The Political Crisis of the Bolivarian Democracy in Venezuela: a necessary revision

By Blas Regnault regnault@iss.nl [1]

09 March 2018

The Venezuelan Democracy is experiencing a complex crisis, in which the legitimacy of the political system and the economic model are at a cliff’s edge, creating a situation with few solutions in sight. This two-dimensional crisis has consequences on multiples levels for political representation, participation of social movements, the exercise of the right of equality before the law and people’s access to food and medicines. Consider the historical and political dimensions of the crisis.

1. Unachieved Participatory Democracy (1999-2013) and the Authoritarian Twist (2013-2018)

Participatory Democracy and its challenges. In 1999 Venezuela inaugurated a new Democratic Constitution, perhaps one of the most inspiring political models of the last 50 years in Latin America: Participatory Democracy. Previously, popular participation had been marginalized in the 1961 Democratic-Liberal Constitution. Once Chavez won the Presidential elections in 1998 and proposed the Constituent Assembly to "re-establish" Venezuelan democracy, his popularity was guaranteed.

It is important to note that the 1999 Constitution and its Participatory Democracy model never privileged “real socialism” as an economic and political model. However, the operationalization of Participatory Democracy never actually took place. At the end of 2012, few laws[2] had been passed to give substance to this democratic model.

From “Participatory Model” to “Twenty First Century ‘Real’ Socialism”. In 2007, after two unsuccessful coup attempts (2002 and 2003), two presidential election wins (2000 and  2006) and a defeated recall referendum (2004), Chávez proposed a constitutional reform process. The aim was to promulgate the socialist character of the Constitution. This referendum was the only electoral process that Chávez lost. The attempt to establish a Communal Socialist State was frustrated by the outcome of this popular election. Despite Chavez’ struggles to lead the model towards a more conventional socialist system, the Constitution of the Bolivarian Republic of Venezuela remained formally untouchable. From 2007 until the announcement of his illness in June 2011, Chávez attempted try to “keep the peace in the party ”, consolidating even more the centralized style of leadership. As a leader, he left two uncompleted tasks: the institutionalization of Participatory Democracy model of 1999, and deconstruction of the Liberal State founded in 1961. These two unfinished tasks created a political and institutional limbo that paved the way for the authoritarian twist that took place after 2013.

The Authoritarian Twist. With the death of Chávez (5 March 2013), and the rise of Nicolás Maduro to the Presidency, political forces (into and out of Chavismo) reconfigured themselves, with the military taking an increasingly prominent role. The ruling party founded by Chavez (Partido Socialista Unido de Venezuela –PSUV)[3] weakens. This undermines the chances of generating consensus for an economic policy strategy to cope with falling oil rents since June 2014, and falling oil production since 2015.  

In December 2015, the opposition won two-thirds of the seats in the National Assembly, radically changing the configuration of political parties within the institution. The elected National Assembly would elect the National Electoral Council (CNE), the General Attorney of the Republic (FGR) and the Supreme Court of Justice (TSJ). However, to forestall this, the outgoing members of the government, in a fast track mode, elected a new Justice of the Supreme Court (TSJ) just before the new National Assembly was installed. Thus, the TSJ remains in the hands of central government, and the party, and has systematically overturned the policies of the new National Assembly.

State of Exception and Economic Emergency. In February 2016, the TSJ authorized the President to move forward and open up the oil sector to international investment. TSJ also empowered him to declare a State of Exception and Economic Emergency, violating the constitutional framework. In March 2017, the TSJ declared that the National Assembly was in contempt, despite having been elected by the population in 2015, and transferred the National Assembly’s its powers to central government (Rulings 155 and 156 of the Constitutional Chamber of the TSJ). In this way, the Supreme Court becomes the supreme national body, lending a "legal" gloss to the authoritarian actions of central government.

Protests 2017. In April 2017 a new wave of protests began, which ended in July with young protesters either dead or in prison.

New Constitution? The government of Maduro called for elections on 31^st of July 2017, to set up a new National Constituent Assembly, parallel to the National Assembly elected in 2015. This National Constituent Assembly was to draft a new Constitution. Unlike what happened in 1999, little is known about this new national political contract. The Constituent Assembly has served to ratify the power of a new General Attorney of the Republic (FGR) and the National Electoral Council (CNE).

