13 February 2015

Greeks should look at what happened to Venezuela under Hugo Chavez


Brussels is never far from Ruritania, but the atmosphere in the Eurozone capital has grown noticeably more rococo since the advent of the Syriza socialist government in Greece. Eurocrats, themselves no strangers to obfuscation and double-talk, are bemused by the performance of the Athenian circus, with prime minister Alexis Tsipras and finance minister Yanis Varoufakis executing a soft-shoe shuffle and engaging in a nice cop/nasty cop routine in which they bewilderingly switch roles. Statements are issued and then disowned.

Beleaguered officials, bankers and politicians look anxiously to Angela Merkel to intervene firmly, in her Mrs Doubtfire role as nanny of Europe. Here, however, they encounter an historical antipathy: where Brussels sees Mary Poppins, Athens sees coalscuttle helmets and reprisal shootings – hence Greece’s opportunist, if quixotic, attempt to extract $11bn in war reparations from its principal creditor.

It is only fair to say that the Maoist claptrap being spouted in Athens by scruffily dressed revolutionaries is no more economically illiterate than the demented attempt by sober-suited politicians in Brussels to create a synthetic currency and accommodate such disparate economies as Germany and Greece within its confines. They were also complicit in endorsing the fraudulent deficit statistics with which Greece bluffed its way into the euro.

But just because the delusion on which EMU ––a political project from its inception – is predicated defies fiscal gravity, that does not validate the corollary, that the programme promoted by its socialist critics such as Syriza, Podemos in Spain and minor cohorts of Looney Tunes elsewhere in Europe has any grounding in reality. With so much at stake for all concerned, it is incredible that the Greek electorate should, even in desperation, have entrusted its destiny to a troupe of Marxist buffoons such as Syriza. In the hypothetical situation whereby Syriza either contrived to gain a reasonably free hand domestically while remaining in the Eurozone, or presided over a post-Grexit nation, what would that entail?

Syriza’s 2014 programme includes raising income tax to 75 per cent for all incomes over €500,000, increasing tax on large companies, imposts on financial transactions and luxury goods, “combating” capital flight, raising minimum salaries to pre-cuts levels of €750 per month and increasing unemployment benefit. Syriza also pledges the nationalisation of banks, railways, airports, postal services and water. Add to that universal free health care, a more liberal immigration policy and withdrawal from Nato and you have a pretty clear picture of the direction in which Syriza would take Greece.

The consequences of such a long march to socialism were topically illustrated even as Varoufakis was parleying with his creditors in Brussels. Venezuela announced the creation of a new foreign exchange platform, easing the currency controls of the past 12 years, but so grudgingly as to represent minimal liberalisation, fresh potential for fraud and probably billions of dollars worth of write-downs by foreign corporations such as General Motors and Procter & Gamble. It is just the latest devaluation by Venezuela in a long train of such measures.

This is not a country brought to its knees by central bankers or laissez-faire capitalism. The ruling PSUV party of the late Hugo Chavez has, for 16 years, pursued a transition “towards a communal state socialism, with the strategic objective of totally neutralising the law of value within the functioning of the economy”. Or, in plain terms, pushing water uphill. The Bolivarian Republic of Venezuela is the legatee of the revolution imposed by Chavez, who came to power in 1999 as an exemplar of the leftward lurch that Alvaro Vargas Llosa characterised as “The return of the Latin American Idiot.”

Chavez exhibited a revolutionary panache that left Tsipras and Co standing. He contrived to create a water shortage (nationalisation of water supplies is also a Syriza policy), for which his remedy was to restrict the taking of showers to three minutes and to prohibit singing in the bath. On his watch, oil-rich Venezuela became the only country in the world to boast a Minister for Electricity Shortages. Under his oxymoronic programme of “21st-century socialism”, wealth creators were officially denominated the “Squalid Ones”. A shortage of lavatory paper provoked riots in supermarkets. And, sorry, Alexis, but the troika had nothing to do with it.

The Bolivarian regime has maintained itself in power with the help of a heavily politicised army, 120,000 Marxist militia and ruthless electoral fraud. Its apologists employ a polytechnic-style jargon even more sesquipedalian than that of Brussels apparatchiks: the regime’s Trotskyite pursuit of “counterhegemonic epistemologies against the capitalist state” means, in practical terms, that McDonald’s in Caracas has run out of potatoes.

At least there are no deflationary concerns: last year’s official (and therefore probably underestimated) figure for inflation was 64 per cent – the highest rate in the world. That more than undoes all the grandstanding government intervention to assist the poor. GDP contracted by 2.8 per cent last year, before the collapse of oil prices, and is forecast to fall by as much as 7 per cent this year. The oil slump has aggravated Venezuela’s economic problems this year, but so endemic has the financial meltdown become under Marxist socialism that it is only an ancillary factor.

Venezuela, including both government and individual functionaries, has now been exposed as the third largest customer of HSBC’s creative Swiss accounts, with deposits totalling $14.8bn, an indulgence that conflicts somewhat with the supposed Marxist purity of the Bolivarian philosophy. In fact, as with all communist regimes, the level of corruption in Caracas would make a Sicilian mayor blush.

So, if Alexis Tsipras, Yanis Varoufakis and the Greek public want to see what the future would hold under a hardline socialist programme, they have no need to consult the Delphic Oracle: Venezuela is an accurate presage of a Marxist tomorrow. It is also strikingly indistinguishable from all our Marxist yesterdays, from Ceausescu’s Rumania to Hoxha’s Albania.

The tragedy for the people of Greece is to find themselves ground between the millstones of EU economic illiteracy fuelled by geopolitical fantasy and the fiscal infantilism of Marxist La La Land. That dilemma reflects the catastrophic failure of the current political system, controlled by solemn-mannered, smooth-spoken charlatans, which represents a very grave danger for the entire continent.

Gerald Warner is a political commentator and writer.