What Now for Venezuela in Chaos?

Thousands of Venezuelans living in Chile protest against Nicolás Maduro, January 23, 2019, in Santiago.

Venezuela may be on the verge of upheaval, as a crisis of political legitimacy threatens to undermine the socialist government of Nicolás Maduro. The chaos in Caracas stems from major underlying economic problems that have been worsening for years. Eleven South American nations, including Brazil, Argentina, Colombia, Chile, and Peru, along with the United States and Canada, are openly backing opposition leader Juan Guaidó. The 35-year-old head of the Venezuelan National Assembly declared himself acting president on January 23, calling for new elections to be held. Maduro, who was first elected president in 2013 to succeed Hugo Chávez, is clinging to power with the support of the country’s forces of law and order. His reelection in May 2018 to another 6-year term was condemned for coercion and vote-rigging.

Venezuela has been wracked by severe shortages of food, medicines, and basic goods like milk, flour, and toilet paper and by disruptions due to power outages and cuts to the water supply. Inflation in the country topped 1 million percent last year! Unemployment and violent crime have soared. In 2001, Venezuela was the richest country in South America, but since 2014 more than 3 million of its people have fled the country. Widespread demonstrations protesting Maduro’s policies have brought people into confrontations with security forces. More than a dozen have died in recent clashes.

Venezuela has abundant oil resources—the largest proven crude oil reserves in the world. But production by the country’s state-run oil company has dropped drastically in recent years due to mismanagement and falling oil prices. The fossil fuel–rich country is even experiencing gas shortages. Corruption and backbreaking debt are taking their toll. The following facts highlight the Venezuelan economy’s severe contraction:

  • GDP fell to $381.6 billion in 2017 from $531.1 billion in 2015;
  • The economy shrank by 18.6 percent in 2016 alone;
  • The economic growth rate was –14 percent in 2017;
  • GDP per capita has dropped 40 percent from 2013 to 2017;
  • Unemployment was at 27.1 percent in 2017;
  • Oil production has slumped to 1.4 million barrels a day, a 30-year low;
  • In a currency devaluation, five zeroes were slashed off the so-called strong bolivar;
  • Venezuela ranks last in economic freedom among 32 countries in the Americas.

Economic sanctions imposed by the United States could make matters worse. And Maduro does have some allies—especially among the globe’s authoritarian regimes: Putin’s Russia, Erdogan’s Turkey, Cuba, and China. The political uncertainty is likely to result in even more civil strife and repression by the Maduro regime. The loyalty of the armed forces will be key to the outcome of the crisis.

Photo credit: © Sebastián Vivallo Oñate/Agencia Makro/Getty Images

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