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Aug 27, 2015 | 09:15 GMT

3 mins read

Bringing Venezuela's Economic Crisis Into Focus

Summary

Satellite images of Puerto Cabello, Venezuela's main port of entry for imported goods, show just how far the country has fallen into economic disrepair. Reliable economic statistics are difficult to come by, so comparing imagery taken years apart can provide some insight that the government does not, particularly as legislative elections draw near.

The images below were taken in February 2012 and June 2015, respectively. The first image came as Venezuelan imports, financed in part by high oil prices, were almost as high as they ever were in recent years. In February 2012, Puerto Cabello was bustling with activity. Container yards were stacked high, a result of the government's oil-fueled spending spree ahead of the November presidential election.

But in 2013, the pace of Venezuela's imports began to slow. When global oil prices plunged in the latter part of 2014, Venezuelan imports dropped precipitously, a trend that has continued to this day. The second image, taken only a few months ago, shows a much different picture: Container yards are far emptier because the government simply has much less money to import goods.  

Before the economic downturn, Venezuela faced high inflation and occasional food shortages caused by the inefficient allocation of financial resources. Currency and price controls, which reduced the amount of food being produced domestically, only aggravated these problems.

And then the crisis grew even worse. Oil revenue accounted for nearly 95 percent of Venezuelan exports by value, so the country was among the hardest hit by the fall of the price of oil. Caracas must now meet consumer demands for food, health products and goods with less than half the annual revenue it once had. Consequently, the country has seen extensive food shortages, long lines at supermarkets and rising instability as angry citizens occasionally resort to looting. Meanwhile, Venezuela's public finances have suffered a heavy blow. Though Caracas can plausibly meet its remaining foreign debt payments for the year, Venezuela's bondholders are concerned the country could default in 2016.

There is no easy way out of Venezuela's economic crisis. For years, the government has been unwilling to make the structural adjustments needed to address the country's economic issues for fear of losing voters' support. But months of economic pain have eroded the ruling party’s support anyway. With key legislative elections scheduled for Dec. 6, the government stands to lose control of the National Assembly to Venezuela's opposition forces.

Venezuela has thus reached a critical juncture. Venezuelan President Nicolas Maduro and National Assembly Speaker Diosdado Cabello, the two leaders responsible for most of the political decisions in Venezuela, will have to decide how to preserve their positions. So far, they appear to have banded together to defend their stakes in the country's political system, but with no end to the crisis in sight, it will be important to monitor their relationship over the coming months. Maduro risks being recalled by referendum in 2016, and members of his own party may join in criticizing him to deflect any threat to their own positions in the long run.

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