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Venezuela: The Humpty Dumpty Problem

Venezuela: The Humpty Dumpty Problem

Venezuela is one of the most broken countries on Earth today. At the moment, two men claim to be president, and millions of people have fled amid one of the largest peacetime economic collapses in history.

So here's a question: assuming that the political crisis could be resolved – a big assumption, but work with us – what would it take to put the economy of Venezuela, once Latin America's wealthiest, back together again?


Here's Gabe with a look at three big issues that would immediately need to be addressed:

Stemming hyperinflation: Venezuela's inflation rate is expected to reach 10 million percent by the end of the year. The Venezuelan bolivar is now worth less than the paper it's printed on because of the government's ill-advised policy of printing money to stave off economic collapse. Since no one wants to produce goods for worthless money – let alone goods subject to price controls – the result has been widespread scarcity and mass hunger that's seen the average Venezuelan lose 24 pounds in recent years. The most immediate task will be to address this devastating currency collapse.

Humanitarian relief: Venezuela is in dire need of aid beyond just food. The country's healthcare system has essentially imploded. Around 13,000 doctors have fled in the past four years, and there's currently an 85 percent shortage of medicines. AIDS-related deaths have tripled in recent years, according tothe FT. Diseases thought to be all but eradicated – like yellow fever, diphtheria, and tuberculosis – are resurgent. The US has sent food and humanitarian aid to Venezuela via Colombia, but it's currently being blocked by the Maduro regime.

Rebooting the economy: Rebuilding Venezuela's economy more broadly will cost an estimated $60 - 80 billion over several years, according to Harvard economist Ricardo Hausmann. The first task for any new government would be to stabilize oil production, a crucial source of government revenue that has fallen to historic lows. It would then face the thorny task of settling massive debts with foreign investors and governments, estimated to total around $140 billion. Lastly, the government needs to woo back the many talented workers who are among the 3 million people who've fled the country since 2015.

The bottom line: Plenty of countries have confronted economic collapses, humanitarian catastrophes, or political crises. But Venezuela is one of the few to face all three of these challenges at once, making recovery that much more difficult.

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When Italy's Prime Minister Giuseppe Conte resigned Tuesday — plunging the country into chaos as it faces once-in-a-generation public health and economic crises — he became the fourteenth Italian to vacate the prime ministership in three decades. (For contrast, Germany has only had three chancellors since 1982, and France has had five presidents.)

But Conte, who had no previous political experience until he was tapped for the top job in 2018, is not so much throwing in the towel as he is taking a massive gamble that President Sergio Mattarella will again appoint him to head Conte's third coalition government in less than three years.

The recent dysfunction is unique even within the context of instability-prone Italian politics. How did Italy get here, and what might come next?

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Ian Bremmer shares his perspective on global politics on this week's World In (More Than) 60 Seconds:

What did you think of Xi Jinping's speech at the virtual World Economic Forum?

Well, his last speech at the real World Economic Forum in Davos, I remember being there four years ago, and given that Trump had just been elected, Xi Jinping gives this big, "We want to stand up and be leaders while the Americans are doing America first." And generally speaking, was probably the most important speech of the week. People liked it. This is a pretty different environment, not so much because Trump has gone, but rather because support and belief in Xi Jinping is pretty low. I will say one thing that was generally well responded to was the call not to enter into a new Cold War. Anybody in the business community generally supports that. There's so much integration and interdependence between the US and the Chinese economies that when Xi Jinping says, "We need to find ways to continue to work together," I mean, this is the pro-globalization audience he's speaking to. They generally agree. But otherwise, the message fell pretty flat. So, the idea that China is going to be globally useful on issues of leadership, especially when it comes to anything that might threaten Beijing's sovereignty, they check global norms at the door. And a few examples of that, when Xi called for support for the rules-based international order, that's in obvious contrast with China's violation of the one country, two systems framework in Hong Kong. And they said, "Well, that's a domestic issue." Well, actually that's not what your agreement was with the British handover. And just because you're more powerful doesn't mean that norm doesn't matter anymore.

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Over the weekend, some 40,000 people in Moscow and thousands more across Russia braved subzero temperatures to turn out in the streets in support of imprisoned Kremlin critic Alexei Navalny. More than 3,000 protesters were arrested, and Navalny called on his followers to prepare for more action in the coming weeks.

But just who is Alexei Navalny, and how significant is the threat that he may pose to Vladimir Putin's stranglehold on power in Russia?

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Angry farmers take Indian fort: In a major and violent escalation of ongoing protests over new agriculture laws, thousands of Indian farmers broke through police barricades and stormed the historic Red Fort in New Delhi on Tuesday. At least one protester died in the chaos, while the government shut down internet service in parts of the capital. Farmers and the government are still deadlocked over the new laws, which liberalize agriculture markets in ways that farmers fear will undercut their livelihoods. The government has offered to suspend implementation for 18 months, but the farmers unions are pushing for a complete repeal. Given that some 60 percent of India's population works in agriculture, the standoff has become a major political test for the government of Prime Minister Narendra Modi's ruling BJP party.

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The GZERO World Podcast with Ian Bremmer. Listen now.

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