watch the presentation and make a brief discussion on the topic explained.
INTRODUCTION • President Nicolás Maduro’s autocratic reign over Venezuela is causing a political crisis as he continues to stifle the opposition. • Venezuela’s severe reliance on oil exports exacerbates the country’s economic crisis. Venezuela’s economy was severely damaged by years of economic mismanagement and the 2014 oil price slump. • Venezuela’s GDP has shrunk by 35 percent since 2013, more than the US economy shrank during the Great Depression. 1 IMPACT ON U.S. TRADE AND INVESTMENT WITH VENEZUELA • The nation is facing severe humanitarian consequences as a result of its hyperinflation, food and medication shortages, severe financial deficits, and declining living standards. • Trade between the United States and Venezuela has decreased as a result of the economic crisis in Venezuela and the low price of oil. • Because of the political and economic unrest in Venezuela, several large American companies that had operations there have either ceased operations entirely or have reduced them. • Holding PdVSA and Venezuelan government bonds, a large number of American investors raises questions about possible losses and legal action against the Venezuelan government. 2 ECONOMIC MISMANAGEMENT DURING THE OIL BOOM • In the 2000s, Venezuela benefited greatly from the surge in oil prices. • Over this time, oil prices increased steadily, peaking in July 2008 at $133 per barrel. • The Venezuelan government received around $900 billion in revenue from the export of petroleum between 1999 and 2015. • Roughly $450 billion, or half of this revenue, was earned during President Hugo Chávez’s second term, from 2007 to 2012. • Chávez expanded food and energy subsidies and launched massive social initiatives with the windfall from oil. • Between 2000 and 2013, social spending as a share of GDP climbed dramatically from 28% to 40%. • Venezuela’s public debt more than doubled between 2000 and 2012, from 28% of • GDP to 58% of GDP.9 3 POSSIBLE FUTURE ECONOMIC SUPPORT FOR VENEZUELA • In order to solve Venezuela’s humanitarian situation, Congress is thinking about sending food and medicine to the nation through nongovernmental organizations (NGOs). • Right now, it seems doubtful that the US government will approve direct help to Venezuela. • In the event that the Maduro administration or a new government in Venezuela makes a substantial shift in policy, American decision-makers might look into ways to provide wider financial assistance to help the country’s economy recover. • This can entail looking into foreign financial assistance packages, maybe including the IMF, and removing sanctions that limit Venezuela’s access to the American financial system. • The question of whether debt taken on by the National Constituent Assembly of Venezuela— which is largely seen as an illegal legislature—should be enforced is also being debated. • In the event that Venezuelan policies do not diverge dramatically, the United States might 4 reconsider its position and think about imposing more severe sanctions on the government. FUTURE MIGRATION FLOWS • Venezuela’s economy is slowly recovering, but both the country and its people are still very susceptible to new shocks. • One of the main hazards is that the availability of energy may continue to deteriorate, which might exacerbate the humanitarian catastrophe by affecting access to water and health care. • Significant dangers are associated with acute gasoline and diesel shortages, which can interrupt economic activities and perhaps exacerbate the lack of electricity. • These elements may speed up the exodus of migrants to nearby nations, escalating the problems in the region. 5 HUMANITARIAN EMERGENCY •The crisis has triggered a humanitarian emergency, with millions of Venezuelans facing food insecurity, lack of access to healthcare, and other basic services. •The situation has resulted in one of the largest displacement crises in the world, with millions of Venezuelans fleeing the country in search of better living conditions, putting strain on neighboring countries and regional stability. •The humanitarian emergency in Venezuela has been compounded by widespread human rights violations, including political repression, arbitrary arrests, extrajudicial killings, and restrictions on freedom of speech and assembly. 6
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