Venezuela is named for the Italian city of Venice, famed for its merchants, its tourism, and its wealth. There is a certain irony in this, because in the last half decade Venezuela has had none of these things.
You could be forgiven for wondering how Venezuela has ended up in its current state. South America is in general quite a wealthy and democratic continent, trailing only Europe and North America in terms of prosperity and freedom. However, Venezuela is currently the glaring exception to this rule. Its problems lie, as so often, in oil. However, Venezuela’s oil problem is different in that it is not that they have too little; rather, it is that they have too much. The nation has such rich reserves that the substance has essentially become its identity. All Venezuelan oil refineries are owned by the government, and duly almost all governmental income comes from exporting it abroad. This overreliance on one product in a country is known as Dutch Disease, and Venezuela suffers with it with a severity rarely seen before.
The consequences of this have been coming home to roost since around the death of long-time Venezuelan President Hugo Chávez in 2013, but the roots of the issue stem back to the early days of his regime. Chávez won power in 1999, and promised immediate widespread welfare for the country, paid almost entirely by the high oil prices at the time. For a short while, this worked well, and standards of living within the country improved throughout the 2000s. However, naturally, oil prices were prone to ups and downs, but Chávez was far from keen to back off from his reforms. Venezuela racked up debt behind the scenes, and in 2013 the bubble began to burst.
Hugo Chávez brought short-term prosperity to Venezuela, but at a long-term cost.
To begin with, it was just a heavy recession. The situation was far from pleasant, but Chávez’s replacement, Nicolás Maduro, simply raised inflation to keep money in circulation and help regular Venezuelans buy food. However, the situation rapidly spun out of control. With oil prices not rising, and instead plunging into a deep dive in 2015, Venezuela’s economy near collapsed. Basic goods, particularly food, became increasingly scarce, and significant protests started to appear as early as February 2014 against the government. The regime, never particularly democratic or fair to begin with, responded with force, killing over forty demonstrators thus far and arresting opposition leaders. Maduro’s efforts to solve the economic crisis also became increasingly desperate. In 2016 he issued a decree forcing citizens to work on farms simply to supply the country with food, while also opening the border with Colombia to allow his citizens to purchase food from there. At the same time, he has constantly inflated the currency, to the point where it is now essentially worthless internationally.
These solutions have not helped. A study in September 2016 found that 15% of Venezuelans were eating discarded market food just to survive, while in October the same year a Fox News Latino report found that during a prison riot in the Venezuelan capital forty inmates killed, dismembered and ate three fellow inmates. That riot was just one of nearly 200 prison riots that year. Since then, Maduro has banned opposition parties and stripped the National Assembly of power, while the situation only continues to worsen.
Venezuela is in an unfathomably deep hole. Its overreliance on oil was the cause of the start of all of this, but government corruption, foolish decision making and a general lack of forethought has left the country politically and economically annihilated. Maduro must be ousted soon, but the recovery once he is gone will be long and slow.