The Rise and Fall of Chavismo in Venezuela
Venezuela is a country on the north coast of South America, which consists of a continental mass and a large number of small islands and islets in the Caribbean Sea. The country has extremely high biodiversity and ranks seventh in the world list of nations with the highest number of species.
Oil was discovered in the early twentieth century and, today, Venezuela has the largest oil reserves in the world and has been one of the world’s leading oil exporters. Previously, the country was an underdeveloped exporter of agricultural products such as coffee and cocoa, but oil soon dominated exports and government revenues. The excess oil of the 1980s led to an external debt crisis and a long-term economic crisis. The recovery of oil prices in the early 2000s gave Venezuela’s oil funds not seen since the 1980s. The Venezuelan government under Hugo Chávez then established populist social welfare policies that initially boosted the Venezuelan economy and increased social spending, temporarily reducing economic inequality and poverty in the early years of the regime. However, such populist policies later became inadequate, which caused the collapse of the nation due to its excesses, including an exceptionally extreme subsidy to fossil fuels, which are widely accused of destabilizing the nation’s economy.
The decline of Chavismo
The economic devastation has basically been caused by Chavismo’s version of socialism, a toxic mixture of expropriations, subsidies, and controls on currency and prices. For Chavez’s last years, Venezuela’s economy was beginning to collapse, even with prices below $ 100 per barrel, and then they crashed.
In such a way, the destabilized economy caused a crisis in Venezuela, which resulted in hyperinflation, economic depression, shortage of basic goods and drastic increases in unemployment, poverty, diseases, infant mortality, malnutrition, and crime. These factors have precipitated the Venezuelan migration crisis, where more than three million people have fled the country. For 2017, Venezuela was declared in default with respect to debt payments by credit rating agencies. In 2018, the country’s economic policies led to extreme hyperinflation, with estimates expecting an inflation rate of 1,370,000% by the end of the year.
Nicolas Maduro, who is Hugo Chavez’s successor, still remains in power and likewise continues to be backed by the army, which remains loyal to him. However, this is expected to change due to the events that have been occurring since January 23 of this year. Likewise, it has been said that, for Maduro, his days in power are numbered.
Source: Peter Millard, Cindy Hoffman, Marisa Gertz, and Jeremy C.F. Lin | Bloomberg