Whenever I visit a conference about blockchain, there is always someone who uses Venezuela as a use case for crypto currency adoption. I get that. Without enough fact finding, this use case has all the ingredients to prove a cryptocurrency is a solution for the problems that Venezuela has. But as always, reality is very different. In fact, reality is hard to find if we look at the current status of the country. It has become a problem in itself.
The reason for writing this piece is that the country’s hardships are felt right on my doorstep. My wife is Venezuelan and my family has been ripped apart because of the political situation. A large part is living abroad and is scattered around the globe. Family that is still in the country is only surviving because they get help from friends and family living abroad. And they are in luck, because a lot of people we know do not have access to help from abroad and they are really suffering.
What makes it even more though is seeing how the media is reporting on what is happening. Let’s just say, there are a lot of opinions and agenda’s that need to be revised. This piece is about fact finding and setting the record straight on what is actually happening in Venezuela and how a country, that has worlds largest oil reserves, has become something George Orwell has written about. It will explain how big the problem of having centralized media is. And it will explain why I literally cried about what happened this weekend.
The real problem
The real problem that Venezuela has, is it’s abundance of what some refer to as “The devils excrement”. Venezuela is a country which has the largest oil reserves in the world (Wikipedia). It also has huge gold deposits and an abundance of other natural resources. Furthermore, it is one of the most beautiful countries in the world. Its richness in everything should make it one of the most prosperous countries in the world. But, unfortunately, it is all but that.
Sometimes you hear Venezuelans say: “God wanted to create paradise on earth, so he created Venezuela. But he did not want the whole world living in Venezuela, so he created the Venezuelan”. This is quite unfair, because the Venezuelan problem is not caused by the Venezuelans. It is the problem of having a very tasty and big pie and the world wanting a piece of it. Having large oil reserves resulted in a way of thinking which Venezuelans describe as “El facilismo”. Knowing that you just have to open a valve to get easy money have resulted in decades if not a century of political mismanagement.
Due to geopolitics, corruption and mismanagement, the benefits of oil booms were always short lived if not even lived at all. This resulted in a large part of the population living below the poverty line and a small part of the population living like kings. During the prosperity boom at the end of to 70’s and the beginning of the 80’s, the sentence: “¡Ta barato, Dame dos!”, was heard on every street corner in Miami. The reason for this boom was the nationalization of the oil industry and the heavy spending that resulted from it. But due to mismanagement, the country was left with a heavy burden when the oil prices plummeted. Furthermore a large part of the population did not benefit from the boom at all. It became the breeding ground for what Venezuela is today.
The political problem
If you want answers for a current problem, one should always look at history to find its origins. In January 1, 1976, President Carlos Andres Perez signed the law that reserved the government the industry and the commerce of hydrocarbons in Venezuela. The same day “Petroleos de Venezuela S.A. (PDVSA)” was born as the company in charge of planning, coordinating and supervising the oil industry. It was the beginning of the prosperity boom of Venezuela mentioned above. Instead of managing the extra income wisely, the administration started to lend heavily. Causing an extreme case of “la enfermedad holandesa”.
In the meantime the current administrations where rattled with corruption and to make matters even worse, the regular working class did not benefit from the boom at all. When oil prices fell, the country became a keg of gunpowder looking for a fuse.
In 1982, MBR-200 was founded by lieutenant colonel Hugo Chávez Frías. MBR-200 was secretive cell within the military and their main complaint was the corruption of Carlos Andrés Pérez as well as Venezuela’s ongoing economic difficulties and social turmoil. In their view, the entire political system had to be changed in order for social change to occur.
The group was also linked to Fidel Castro. Castro was looking towards Venezuela as an ally because it was experiencing economic difficulties as a result of the Soviet Union’s Perestroika. He saw in Venezuela a piggy bank that eventually could provide the funds he desperately was searching for. Meanwhile, the discontent of the people grew.
In 1989 bloody street riots took place known as the “Caracazo”. The weeklong clashes resulted in the deaths of hundreds of people, thousands by some accounts, mostly at the hands of security forces and the military. And after the failed coup in 1992 by the hand of Hugo Chavez, the country was left in crisis. These circumstances in which the 1992 coupe took place are important as they lay the foundation of rise of Hugo Chavez.
Chávez gave himself up to the government and appeared on television, in uniform, to call on the remaining coup members to lay down their arms and spoke the famous words: “Por Ahora”. There is always the question how it is possible that someone who organized a coupe d’etat, was released from prison in no-time and, not long after, became the president of Venezuela.
