Saturday 1 October, 2016 Update: China Cuts Off Venezuela

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As Venezuela’s political and military instability continues on with no end in sight, China is reconsidering its strategic relationship with the South American nation. Over the past decade China has been a major supporter of Venezuela’s economic growth. Over $60 billion in loans were poured into the country and China took a leading role in helping to develop and modernize the Latin American country’s infrastructure. In return, China received a secure source for oil. Beijing has long regarded Venezuela as its most important ally in Latin America and has treated her as such until now.

China has stopped the flow of cash to Venezuela, finally accepting that the situation there is probably irreversible. The economy is teetering on the verge of collapse. Conditions for companies doing business in Venezuela, as well as the Venezuelan people, have dropped to near-nightmare levels. There is a nationwide shortage of food, medicine, and nearly every type of consumer good imaginable. Food riots are now a regular occurrence in Venezuela’s largest cities. Exports and imports have nearly dried up and many nations are quite reluctant to import Venezuelan goods. Beijing has realized that things will not improve for Venezuela any time soon. As long as Nicolas Maduro and his government holds power, the economic downfall is not going to be reversed.

Maduro’s days could be numbered. As the socialist economic system his predecessor implemented comes apart, the political opposition is rallying to oust Maduro from power. However, the recall process will be a long one beset with obstacles. If a recall referendum is set in January of 2017 and Maduro loses, he would be replaced by his vice president, a man that Maduro has personally selected. Referendum or not, the socialists will remain in power until the next regularly scheduled presidential election in 2018. So, the opposition is at a crossroads and needs to come up with an alternative to its referendum strategy.

Having Maduro in power does not benefit China if the economic situation in Venezuela continues to deteriorate. Unless the economy shows signs of rebounding, China’s coffers will remain closed. On the flip side of the coin, the absence of loans from China make it even more difficult for Maduro to move the country away from the edge of the cliff where it is currently positioned.

And if Maduro’s efforts to reignite the economy fail entirely, how long will be until Venezuela collapses altogether?  Probably not very long.

One comment

  1. Interesting to see that Chavism is dead now and that oil prices control everything. Is somehow sad though for Venezuela’s people we don’t know the outcome or the possibility of a coup there…

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