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Oil Crisis? It’s Socialism, Stupid

By: Javier Garay - @Crittiko - Jan 22, 2015, 4:13 pm

EspañolWe appear to be in for a rough year in 2015, and this will be especially true in those Latin-American countries that have adopted their own version of 21st-century socialism. Venezuela, Ecuador, Bolivia, Argentina, Nicaragua, and even Brazil are all experiencing some kind of economic crisis, or social and political unrest in varying degrees.

The unavoidable conclusion here is that the political and economic model being followed is unsustainable. It does not allow for wealth creation, and neither does it solve social or institutional problems. Its not simply the fault of the people who currently hold power either, but rather the ideas that these rulers have tried to force into reality. The current debate, however, has wrongly centered on attempting to explain each country’s crisis separately, attributing them to external factors.

For example, there is much talk about Nicolás Maduro’s inept administration in Venezuela, or the mismanagement in Argentina and Brazil at the hands of Cristina Kirchner and Dilma Rousseff, respectively. In each case, there is a tendency to blame their problems on the oil market and the drop in prices.

The reluctance to call things as they are — to admit the socialist model is a failure — has allowed these leaders the room to invent magical solutions and remain in power just a little longer. For them, it’s no longer about the pursuit of lofty goals, like wealth creation or improving the general welfare. Their only goal is to stay in power.

If they truly cared about the future of those individuals who voted them into office, they would never have chosen such a destructive model and stolen their freedom. And if they chose this path out of sheer ignorance or sincere error, they would have given it up long ago or stepped down.

However, since the notion persists that their problems rest not with their political model but in the circumstances internationally or the current administration, everyone has — unsurprisingly — placed their hopes in China’s increasing role as a superpower.

Both Maduro and President Correa of Ecuador have traveled to China to seek financial aid. Nicaragua has of course kicked off its new interoceanic canal with Chinese backing, and Bolivia has consolidated most of its debt in the Asian state. In other words, socialist leaders, while obsessed with demonizing US “imperialism,” are eager to promote China’s.

This goes to show how simplistic the idea is that every advancement or setback in Latin America can be attributed to external forces. Now it turns out the Chinese government must come to the rescue and save these crumbling socialist regimes.

China’s pragmatic stance has been interesting to observe. Beyond the rhetoric, it’s clear that Chinese officials will only bet on those countries they can get some sort of economic gain from. That’s why Venezuela, faced with eminent collapse, could not get anything more than promises during Maduro’s visit to Beijing. The same goes for Ecuadorian President Rafael Correa.

CountrCountries that have adopted 21st-century socialism run to China when the heat is on.
Countries that have adopted 21st-century socialism run to China when the heat is on. (Andes)

This strategy could go on for a few more years. Latin-American leaders who have made damaging poor decisions will continue to wait for China to come to the rescue, postponing the necessary reforms to solve the problems they created for themselves.

We can definitely expect a larger role for China in Latin America, but it won’t bring about many changes. As I have previously said, US tutelage will be replaced by Chinese; the only difference is the latter cares nothing for the the liberal values the former has shown, even if only symbolically.

Indeed, a tough year lies ahead for 21st-century socialists. Crisis will deepen in most of these countries. It’s possible that we see changes in leadership, perhaps even violent overthrows. Unfortunately, however, there seems to be no foreseeable change in the collective belief that foreign actors — be it the United States or China — should solve our problems, nor in the insistence on failed economic models. As difficult as things will likely get in Latin America in 2015, they’re poised to remain exactly the same.

Translated by Daniel Duarte. Edited by Guillermo Jimenez.

Javier Garay Javier Garay

Javier Garay is a professor at the Externado University of Colombia. He has written two books on international issues, such as development, after his doctoral dissertation focused on the same topic. Follow him on Twitter @crittiko and through his personal blog, Crittiko.