The Dialogue in the Dominican Republic: towards a Transition? From October 2016 to February 2018 several meetings have been held in the Dominican Republic between the visible opposition (mainly established in the Constituted National Assembly) and the Government. The aim of these talks was to re-establish political consensus and end the political violence. Some international mediators have participated in these discussions. Unfortunately, these negotiations had no positive results, and constitutional order is not yet re-established. On the contrary, it seems these dialogues contribute even more to delegitimize the political forces in power around Maduro. At the time of the writing in early March 2018, presidential elections are planned for 20 May 2018. The visible opposition has decided to call for a boycott of these presidential elections, since there is no confidence in transparent and fair electoral processes.

2. The present state of Democracy in Venezuela

Basic rights: Venezuela is falling behind. Access to basic goods is no longer guaranteed for most Venezuelans. There is an increase of dependency on direct subsidies through the so-called CLAP, a box with food provided by the central government. This is only for those registered for a consumption card called the “Carnet de la Patria”. Other social consequence of the food crisis are cases of malnutrition which are even preventing children from attending school (UNICEF, 2018)[4].

Inefficiency in public management, unsustainable exchange rates.  Misguided economic policies create profound distortions throughout the whole economy.[5] Exchange rate parity means drastic reductions in foreign currency and a deterioration of the productive sectors, with damaging effects on the ability to import, and crises in production and distribution of medicines and food. In the case of medicines, the population is having enormous difficulties in treatment of chronic diseases such as high blood pressure, cancer, diabetes and renal dialysis.

Hyperinflation. In 2017, non-official figures indicate that inflation was near 2,616 per cent! For instance, by February 2018, a person that earned the basic minimum wage (basic salary plus food allowance) had the capacity to buy around 10 per cent of the food basket required and 8 per cent of a basic family food basket. A public sector graduate could acquire just 19 per cent of the food basket and 13 per cent of the basic family basket, with their average salary.

Forced migration. The number of people leaving the country is growing. The main reasons for migration are the low wages relative to living costs, and the general critical situation of shortages. Unofficial figures estimate that up to 4.5 million people have emigrated in the last 5 years[6]. People have started to move to neighbouring countries such as Colombia and Brazil. Other important contingents of people are migrating to other Latin American countries, including Ecuador, Peru, Argentina, Chile, Bolivia, Panama and Costa Rica, as well as to European countries such as Spain, Italy and Portugal. Many migrants to Europe are descendants of refugees who arrived in Venezuela after the Spanish Civil War and The Second World War.

In conclusion, this crisis of democracy in Venezuela is fundamentally due to two historically unsolved puzzles. On the one hand, a frustrated “Participatory Democracy” has been pending since 1999. On the other hand, misunderstandings of the oil economy, and its consequent mismanagement, has resulted in the squandering of oil rents. To solve these puzzles, politicians and social scientists should pay much more attention to the social and economic history of such this diverse and specific country, Venezuela.

References and Sources

-   García Guadilla, María PIlar (2018). Exclusionary Inclusion: Post-Neoliberal Incorporation of Popular Sectors and Social Movements in New Left 21st Century Socialism: the experience of Venezuela. https://www.academia.edu/23713466/Exclusionary_Inclusion_Post-Neoliberal_Incorporation_of_Popular_Sectors_and_Social_Movements_in_New_Left_21st_Century_Socialism_the_experience_of_Venezuela   

 -       UNICEF (26^th January 2018) https://www.unicef.org/media/media_102501.html

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[1] Blas Regnault is a Venezuelan Sociologist, devoted to the study of global oil price cycles and its impact on the sustainable development in oil exporting economies.

[2]  The Organic Law for Potable Water and Waste Service is one of the law. However most of the set up policies were Presidential decrees, or voluntary wishes expressed by Chavez during his allocutions in “Aló Presidente” (García Guadilla, María PIlar, 2018).

[3] On 5 February 2018, Nicolás Maduro registered a new political party with the National Electoral Council (CNE). This new party is called “Vamos Venezuela”, and is set up as if it were separate from the PSUV.

[4] Statement published the 26 of January 2018 in New York https://www.unicef.org/media/media_102501.html

[5] Since February 2018, the official exchange rate changed from 10.00 to 30,000.00 bolivars per dollar, while the parallel dollar parity, which has a significant impact on the pricing, was 230,000.00 bolivars per dollar on 23 February 23, 2017.

[6] According to the last Census, in 2018 Venezuela reach 32 Million of people.

The oil rent and the economic crisis in Venezuela

By Blas Regnault regnault@iss.nl [1]

March 2018

The Venezuelan economy is experiencing a very complex crisis. Common sense invites us to draw hasty conclusions, explaining the problem trough the so-called resource curse. In my opinion, the oil rent is neither a blessing nor a curse. The oil rent is just a peculiar income that deserves a different conception into the national accounts in order to understand the performance of these oil-exporting economies. Deconstructing the “curse” argument and taking into account some peculiar aspects of the global oil business can give us initial answers to understand the Venezuelan crisis.

What is the oil rent? What is the oil price? The oil rent is a fluctuating income, linked to the global productivity of the oil wells in the world market (Differential Rent or Ricardian Rent). In nowadays, the global productivity of oil wells is due to the traditional natural conditions and to the emergency of new technologies, such as “Shale Oil” in US. Thus, the price of a barrel, after pay wages and profits, depends on the production cost of the least productive well, creating a differential of costs that the most productive regions have taken advantage.

Oil rent at stake. Thus, the oil rent is a widely accepted, inevitable and a specific remuneration into the oil business. In historical terms, National Oil Companies (NOC), Major Oil Companies (MOC), oil national states and private owner (only in US) have been fighting to taking advantage of the oil rent. In Texas, Alaska, Saudi Arabia, Kuwait, Norway, UK, Nigeria or Venezuela the property rights regime represents the main legal tool to keep part of the rent. In the last 100 years, Venezuela developed a specific fiscal regime that inspired the foundation of the Organization of Petroleum Exporting Countries (OPEC), an organization made it to fight for the oil rent from the supply side.

What is the problem with the oil rent? Even if the oil rent has been a historically and recurrent income for the Venezuelan economy, the uses of the oil rent rest unsolved. Indeed, the problem with the rent starts when a country, an entire economy, makes policies (both, in the oil and non-oil sectors) counting on the oil rent as if it was a stable and an inexhaustible income over time. Indeed, one of the ideological risks with the oil rent is to suppose the fiction of having that income in the future, committing the majority of the time to the country with external debt. This was the case of the origin of the external debt during the 80's and it is what is happening now.

Why the falling of oil rent is the crisis of the national economy? The crisis in an oil rent dependent economy occurs when oil prices fall below the commitments made in the national budget. If the economic system did not save funds aside for the low prices periods, if the economic system is not prepared for the fluctuations of the oil rent, a crisis ensues, whose dimensions will always have the size of the commitment acquired.

However, the current Venezuelan crisis has three additional characteristics:

· The national oil industry has suffered a significant deterioration in its productive capacity[2].

· The non-oil sector devoted to food production (dependent also on the oil rent), has suffered very serious consequences in its productive capacity.

· The inefficiency in the internal fiscal accounts and the unsustainable exchange rate parity creates profound distortions throughout the whole economy.

This also causes a drastic reduction of foreign currency and a generalized deterioration of the productive sectors, having a hyper-inflationary effect on prices

Non-productive solution for the massive economic crisis. The national government is still far from initiating a plan of economic reactivation oriented to the national production. On the contrary, the fall of the oil rent has led the government to look for other sources of rent, exacerbating the extractive condition of the economy. At present, the government is trying to recover revenues through indebtedness with a cryptocurrency called Petro, committing future barrels of oil in private hands and reversing rights obtained in 2001 with the Hydrocarbons Law. Petro will undoubtedly has a direct consequence on national sovereignty. In addition, government has created the Orinoco Mining Arc, for the exploitation of gold and other minerals, placing more than half of the southern province of Guayana at the disposal of large transnational mining corporations.

What to do with the oil rent? In Venezuela, the public discussion about the uses of the oil rent in the national development starts in 1934, and is still on going. However, the ambiguous conception of the oil rent since 1976 has prevented a consensus on the uses of oil rent, leading the economy indebtedness and to the mismanagement of the oil rent.

Building accountability for the oil rent. Oil exporting economies have to deal with the oil rent as inevitable part of its national income. The main challenge is how to build a national account system and institutional framework oriented to the accountability of this oil rent, in order to prevent the historical mismanagement that this country has witnessed.

References and Sources

-   Mommer, Bernard (1989). ¿Es posible una política petrolera no rentista? In Revista BCV: Caracas, Volumen 4 – No. 3 – 1989; pp. 56-107

-   Murshed, S. Mansoob (2004) ‘When Does Natural Resource Abundance Lead to a Resource Curse’, IIED-EEP Working Paper 04-01, www.iied.org. 

