Venezuela's collapse is looking a lot like the Soviet Union's, argues Ander Aslund for Foreign Policy. "The Venezuelan government…has insisted for years on maintaining drastic price controls on a wide range of basic goods, including food staples such as meat and bread, for which it pays enormous subsidies. Nonetheless the Venezuelan government, like the Soviet Union's, has always felt it could afford these subsidies because of its oil revenues. "But as the oil price has fallen by slightly more than half since mid-2014, oil incomes have fallen accordingly. And rather than increase oil production, the Venezuelan government has been forced to watch it decline because of its mismanagement of the dominant state-owned oil company, PDVSA. "And now Venezuela seems intent on repeating the Soviet folly of the late 1980s by refusing to change course." |
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