05-21-2016, 07:24 AM
(This post was last modified: 05-21-2016, 07:47 AM by ZpaceJ0ck0.)
http://fortune.com/2016/05/20/coke-venezuela-suspends/
Coke Has Suspended All Production in Venezuela
EDIT: Some of you may ask "how bad is that?" or "what's the current situation in Venezuela", if you are one of those, i'm going to leave this in-depth analisys by reddit user "A-soporific":
Coke Has Suspended All Production in Venezuela
EDIT: Some of you may ask "how bad is that?" or "what's the current situation in Venezuela", if you are one of those, i'm going to leave this in-depth analisys by reddit user "A-soporific":
![[+]](images/collapse_collapsed.png "[+]")
Spoiler
This is a longer story than I'm telling, but yeah here we go.
Venezuela has always had issues with corruption, but it's not normally this much of an issue. I mean, lots of countries have issued with corruption. But, around twenty years ago a fellow by the name of Hugo Chavez was elected president some years after he tried to take the job by force in a coup that, obviously, failed.
You see, Chavez was enamored with two things: Simon Bolivar and the wave of revolutions that cleared the Spanish from the New World, and international socialism. Now, Simon Bolivar was cut from much the same cloth as Thomas Jefferson or George Washington and is really a man who deserves remembering. But Chavez wanted to be Bolivar, just swap out the Spanish for the United States and Bolivar's liberalism for socialism.
At first Chavez appeared to be doing a good job, but the man was a bit suspicious of absolutely everyone. He knew how easy it was to plot a coup and was constantly being convinced that one was brewing against him. This wasn't entirely unjustified because 2002 there was one. There were a lot of powerful people in the country that were unhappy with strained relations with US and EU and very close ties to Cuba to the point where the nation was basically trading oil for Cuban grade school textbooks and doctors. The coup ousted Chavez for about 47 hours before failing because the military wouldn't back the coup and the poor of Caracas came out to defend the Bolivarian Revolution. One of the primary causes of failure was a complete lack of backing from the US, and George W. Bush's insistence that the US not be involved.
This was, in many ways, a breaking point. The man put up lead by the planners of the Coup was head of the Venezuelan Federation of Chambers of Commerce. In short, businesses became the enemy as much as the US in the eyes of the Chavista movement. So, even though the State-run Oil company was 70% of the nations exports, it's leadership was culled and replaced by political supporters of Chavez. The media, who had not been a friend to Chavez prior to the coup, found itself being seized, forced to close, or force out of the nation altogether. A number of companies tied to the coup were outright seized. When the markets reacted poorly to this and the Bolivar (the currency of Venezuela) suffered price controls were put in place "fixing" the rate at which money can be (legally) exchanged for a different nation's currency.
Things didn't go great after that. The price fixing made it hard to sell Venezuelan made stuff outside the country hard. For a while, at least, people managed and found local sources or tightened belts. There were the occasional nationalization of a newspaper or oil platform but Chavez was popular and on the ball enough to prevent things from getting worse.
Then, in 2013 Chavez died. Everything got much worse. Nicolas Maduro was elected by a narrow margin, and he was Chavez's hand-picked successor. Not hand-picked because he was as good as Chavez, but because he was ideologically pure and a good friend. Maduro is, in every way, a pale echo of Chavez. He is not as talented, charismatic, or skilled as his friend and mentor. His inadequacy took a bad situation and made it much worse.
There have been periodic problems since. For the first time shortages appeared on shelves in 2013, as many of the companies who had stockpiled money for imports ran out. In 2014 there were massive protests and riots. Last year a number of airlines either stopped accepting Bolivars in exchange for plane tickets or abandoned their routs to the country altogether because they couldn't buy the things they needed there and the state wouldn't let them convert Bolivars into Dollars. There were no resolutions to any of these problems. Instead, the police and military were able to "restore order" either by seizing the offending business and turning it over to more ideologically pure supporters of the government or by clearing the streets of protestors. The last independent news broadcasters were also forced out, meaning that the only news is that the Government is producing itself.
What has happened here is the fact that his Coke subsidiary has run out of dollars with which to buy sugar. Normally, this isn't much of a problem in that the company can simply go to the bank and change local currencies (Bolivars) for the currency to buy imports (US Dollars), only because the price controls the banks don't have any dollars. The only export of any note that can bring in dollars is oil, which is controlled by the government. The problem is that the global price of oil has fallen by more than half and at the same time oil production has faltered under mismanagement and corruption on the part of those political appointees. So, the government just doesn't have the dollars to trade to the Coke bottler to buy sugar. The Coke subsidiary simply cannot function and has announced as such. This is the same thing that happened to the Clorox plant, beer manufacturer, and that consumer electronics chain last year. The Coke subsidiary will most likely be seized by Maduro and forced to "open" but still fail to produce output because they can't make anything without sugar.
Coke, as a company, prides itself on being literally everywhere. They're in China and were in Russia towards the end of the Soviet Union. When World War II happened, they built portable bottling plants and shipped them around the South Pacific following US Marines, to ensure that they could always get a Coke. In terms of prevalence and hardiness Coke is the cockroach of the business world. It's always there, it survives just about anything. When Coke can't take it, you're talking apocalypse level disaster.