In comes Rafael Caldera, a brilliant intellectual and former president of Venezuela. A key distinction between Caldera’s first government and those of his predecessors lay in the area of foreign policy. President Caldera restored bilateral relations with the Soviet Union and the socialist nations of Eastern Europe, as well as with a number of South American nations that had fallen under military dictatorships, including Argentina, Panama, and Peru. Furthermore, although he was one of the founders of the political and economical system, he was one of the first to see its weakness. So much oil had led not just to dependence but widespread corruption and growing resentment from the popular sectors left off the gravy train.
Caldera’s second administration faced enormous challenges. He needed to defuse the powder keg. To overcome the discontent of the popular sectors, he released the military officers responsible for the failed coups of 4 February and 27 November 1992. As a result of this policy, aimed at pacifying the insurgent military force, there were no uprisings, attempted military coups, or deaths for political demonstrations during the five years of Caldera’s second term. A win for him, but in doing so, he unleashed the Kraken.
Rise of Dictatorship
Venezuela has a history of corruption and foreign intermeddling. A funny example is the Cisneros group, one of the oldest of Pepsi’s independent franchise operations. For five decades they were able, with government support of course, to flood the Venezuelan market with PepsiCo products. To this day Cola is referred to as Pepsi and you will get a strange face if you ask for a Coca Cola.
Although Caldera’s administration was characterized by tranquility, there was a lot of corruption and the oligarchy kept its power. When everything is easy, you get lazy. This is what happened with the oligarchy in Venezuela during the election of 1998. Venezuela was a divided country and they underestimated the popularity of Hugo Chávez. The candidate Hugo Chávez was up against was former beauty queen Irene Sáez.
Chávez won the election by support from the country’s poor and “disenchanted middle class”, whose standard of living had decreased rapidly over the previous decade. It’s no secret that Chávez was backed by Castro. Even Caldera had ties with Castro, but no one could imagine at that time the impact this would have on the country. Hugo Chávez was a very intelligent and charismatic person. Even I have a soft spot for him, even though a strongly resent the majority of his policies. He was the kind of crook that was so charismatic, that you would let him get away with most of his crimes.
His first term was what you would call, “Chavismo Light”. It layed the foundation of the disaster Venezuela has become. It all starts out with a lot of nepotism. Promoting his family, inner circle and former MBR-200 members with top positions. Soon after, he made the cuban doctors for oil program a reality. With that program he basically gave Cuba and Castro USD 3 billion a year with nothing in return. This program continues to this day. He knew the oligarchy would try to do something, and he was working towards a confrontation.
So in 2002 they committed a sorry excuse for a coupe d’erat. This was a huge mistake. Because it failed, it gave Chávez cult status and thus it gave him the power to do whatever he wanted to do. Stuff went batshit crazy after that. Here is a short anthology.
Because the role of some privately owned broadcasters played during the failed coupe, he had an excuse to expropriate every independent news outlet, radio and tv station in the country. And so he did. There is not one source of news in the country that is not government controlled.
He slowly but steadily wrecked every democratic institution in the country. Everything that could pose a threat, he changed. From being able to be elected forever to creating a state fund called “Fonden” which does not have any oversight and is handling all the state finances.
He institutionalized corruption. Every “social” reform program he launched was just another scheme to make money for his inner circle. Schooling programs, housing programs, construction programs, everything was just another scheme to corrupt and to politicize a common good.
He corrupted the Bolivar. And he corrupted it completely. There is no free access to foreign currency in Venezuela. Every Dollar, Euro or Swiss franc has to be applied for. Importing a good? Sorry, you need to ask the government nicely and give them some persuasion in the form of a kickback. He knew the result would be a thriving black market for foreign currency. And guess who are the driving forces of this market? Yes, the inner circle of the government. Yes, they are the only ones with access to the official rate. How big is this? Well, if you think the Odebrecht case in Brazil is big, this will blow your mind.
The story continues. He introduced a fixed selling prices for imported goods. A list that grows bigger every day. You know what the result is? Yes, indeed another scheme to corrupt. Buy something for the state sponsored price and ship it across the border. Maybe you think that you cannot get rich from selling toilet rolls? Well, if a government is willing to buy them from you at 5 bucks a piece they will. And a kickback works miracles.. Even worse is gasoline. The state-sponsored price of gasoline in black market rate Bolivar is so low, that when you ship a truck full of it across the border to Colombia, you will make a more than you would by shipping the same truck full of cocaine to Europe. Why do you think we have criminal gangs supporting this corrupt government? Follow the money.
