Venezuela's Demise Is A Geopolitical Litmus Test For The U.S.

Authored by Grgeory  Copley via OilPrice.com,

Is Venezuela’s 2017 transformation symptomatic of the growing global polarization? And does it show how the collapse of globalism is resulting in the re-emergence of a range of governmental forms which no longer even need to acknowledge “Western-style” democracy? 

Are we seeing the revival of a bloc of pre-Westphalian nation-states with major power support? 

That is, societies which are not based on the balanced, nation-state concept which evolved from the Peace of Westphalia in 1648. Westphalian-style states have come to mean nation-states which married entire societies and leaderships to their geography and were imbued with legitimacy because of the relationships — tacit, historical, or electoral — between the societies and their governance. In shorthand terms: Westphalianism implies sovereignty underpinned by legitimacy. The term “pre-Westphalian”, used here for the first time, implies a form of despotism (control of a population without its consent); a lack of the rule of laws agreed by the society, and therefore a lack of structure (and therefore sovereignty) as recognized by its own population.

Some trends are emerging which show how different the 21st Century global strategic architecture will be from the 20th. The present Venezuelan Government has abandoned even a pretense of adherence to what the West calls democracy. For some states, a return to autocracy is seen as the only avenue to escape total loss of power by governing élites, even though history has demonstrated how fragile and vulnerable such power structures can quickly become. 

Venezuelan Pres. Nicolás Maduro’s stage-managed July 30, 2017, “election” of a new National Constituent Assembly may have set the paradigm for how governments in the emerging post-democratic world can sustain nation-states which owe nothing to the global order. It is not a new model, and it may not endure. But it is a model which has some chance of survival (with little economic success) in a world in which major powers find it inconvenient or difficult to intervene against such states. Or if there are no pressures to overturn major power disinterest. 

In this instance, the declining power of Venezuela’s petroleum exports not only damage the internal economy (given that 95 percent of the nation’s foreign exchange is earned from oil), it limits Venezuela’s importance as either partner or target for foreign powers. 

The Venezuelan election swept away any pretense that Mr. Maduro’s Government would now be recognized internationally on any other grounds than the fact that it physically controlled the territory of the Venezuelan State.

The July 30, 2017, “election” — the “near-final act” in dispensing with a National Assembly controlled by opponents of Pres. Maduro’s United Socialist Party (PSUV: Partido Socialista Unido de Venezuela) — was contrived to return all power, but not necessarily legitimacy, to the PSUV. This was foreseeable when the Supreme Court announced on March 29, 2017, that it was assuming the functions of the National Assembly. The Court reversed that finding three days later, but the process of bypassing the Assembly had begun to take root in Mr Maduro’s mind. 

The imposition of top-down control - suppression - of a society is, however, expensive, and requires an effective system to remove weapons and opportunity for dissent from internal opponents.

Pres. Maduro is yet to demonstrate that he has achieved that level of control.

Arguably, in the United States of America, the attempts by the Administration of Pres. Barack Obama (2009-17) to remove weapons and ammunition from the general public actually stimulated the voter base to reject his ideals and those of his chosen successor in the 2016 Presidential election. 

It is probable that the Venezuelan opposition, already restive and growing in confidence before the July 30, 2017, “election”, would become further emboldened and could act with a greater sense of urgency than before. US Government-imposed sanctions on key PSUV leaders further strengthened opposition resolve. Opposition groups not only challenged the legitimacy of replacing the National Assembly without a mandate to do so, but became emboldened by plausible allegations that the voting was rigged on July 30, apart from the opposition boycott of the event. 

UK-based Smartmatic, a software company which had set up voting systems in Venezuela, said in a company statement on August 1, 2017, that “without any doubt” the voting results had been altered by “at least” a million votes. Moreover, voters were never given the option of rejecting the plan to replace the National Assembly with the Constituent Assembly. The new Assembly theoretically has the power to dismiss any branch of government, including the National Assembly. The National Electoral Council’s claim that almost 8.1-million people (more than 40 percent of the electorate) had voted was rejected not only by Smartmatic, but by Venezuelan opposition leaders. There was no international monitoring in place. 

