In 1999, a man with much self-determination and care especially for the poor came to power as the President of Venezuela. