Venezuela: a victim of mismanagement, imperialist design - EDITORIAL

enezuela is a country with the largest  deposits of unrefined oil resources in the world. Yet it has the world’s  highest rate of inflation -- a staggering 2,600% last year -- according  to recently released figures. Its economy is tittering on the brink of  bankruptcy. How did this happen?
Venezuelan oil isn’t high in  quality. It needs heavy processing and consequently Venezuela’s oil  requires specialized refineries and thereby oil fetches lower world  market prices. But in the 1990s with oil prices at a high, the country  was a powerhouse in Latin America, wielding enormous power and influence  in the region.
Today oil prices are less than half their peak  from 2008. According to the Organisation of Petroleum Exporting  Countries (OPEC), Venezuela’s oil production has fallen 12% over the  past two months. The 1.7 million barrel production, is the lowest since  2002, a direct fallout of the 2002/3 sacking of nearly half the trained  staff of Petroleos de Venezuela (PDVSA) by the country’s then President  Hugo Chavez for taking part in a strike, which he saw as a plot to  overthrow his regime. He went on to fill the posts with party loyalists;  majority of whom had no training as skilled oil workers. 

Not  surprisingly though, around 95% of Venezuela’s income is derived from  the sale of oil, the country’s production and sale has kept falling.  resulting in a serious loss of income. To overcome the crisis, it had  also sold oil to China in advance. 
When the oil prices declined, the shipments had to increase to keep up with the lower price.  But Venezuela had sacked most of its trained staff and the  newly-recruited untrained staff it recruited in the aftermath of the  expulsions, were not in a position to raise production to meet the new  demands. 
Again, specialised oil producing machinery is  expensive to maintain. According to Francisco J. Monaldi, Ph.D -- a  fellow in Latin American energy policy at the Centre for Energy Studies  -- it costs Venezuela a minimum of at least $8 billion a year as  maintenance costs alone. The untrained post 2003 staff were not aware of  this. Instead of maximum reinvestment to meet greater production needs,  money was taken away from an industry which takes massive amounts of  money to maintain and relocated to providing relief and building  infrastructure.  Maintenance and upgrading of machinery were cut by half  as funds were diverted. 

Chavez utilised oil money to fund  many of his infrastructure and housing projects, which saw vast  improvements in the quality of life for some of the poorest Venezuelans,  according to Gregory Wilpert, a sociologist and author of “Changing  Venezuela by Taking Power: “The History and Policies of the Chávez  Government.” 
With the drop in the price of oil, there was the inability to increase its production and falling oil revenues. In November, the country defaulted, failing to pay interest on two US$-denominated bonds  by the end of a grace period in November. 
However, the  problems plaguing the Venezuelan economy are not solely due to its  policies of re-investing oil profits in an attempt to raise the living  standards of its people or its socialistic policies. While these  policies played a role in destabilising the country’s economy, it was  the artificially low oil prices and sabotage by hostile forces that have brought the Venezuelan economy to its knees, so-to-say. 

Since  2014, Saudi Arabia flooded the market with cheap oil -- a calculated  move coordinated with US foreign policy goals. Despite not just losing  money, and even falling deep into debt trap, the Saudi monarchy  continues to expand its oil production. The result has been driving down  oil price from $110 per barrel to $28. The goal weakened those  opponents of US, whose economies are centred around oil and natural gas  exports. And Venezuela is one of those countries. 
The  problems currently facing Venezuela started in 2014. The already growing  abundance of oil due to hydraulic fracturing, or fracking, was  compounded by Saudi Arabia flooding the markets with cheap oil. 
The  result: Massive price drops affecting countries the US sees as its  enemies.  Russia, Venezuela, Ecuador, and the Islamic Republic of Iran  all have economies that have suffered the sting of low oil prices. 

Michael Reagan - the son of Ronald Regan- writing for ‘Townhall’ in  2014 said “My father did the same thing to hurt the Soviet Union during  the 1980s. Since selling oil was the source of the Kremlin’s wealth, my  father got the Saudis to flood the market with cheap oil. Lower oil  prices devalued the ruble, causing the USSR to go bankrupt, which led to perestroika of Mikhail Gorbachev and the collapse of the Soviet  Empire.”
History seems to be repeating itself.