- OPEC (2018) Monthly Oil Market Report, 12^th February 2018. Available in http://www.opec.org/opec_web/en/ 

-  Regnault, Blas (March 2018). “Synchronicity between recent transformation in liberal institutional frame in Venezuela and the new challenges of a ‘green’ global oil business”. MIMEO.

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[1] Blas Regnault  is a Venezuelan Sociologist, devoted to the study of global oil price cycles and its impact on the sustainable development in oil exporting economies.

[2] According to the OPEC, the Venezuelan Oil production losses 604,000 barrels per day since 2016 (2,373 MBD 2016/ 1,769 MBD Jan 2018).

The Crisis of the Bolivarian Democracy in Venezuela: a necessary revision

By Blas Regnault[1]

March 2018

The Venezuelan Democracy is experiencing a complex crisis, in which the legitimacy of the political system and the economic model are on a cliff’s edge, creating a situation with few solutions in sight. This two-dimensional crisis has consequences on multiples levels of the social welfare: the political representation of interests, the political participation of social movements, the exercise of the right of equality before the law and the access to food and medicines. The crisis is forcing citizens to leave the country, expelled by the shortage situation, the social violence and the political repression. Let us describe some historical issues related to each dimension of the crisis.

1. The Unachieved Participatory Democracy (1999-2013) and the Authoritarian Twist (2013-2018)

The Participatory Democracy and its challenges. In 1999 Venezuela inaugurates a new Democratic Constitution, perhaps one of the most inspiring political models of the last 50 years in Latin America: The Participatory Democracy[2]. Despite the operationalization of this political model never took place, there were few laws that attempted to give body to political participation within this democratic model[3]. In that sense, the Participatory Democracy does not privilege a socialist model. Indeed, the Chavez's popularity was due largely to his ability to interpret the immense need of the Venezuelan population to participate in the conduction of their destiny. Popular participation was a marginalized promise in the Democratic-Liberal Constitution of 1961. So, once Chavez won the Presidential elections in 1998 and proposed the Constituent Assembly in order to re-found the Venezuelan democracy, his popularity was guaranteed.

From the “Participatory Model” to the “Twenty First Century ‘Real’ Socialism”. However, in 2007, after two unsuccessful coup d’états (2002/2003), two won presidential elections (2000 / 2006) and a defeated recall referendum (2004), Chávez proposes a constitutional reform in order to promulgate the socialist character of the Constitution. This referendum was the only electoral process that Chávez lost. The attempt to establish a Communal Socialist State was frustrated by popular election. Despite “El Comandante” struggles to lead the model towards a more conventional socialist system; the Constitution of the Bolivarian Republic of Venezuela remained formally untouchable. From 2007 until the announcement of his illness in June 2011, Chávez attempted try to “keep the party in peace”, consolidating even more the centralized style of power. As a leader, he leaves two uncompleted tasks: The institutionalization of the Participatory Democracy promulgated in 1999 and the deconstruction of the Liberal State promulgated in 1961. These two unachieved tasks created a political and institutional limbo that paved the way for the observed authoritarian twist since 2013.

The Authoritarian Twist. With the death of Chávez (5^th of March 2013), and the rise of Nicolás Maduro to power, the political forces (into and out of Chavismo) are recomposed, taking increasingly prominent role the military strata (more obvious since November 2013). The ruling party founded by Chavez (Partido Socialista Unido de Venezuela –PSUV–)[4] weakens and the chances of generating consensus in order to build an economic policy for managing the crisis (the falling of the oil rent since June 2014 and the oil production since 2015) are very low.  

In December 2015, the opposition won 2/3 of the deputies of the National Assembly, radically changing the configuration of forces within the public power. The elected National Assembly will have the control to elect the National Electoral Council (CNE), the General Attorney of the Republic (FGR) and the Supreme Court of Justice (TSJ). However, the outgoing governmental forces, in a fast track way, elect a new Court Supreme of Justice (TSJ) just before the installation of the new National Assembly. Thus, the TSJ remains in the hands of the central government, and its management systematically turns against the actions of the new National Assembly.

