After several decades of writing about Latin American affairs, I thought I couldn’t be surprised by anything anymore. But when a leading international economist told me that Venezuela is likely to have a 10 million percent inflation rate in 2019, I almost choked.
Did I hear that correctly? Ten million percent a year?
Alejandro Werner, director of the Western Hemisphere department of the International Monetary Fund, nodded and confirmed that I was not hearing things.
“Yes, 10 million percent, because prices in Venezuela are doubling or tripling every month. And that, when you take it to 12 months, generates an exponential inflation rate,” Werner said. He added that the Venezuelan economy collapsed by 18 percent in 2018, for a total contraction of 50 percent over the past four years. And he projected that it will fall by 5 percent more in 2019.
Curious to see whether the IMF’s projection was too dramatic, I asked the World Bank for its own projections for Venezuela’s economy in the coming year. Jorge Familiar, the World Bank’s vice-president for Latin America and the Caribbean, told me that they are very similar to the IMF figures.
Asked how long can any country carry on with an inflation rate in the millions without descending into total chaos, Familiar responded: “I think that we don’t have a precedent of any country that has had these levels of inflation for such a long time. I, at least, can’t remember any.”
If the latest IMF and World Bank projections materialize, hunger and violence will escalate even further in Venezuela, and millions more will try to flee the country.
According to a Brookings Institution study released this month, 8.2 million Venezuelans — including the 3 million who have already left the country — will flee over the next two to three years.
But Luis Almagro, secretary general of the 34-nation Organization of American States, told me last week that the Venezuelan exodus may be even larger than estimated in the Brookings report.
“I think that the 8.2 million figure may end up being too low, considering the magnitude of Venezuela’s crisis,” Almagro told me. “There may be up to 10 million Venezuelans who will have to abandon that country over the next four years.”
That would be a much larger migration disaster than the Syrian refugee crisis that has shaken the European Union, and that contributed to the rise of right-wing anti-immigration governments and political parties across Europe. It certainly would be an unprecedented mass exodus in Latin America in recent times.
Of course, Venezuelan dictator Nicolas Maduro may be more than happy with the prospect of millions more leaving his country and being left with a mass of impoverished people who can be easily controlled with government food subsidies and receive U.S. dollars from their relatives abroad. Cuba started doing that nearly six decades ago, and it has allowed Cuba’s dictatorship to remain in power ever since.
But Maduro may not get away with it as easily. There is no way that Colombia, Brazil and other countries in the neighborhood will agree to absorb 8 million to 10 million Venezuelan refugees, barring a massive package of international aid that I don’t see coming anytime soon. Many of Colombia’s schools and hospitals are already overcrowded.
Venezuela’s humanitarian crisis will directly or indirectly hurt every country in the region. It will be, by far, Latin America’s most urgent problem. Countries such as Mexico and Spain, which have suggested that they will not join international diplomatic efforts to restore democracy in Venezuela, will not be able to remain on the sidelines.
It may even become a global crisis, especially after reports that two Russian Tu-160 bombers with nuclear capabilities landed in Venezuela this month, and Maduro claimed that more Russian military assistance will follow. If projections of 8.2 million to 10 million refugees materialize, Venezuela will become an international hot spot like the Middle East.
Andres Oppenheimer is a Latin America correspondent for the Miami Herald.