Venezuela – end of the crisis in sight? — RT DE

An analysis by Ociel Alí López

Amidst major US media coverage, the UN Regional Commission announced that Venezuela’s growth is estimated at 5 percent for the current year.

What does this data mean?

According to the report, “The region is expected to grow at an average rate of 1.8 percent (while) the economies of South America are expected to grow by 1.5 percent.”

In other words, Venezuela’s success is estimated to be three times the average South American growth. It is considered the country with the best forecasts.

In terms of Latin America, it is only surpassed by Panama (6.3 percent) and the Dominican Republic (5.3 percent). But all of its neighbors, including Brazil and Colombia, have slower growth, according to the report. This changes the economic map of the region and allows us to think again about the oil role of the Caribbean country.

In percentage terms, its growth will even surpass the USA (2.8 percent) as well as the European Union (2.8 percent) and reach China, which is also estimated at five percent.

The regional context, on the other hand, is weakened

The economies of Latin America and the Caribbean face a complex situation in 2022 due to the war between Russia and Ukraine. The ECLAC document states:

“This creates new uncertainties for the world economy and negatively affects global growth, which is estimated at 3.3 percent. That is one percentage point lower than assumed before the start of hostilities.”

What are the reasons for Venezuela’s boom?

Obviously, one expects a special event that fundamentally changes the economic dynamics. Possibly an easing of the sanctions, or open special regulations for international oil companies to enter the Venezuelan oil business.

In other words, Venezuela would grow 1.7 percent more than the world average if such a scenario were to materialize. This number is surprising given the well-known crisis that has plagued the country for at least eight years due to a financial blockade from Washington.

At the beginning of April, the Swiss bank Credit Suisse forecast economic growth of 20 percent for Venezuela, “one of the highest in the world this year”. According to an earlier projection, 4.5 percent had been estimated. The ECLAC confirms that the country’s growth will not be somewhat restrained, as initially assumed, but will increase significantly.

Both data would confirm a recovery in the economy. It could also end the long decline in GDP, which has suffered a double-digit relapse for several years over the past decade.

Where does this reevaluation come from?

The rise in oil prices is likely to be an important factor in forecast recalculations, but certainly not the only one.

In previous years, particularly prior to the pandemic, the commodity’s price recovery had adversely impacted Venezuela’s revenues due to low oil production by national industry. This factor must be taken into account for forecasts, although an increase in production cannot yet be confirmed in real terms. Also, the price is now stabilizing much higher than before the pandemic.

The paradox of the growth data is dictated by the OPEC report, which says the country slowed its oil production by 7.6 percent in March of this year, with daily production reaching 728,000 barrels. Because by the end of 2021, the volume had approached one million barrels.

The role of oil company Chevron and the election year

The oil company Chevron is exerting strong pressure in Washington to end the sanctions. They prevent the company from ramping up production in Venezuela. However, neither the White House nor the US Asset Control Office has given the green light for a definitive change in US foreign policy. Washington has made no progress in this regard, despite meetings with Nicolás Maduro’s government.

Additionally, 2022 is an election year in the US, which calls for special political caution for the government. So it seems that the expected growth does not necessarily depend on the US decisions on sanctions.

Venezuelan opposition urges Biden to end financial sanctions

Weeks before the ECLAC estimates were released, a group of prominent opposition economists and businessmen wrote a letter to President Joe Biden calling for the sanctions to be lifted. The letter is referred to in the media as the “Letter of the 25”. The document says:

“Although economic sanctions are not the cause of Venezuela’s humanitarian emergency, they have seriously worsened conditions for the average Venezuelan.”

The public position reveals the current disintegration of the pro-interventionist strategy pursued by the Venezuelan opposition, particularly since Juan Guaidó’s self-swearing-in in 2019. With a new strategy, she wants to distance herself from the tutelage of Donald Trump’s foreign policy.

Among the signatories to the letter are Ricardo Cusano and Jorge Botti, two former presidents of the Venezuelan employers’ organization. Also well-known economists such as José Guerra and Rafael Quiroz, who were outspoken opposition activists and opponents of President Nicolás Maduro’s government.

Not only the economy and politics, but also the airlines

On April 24, US media outlet Bloomberg reported that TAP Air Portugal had resumed operations to Venezuela. According to the media agency, the move is part of a series of signals from international commercial airlines to open a new phase of their flight operations in Venezuela.

In 2019, at the height of the political confrontation, the main airlines such as Lufthansa, Air Canada or Alitalia decided to cease operations. Today, according to Bloomberg, they may be considering resuming him.

The reactivation of commercial aviation, the above growth forecasts and the statements by parts of the Venezuelan opposition seem to be responsible for a new treatment of the Venezuela issue and the expected ending of the sanctions policy.

More on the subject – Venezuela: Loyalty with Russia and oil deals with US

RT DE strives for a broad range of opinions. Guest posts and opinion pieces do not have to reflect the editor’s point of view.

Translated from the Spanish.

Ociel Alí López is a sociologist, political analyst and professor at the Universidad Central de Venezuela (UCV; German: Central University of Venezuela) in Caracas. He writes for various media in Europe, the United States and Latin America.

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