The TSJ, the FGR and Central Government against the Legislative Power. In February 2016, the TSJ authorized the President to move forward in opening oil sector to international Capitals. TSJ also empowers him to govern in a State of Exception and Economic Emergency, violating the constitutional framework. In March 2017, the TSJ declared in contempt of the National Assembly elected by the population in 2015, transferring its powers to the central government (Sentences 155 and 156 of the Constitutional Chamber of the TSJ). In those terms, the Supreme Court becomes a kind of supranational power, giving "legal" character to the actions of the central government.

Protests 2017. In April 2017 a new wave of protests began, which ended in July with young protesters dead and several prisoners, in a clear criminalization of the protests.

New Constitution? The government of Maduro called for elections on 31^st of July 2017, to set up a new National Constituent Assembly, parallel to the National Constituted Assembly. This National Constituent Assembly will draft a new Constitution. However, unlike what happened in 1999, little is known about this national political contract. The Constituent Assembly has served to ratify the power of a new FGR and CNE, in clear ignorance of the Bolivarian Constitution and also elections of the National Assembly in December 2015.

The Dialogue in Dominican Republic: towards a Transition? Since October 2016 until February 2018 several meetings have been held in Dominican Republic between the visible opposition (mainly established in the Constituted National Assembly Dec. 2015) and the Government in order to re-establish political conditions and stop political violence. Some international mediators have participated in the dialogue. These negotiations did not have any positive results for re-establishing the constitutional order. On contrary, it seems these dialogues contribute even more for delegitimizing the current political forces and then the political system. At the time of the writing (24/02/2018), the presidential elections will take place on 22^nd of April; a unilateral decision took by the government. The visible opposition has decided to no participate in these presidential elections.

2. Massive crisis in an oil exporting economy dependent on oil rent[5]

Why the falling oil rent is the crisis of the national economy? In Venezuela, the problem is not the oil rent. In the last 100 years the oil rent has been a historically and recurrent income for the Venezuelan economy. The oil rent is a fluctuating income, linked to the global productivity of the oil wells in the world market (Differential Rent or Ricardian Rent). Both, National Oil Companies (NOC) and Majors Oil Companies (MOC) have taken advantage of the oil rent in historical terms. Thus, the oil rent is an inevitable and specific remuneration into the oil business. In fact, like every oil landowner (in Texas, Alaska, Saudi Arabia, Kuwait, Norway, UK or Nigeria) Venezuela has exercised their sovereignty over the oil wells belonging to the nation through its fiscal regime[6]. Thus, the oil rent is a widely accepted income in the global oil regions. The problem is when a country, an entire economy, makes economic policies (both, in the oil and non-oil sectors) counting on the oil rent as if it was a stable and an inexhaustible income over time. Indeed, one of the ideological risks of the oil rent is what to do with such large sums of money[7]. Among other risks, it supposes the fiction of having that income in the future, committing the majority of the time to the country with external debt. This was the case during the 80's and it is what is happening now.

The economic crisis in an oil rent dependent economy occurs when oil prices fall below the commitments made in the national budget. If the economic system is not prepared for the fluctuations of the oil rent, a crisis ensues, whose dimensions will always have the size of the commitment acquired. However, the Venezuelan case has two additional characteristics: on the one hand, the national oil industry has suffered a significant deterioration in its productive capacity[8], fact that OPEC and Non-OPEC countries have taken advantage. On the other hand, the non-oil sector devoted to food production (dependent also on the oil rent), has also suffered very serious consequences in its productive capacity, bringing serious shortage of goods.

The inefficiency in public management and unsustainable exchange rate parity creates profound distortions throughout the whole economy[9]. This also causes a drastic reduction of foreign currency and a generalized deterioration of the productive sectors, having an effect on the import and production of medicines and food. In the case of medicines, it is important to refer to enormous difficulties of population to get treatment of chronic diseases such as high blood pressure, cancer, diabetes and renal dialysis.

Hyperinflation touched food and several goods that often serve for survival. In 2017, non-official figures indicate inflation was near of 2,616 percent. For instance, by February 2018, a person that earned an integral minimum wage (basic salary plus food allowance) only had the capacity to buy 10 percent of the food basket and 8 per cent of the basic family basket. A graduated public servant could acquire 19 per cent of the food basket and 13 per cent of the basic family basket.

