By Mike Hermida
This decade has seen major financial crises in Venezuela and Argentina. At first glance, they might seem similar: two of the top five Latin American economies are failing, causing detrimental effects to their people. Nevertheless, these two examples lie at either side of the extremes of the region’s political spectrum.
The similarities and differences on the cases of Argentina and Venezuela reveal a need for the people to think critically and stay informed.
Financial problems in Argentina date back to the military dictatorships of the Cold War, but peaked with the election of far-right president Mauricio Macri in 2015. According to a September article from Telesur (a Venezuelan anti-neoliberal news source), Argentina’s crisis was exacerbated by Macri’s decision to reopen the market to the foreign trade.
This was a reversal of the previous president’s policy, the populist leftist Cristina Kirchner. The Kirchner government applied a closed-market regime, where the majority of goods had to be bought from domestic sources. Macri’s foreign trade policy gave rise to the prices of everyday necessities, such as groceries and gas used for heating one’s house.
Macri also increased the interest rate to an unprecedented level. Together, these changes lead to mass devaluation of the Argentine peso. This means that the cost of living has gone up and job opportunities have gone down.
To make matters worse, Argentina has structural problems that have gone unaddressed under the Macri administration. There is a large dependence on goods, such as foodstuffs and grains, which have their prices set by the international market. Therefore, any shift in prices in the international market affects the domestic prices of goods.
Similarly, an Al-Jazeera documentary on left-wing Venezuela’s economic crisis reveals that the financial problems started in 2013, the year ex-president Hugo Chávez died. The documentary blames a downturn in the world’s oil prices and the country’s dependence its oil revenue as the source of the crisis.
After Chávez died, Nicolas Maduro became president. At that time, the world oil price dropped, so the country’s revenue decreased.
It must be added, however, that there are other factors hurting the economy, like United States-aligned Colombian groups. Because of their geographical proximity and encouragement from the U.S., these groups engage in acts that harm the Venezuelan economy.
In an interview with Telesur, Minister of the Economy Ricardo Menendez states that a large problem is extraction smuggling. Extraction smuggling is an act by these Colombian groups that take “Bolivars [the Venezuelan currency] out of the borders in order to generate a drought.”
The same situation happens with food. The problem is so bad that Menendez hyperbolically stated that the country has “imported 300,000 tons of rice, and 300,000 tons of rice goes through the border towards Colombia.”
The key difference between the cases of Argentina and Venezuela is in their ideology. Macri is a right-wing, U.S.-friendly president. On the other hand Maduro and Chávez are from the United Socialist Party. This means that, although both countries are experiencing major economic struggles, the reactions by the U.S. and Canada have been radically different.
The ideological differences between the two presidents are reflected in their responses to each crisis. The Argentina response to its crisis was to ask for a bailout by the International Monetary Fund.
In a press release, the IMF stated that it approved an arrangement with the government. The IMF is to give Argentina $50 billion USD over the next three years. In exchange, the country will adopt IMF-dictated structural adjustment programs. Most notably, Buenos Aires has already started to apply austerity measures to the public sector.
On the other hand, Venezuela has a strong policy of refusing to take any loans from the IMF in order to avoid structural adjustment programs that can have devastating effects on the people. It has also managed to pay off $60 billion USD of its foreign debt.
Despite the efforts by the Maduro administration, an op-ed for Sputnik reveals that Western media has been openly (and often erroneously) attacking the Venezuelan government since Chávez’s presidency began. For example, anti-Maduro protesters are represented as peaceful, upstanding victims, while police violence is exaggerated. Further there is regular reporting on politicians (notably Republicans of the U.S. Senate) who call for a coup on Maduro’s government.
That is not to say there are no legitimate criticisms of Maduro. Amnesty International has noted that since 2016 there has been “an increase in the deployment of military forces to repress protests.” Amnesty also points to the way human rights defenders have been “subjected to attacks and smear campaigns,” such as in the case of transgender lawyer and activist Sam Seijas.
Maduro’s rule by decree and weakening of the National Assembly’s power are also disturbing. Yet the demonization of Maduro by neoliberal forces is equally rooted in a desire to wipe out alternative economic and governmental arrangements – in this case a socialist regime. The existence of such possibilities show that there’s nothing natural or inevitable about crowning the market God-Emperor.
Tense relations between Venezuela and the U.S. are juxtaposed with friendly relations between Macri and North America. Since he came to office, Macri has met with former U.S. president Barack Obama, vice president Mike Pence, and Prime Minister Justin Trudeau. He even literally tangoed with the Obamas, dancing the traditional Argentine dance with the then-president and first lady in their visit to Buenos Aires.
Regarding Trudeau’s visit to Macri at the presidential Pink House in 2016, the CBC reported that the two countries have a “developed relationship and a free-trade agreement.” The article further notes that Macri’s presidency as being “a continent-wide shift away from the left-wing populist agenda represented by the Kirchners, Brazil’s [sic] Lila da Silva and Venezuela’s Hugo Chavez.”
The similarities and differences on the cases of Argentina and Venezuela reveal a need for the people to think critically and stay informed. It is important to consume media sources that posit an alternative to the neoliberal narrative.