Smartmatic was the voting machine company established by Venezuelans under the late Pres. Hugo Chávez to provide the Chávez Government with its own sense of confidence that it could control the outcome of elections. And now Smartmatic has turned on Pres. Chávez’ designated successor. Smartmatic will now need to distance itself from its Venezuelan roots. 

The voter count discrepancy may only be relevant to the degree that it fuels internal and external indignation and action.

At a broader level, several outcomes and indicators are significant:

Venezuela’s economy will continue its downward spiral, fueling population outflow and the ac-tivities of major armed insurrectionist factions internally, probably with external sponsors;

International recognition of and trade with Venezuela will contract, but some governments (People’s Republic of China, Iran, Cuba, Turkey, etc.) may take the opportunity to develop a separate trading framework to include Venezuela. This could include a number of Caribbean states which have been induced to work closely with the PRC and against the US. This will gal-vanize US attention to act against some of the smaller PRC allies in the area, particularly Domi-nica;

The creation of a “non-Western” trading system will be significantly influenced by the degree of success Venezuela has in surviving internal dissent and US-led Western sanctions.

Venezuela’s situation highlights the degree to which the US has lost influence in the Americas. So this is where it is being challenged, and why Venezuela is a significant test case.

"Socialism Has Produced Some Very Powerful Millionaires": As Venezuelans Starve In The Streets, The Elites Party On

Authored by Daniel Lang via SHTFplan.com,

It’s always funny to debate socialists on the merits of their ideology.

If you point to a country like Venezuela, and say “See! This is what socialism leads to,” they’ll no doubt claim that it isn’t a real example of socialism. But if you went back in time by just a few years, you’d find that their perception of Venezuela was quite different.

Celebrities like Sean Penn, Oliver Stone, and Danny Glover praised the regime not too long ago, as did intellectuals like Noam Chomsky.

Six years ago, Bernie Sanders claimed that “the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina.”

These days however, those voices are conveniently silent in regards to Venezuela. There’s always at least one “perfect” example of socialism for leftists to hold up, right up until that that shining example utterly fails.

But that is by no means the extant of their cognitive dissonance. While these same figures preach about how equitable socialism is, and rail against the 1%, socialist countries like Venezuela are run by tiny wealthy elites who are having a blast while their countrymen starve in the streets.

The country may be stricken by poverty and political violence, but a rich minority acts like they are untouched by the crisis.

Case in point: Caracas, one of the world’s most violent cities, is the first in South America to open a branch of the trendy Buddha Bar international nightclub chain.

In a country where basics such as flour and sugar are in short supply, Buddha Bar guests can order tuna steak, pork ribs or fish tacos — as long as they have dollars to pay.

“You can have as good a time here in Caracas as in New York, Dubai or Saint Petersburg,” says one of its owners, Cristhian Estephan.

Eight pieces of salmon and shrimp sushi here cost 55,700 bolivars, or the equivalent of more than a quarter of the country’s official monthly minimum wage…

…While the mass protests against President Nicolas Maduro show that Venezuelans’ anger at their hardship is boiling over, the well-off are still managing to have fun.

This always happens in socialist countries, because socialist regimes don’t distribute the wealth equally to everyone. Once the government has a firm grip on the economy, it can distribute that wealth to whoever is the most loyal to the regime.

“Wealth in Venezuela is generated by state revenues that depend on the oil sector,” says Colette Capriles, a sociologist at Simon Bolivar University.

“The state redistributes that revenue. The Chavez government used it with preference for those who needed it most,” with social welfare spending, she says.

But it also offered an opportunity for those close to power to line their pockets.

“This form of socialism has produced some very powerful millionaires,” says Capriles.

“Most of them are government officials or people close to them — and currently they are one of the main things holding up the government.”

I’m sure that fact is also conveniently ignored by leftists celebrities and intellectuals. They’re so wrapped up in their ideology that they can’t see the truth that is staring them in the face.

