Economic problems


While corrupt politicians offer the opportunity to put faces on the country’s issues, a distinction of which they are not undeserving, the Venezuelan economy has been in a free fall for years.  “Economic output in Venezuela fell by 16% in 2016, 14% in 2017, and is expected to drop by 15% this year.  Meanwhile, after jumping from 112% in 2015 to 2,400% last year, inflation in Venezuela is expected to hit five-digit levels in 2018” (9).  There is no positive spin to be put onto numbers like these.  To say the country is in trouble would be a massive understatement.  While we can attribute this situation to failed policies enacted by inept, unprepared, and incapable politicians, this only further illustrates the dire straits in which the country finds itself.  If ineptitude on the part of Chavez’ Bolivarian politicians is what put the country in its present state of affairs, what chance is there that Maduro’s iteration of the Bolivarian government will find a way out?


The people who feel the effects of this, of course, are the Venezuelan citizens as they try to buy food, medicines and other essential items whose prices rise dramatically by the day without accompanying wage increases for those who are lucky enough to maintain employment.  By the Economist’s “Big Mac Index” measurement the Venezuelan currency, the Bolivar, has lost 99.9% of its value “in almost no time” (10).  This measurement attempts to show in more simple and practical terms the value of a country’s currency in its ability to buy food, specifically a Big Mac at McDonald’s, to give insight into what people in the country are going through economically.  In any case, it seems that the Big Mac is the cuisine of the wealthy in Venezuela at the moment.  Not only does this paint a grim picture of the economic circumstances in the country, it is perhaps a frightening sign for the general state of nutrition in the country.


All joking aside, Venezuela’s economy shrunk by almost a third between 2014 and 2017, and it is not a coincidence that 2014 saw a significant drop in oil prices (8).  According to Danielle Renwick, “Oil accounts for about 95 percent of Venezuela’s export earnings and 25 percent of its gross domestic product (GDP).”  The economic problems that the country is facing at present are due in large part to the dominance of oil in the Venezuelan economy and the country’s inability to diversify at any point in its oil-rich history.  This lack of economic diversity has made Venezuela uncomfortably beholden to the volatile international price of oil, which is affected by policies and crises in places around the world over which Venezuela can exert little to no control.  Even in Saudi Arabia — where the Saudi government can, in some cases and to some degree, control regional political issues that affect global oil prices — we are seeing economic diversification as a point of emphasis for the new crown prince.  The fact that no meaningful progress was made toward this end in Venezuela in years past when it seems to have had the means is unfortunate, because it certainly looks like that opportunity has long since passed the country by.  


The oil industry’s, and perhaps Venezuela’s, fate was sealed when Hugo Chavez came to power and dismissed the technocrats running the state-owned oil company, PDVSA, in favor of political appointees with questionable expertise in the energy arena.  Much of this happened in a purge during a round of strikes and anti-Chavez protests that culminated in a coup attempt in 2002.  Chavez had an ambitious social agenda and needed the PDVSA’s profits, really the only means by which Venezuela could create significant revenue, to fund it.  To that end, the focus of the company was turned from long-term viability to short-term maximization of profit as a political necessity.  As PDVSA went downhill, it took the economy of Venezuela with it.  “During the highest oil boom in history, when every other country in the world increased investment, Venezuela did not, and production kept declining,” said Francisco Monaldi, a Latin America expert at Rice University (13).


This missed opportunity has spelled disaster for Venezuela.  Only North Korea is ranked lower on The Heritage Foundation’s 2018 Economic Freedom Index list.  Its report also says that “severe shortages of food, medicines, and other consumer goods, combined with near hyperinflation, have accompanied the worst economic contraction ever recorded” (11).  The IMF predicted that inflation could hit 13,000% in 2018, but that estimate could be very low in real terms (13).  Suffice it to say Venezuelan currency is essentially worthless and continues to lose value seemingly by the day.  Those lucky enough to have access to US dollars are at a distinct advantage, as the dollar is of vital importance to the Venezuelan economy.  Those who have dollars are able to get what they need to survive, while those who don’t can’t in many cases.  That the currency of the evil imperialist United States is the thing that gives Venezuelans access to the means of survival must have Chavez turning over in his grave.  What is more, the irony of Chavez putting in motion the events that put the Venezuelan economy in this position while trying to do precisely the opposite might be humorous were it not surrounded by such awful human tragedy.


Social Issues


The consequences of the corruption, mismanagement and general ineptitude of the Venezuelan government dating back prior to the Chavez regime, are being felt, as is the way in such cases, by the citizens of Venezuela.  They are seeing their wages and savings disappear into the abyss of hyperinflation.  They are seeing instances of violence in the country skyrocket along with the number of people living in abject poverty.  Even when people are lucky enough to find a way out of the country they are often helpless, destitute, and at the mercy of human traffickers, employers and law enforcement officers in the countries to which they escape (mainly within Latin America) who all too often prey on the Venezuelans’ helplessness.  There have been far too many stories of migrants being kidnapped, extorted, forced into sexual labor, and a host of other such horrible fates.


