Venezuela crisis

2. CONTENT
 HISTORY OF VENEZUELA
 CURRENT SITUATION
 REASONS FOR CRISIS
 IMPACT OF CRISIS
 POSSIBLE SOLUTION

3. HISTORY OF VENEZUELA

4. VENEZUELA AT GLANCE
• LOCATION – South America
• CAPITAL - Caracas
• OFFICIAL LANGUAGE – Spanish
• CURRENCY – Bolivar
• POPULATION - 31 Million
(44th)
• PRESIDENT - Nicolás Maduro

5. DISCOVERY OF VENEZUELA
 For centuries the indigenous peoples of
Venezuela lived by farming but also by
hunting and fishing.
 Then in 1498 Christopher Columbus
became the first European to reach
Venezuela.
 1499 - Alonso de Ojeda, a Spanish explorer,
apparently names the country's north coast
"Venezuela", or "little Venice" because of
its resemblance to the Italian city.

6. INDEPENDENCE OF VENEZUELA
 1810 - The king of Spain was overthrown by France's
Napoleon Bonaparte, providing an opening for anti-
colonial movements fighting for independence.
 1821 - After a series of bitter battles Gran Colombia
- comprising Venezuela, Colombia, Panama and
Ecuador, wins independence from Spain.
 1830 - Venezuela separates from Gran Colombia to
become an independent country with Caracas as its
capital.

7. DISCOVERY OF OIL
 Around 9th and 10th century Venezuela indigenous
tribes found oil seeping through the land.
 1922 a huge oil well was discovered and Venezuela
became the largest oil producer in the world.
 Venezuela allowed American oil company to write
Venezuela’s petroleum law.
 In 1928 Venezuela has the largest oil reserves in the
world.

8. GROWTH OF VENEZUELA
 World War 2 increased demand so much that Venezuela
was producing 1 million barrels per day.
 During 1950s Venezuela was one of the strongest and
most prosperous in South America
 GDP Per Capita almost reached that of West Germany
 4th wealthiest per capita nation
 Worker enjoyed higher wages in North America

9. FURTHER FLUCTUATIONS

10. Bad economic policies and politics
Falling Oil Prices and Dependent on Oil reserves
Printing more money and switching currencies
Nationalization of private companies
Crimes against humanity
?

11. Bad economic policies and politics
Huge Chavez is the president of Venezuela from 1999-2013 and died in
2013 due to cancer. During the presidency of Chavez, He spend all the
revenues that comes from oil to welfare programs.
They do have not focus on agricultural and manufacturing sector . They
hare heavely dependent on Imports .While the economy shrinks, the price
of goods is skyrocketing. Years of excessive government spending on
welfare programs and poorly managed facilities set the stage for the crisis.

12. In 2013 Nicolás Maduro become the president of Venezuela. Maduro govt faces low oil prices. Lack
of oil reserves forces the government to curtail its welfare programmes.

13.  President Maduro reduced the power of National Assembly. The National Assembly was
Venezuela’s legislative branch, dominated by opposition parties. Maduro replaced it with a
regime-controlled “Constituent Assembly.”
 Maduro has also ensured that his Socialist Party stays in power by blacklisting and jailing
opposition candidates, shutting down news outlets that report on the regime’s actions and
offering food in exchange for votes.
 And pro-democracy groups that receive foreign funding are now subject to prosecution on
charges of “financing terrorism” under a 2012 anti-money laundering law. The controversial
legislation has handicapped Venezuelan society’s ability to organize against the regime.

14. Printing more money and switching
currencies
 Venezuela has responded to this need for revenue by simply printing more money – and
that has led to spiralling inflation, with the currency becoming increasingly weak in
terms of its purchasing power. Chávez and his successor, Nicolás Maduro have each
responded to this spiralling inflation in turn with major currency changes.
 The first change occurred in 2008 when Venezuela switched from the standard bolívar
to the bolívar fuerte (strong). Then, in August 2018, Venezuela switched currencies
again, this time replacing the strong bolívar with the bolívar soberano (sovereign).

15. Falling Crude Oil Prices globally
 Poor economic performance of China,Brazil and Europe has dropped the demand of crude oil
prices.
 Supply has Risen: US oil production is highest of 30 years due to Shale oil production.
 OPEC countries are producing more oil despite of low demand.
 Countries are shifiting to renewable resourses.

16. Dependent on Oil reserves
 Things got really bad when oil prices started to plunge in 2014. Venezuela has the
world's largest oil reserves, but the problem is that oil is the only game in town. It
makes up over 95% of Venezuela's revenue from its exports. If it doesn't sell oil, the
country doesn't have money to spend.
 Oil prices were over $100 a barrel in 2014. Today, they however around $50 a barrel.
 Venezuela's state-run oil company, PDVSA, hasn't paid the companies that help extract
its oil, such as Schlumberger (SLB). In the spring, Schlumberger and other companies
dramatically reduced operations with PDVSA, citing unpaid bills.

