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Venezuela: United in poverty

Venezuelans have been suffering from years of mismanagement and deprivation. The latest figures reveal just how bad things have become: There has been a huge rise in the number of people living in extreme poverty.

Nicolas Maduro's first year as president of Venezuela has not gone well.

He has had great difficulty filling the shoes of his predecessor, Hugo Chavez, whom he revered. Riots by student supporters of the opposition have been going on for months - the situation has become almost routine.

Now Maduro's own National Statistical Institute has presented him with further evidence of inadequacy: The number of Venezuelans living in extreme poverty rose last year - by around three-quarters of a million.

Price of years of mismanagement

This statistic definitively puts an end to the great boast of Venezuela's "socialism of the 21st century." For the past decade, Chavez's party has made much of its success in helping people out of poverty and enabling them to live with dignity.

Nicolas Maduro (L) and Diosdado Cabello (R) (Photo: REUTERS/ Carlos Garcia Rawlins)

Venezuela's leaders blame the dire economic situation on an international conspiracy

But two key factors were studiously ignored for 20 years by the Chavismo propaganda machine. First, that the record prices Venezuela was getting for its oil might eventually drop. And second, that throwing massive sums of public money at social programs does not secure long-term prosperity.

Venezuela's people are the ones who are paying the price. And, as always, the burden falls on those who already have very little. Every fourth Venezuelan is officially poor, but according to the latest statistics, 2.8 million people now live in extreme poverty. That's almost one in 10.

"What happened in this country in 2013, and what we can expect in 2014, is extremely worrying," said Jose Guerra, former director of the Central Bank of Venezuela. The prospects of things improving any time soon are virtually nil.

High prices, short supply

Woman carrying several plastic bags of shopping outside a private supermarket in Caracas. (AP Photo/Fernando Llano)

Inflation is currently at more than 56 percent and basic foodstuffs are in short supply

The country is sitting on the world's largest oil reserves, yet it has an inflation rate of more than 56 percent. Only in Syria and Sudan do prices rise faster. Foodstuffs in Venezuela are particularly affected: In this sector, inflation is currently around 74 percent.

This is partly because many staple foods are in very short supply. The newspaper El Nacional recently reported on the ridiculous lengths a bride and groom from Caracas had to go to in order to get their hands on condensed milk to make a dessert for their wedding.

"I was very relieved when my sister, who lives outside the city, found a supermarket that had condensed milk," the groom, Gustavo Rubio, told the paper. "However, each person was only allowed to buy two cans. So we had to ask friends and relatives to help out." It took them three months to collect the required amount.

Condensed milk is hard to find, and very sought-after. Venezuelans use it as a substitute for fresh milk, which hasn't been available for a very long time. So-called "sensitive products" like flour, oil, sugar and meat are most likely to be found in government-run supermarkets, at subsidized prices.

Nonetheless, people are barely able to stretch their money to last the month. Subsidies alone can't balance out the reduction in purchasing power through inflation.

A group of young demonstrators, some wearing masks, jumping on a banner of the Bank of Venezuela (Photo: REUTERS/ Jorge Silva)

Anti-government demonstrations and riots have been going on for months

Oil alone is not the answer

Of every $100 Venezuela brings in, $96 come from oil exports. The country exports almost nothing else. Yet the oil industry is run-down and inefficient. Many of the buyer countries, the ones with whom the government is politically friendly, pay concessionary prices.

At home, gas too is subsidized, and one of the few things every Venezuelan can afford. It costs around $0.82 (0.60 euros) to fill a tank; mineral water is more expensive. This populist subsidy alone costs the state 1$2 billion (8.8 billion euros) a year.

Private enterprise is almost non-existent these days, suffocated by tight constraints and the government's foreign exchange regulations. Many foodstuffs must be imported, and this too drives up prices to levels that are simply out of reach for the poor.

A young Venezuelan girl with the poor district of Coche in the background (Photo by Mario Tama/Getty Images)

Every fourth Venezuelan is poor. One in 10 now live in extreme poverty

Venezuelan human rights organization Provea, certainly no friend of the opposition, has demanded an explanation from the government: "The worst mistake it could make would be to ignore this reality, or to trivialize it," said Provea's Rafael Uzcategui.

"It's important that the government explain to the country how it is possible that, in spite of the 36 social programs that currently exist, there has been such a big jump in extreme poverty."

Conspiracy theories instead of reform

But Maduro sees no reason to change his economic course and introduce long-overdue reforms. Instead, he and his government have opted to blame a worldwide conspiracy aimed at his country.

Speaking on TV, President of the National Assembly Diosdado Cabello explained who he holds responsible: a number of well-known Venezuelan artists, and the World Economic Forum in Davos.

Certainly not his government's own policies.

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