The Venezuelan Crisis: Will the Country Recover?

The Venezuelan Crisis: Will the Country Recover?

This article is part of a series that will be released before the end of 2015, drawing from The Contour‘s annual print issue titled Upheaval, Revolution & Tragedy: The World of 2015, which can be found online at The Contour: Print Edition

***

Hugo Chavez came to power in 1998 and implemented a series of socialist reforms in his Bolivarian Revolution. Many Venezuelan citizens, including the poor and elderly, praise his policies. Following Chavez’s footsteps, President Maduro hopes to uphold left-wing policies, but must do so amid Venezuela’s rapidly deteriorating economy.

Venezuelan elections could bring turmoil to the country 

venezuelancrisis
Venezuelan citizens are without basic supermarket goods.

Venezuela’s declining economy has reached a concerning level. Venezuelans must wait at supermarkets overnight to acquire basic products. 30% of the population has been reduced to eating just two meals a day due to food shortages and the gastronomical prices of basic foods such as milk, flour, and chicken.

Importing goods has become impossible. Mercado Libre, a Venezuelan version of Ebay, sold packets of thirty-six condoms at an equivalent price of $755, eighty-five percent of the Venezuelan monthly minimum wage. Currency price controls make US dollars almost unattainable, discouraging Venezuelans from engaging in legal trade, which continues to encumber the economy.

Venezuela started the year with an inflation rate of sixty-three percent, the highest rate of all countries in Latin America. As oil prices declined rapidly, Venezuela slipped into economic stagnation and inflation. The International Monetary Fund estimates inflation levels will continue to increase to a whooping 150% while the World Bank also estimates the economy to keep shrinking by ten percent this year.  

Venezuela’s exports of oil and natural gas contribute to 95% of its export profit and 25% of its GDP. But, Venezuela’s economic crisis is not founded solely by a feeble economy too reliant on oil exports. Past and current mismanagement of the government and government-owned enterprises, radical nationalist policies, currency price control policies, and increased presence and influence of  drug cartels in the country drive this crisis.

Under former President, Chavez, and his successor, President Maduro, company leaders and high-ranking officials embezzled billions of dollars from Venezuela’s state oil company, PDVSA.

Chavez’s nationalist policies have also hindered foreign investment. The nationalization of PDVSA and its joint venture with foreign companies was not only unprofitable with falling oil demands, but discouraged foreign investment right when Venezuela needed it the most.

The Venezuelan economy will continue to deteriorate if the corruption does not stop. This past Sunday the 6th Venezuelans elected their National Assembly and voted in favour of the MUD democratic opposition party, a move that Venezuelans hope will bring stability to the country.

by Ainara Moreno ’18