Venezuela

Iran To Venezuela, An Ugly Mix Of Oil Wealth And Social Unrest

Donald Trump has become a convenient scapegoat for problems in countries like Venezuela and Iran, where vast oil reserves leave few excuses for pervasive economic problems.

Oil truck in Zuata, Venezuela
Oil truck in Zuata, Venezuela
Danilo Arbilla

-OpEd-

BOGOTÁ — Is it good to have oil? It might sound like a silly question.

Judging by the news we read and the images circulating, it seems like the world's oil kings and queens have it all. Yachts, mansions and landmark buildings, paintings, works of art, not to mention soccer teams — nothing seems out of reach for those with petrodollars coming out of their proverbial ears.

But is it really all that good? Because in Venezuela and Iran, we are seeing people, ordinary folk, come out onto the streets to protest over shortages, rising prices, unemployment and a deepening lack of basic goods. They say they are hungry, ready to burn and die in the streets. These are two countries with seemingly unending supplies of oil. So how is this possible? Iran has the world's second-biggest gas reserves and is fourth in terms of oil reserves. Venezuela may have the world's biggest oil reserves.

In Iran, President Hassan Rouhani says his government accepts peaceful protests and the order is not to suppress them, but the government has restricted access to social networks and at least 12 civilians were shot dead in the hours after demonstrations began.

Venezuela's case remains singular. President Nicolás Maduro has just announced, elatedly, on state television and radio a 40% rise in the minimum wage and a 30% increase in basic family allocations. Which means a 70% increase, though in reality that is a little below the rise in prices for the sole month of November, which was 81%. The accumulated inflation rate back then was 2,700%.

The self-styled Bolivarian leader has hailed his wage hikes as "good news at the start of 2018 for job protection, stability and revenues for all the country's workers."

Is it truly good news, or has Maduro simply gone gaga?

With this increase, which only benefits state workers, the overall minimum wage (including the "family basket coupons') has reached 797,510 bolivars, with which a Venezuelan could purchase around $7 at going market rates. Yes, seven, you read right, though it might be even less by the time you're reading this.

A notable detail here is that the hike's beneficiaries are state servants, notably members of the military, the core of regime supporters whose total numbers are steadily declining. Many, but probably not all of them, can also buy dollars at some state-imposed rate like 10 bolivars to the dollar, or the rate for state-sector firms, which is around 3,300 bolivars to the dollar, then sell their subsidized dollars at market rates of around 120,000 bolivars a dollar. It must be a nice little earner for those few, or many, Maduro friends and cronies able to cash in this way.

Trump has become the perfect target for so many.

How does one explain this paradoxical relation between oil wealth and dismal living in the same country? Rouhani and Maduro would converge on one point: Donald Trump. He is not to blame for everything, of course, since U.S. imperialism was already a long-time favorite target in these countries.

But Trump has become the perfect target for so many: guilty conservatives, genuine reactionaries, opportunist businessmen, fearful or complacent types, fascists of the Right and the Left, authoritarian progressives, populists and all the pusillanimous, cringing creatures scuttling their way through the recesses of political correctness. Denouncing Trump suits them all.

Knocking the Donald wins you easy applause. Some of the critics become so puffed up with righteousness they practically feel like Che Guevara fighting in the jungle.

It is true the current U.S. administration leaves much to be desired, though probably mostly for its tone, register and bad forms. But it is quite a stretch to blame Trump for hyperinflation in Venezuela and unemployment in Iran. You'd think Maduro and Rouhani are more at fault, perhaps? Put simply, people in both countries are not as stupid as leaders like these two may think.

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