No plan for the massive economic crisis. The national government is still far from initiating a plan of economic reactivation oriented to the national production. On the contrary, the fall in rentier oil income has led the government to look for other sources of rent, exacerbating the extractive condition of the economy. At present, the government is trying to recover revenues through indebtedness with a cryptocurrency called Petro, committing future barrels of oil in private hands. The unconstitutional privatization of the barrels for the future is a reversal of the rights obtained in 2001 with the Hydrocarbons Law. Petro is a form of debt that will undoubtedly have a direct consequence on national sovereignty. In addition, government has created the Orinoco Mining Arc (Arco Minero del Orinoco), for the exploitation of gold and other minerals, placing more than half of the southern state of Guayana (Bolívar) at the disposal of large transnational mining corporations. The Orinoco Mining Arc is devastating the socio-environmental conditions of indigenous peoples in the Amazon rainforest (Lander, 2017).

3. The state of the Democracy in Venezuela

In terms of the most basic rights, the Venezuelan Democracy is failing. Access to basic goods is not guaranteed. There is an increase of dependency on direct subsidies through the so-called CLAP, a consumption card provided by the central government. This “positive concession” (“inclusion from above” García Guadilla, 2018) limits autonomy and alienates the fundamental freedoms to food. Other social consequence of the food crisis is the malnutrition that is preventing children from attending schools (UNICEF, 2018)[10]. In addition, the access to both, public health service and medicines are not guaranteed.

In terms of the working opportunities, far is the economic system to provide a decent job for the working class. In the name of socialist ideology and the “economic war”, the authoritarian regime has alienated the fundamental right to a decent salary. Indeed, the central government has insisted that the crisis has been produced by “an economic war that foreign countries have initiated against Venezuela”. The author of this article has no doubt about the special interest of traditionally colonialist nations as well as those that have been emerging since the last decade, to control the natural resources of Venezuela. However, the “economic war” is a “Manichean” argument. One can deconstruct it using a little common sense walking on Caracas’ streets, where one can corroborate that people are feeding from garbage. This is one of the most painful verification in an historical oil country with no war at all.

In political terms, the government did not activate the Participatory Democracy to fight against the supposed “economic war”. The government excluded criticism from their own followers. It seems that once again the central power marginalized people, this time privileging a new emerging social class lead by the military forces. 

The forced migration. The number of people expelled from the country is increasing. The main reasons of migration are low wages and shortage situation. Unofficial figures estimate that 4.5 million people have emigrated in the last 5 years[11]. People have started migration to neighbouring countries such as Colombia and Brazil. Other important contingent of people are migrating to other Latin American countries, such as Ecuador, Peru, Argentina, Chile, Bolivia, Panama and Costa Rica, and European countries such as Spain, Italy and Portugal. Many of the migrants to Europe are descendants of refugees arrived to Venezuela after the Spanish Civil War and The Second World War. There are also political refugees; however, they are lesser in quantity and importance.

The crisis of democracy in Venezuela is fundamentally due to two historically unsolved puzzles. On the one hand, the frustrated “Participatory Democracy” pending since 1961. On the other hand, the misunderstanding of the oil condition, and its consequent mismanagement of oil rent. To solve these puzzles, politicians and social scientists should pay more attention to the social and economic history of such a diverse and particular country as Venezuela.

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[1] The author is grateful for the observations and criticisms of the following colleagues: Cecilia Torres, Jose Luis Fernandez-Shaw, Beatriz Barrot, Larissa Barbosa, Daniela Andrade, Brenda Rodriguez and Tefera Negash. However, everything here exposed is the sole responsibility of the author.

[2] Sometimes understood in opposition sometimes understood as a complement of the Liberal and Representative Democracy

[3]  The Organic Law for Potable Water and Waste Service is one of the law, other policies were set up by Presidential decrees, or volunteer willing expressed by Chavez during his allocutions in “Aló Presidente” (García Guadilla, María PIlar, 2018).

[4] The 5^th of February 2018, Nicolás Maduro registered in the National Electoral Council (CNE) a new political party called “Vamos Venezuela”, setting up as a separate party from the PSUV.

[5] The performance of the national economy, as well as of the different public institutions cannot be evaluated rigorously given the absence of updated official data since, at least, 2013. Most of the information has been obtained from data disclosed by academic centres, international institutions or policy analysts, presenting significant differences between them.

[6] Between 1993 and 2001, the Venezuelan Fiscal Regime changed as a part of deregulation reforms of the oil sector, causing 20 Billion Dollars losses for the Nation in the three first years. In 2001 a New Hydrocarbon Law recovered the historical role of the State as landowner in the oil business. This new Hydrocarbon Law increased the oil rent income of the economy in about 65 percent.

