Venezuela Imploding Like the Soviet Union

The answer : "more and more socialism"

By Fabio Rafael Fiallo

The crumbling of the Soviet bloc in the late 1980s demonstrated two things: One, that deep-seated economic inefficiencies could force a political system to implode; and two, that such an implosion could be hastened by the ideological obstinacy of its leaders. 

The state's mismanagement of the economy -- exacerbated by the Cold War arms race against the U.S and the cost of the invasion of Afghanistan -- left in tatters the once powerful Union of Soviet Socialist Republics (USSR). Thus, in 1985, when Mikhail Gorbachev succeeded the visionless and ideologically-corseted Konstantin Chernenko at the summit of power in the USSR, he couldn't but realize that the Soviet system lacked economic oxygen to continue playing a superpower. Four years later, the Berlin Wall crumbled.

The current situation in Venezuela -- under the Chavez-designated heir and proclaimed winner of a tainted election Nicolás Maduro -- is similar to, and no less untenable than, that of the Soviet Union at the time of Chernenko.

The misallocation of resources brought about by price and foreign exchange controls, the wasting of oil revenue in the funding of domestic patronage and regional alliances, as well as the paralysis of private investment due to the government's hostility against the entrepreneurial class, have taken a heavy toll on the Venezuelan economy. Rampant inflation, multiple devaluations and chronic shortages of essential goods form just part of the hardships enjoyed by the Venezuelan population.

Gone are the days when Hugo Chávez boasted about being able to cut oil exports to the "Empire" (i.e. America). More than ever before, the Venezuelan regime badly needs the foreign exchange generated by such exports.

As a matter of fact, oil sales to other countries do not provide as much fresh foreign exchange as do the corresponding exports to the United States. Although at a 30-year low, exports of oil to the U.S. are still 50 percent higher than those to China. Moreover, out of the 640 thousand barrels per day that Venezuela ships to China, 30 percent is destined to pay back the debt contracted by Hugo Chávez with Beijing ($42.5 billion).

True, unlike Chernenko's USSR, Venezuela doesn't spend in military adventures outside the country. All the same, the Venezuelan government is squandering the country's financial resources through other means: It keeps alive the Castro regime and provides oil to friendly governments in the region.

Furthermore, the purchase of heavy weaponry by Hugo Chávez has had adverse economic repercussions akin to the damaging effect of the Cold War arms race on the Soviet economy.

To cope with such a bleak economic and geopolitical scenario, what does President Maduro have to offer? Well, he recently declared that he intends to bring "more and more socialism" to his country.

"More and more socialism"? This self-destructive dynamic is all the more devastating as President Maduro gives signs of sailing directionless.

One day he declares in a threatening tone that he knows the names of the hundreds of thousands of Chavistas who didn't vote for him -- thereby casting doubts on the confidentiality of Venezuela's voting system, while hinting that he could take retaliatory measures against the turncoats -- and a few days later his right-hand man Elías Jaua distributes credits to micro-entrepreneurs swearing that the government will not look at their political affiliations.

One day the government announces the introduction of a rationing chip, and the following day, noting the widespread discontent triggered by the announcement, Maduro balks and pretends he didn't approve of the measure.

One day Maduro declares that he holds overwhelming evidence that the "Empire" inoculated cancer to Hugo Chávez, and a few weeks later, desperate to secure international legitimacy, he requests Secretary of State John Kerry to grant an interview to Mr. Jaua, Venezuela's minister for foreign affairs.

Maduro's foreign policy has thus far been a staggering exercise in public vociferation against any foreign government that dares to call for a dialogue between government and opposition parties in Venezuela.

Mr. Maduro, who was handpicked as Hugo Chávez's successor, not for his shrewdness or competence but for his loyalty (some say, docility) toward Hugo Chávez and the Castro regime, has a point in common with the USSR's Chernenko: both will be remembered as having lacked charisma and intellectual breadth. This bodes ill for Maduro's capacity to fulfill effectively the mission bestowed on him after the death of his mentor.

In fact, each new stumble by the Venezuelan Chernenko is one more crack in the confidence and credibility that he may have enjoyed initially among the members of his own political movement.

The political base of Chavismo has been shrinking, as shown by the million votes lost between the presidential elections of October 2012 and those of April 2013.

Little wonder that Standard & Poor's has just downgraded Venezuela's sovereign debt, from B+ to B, pointing to worsening economic conditions amid political instability and infighting.

For all these reasons, what awaits Chavismo-led Venezuela doesn't look any brighter than the predicament of the Soviet Union when Konstantin Chernenko kept cruising in collapse mode.