Life for those who remain in Venezuela is also difficult and dangerous, to put it mildly.  Crime and poverty are rampant, while opportunity is increasingly scarce.  “Poverty has increased, affecting more than 81 percent of the population today compared to 48 percent in 2014” (2).  While a 48 percent poverty rate is nothing to brag about, in the sharp rise we once again see a coincidence with the drop in oil prices and the resultant collapse of the Venezuelan economy.  In most cases with increased poverty comes a corresponding increase in crime, and Venezuela is no exception to this somber rule.  The murder rate has gone through the roof; there are serious issues with reliable access to such basic services as running water and electricity; and hunger, malnutrition and a variety of preventable diseases pose major threats to Venezuelan people (13).  The stories of loss, starvation and violence are numerous, and Venezuelans quite understandably are seeking refuge outside the country’s borders in startling numbers.


People are leaving Venezuela at a rate of roughly 5,000 per day.  Countries in the region, outside the United States, are largely incapable of resettling the large number of Venezuelan refugees, leaving many with nowhere to go.  For their part, a lot of the other countries in Latin America are experiencing serious political, economic and social problems of their own, and are really in no position to help on a grand scale.  As Anthony Faiola puts it, “Venezuelan professionals are abandoning hospitals and universities to scrounge livings as street vendors in Peru and janitors in Ecuador.  In Trinidad and Tobago — a petroleum-producing Caribbean nation off Venezuela’s northern coast — Venezuelan lawyers are working as day laborers and sex workers.  A former well-to-do bureaucrat who once spent a summer eating traditional shark sandwiches and drinking whisky on Trinidad’s Maracas Bay is now working as a maid.”  




If the dreams of the political opposition, and much of the rest of the world, are realized and the Maduro regime falls, it is likely that this desired state of affairs will fail to fulfill the hopes and dreams of the people of Venezuela, at least not in the near term.  Such a turn of events would merely be a starting point for what is sure to be a lengthy and exceedingly difficult rebuilding process.  A politics that is so obviously fractious that parties ostensibly united against Bolivarian rule lay essentially powerless against it will not magically mend itself once the regime falls.  Perhaps feelings about Maduro and his regime were one of the few points of agreement among the parties, and without that marginally effective unifying force, the road ahead figures to be contentious.  The economic damage that has been done by years of Bolivarian rule will take massive amounts of aid and investment, not to mention years, to remedy; and put Venezuelan ingenuity and expertise, drastically decimated by the Bolivarian years, to the test.  Is Venezuela up to the task?  Venezuelans sure hope so.





1. Sabatini, Christopher. "Mediation in Venezuela Is Doomed to Fail." Foreign Affairs. 7 July 2017. Web. 14 June 2018.


2. Trinkunas, Harold. "The Tragedy of the Venezuelan Opposition." Foreign Affairs. 5 January 2018. Web. 15 June 2018.


3. Reuters Staff. “Venezuelan Election Turnout Figures Manipulated by One Million...” Reuters, Thomson Reuters, 2 Aug. 2017


4. Trinkunas, Harold. "The Tragedy of the Venezuelan Opposition." Foreign Affairs. 5 January 2018. Web. 27 June 2018.


5. Sanchez, Ernesto J. "Getting Venezuela to Behave." Foreign Affairs. 7 April 2017. Web. 5 July 2018.


6. Wyss, Jim. “Venezuela's Supreme Court, Once Again, Throws Maduro a Lifeline.” Miami Herald, 31 Jan. 2017.


7. Romo, Rafael. “Venezuela's High Court Dissolves National Assembly.” CNN, Cable News Network, 30 Mar. 2017.


8. Shifter, Michael, and Ben Raderstorf. "Venezuela After the Constituent Assembly." Foreign Affairs. 1 August 2017. Web. 14 July 2018.


9. Flannery, Nathaniel Parrish. "Venezuela's Economic Crisis Keeps Getting Worse." Forbes. 22 March 2018. Web. 14 July 2018.


10. “Venezuela's Currency Plumbs Unknown Depths.” The Economist, The Economist Newspaper, 25 Jan. 2018


11. The Heritage Foundation. “2018 Index of Economic Freedom.” 14 July 2018.


12. Renwick, Danielle. “Venezuela Is in the Midst of an Unprecedented Crisis.” Council on Foreign Relations, Council on Foreign Relations, 23 Mar. 2018.


13. Schechter, Peter and Jason Marczak. “The Waning of Petrocaribe? Central America and Caribbean Energy in Transition.” The Atlantic Council, 2018.


14. Johnson, Keith. "How Hugo Chávez Blew Up Venezuela’s Oil Patch". Foreign Policy, 16 July 2018.


15. Cárdenas, Jose R. "Don’t Let Venezuela’s Government Smear The Opposition’s Brightest Star". Foreign Policy, 27 June 2018.


16. Faiola, Anthony. "From Riches To Rags: Venezuelans Become Latin America’s New Underclass.". Washington Post, 27 July 2018. Accessed 28 July 2018.


17. Krygier, Rachelle. "In Socialist Venezuela, The U.S. Dollar Becomes King". Washington Post, 2 August 2018. Accessed 6 Aug 2018.


18. Faiola, Anthony. "They Be Pirates: An Old Scourge Is Reappearing In The Caribbean". Washington Post, 13 August 2018. Accessed 14 Aug 2018.