[7] In Venezuela an historical discussion started in 1934 is still going on about the uses of the oil rent in the national development. However, the continuous political changes occurred every 40 years have prevented a consensus resolution on the uses of oil rent. Norway uses to be one of the examples used by Venezuelan analysts because of the creation of its Intergenerational Saving Fund and the Macroeconomic Stabilizing Fund. In the case of Alaska every year the oil sector generates surpluses which are distributed among the population.

[8] According to the OPEC in the Monthly Oil Market Report, 12^th February 2018, Table 5-10: OPEC crude oil production based on primary sources, the Venezuelan Oil production losses 604,000 barrels per day since 2016 (2,373 MBD 2016/ 1,769 MBD Jan 2018).

[9] Since February 2018, the official exchange rate changed from 10.00 to 30,000.00 bolivars per dollar, while the Parallel dollar parity, which has a significant impact on the pricing, was 230,000.00 bolivars per dollar on February 23, 2017.

[10] Statement published the 26th of January 2018 in New York: “In Venezuela, prevalence of malnutrition among children grows as economic crisis deepens. UNICEF urges coordinated national action to reach children most in need” https://www.unicef.org/media/media_102501.html

[11] According to the last Census, in 2018 Venezuela reach 32 Million of people.

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References and Sources

• Betancourt, Rómulo (1956). Venezuela Política y Petróleo. FCE: México. 886 pp.
• García Guadilla, María PIlar (2018). The Incorporation of Popular Sectors and Social Movements in Venezuelan Twenty First Century Socialism. In Eduardo Silva and Federico Rossi (Editors). 2018 “Reshaping the Political Arena in Latin America: From Resisting Neoliberalism to the Second Incorporation” (Pitt Latin American Series)
• Lander, Edgardo y Santiago Arconada (2017). Venezuela: un barril de pólvora. Nueva Sociedad No 269, mayo-junio de 2017, ISSN: 0251-3552, <www.nuso.org>.
• Regnault, Blas (2013). Neither a Blessing nor a Curse: Natural Resources and the development in oil-exporting economies. International Initiative for Promoting Political Economy. IPPE, 2013. Den Haag.
• Regnault, Blas (March 2018). “Synchronicity between recent transformation in liberal institutional frame in Venezuela and the new challenges of the global oil business”. Mimeo.
• Mendoza Pottellá, Carlos Ramón (Dec. 2017). Consideraciones sobre la industria petrolera venezolana y sus perspectivas a corto y mediano plazo. Mimeo.
• Mommer, Bernard (1989). ¿Es posible una polítcia petrolera no rentista? In Revista BCV: Caracas, Volumen 4 – No. 3 – 1989; pp. 56-107
• Murshed, S. Mansoob (2004) ‘When Does Natural Resource Abundance Lead to a Resource Curse’, IIED-EEP Working Paper 04-01, www.iied.org.
• OPEC (2018) Monthly Oil Market Report, 12^th February 2018. Available in http://www.opec.org/opec_web/en/
• UNICEF (26^th January 2018) “Urges coordinated national action to reach children most in need” https://www.unicef.org/media/media_102501.html

Blas Regnault (Institute of Social Studies, Erasmus University of Rotterdam, The Netherlands ISS-EUR PhD Candidate) is a Venezuelan Sociologist, devoted to the study of global oil price cycles and its impact on the sustainable development in oil exporting economies.

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Welcome!

Welcome to my Blog

The unexpected chute of oil prices during the last six months of 2014 represents almost 50% dollar per barrel. This fact gives us again evidence about how difficult is to forecast and to explain global oil prices. Every author seems to be surprised about these changes in prices, after six years of constant increase and high-level prices. Nowadays many forecast financial advisors start to explain how low the prices will be the next six years. But one question still remains between scholars: Why this miscomprehension about oil price fluctuation? Why economic theory cannot find causes of oil price movements to forecast them?

The main objective of this article is to expose a theoretical analysis about the determinants of the long-term oil price trend. The relevance of this analysis is justified by two reasons: The first one is related to a very significant omission made by the conventional theory of price about the difference between relative prices and money prices (Nicholas; 2011, 2014, and 2015). The second reason is related to the peculiar condition of the global oil industry and its price formation. Both the inclusion of relative and money prices and the specific condition of the global oil industry have a central importance to understand the determinants of the international oil price trend.