17. Nationalization of private companies
 PDVSA(Petroluem of Venezuela) is state oil and natural gas company.
Chavez order PDVSA to start hiring people in order to reduce unemployment . PDVSA don’t need
more people so it creates financial burden on PDVSA . PDVSA generates 95% of country income.
 Chvez is against the private business. He nationalized the private companies

18. Crimes against humanity
 According to a recent report on human rights in Venezuela, police and
other government forces killed 131 protesters between 2014 and 2017.
 And since 2013, the Venezuelan security forces have arrested 12,000
citizens, executed 8,292 and tortured nearly 300 people. The report was
written by a panel of independent international experts appointed by
the Organization of American States and based on witnesses’ public
hearings.
 The United Nations made a similar recommendation in a report on
human rights violations there.
 After years of violent repression, most people are now too afraid to
protest.

19. PRESENT
SITUATION OF
VENEZUELA

20. PROBLEMS IN VENEZUELA
1. Hyperinflation : The biggest problem
• 2.69 million percent annual inflation rate.
• Can reach up to 10 million percent by this year.

21. 2. ECONOMIC WAR :
• Venezuelan currency (BOLIVAR) has weakened sharply in
the black market.
3. Food shortages :
• Influence of black market on
the prices.
• Attempts of the general public
to cross the border with
Colombia to buy basic goods.

22. 4. Oil output :
• On a track to fall below 700,000 barrels per day in 2019.
5. Health assistance :
• Unavailability of medicines and
equipments.

23. 6. Crime and poverty :
• 27,479 were killed in 2016 (an all-time high)
• Caracas, Venezuela was the most dangerous capital city in
the world in 2017.

24. WHAT’S THE GOVERNMENT DOING ABOUT IT ?
Back in August, the government lopped five zeros off the old
“strong bolivar”. This meant people no longer had to carry such
huge amounts of cash.
It also began circulating eight new banknotes worth 2,5,10,20,
50,100,200 and 500 sovereign bolivars and two new coins.
The new currency is part of an “economic package” of measures
Which the government says is the “magic formula” to help
Venezuela’s battered economy recover.
Among the measures were :
• Raising the minimum wage to 34 times its previous level from
1st September.

25.  Anchoring the sovereign bolivar to the petro, a virtual
currency the government says it is linked to Venezuela’s oil
reserves.
• Curbing Venezuela’s generous fuel subsidies for those not in
possession of a “Fatherland ID”.
• Raising VAT by 4% to 16%.
However, the currency has continued to fall since
its
introduction, and a further minimum wage increase has had to
be introduced, leading to questions over how effective the
move
was.

26. Impact of
Venezuela Crisis

27. SOCIAL CRISIS
 Hunger
When the price of petroleum was high, Venezuela
became dependent on food imports, and once the price
declined the government became unable to afford the
imports.
According to the head of waste collection in the city of
Maracaibo, Ricardo Boscan, 6 out of every 10 garbage
bags or trash cans are being looted by hungry people.

29.  Health
In Maduro presidency, the Government could not supply
enough money for medical supplies among healthcare
providers, with doctors saying that 9 of 10 of large
hospitals had only 7% of required supplies and private
doctors reporting numbers of patients that are
"impossible" to count dying from easily treated illnesses
due to the "downward sliding economy" in 2014.
 Emigration
The PGA Group estimates more than 1.5 million
Venezuelans emigrated between 1999 and 2014 but
an estimated 1.8 million left by 2015. In the first
part of 2018, emigration from Venezuela was
estimated to average 5000 a day

31.  Crime

32. How Venezuela's crisis will impact
petrol, diesel prices in India
 Venezuela was India's fourth biggest crude supplier after
Iraq, Saudi Arabia and Iran in the current fiscal till
November, accounting for about 12% of India's total oil
imports.
 According to CARE Ratings, if the Venezuela situation is
not resolved by the time the Iran oil sanction waivers are
lifted, it could push up oil prices to $70 bbl by May 2019.
 India imported about 340,000 barrels a day last year .
 CARE assume at the macro level with imports of 1643 million
barrels of crude oil in FY19, a dollar increase in prices on a
permanent basis would increase the bill by roughly $1.6
billion per annum !!!

34. The need for
more
international
action
Need for armed intervention to
depose Maduro and facilitate
humanitarian relief
Any such intervention would of
course require a meaningful
international coalition; clear
international and domestic legal
justification and sanction; and the
will and resources to persist in what
would almost certainly be year's long
commitment
But such an action should be avoided
as much as possible.

35. Address the refugee crisis
 Immediately halt the deportation of any Venezuelan immigrant
 Immediately meet the UNHCR’s identified funding needs
 Increase funding for Venezuela’s affected neighbors, especially Colombia
 Provide recognized travel credentials to Venezuelans forced to flee without
documents

36. Logical way forward
 National assembly must designate a new government.
 New military high command to organize and return to Democracy.
 Introduction of new currency anchored to USD.
 Slowly restructure employment scenario and reduce corruption.
 US sanctions lifted in case of end of Mundo regime ,IMF provides
loan ,economy will set back when oil production rebounds.