Venezuela starts post-Chavez era with focus on economy

Venezuela starts post-Chavez era with focus on economy
Xinhua | 2013-12-28 11:25:47

This year has been difficult for Venezuela after the death of its iconic
leader Hugo Chavez, as the struggling state-driven economy, high
inflation and shortage of goods became a political battleground for
ruling socialists and the pro-business opposition.

ECONOMIC WAR

After the death of Chavez on March 5, Nicolas Maduro, hand-picked by
Chavez, won the presidency over the right-wing opposition candidate
Henrique Capriles and took office in April.

The Maduro government, determined to move forward with the socialist
reform pursued by Chavez, soon faced an "economic war," which it said
was launched by the opposition, including sabotaging electric and oil
facilities, creating scarcity of basic goods, and hiking prices.

Spanish journalist Ignacio Ramonet, who has written a book on the life
of Chavez, told Xinhua that the main goal of the conservatives was to
discredit and then oust Maduro.

"The immediate objective of the right wing was to provoke a situation to
win the municipal elections in December and subsequently launch a
campaign of illegitimacy against the revolutionary government, and then
call a referendum against President Maduro," he said.

Jesus Farias, deputy from the ruling United Socialist Party of
Venezuela, said Maduro's initial months in power have been marked by a
strategy of the opposition to weaken the government economically through
actions such as speculation, usury, hoarding and energy crisis.

ECONOMIC OFFENSIVE

Maduro responded with his "economic offensive" aimed at stabilizing the
economy.

He called for a civilian-military operation to combat price hikes,
speculation and hoarding, and created institutions to protect purchasing
power and stabilize the national economy.

To empower Maduro to take immediate measures to stem the economic
turmoil, the National Assembly passed the Enabling Act in November, a
law that grants the president a temporary power to rule by decree, for
12 months.

Maduro also introduced new laws, awaiting final approval by the Supreme
Court, to curb rampant capitalism, including one that limits profit
margins on imported goods to 30 percent.

The purpose of the government's new economic measures was "to reach a
point of equilibrium where consumers have access to fair prices, workers
have guaranteed job security and sellers have their corresponding
profits of between 15 percent and 30 percent to continue to invest in
their businesses," Maduro explained during a recent speech.

The culmination of the government's efforts came on Dec. 3 when the
parliament passed the Homeland Plan 2013-2019, a program originally
presented by Chavez in 2012 and ratified by Maduro to guide the
development of the country in the next six years.

The adoption of the law was a victory, Farias said, adding that the
economic system has serious structural deficiencies that must be addressed.

"That is a burden that we have been carrying around for decades, an
economy that was established in the 20th century and now produces
recurrent disorders," he said.

The approval of the Homeland Plan and the Enabling Act has strengthened
the Venezuelan leadership, as the laws will create a favorable
environment for steady economic growth and stable social development in
the country, Farias said.

Echoing Farias, economist Tomas Sanchez told Xinhua, "the government
took corrective measures to address these issues and despite the brief
time elapsed, the economic offensive has had a positive impact."

Maduro's policy appears to be paying off, with local elections in early
December showing the majority of Venezuelans backed the socialist
government, which won 255 municipalities, though it lost several major
cities, including the capital of Caracas.

However, analysts were cautious about Maduro's next move. On the one
hand, the victory might encourage the radicals who pushed for the
tightening of price controls that appears to have provided Maduro with
the needed electoral boost.

On the other hand, now that the elections are over, it gives the
government sufficient room to devalue its currency, which Wall Street
investors call necessary to close the government's fiscal gap and reduce
capital flight.

Critics say the government needs to relax exchange controls, lift
restrictions on private businesses and tackle the structural imbalances
of the economy.

http://www.globaltimes.cn/content/834637.shtml