Is it a cautionary tale about the inevitable economic failure of socialism or an example of what can happen, in an ever-shrinking world, when you have placed all of your eggs in one basket?

Yes.

The crisis unfolding in Venezuela before the world’s horrified eyes is a devastating mix of the two, causing food, power and water shortages, and it shows no sign of ending anytime soon. Venezuelans are standing in queue for hours to buy basic supplies, such as food, fuel and toilet paper, at state-run stores selling government-subsidised commodities.

Goods are being sold by the state-run stores at prices so far below market value that they have triggered a black market, effectively making the government an unwitting wholesaler. People buy the items there and then resell them at higher prices, creating empty grocery store shelves and new careers for young men known as bachaqueros – derived from the term bachaco, an aggressive ant-like insect.

empty supermarket shelves in Venezuela

The government has hiked wages and is printing more Bolivars, driving inflation into triple-digits in a situation that no one thinks is sustainable.

Still, a glimmer of hope emerged Saturday, May 28 when mediators met separately with members of President Nicolas Maduro’s administration and opposition leaders, Reuters reported. Representatives from both sides sat down with mediators in the Dominican Republic.

The opposition, having won control of the Legislature in December, wants to force a voter referendum on Maduro’s recall, while Maduro, despite popularity ratings that have dipped below 30 per cent, has refused to step down.

The oil-rich South American nation, which amassed huge wealth during the oil boom years leading up to the Great Recession of 2008, has seen its life blood nearly choked off over the past year. It relies on oil exports for 96 per cent of its income, and oil prices have dropped to below $28 per barrel, down from a high of $145 (£100) per barrel in 2008.

Ironically, Maduro can thank the United States, long-time adversary of his predecessor, Hugo Chavez, for launching the chain of events creating his current crisis. Responding to the US’ exploitation of new sources of shale oil in the US and Canada, OPEC decided to ramp up production, flooding the market with a global oil surplus designed to lower prices and quickly force new producers out of business.

If low oil prices have hurt OPEC’s richest members, such as Saudi Arabia, they have annihilated the economies of smaller members like Venezuela that have failed to diversify their exports. Venezuela owes its foreign creditors $120 billion (£83 billion), and could default on a $7 billion payment due by the end of the year.

Defaulting could allow negotiation of more favourable repayment terms, but Venezuela fears a rash of shareholder lawsuits also could result.

Making a recovery more unlikely is the socialist economy’s inability to adapt to, improvise and overcome the severe problems caused by the oil glut. State-run economic systems are notorious for their rigidity. Think the massive Titanic trying to quickly steer clear of the iceberg moments before impact.

Venezuela’s only hope in the near term is persuading its more well-heeled OPEC counterparts to stand down in their game of chicken with North American producers, and reduce output to raise oil prices.

Only then might Venezuela feel some relief, however short-lived it might be if Maduro retains control.

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