Not only does socialism always fail, this ideology that so many leftists claim can end wealth inequality, always leaves the masses hungry and poor. It always props up a rich elite class that is insulated from the problems that they cause.

Actions Have Consequences! Ask Venezuela

Authored by Bill Bonner via InternationalMan.com,

Let’s turn to an economy getting doomier by the day: Venezuela.

Actions have consequences. In public policy, it is impossible to say what the consequences will be. There are too many delusions and too much smoke.

Take a policy said to eradicate city rats. Its real purpose is to reward a large political donor who owns a pest control firm. It ends up killing the pigeons.

Often, policies with clear and obvious purposes end up producing outcomes completely at odds with the stated objectives.

Prohibition, for example, increased the number of drunks. The War on Drugs fattened drug dealers’ profits.

The War on Poverty has made poverty respectable… even attractive… to poor people.

The War on Terror has probably made a million otherwise sane and sensible Muslims yearn to blow up something with a U.S. flag on it.

Most often, these outcomes are not exactly surprises. Look more closely and you will often find, hidden behind the promises… a pest control firm!

News reports, for example, tell us that U.S. arms dealers are about to get a $110 billion payday. President Trump announced a weapons deal with the Saudis – the biggest in history.

Into the Abyss

Although the exact consequences of public policies are obscure, the patterns are familiar.

Win-lose deals always reduce total human satisfaction.

Win-lose deals – unless they are imposed by petty criminals or local bullies – require government insistence. Otherwise, no one would take the losing side.

So the more government there is… the more active, ambitious, and overbearing it is… the more win-lose deals subtract from the sum of human happiness.

A month ago, as many as a million of these disappointed people demonstrated against the government of Nicolás Maduro in Venezuela. It was the “Mother of All Protests,” they said.

What was their beef?

Inflation is running at about 700% a year. Last year, GDP plunged 19%. Food staples – beans, rice, bread – are disappearing. Families cross the border into Colombia to buy toilet paper.

Hospitals have no medicine, no equipment, not even rubber gloves and disinfectants. Sometimes, they have no electricity. Deaths of premature babies have increased 10,000% in the last five years.

How did a country make such a mess of itself?

Win-Lose

In a sense, the country was a victim of its own good luck… and then a victim of its own bad judgment.

The good luck happened in 1914 when the first oilfield was drilled. The money followed.

By the 1950s, with a basically market-oriented government, Venezuela rose to become the world’s fourth-richest country in terms of GDP per capita.

Today, the country has the largest proven oil reserves in the world – 297 billion barrels of the stuff compared to 267 billion barrels in Saudi Arabia.

But good luck allows you to make bad judgments. With the oil wealth flowing, Hugo Chávez – who described himself as a Trotskyist two days before his inauguration as president in 2007 – could impose win-lose deals on the whole economy.

Key industries were nationalized. Price controls were put in place. Wealth was redistributed.

Win-lose deals can redistribute wealth but only to the extent win-win deals create it. Take away the win-win deals, and the wealth soon runs out… as it did in Cuba and the Soviet Union.

Now the tank is about empty in Venezuela, too.

Banana Republic

It doesn’t matter what you call it – government is always a means for the few to exploit the many.

The few use every resource available to them to keep the hustle going, with special attention given to manipulating the gullible mob.

The typical citizen rarely has any idea of what is going on… and doesn’t have much curiosity about it. As long as he has credit for a new pickup and a champion who promises to smite his enemies, the common man will go along with almost anything.

But the Venezuelan auto industry has been ruined. And there’s no credit available. So there are few new pickups on the streets, and much of the public has turned against the government.

Not surprisingly, the policies that destroyed Venezuela delighted U.S. economists and politicians – who were eager to impose win-lose deals of their own.

In 2007, Nobel Prize-winning economist Joseph Stiglitz praised the “positive policies” in health and education of the Chávez government.

And in 2011, Bernie Sanders wrote:

These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today than they are in the land of Horatio Alger. Who’s the banana republic now?

Sanders had no idea what was really going on in Venezuela. But he was right about what was going on in the U.S. It was on its way to becoming a banana republic.

Only without the bananas. Or the republic.