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.

During the past year, 58% of all cyberattacks observed by Microsoft from nation-states have come from Russia. And attacks from Russian nation-state actors are increasingly effective, jumping from a 21% successful compromise rate last year to a 32% rate this year. Russian nation-state actors are increasingly targeting government agencies for intelligence gathering, which jumped from 3% of their targets a year ago to 53% – largely agencies involved in foreign policy, national security or defense. The top three countries targeted by Russian nation-state actors were the United States, Ukraine and the UK. These are just a few of the insights in the second annual Microsoft Digital Defense Report. Read additional highlights from the Microsoft on the Issues blog and find the full report here.

If you had to guess which current world leader has made the most trips to Africa, who would you say? China's Xi Jinping? Nope, hardly — he's been there just four times. France's Emmanuel Macron? Pas de tout.

The answer may surprise you: it's Turkish President Recep Tayyip Erdogan, who's been to the continent more times than the leader(s) of any other non-African state. Just this week he notched his 28th visit, with stops in Angola, Nigeria, and Togo. Sure, being in power for two decades creates a lot of opportunities for exotic travel, but even Putin isn't close: he's been to Africa just five times, all to visit South Africa or Egypt.

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Former Libyan strongman Muammar Qaddafi was killed by rebels on 20 October, 2011, after a NATO intervention designed to protect civilians helped strengthen an uprising against his regime. Since then, the country has been mired in chaos as different factions have battled for control, resulting in extensive destruction and human causalities. Libya has been nominally governed since 2014 by warring administrations backed by foreign powers in the west and east of the country. Last year, UN mediation efforts finally began to gain traction with an agreement on a cease-fire and a roadmap for elections to be held later this year. We talked with Eurasia Group expert Ahmed Morsy to find out how things are going.

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China's GDP grew a lower-than-expected 4.9 percent year-on-year in the third quarter of 2021, a whopping three percentage points less than in the previous period. It's a big deal for the world's second-largest economy, the only major one that expanded throughout the pandemic — and now at risk of missing its growth target of 6 percent for the entire year.

Normally, such a drastic slowdown would have put the ruling Communist Party in a tizzy. But this time, Xi Jinping knows this is the price he must pay for his big plans to curb rising inequality and boost the middle class at the expense of the CCP's traditional economic mantra: high growth above all else.

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6,000: Poland has doubled the number of troops guarding its border with Belarus to almost 6,000 because of a surge in migrants trying to cross over (there were 612 attempts on Monday alone). Warsaw accuses Minsk of sending non-EU migrants into Poland as payback for EU sanctions against Belarus.

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Religious tension rising in Bangladesh: Clashes between Hindus and Muslims in Bangladesh have surged over the past week, leaving at least four people dead. After an image was posted on Facebook showing the Quran at the feet of a statue at a Hindu temple, Muslims burned Hindu-owned homes and attacked their holy sites. Both sides have taken to the street in protest, with Hindus saying that they have been prevented from celebrating Durga Puja, the largest Hindu festival in the country. Such acts of sectarian violence are not uncommon in Bangladesh, a majority-Muslim country where Hindus account for nine percent of the population. Indeed, as Eurasia Group's Kevin Allison recently warned, unverified social media content stoking inter-ethnic conflict is a massive problem throughout South Asia, where for many people Facebook is synonymous with the internet.

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Ian Bremmer's Quick Take:

Read Ian Bremmer's wide-ranging essay in Foreign Affairs that puts in perspective both the challenge, and the opportunity, that comes from the unprecedented power of Big Tech.

Hi, everybody. Ian Bremmer here on the road, something we haven't done very much recently, but will increasingly as we try to move through COVID. And I want to talk to you about a new article that I just put out in Foreign Affairs that I'm calling "The Technopolar Moment." Not unipolar, not bipolar, not multipolar, technopolar. What the hell does technopolar mean?

It means that increasingly big technology companies are themselves geopolitical actors. So to understand the future of the world, you can't just look at the United States, Europe and China. You need to look at the big tech companies, too.

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China gets away with a lot these days in Hong Kong, Xinjiang, and elsewhere. That's because over the past decade, its economy has experienced explosive growth, making it an indispensable trading partner for almost every country in the world. At the same time, China has been expanding its share of the global economy, and is now set to overtake the US as the world's biggest economic powerhouse in the near term. We take a look at China's annual growth rate and share of the global economy based on GDP over the past decade.

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