And yes, this all had to do with increasing his grip on power. And he succeeded. Knowingly corrupting someone, means that you get control over that someone. And it does not matter if this someone is in the opposition or not. Hell, it does not even matter if it is another city or country. He bribed nations and in return he got their support to cling onto power. Meanwhile he left some breadcrumbs on the table for his followers. He had the windfall of an oil boom. This time, the only people who benefited from it where other countries and his inner circle.
When Chávez died, it got even worse. Venezuela turned into a foreign controlled full-blown dictatorship and a country of horrors.
Living the horrors of a Dictatorship
The way Chávez died is weird. He died in Cuba, his trusted ally, and he apparently appointed a successor. This was Nicolas Maduro. Someone who is a bit more than just a bus driver. His origins are a bit vague. He is trained in Cuba and when I say trained I mean heavily trained. He used to be the bodyguard of Chávez and has been around since the beginning of the Chávez era.
He probably does not move an inch without the go-ahead of Cuba or Russia. How he got elected was through utterly corrupt elections. I think a lot of powers chipped in to make it happen. Fact is that every resource that was available has been used to get him into power. Buying votes with government funds? Check. Dead people voting? Check. Corrupt opposition members? Check. Every trick that could be used, has been used.
You would think that Chavez left the new administration with enough tools to hold on to power. Well, after the parliamentary elections in 2015, it became clear that the regime had lost popular support. That was a problem for them as they could not rule by decree anymore.
Every aspect of the then already pseudo-democracy needed to be destroyed. So they created Tribunal Supremo de Justicia. Basically a high court that consist only of regime supporters. A better word is a Nazi Court. And they created the Asamblea Nacional Constituyente which is basically a Nazi Assembly. This turned Venezuela in a fully fledged dictatorship. Everything is now is state owned or state controlled. And this dictatorship is willing to throw the people under the bus to remain in power.
The breadcrumbs which were on the table are gone. The majority of the people live on government handouts. The so called clap boxes. With these boxes they have even politicized food. Furthermore it is another scam as some people are getting payed a lot to provide the boxes. Regular medical care is not to be found anymore. Public hospitals are non functioning and forget about medical equipment or medicine. People are dying because of the policies of the regime. Dying of crime, malnutrition or lack of proper medical care.
The regime is playing the imperialist card. But they forget to mention that the problems where already there when no sanction whatsoever was imposed. People have short memories apparently. And people have lost hope. Luckily the weak spot of the regime has been found. The regime does not give a flying fuck about the regular Venezuelan.
As a result the country is experiencing a humanitarian crisis. Like I said, children are dying and the regime is acting like everything is just dandy. It is not and it has not been for a long time. The regime refuses humanitarian aid as it makes them look weak. Remember, the initiative of this weekend was not the first attempt to offer humanitarian aid. Of course it is politicized. If it were not for the regime we would not be in this position in the first place. So they need to go. Although this weekend had a good start, what happened soon after made my heart sink. A truck with humanitarian aid was set on fire… on Venezuelan territory… A truck with supplies that could have saved the lives of children. Children, who were denied to live by a regime. To make matters even worse, one of our friends told us at that moment that a relative had just lost her 12 year old boy. This boy had appendicitis, something that is easily cured in any other country. But because this boy was born in Venezuela, he was denied life. Denied life by a regime.
You think that it could not get worse, but it did. The international press coverage on the situation in Venezuela is abysmal. The amount of disinformation being spread is unbelievable. People with opinions about Thrump. Opinions about an American led invasion. Reports on the number of people who went to a benefit concert. The problem of politicized humanitarian aid. Roger Waters.. It is just unjustifiable. Sources which are clearly state sponsored disinformation campaigns are being interpreted as being true. To all involved I can only say this, look in the mirror and be ashamed of yourself. The Venezuelan problem is not about ideology. It is about people dying and about people needing help. In criticizing Humanitarian Aid, you clearly place yourself on the wrong side of history. You are defending a regime that kills and that destroys.
To loop back, to where we started, It is clear that we have huge problem regarding news and trustful reporting. This problem is bigger than the problem bitcoin is trying to solve. Disinformation has become more powerful than information. Why? Because all the channels we use for news and information gathering are centrally owned. Therefore they are easy to corrupt. And it is happening continuously. I think that this is something our industry should focus on. A way to provide information free of propaganda. It will help, it will help to liberate the people of Venezuela. It will help to save lives. Just take a look at the picture, this cannot be the future of any county…