Foreign Policy takes a fascinating look at the “money-losing machine” in South America, but makes one caveat:

While the biggest corruption schemes in Venezuela are organized and sustained around currency controls and subsidies, neither of these policies was instituted by Chávez or brought about by his so-called Bolivarian Revolution. The gas subsidy has been in place for several decades, with its current price fixed since 1996, three years before Chavez came to power. Venezuela’s currency, meanwhile, was fixed between 1930 and 1983. After that year, in fact, it instituted a multiple exchange regime that, by the time it was lifted in 1989, was characterized by a 132 percent difference between the official and parallel rates. The same could be said of inflation, which averaged 50 percent per year during the mid 1990s and even reached 115 percent in 1996. With the exception of 2013 and 2014, Venezuela averaged 22 percent inflation during the Chávez era. …

Which brings us, finally, to the million-dollar question: In post-Chávez Venezuela, who has the political capital to institute the deep and painful reforms the country requires to break out of this wicked cycle?


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