Venezuela's Crisis: Causes and Consequences

Introduction

• Venezuela has a complex crisis with various political interpretations.
• The country was once wealthy but is now unstable and impoverished.

Historical Context

• Post-Dictatorship Wealth:
  • Overthrew military dictatorship in 1958.
  • Became one of the wealthiest Latin American countries due to oil reserves.
• Oil Dependency:
  • Venezuela has the largest oil deposits in the world (18.2% of global reserves).
  • Wealth concentrated in oil exports during the 1960s and 1970s.

Economic Decline

• Resource Curse:
  • Failure to diversify economy; reliance on oil led to vulnerabilities.
• Oil Price Fluctuations:
  • Oil prices peaked in 1980, then fell to below $10 per barrel by 1986.
  • Economic crisis led to $33 billion in debt.
• IMF Intervention:
  • Sought aid from IMF, which required deregulation and cutting welfare programs.
  • Resulted in social unrest (the Caracazo) after austerity measures were implemented.

Social Unrest and Government Response

• Caracazo:
  • Riots and protests in 1989 due to anger over austerity, resulting in police violence.
  • Thousands may have died due to government crackdowns.
• Corruption:
  • Widespread corruption worsened the situation, with wealth concentrated among elites.

Rise of Hugo Chavez

• Political Shift:
  • Chavez capitalized on public anger, elected in 1998.
  • Implemented social programs funded by oil profits, exacerbating oil dependency.
• Economic Management Issues:
  • Ignorance of oil industry management led to decline in production.
  • Failure to diversify economy continued.

Economic Collapse under Maduro

• Hyperinflation:
  • Chavez’s devaluation of the Bolivar led to hyperinflation and economic collapse.
  • Poverty surged, and many resorted to barter systems for survival.
• Maduro’s Regime:
  • Maduro’s election in 2018 was marred by corruption and suppression of opposition.
  • Increased authoritarianism in response to unrest and economic chaos.

Current Situation

• Humanitarian Crisis:
  • By 2016, 75% of population suffered weight loss due to famine.
  • High inflation and poverty levels with widespread violence.
• Political Stalemate:
  • Opposition-led National Assembly declared 2018 elections invalid, naming Juan Guaidó as acting president.
  • Maduro refused to abdicate, maintaining power amid international pressure.

Conclusion

• Key Factors of Collapse:
  • Oil dependency, political mismanagement, corruption, and authoritarian governance.
  • The crisis underscores the human cost of failed policies—many Venezuelans suffer from hunger and lack of basic necessities.
• Reflection:
  • Discussion on the implications of political and economic decisions on real people's lives.