Venezuela’s boliburguesía ‘kleptolobby’ highlights perils of populism


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Venezuelan President Nicolas Maduro is in Moscow, where he is due to hold talks with his Russian counterpart, Vladimir Putin. The Kremlin said earlier that Maduro will meet with Putin on October 4 for talks focusing on “the development of a strategic partnership between the two countries in various spheres” as well as international and regional issues, RFE/RL reports:

Venezuela became the largest external source of crude oil for Russian state giant Rosneft a few years ago, and Rosneft has provided support for Venezuela’s state oil company after the United States imposed sanctions on Maduro in early August. Reuters reported later in August, citing unnamed sources, that Maduro’s government has increasingly turned to Russia for cash and credit amid unrest in the Latin American country….Maduro also said he expected to discuss arms sales and expressed confidence that “even if we do not ask, we will be given even more support to boost Venezuela’s defense capacity and sovereignty.” He said that cooperation with Russia had made Venezuela’s armed forces “three times stronger over the past 15 years.”

As if often the case in authoritarian regimes, Venezuela’s citizens who are in the most need are those who are not getting help, writes analyst Scott Bleiweis writes for the Foreign Policy Journal:

The value of Venezuela’s currency continues to shrink while prices keep rising. Many cannot afford basic necessities, and many turn to the black market for goods and currency which further strangles the economy. The value of minimum wage earnings has plummeted by an astounding 88% in the last 5 years.

Transparency International

The ‘Bolivarian revolution’ has brought record levels of corruption.

Back in 2014, Venezuelan economists assumed reform would come early simply because the political costs of failing to reform would be so exorbitant, notes Francisco Toro, Executive Editor of Fast forward to 2017, he writes for Chatham House, the London-based foreign policy think-tank:

The official dollar exchange rate was allowed to slip, cautiously, in February 2016 from 6.30 bolivars to the dollar to 10. The black market exchange rate, for its part, exploded from 71 to the dollar in June 2014 to 23,786 bolivars at the time of writing. The 10-to-1 arbitrage margin that horrified economists back then has turned into a 2,379-to-1 margin now.

“It is huge distortions like these − and not anything that happened to the price of oil − that have seen Venezuela slide into the social and economic crisis it is now in,” Toro adds. “The real story of Venezuela’s collapse is the story of its Arbitrage Kleptolobby, because the exchange-rate-aided looting of the Venezuelan state continues unabated.” RTWT

This is to be expected because populism practises “in-grouping”, notes democracy scholar John Keane:

Rudiger Dornbusch and other scholars, including James Loxton, have shown that although populism can foster economic growth and redistribute wealth and income in favour of formerly marginalised groups ….it typically has the effect of privileging new sets of elites….In the name of “the people”, it practically does what all populism does: it creates a wealthy stratum of oligarchs, like Venezuela’s boliburguesía, whose appetite for chartered flights, real estate and luxury cars has been whetted by kickbacks linked to state contracts showered on pro-government corporate executives and former military officials.


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