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Out of business

Out of business

Out of business
August 30
10:24 2018

Jesus Sanchez Melean

When a business goes into a financial crisis can go out of business and disappear. However, this is not an option for countries when they suffer economic and political crises. The menu of options a troubled country has includes: Changing their name, like Burma did in 1988 to become Myanmar; to merge with other states to become a larger entity, like the European Union; or to see how a portion of their territory is snatched, like Russia did with Crimea in 2014.

Countries usually keep going even when their governments make the worst mistakes and take their citizens to the extreme of poverty. With that said, I want to address the case of Venezuela as if it was a company going bankrupt. At the end of August, the U.S. Federal Judge Leonard Stark, from Delaware, ordered the sale of the stock Venezuela owns in Citgo, a company that owns 30 refineries and a massive network of gas stations in the U.S.

This ruling comes after Venezuela didn’t fulfill his obligations with a business partner, Cystallex International Corporation. Citgo is considered the largest asset Venezuela owns in the U.S. Also, stocks that Venezuela owns in Citgo are usually offered as collateral for the bonds that PDVSA, major oil company in Venezuela, issues. Losing the stock in Citgo represents a serious blow to that country’s already damaged financial credibility.

We could conclude that Venezuela, seen as a business, is not taking care of their fixed assets, or their relationship with the investors that have provided funding for the regular operations of the country in recent years. It also seems as if Venezuela pays little attention to their internal customers, those who contribute to their finances by paying taxes. The media and social media of those who live in the country report that there are daily interruptions in the supply of electricity, gas, and water, all state-owned services. These internal customers constantly express their disappointment for the shortages of food, medicine, and car parts. Those shortages are about to get worse with the recent measures enacted by the Maduro regime.  The government declared a minimum wage increase of 3,364%. Economists expect that more of the businesses that produce consumer goods will close their doors considering the increase in the cost of their payroll and a freeze on sale prices imposed by the government.

Clients must now get ready to survive without basic services. Venezuelans will be forced to continue living in austerity, with outrageous suffering, and hoping for charity from the Maduro regime or from anyone that can help. Venezuelans won’t be able to pay taxes. The IMF predicts that the Venezuelan economy will shrink 20 per cent. Meanwhile, inflation will surpass 1 million per cent, according to the same entity.

It is clear that Venezuela is going through a really hard time. Hyperinflation, stagnation and the shrinking of the economy are as lethal as certain types of cancer. Some will argue that those are “just economic indexes” and that they are fictional. But, there is another critical issue for this company called Venezuela, and that is the loss of human capital. According to the International Organization for Migrations (OIM), a United Nations Agency, about 2.3 million of Venezuelans currently live outside of their country.

From that total, a 69 per cent left the country since 2015. These 1.6 million Venezuelans abandoned the country after they realized the grim future of the country where they were born and raised. For them, this Venezuela, built by Hugo Chávez and his heirs, is not viable. It offers no opportunities. For them, the country has disappeared from Earth. The country was eliminated and liquidated. For them, Venezuela will continue to exist, but only in their minds and hearts.


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Edición Virtual | #325 | 8 de noviembre 2018

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