That's actually pretty much where we are now in Venezuela. There was already a coup, and hundreds of thousands protesting for months. The party of Chavez and Maduro were already voted out of power, but are using "emergency" laws to maintain their positions. There's no democratic or undemocratic process left for the average person to try to fix things other than "burn it down-start from scratch". If Maduro was smart he would step down in favor of someone more capable and willing to compromise, but if Maduro was smart it wouldn't have gotten this far in the first place.
Venezuela has always had issues with corruption, but it's not normally this much of an issue. I mean, lots of countries have issued with corruption. But, around twenty years ago a fellow by the name of Hugo Chavez was elected president some years after he tried to take the job by force in a coup that, obviously, failed.
You see, Chavez was enamored with two things: Simon Bolivar and the wave of revolutions that cleared the Spanish from the New World, and international socialism. Now, Simon Bolivar was cut from much the same cloth as Thomas Jefferson or George Washington and is really a man who deserves remembering. But Chavez wanted to be Bolivar, just swap out the Spanish for the United States and Bolivar's liberalism for socialism.
At first Chavez appeared to be doing a good job, but the man was a bit suspicious of absolutely everyone. He knew how easy it was to plot a coup and was constantly being convinced that one was brewing against him. This wasn't entirely unjustified because 2002 there was one. There were a lot of powerful people in the country that were unhappy with strained relations with US and EU and very close ties to Cuba to the point where the nation was basically trading oil for Cuban grade school textbooks and doctors. The coup ousted Chavez for about 47 hours before failing because the military wouldn't back the coup and the poor of Caracas came out to defend the Bolivarian Revolution. One of the primary causes of failure was a complete lack of backing from the US, and George W. Bush's insistence that the US not be involved.
This was, in many ways, a breaking point. The man put up lead by the planners of the Coup was head of the Venezuelan Federation of Chambers of Commerce. In short, businesses became the enemy as much as the US in the eyes of the Chavista movement. So, even though the State-run Oil company was 70% of the nations exports, it's leadership was culled and replaced by political supporters of Chavez. The media, who had not been a friend to Chavez prior to the coup, found itself being seized, forced to close, or force out of the nation altogether. A number of companies tied to the coup were outright seized. When the markets reacted poorly to this and the Bolivar (the currency of Venezuela) suffered price controls were put in place "fixing" the rate at which money can be (legally) exchanged for a different nation's currency.
Things didn't go great after that. The price fixing made it hard to sell Venezuelan made stuff outside the country hard. For a while, at least, people managed and found local sources or tightened belts. There were the occasional nationalization of a newspaper or oil platform but Chavez was popular and on the ball enough to prevent things from getting worse.
Then, in 2013 Chavez died. Everything got much worse. Nicolas Maduro was elected by a narrow margin, and he was Chavez's hand-picked successor. Not hand-picked because he was as good as Chavez, but because he was ideologically pure and a good friend. Maduro is, in every way, a pale echo of Chavez. He is not as talented, charismatic, or skilled as his friend and mentor. His inadequacy took a bad situation and made it much worse.
There have been periodic problems since. For the first time shortages appeared on shelves in 2013, as many of the companies who had stockpiled money for imports ran out. In 2014 there were massive protests and riots. Last year a number of airlines either stopped accepting Bolivars in exchange for plane tickets or abandoned their routs to the country altogether because they couldn't buy the things they needed there and the state wouldn't let them convert Bolivars into Dollars. There were no resolutions to any of these problems. Instead, the police and military were able to "restore order" either by seizing the offending business and turning it over to more ideologically pure supporters of the government or by clearing the streets of protestors. The last independent news broadcasters were also forced out, meaning that the only news is that the Government is producing itself.
What has happened here is the fact that his Coke subsidiary has run out of dollars with which to buy sugar. Normally, this isn't much of a problem in that the company can simply go to the bank and change local currencies (Bolivars) for the currency to buy imports (US Dollars), only because the price controls the banks don't have any dollars. The only export of any note that can bring in dollars is oil, which is controlled by the government. The problem is that the global price of oil has fallen by more than half and at the same time oil production has faltered under mismanagement and corruption on the part of those political appointees. So, the government just doesn't have the dollars to trade to the Coke bottler to buy sugar. The Coke subsidiary simply cannot function and has announced as such. This is the same thing that happened to the Clorox plant, beer manufacturer, and that consumer electronics chain last year. The Coke subsidiary will most likely be seized by Maduro and forced to "open" but still fail to produce output because they can't make anything without sugar.
Coke, as a company, prides itself on being literally everywhere. They're in China and were in Russia towards the end of the Soviet Union. When World War II happened, they built portable bottling plants and shipped them around the South Pacific following US Marines, to ensure that they could always get a Coke. In terms of prevalence and hardiness Coke is the cockroach of the business world. It's always there, it survives just about anything. When Coke can't take it, you're talking apocalypse level disaster.
That's actually pretty much where we are now in Venezuela. There was already a coup, and hundreds of thousands protesting for months. The party of Chavez and Maduro were already voted out of power, but are using "emergency" laws to maintain their positions. There's no democratic or undemocratic process left for the average person to try to fix things other than "burn it down-start from scratch". If Maduro was smart he would step down in favor of someone more capable and willing to compromise, but if Maduro was smart it wouldn't have gotten this far in the first place.