Milk of human kindness: let’s help Venezuela

Latin American business consultant

If there is any truth in the maxim that one good turn deserves another and, in the light of millions of desperate Venezuelans fleeing their dystopian homeland, the paltry contribution New Zealand has made to alleviate the refugee crisis needs to be urgently increased.

Venezuela was once Latin America’s most prosperous nation, thanks to the largest petroleum reserves in the world and was, until 2015, New Zealand’s biggest export market in Latin America.

Between 1988 and 2015, Venezuela bought more than $2 billion of New Zealand milk powder, including $653.7 million in 2008, when it was New Zealand’s most important dairy export market that year.

The free healthcare and higher education, vigorous economy and the best infrastructure in Latin America, which enabled Venezuelans to enjoy the highest standard of living in the region, are now just faint memories after two decades of socialist rule by authoritarian kleptocratic demagogues.

Venezuela’s problems started in 1999 with the election of socialist Hugo Chavez as president when high oil prices were able to fund extravagant social spending (including free New Zealand milk powder for workers’ children).

Nicolas Maduro, his stunningly incompetent successor, has overseen disastrous mass nationalisations of businesses, foreign exchange controls and food rationing (Venezuelans each lost an average of 11 kilograms of weight in 2017). He has replaced the democratically elected Congress, and ruthlessly suppressed protests.

In May last year, Maduro launched a new currency called the ‘‘sovereign bolivar’’ by removing the last five zeros from the old bolivar, as well as a bizarre, underlying crypto-currency called the ‘‘petro’’, but neither has done anything to stem Venezuela’s virulent hyperinflation.

The IMF reports that Venezuela’s GDP has dropped by 45 per cent since Maduro took office, 2018 unemployment is 33 per cent, and it predicts hyperinflation at one million per cent in 2018 and 10m per cent in 2019.

A 3000 per cent minimum wage hike in May (to US$6 a week) was intended to stem the huge tide of impoverished refugees flooding into Venezuela’s neighbouring states, but the measure has had little effect, as the average family needs 20 minimum wages a week to buy a basic basket of food. So, to avoid starvation, more than 3m Venezuelans have chosen to leave.

The Lima Group, of 13 Latin American nations and Canada, is trying to broker new, democratic elections, although Maduro has dismissed the group as ‘‘United States puppets’’. The New Zealand Government is actively supporting the Lima Group, and has pledged $145,000 in humanitarian aid for Venezuelan refugee camps in Brazil and Colombia.

It should do even more by donating milk powder for the many thousands of starving infants and children caught up in the forlorn exodus. Milk powder would be a fitting humanitarian quid pro quo for the billions Venezuela spent on New Zealand dairy products in better times.

Humanitarian considerations aside, supporting refugees with milk powder will build New Zealand’s profile and help our dairy exporters reclaim market share once Venezuela gets back on its feet, albeit this could be a decade or more away, given the myriad political and investment challenges Venezuela must overcome first.