic problems.

"Venezuela's own problems probably deterred the US from seeking real tough economic
sanctions until now," Richard Nephew, senior researcher with Columbia University's
School of International and Public Affairs, told Al Jazeera.

"Venezuela has had no one else to credibly blame for the last few years and the United
States did not want to bail out the Maduro regime by giving it the argument that the
United States was responsible," he added.

THE BIG PICTURE

From riches to rags: Venezuela's

economic crisis
SOURCE: AL JAZEERA NEWS

Business & Economy Venezuela Latin America War & Conflict

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NEWS / QATAR

Qatar prepares for Maroons'

homecoming after Asian Cup
win
Citizens and residents set to celebrate Qatar's biggest
football achievement with parade on Doha Corniche.
02 Feb 2019 14:53 GMT

The Maroons are set to land at Doha's old airport where the Emir of Qatar Sheikh Tamim bin Hamad Al Thani
is expected to welcome them [Andy Richardson/Al Jazeera]

Qatar is preparing to honour its national football team with a street parade in Doha
following the Gulf nation's upset victory at the AFC Asian Cup in the United Arab
Emirates (UAE).

The Maroons are set to land at Doha's old airport at 15:30 GMT on Saturday, where the
Emir of Qatar Sheikh Tamim bin Hamad Al Thani is expected to welcome the team.

The players and entourage will then parade through the capital's Corniche to Sheraton
Park in the city's high-rise West Bay area, where the Qatar Football Association, in a
Twitter post, called on fans to gather.

The Qatari team will arrive in Doha via Oman, as direct flights between Qatar and Asian
Cup host UAE remain banned due to a nearly two-year blockade imposed on Doha by its
Gulf neighbours.

Qatari football fans were barred from attending the tournament because of the bitter
political rift and their national team was forced to play almost entirely without
supporters. In the match against the UAE, a hostile local crowd hurled shoes and water
bottles at the Qatari players.

Qatar's stunning 3-1 win over four-time champions Japan in Abu Dhabi marked the
country's biggest football achievement yet, which set off impromptu street parades in
Doha on Friday.

The capital's streets were gridlocked with cars as citizens and residents draped in Qatar's
maroon and white flag hung out of car windows or hopped on to rooftops, horns blaring
in celebration.

‫ﻗﻄﺮ_ﺑﻄﻞ_اﺳﯿﺎ‬# ‫وﺻﻮل‬
3:30 | ‫ﺻﺤﺎر‬# ‫اﻟﻤﻨﺘﺨﺐ_اﻟﻘﻄﺮي ل‬#
‫اﻟﺴﺒﺖ‬# - ‫ص‬
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‫ﻋﻤﺎن‬# ‫ﻓﻲ‬
--
‫اﻟﻮﺻﺎل‬# ‫ﺗﻐﻄﯿﺔ‬
‫ﻗﻄﺮ_اﻟﯿﺎﺑﺎن‬#2019_‫ﻛﺎس_اﺳﯿﺎ‬# - -
‫ﻧﻔﺘﺨﺮ_ﻓﯿﻜﻢ‬#
pic.twitter.com/O9L2BLLPJg
Qatari fan Ahmed al-Kaabi described the Maroons as "heroes".

"This is the first continental cup we have taken and it's despite all the pressure that was
put on this team, which just proves that they are heroes," he said in Doha.

The Asian Cup victory will give Qatar renewed hope of being able to compete against the
globe's best teams when it participates for the first time in the World Cup - as hosts - in
2022.

Fans described Qatari players as "heroes" after the stunning win against Japan [Noushad Thekkayil/EPA]

"Today we made history for our country, we need to be very proud about our
achievement," said Qatar coach Felix Sanchez.

"This is one step more towards being ready for 2022 and represent Qatar as a very
competitive team at the World Cup."

'We wrote history'

Qatar raced into the lead when Almoez Ali put the ball into the net with a spectacular
bicycle kick in the 12th minute.

Ali's early goal, his ninth in the tournament, took him past Iranian Ali Daei's 1996 tally.
And combined with a 27th-minute long-distance strike from Abdulaziz Hatem and a late
Akram Afif penalty, it helped the Qataris claim their first continental title.

Sudan-born Ali's record goal came after a protest by the UAE over his eligibility to
represent Qatar was dismissed by the Asian Football Confederation (AFC) only a few
hours before kickoff.

"Qatar today is a top Asian team," goalkeeper Saad Al Sheeb said. "We wrote history."

After upsetting the final favourites, the players wrapped themselves in Qatari flags in a
display of patriotic furore.

Qatar's Asian Cup win marks the country's biggest football achievement [Roslan Rahman/AFP] 

"This result doesn't come from nothing," said defender Bassam al-Rawi, the other player
whose eligibility was questioned by the UAE.

"It came with a lot of effort. It came from determination. It came from immense hard
work on the pitch. We were able to win today because we took all the chances."

The victory was also celebrated wildly by thousands of Omanis who had turned out to
support Qatar in the absence of their own fans.

Qatari fans were barred from attending the tournament in the UAE [Karim Jaafar/AFP]

Since joining other Arab countries in cutting diplomatic, economic and travel ties with
Doha in 2017, the UAE has warned residents that expressing sympathy for Qatar could
lead to fines and imprisonment.

The UAE is among a quartet of nations accusing its regional foe of supporting
"terrorism", which Qatar denies, and even prevented the team from travelling directly to
Abu Dhabi for the tournament.

After their stunning win, the Maroons travelled to Sohar in Oman via bus, where they
were greeted by hundreds of cheering fans, according to videos posted on social media.

Al Jazeera's Andy Richardson, reporting from Doha, said: "It's hard to overstate the level
of achievement that the Qatar team has pulled off. They came into this tournament
without any real track record of success at the Asian Cup."

"There were signs of a young team on the rise even ahead of this success. The vast
majority of this team came through the Aspire National Academy here in Qatar - a hugely
ambitious project set up in 2004 to identify and nurture young talent," he added.

SOURCE: AL JAZEERA AND NEWS AGENCIES

Football Qatar Middle East Sport United Arab Emirates

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