"How similar are the situations in Venezuela and 1980s Philippines?"
For several centuries the only things that the Philippines and Venezuela had in common were their common Spanish-colony heritage and the fact that they were both members of the world Roman Catholic community. In recent times a third similarity has materialized: widespread civil unrest aimed at removing from office an individual who over the years had abused the powers of the presidency and converted Venezuela—the Spanish conquistadores were reminded of Venice—from a wobbly democracy to a virtual dictatorship. That individual is, as the world knows now, Nicolas Maduro, who rose to Venezuela’s presidency upon the death of the flamboyant ex-paratrooper Hugo Chavez.
Venezuela today is a replica of the Philippines during the two and a half years following the assassination of Opposition leader Benigno Aquino Jr. from exile. Like the Philippines of those days, Venezuela is an international pariah. Outraged by his series of anti-democracy actions—curtailment of constitutionally guaranteed civilian freedom, rigging of National Assembly elections, packing of Venezuela’s Supreme Court with his allies and coddling of the military and the police—Nicolas Maduro is the object of endless protests on the streets of Venezuela’s cities, especially the capital, Caracas.
During the days following August 21, 1983 rallies in Metro Manila and this country’s other major cities were almost a daily occurrence as the parliamentarians of the street sought to achieve what the members of the padlocked legislature were no longer able to do. Today’s Venezuelan rallies and protests hogged the world’s newspaper headlines and evening news programs, like this country’s anti-dictatorship activities did three decades ago.
Like the citizenry—especially the poor citizens—of the Philippines then, today’s ordinary Venezuelans are bearing the brunt of one individual’s increasingly desperate desire to cling to power. The crippling sanctions imposed by the US and other countries, the trade embargoes, the inflationary impact of the near-collapse of the national currency—the bolivar—and, more recently, the Maduro government’s inhumane refusal to allow the entry into Venezuela of donated food and medicines have combined to make life hell for the hapless citizens of that oil-rich country. During the early 1980s all Filipinos bore the brunt of the punitive economic actions taken by the international community against the Marcos dictatorship, including the highest inflation rates experienced by this country in the post-World War II era.
The situation in Venezuela gets more tense and volatile by the day. With the backing of the US and the European Union, Maduro’s rival in the 2018 presidential election, Juan Guaido, has proclaimed himself Venezuela’s de facto president. And last week the National Assembly, at Guaido’s behest, has declared a state of national emergency in the wake of continuing power blackouts that Guaido and his supporters claim are being engineered by the Maduro government.
Venezuela’s agony continues, and the world watches with utmost sympathy and full support. With every day that passes, the once-vigorous Venezuelan economy sinks deeper into debt and the nation’s people go hungrier and more miserable.
Today the same questions are being asked about the Venezuelan situation as they were being asked about this country and its mid-1980s political ferment. How long will Venezuela remain as it is today? And what will it take to remove Nicolas Maduro from power and restore Venezuela to its pre-Maduro times?
The approach to the answers to these questions is to ask what elements are missing from the present Venezuelan situation. Looking back at this country’s anti-Marcos effort, two things stand out as missing elements. One is the existence of a Roman Catholic prelate with the stature and activism of the late Jaime Cardinal Sin; there appears to be no one in Venezuela’s Roman Catholic hierarchy to even approximate Cardinal Sin in stature. The other missing element is the defection from the Maduro camp of a high-rank military officer, preferably the chief of staff of the Venezuelan armed forces; thus far there appears to be no early prospect of that, notwithstanding Guaido’s fervent supplications.
Absent those two elements—and without a truly dramatic event, like a high-profile assassination, the world appears to be doomed to merely read and view reports of the Venezuelan opposition’s oust-Maduro efforts for some time to come.
From my reading of what the economic managers of the Duterte administration have been saying about the inflationary surge of 2018-—the steady rise in the inflation rate this year and the measures adopted by the authorities to deal with it—and about the likely inflation scenario for 2019, I have come to the conclusion that their view of the current inflation situation can be summed up as follows: “The surge in consumer prices throughout 2018 is subsidizing and will, as a result of the government’s remedial measures, make possible a return to the 2-to-4 percent annual inflation target set by the Bangko Sentral ng Pilipinas.”
The economic managers—the Secretary of Finance, the Governor of the BSP, the Secretary of Socio-Economic Planning, the Secretary of Trade and Industry and the Secretary of Budget and Management—appear to be saying that the Philippine economy has been undergoing an inflationary ride, that things are beginning to simmer down, that the inflation rate will return to target in 2019 and that all will then be back to normal.
Back to normal? Not quite. Inflationary episodes always leave an aftermath, and this year’s inflation is no different. The 2018 inflation has left—I really should say ‘is leaving’ because there is no certainty about a continued downward movement of prices in the months immediately ahead—behind debris from which the economy will recover in the months immediately ahead.
For starters, there is the upsurge of an inflationary psychology which has not been there in recent times and has a tendency to linger. Once inflationary psychology takes hold, producers begin to indulge in speculation, ever trying to guess whether their suppliers intend to raise their prices and often making pre-emptive price strikes. In that kind of environment—and that is the environment that has come to prevail—marketplace stability is not possible.
With their let’s-move-on mindset, the economic managers believe that the return of the inflation rate to the 2-to-4 percent target range means that things are back to normal and that all is now well. But things are not back to normal. Prices are now higher across the board, and prices, once raised, hardly ever come down. They’re sticky. The price increases that the 2018 inflation has caused producers to implement will have created changes in competitive positions; in the case of Philippine exports, this country’s competitive positions vis-à-vis certain foreign products may well have been negatively affected.
A further element of the aftermath—the debris—of the 2018 inflation has been the generally jarring effect that it has had, and continues to have, on international prospects of the Philippine economy. No longer can the economic managers speak strongly of this country’s sound macro-economic fundamentals. The new wave of price instability has caused foreign institutions and analysts to re-examine the state of those fundamentals. As a result, there have been downgrades in the projections of the Philippine economy’s growth in 2019 and 2020.
The Philippine economy took a beating in the year that is about to end. And largely because of a wayward locomotive called TRAIN 1.