The Venezuelan Endless Quarantine: Will Its Economy Survive?

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By FTN Editorial Team

Since 2013, the Venezuelan economy has been in free fall. In just seven years, the country’s gross domestic product has lost nearly 70 percent of its value. This economic collapse represents the largest in the modern history of the western hemisphere. An economic collapse that, according to the latest ENCOVI report, has condemned over 95 percent of Venezuelans to poverty, and 79 percent to extreme poverty, as their incomes cannot even cover the basic food basket.

As if this were not enough, the COVID-19 global crisis brought enormous challenges for the Venezuelan economy. The virus paralyzed not only the country but the entire world. As such, it has condemned economies to induced comas. This has happened especially in countries where the virus spread easily, such as the nations of the European Mediterranean. But it will naturally affect greatly to middle- and low-income countries, such as all of Latin America. Overall, the global economic damage of COVID-19 is estimated to be around $9 trillion. In the case of Venezuela, between COVID-19 and the collapse already underway, the country’s gross domestic product will decrease by 18 percent this year.

The most worrying thing about this matter is that the coronavirus is here to stay. It will be a long time before science can cure or at least mitigate the effects of coronavirus on people’s health. Especially the devastating effects that the virus has on elderly people or those with physical difficulties caused by other diseases, such as cancer. For this reason, countries are trying to find ways to reactive their economies even if COVID-19 is nowhere near being stopped. Hence, different preventive measures will be deepened and systematized, such as the use of facemasks or maintaining a prudential separation between people. In this sense, the challenge in health terms is, we either adapt or stop living.

However, in the case of Venezuela, the regime is not even trying to open the economy up. Instead, it is pursuing an endless quarantine. A policy that is not viable in any country in the world, much less in Venezuela. If this indefinite quarantine is followed, be it rigid or flexible, the country will not only face the coronavirus sooner or later. But it will also keep deepening its humanitarian crisis. 

In detail, the government has been pursuing a so-called 7×7 quarantine, which is based on maintaining 7 days of rigid quarantine and 7 days of flexible quarantine. The rigid type allows people to circulate until noon, while the flexible until the afternoon. And both are keeping most businesses close. This is problematic since the 7×7 is not preferable neither in economic nor health terms. In economic terms, we need to normalize the activity of the private sector. Not only to avoid a possible famine but also because we need to give millions of Venezuelans the economic opportunity to protect their health. Otherwise, the lack of economic resources will prevent both households and commercial establishments from increasing their health standards, by inhibiting them from paying for preventive measures such as a digital thermometer or an increase in personnel responsible for maintaining high health standards.

Similarly, the problem with the 7×7 is not only its poor economic feasibility. The 7×7 is also not efficient in sanitary terms. On the contrary, these months have shown that the reduction in working hours has increased the crowding of people. Not only in commercial establishments but also public transports. This is especially evident in food-related businesses. Since the budget of the vast majority of Venezuelans does not allow them to buy food for long periods. By contrast, most Venezuelans are forced to buy food for a day or two at most. 

In this sense, the country should abandon the 7×7 strategy immediately, and replace it with a dual system. One based on a systematic economic opening, accompanied by a considerable increase in sanitary measures. This is a change that can be made effective immediately, and it will not cost anything. Since the increase in preventive measures will be financed by the private sector. Which in turn will be benefited from the increase in economic activity in the country. In other words, this new system of “responsible reopening” would be a win-win for the entire country.

By Jorge Jraissati

Jorge Jraissati is the President of the Venezuelan Alliance. Graduated at the Wilkes Honors College, Jorge is an economist, political leader, and a fellow at the Abigail Adams Institute. Jorge has been invited as a guest lecturer to over 20 universities, such as Harvard, NYU, and Cambridge.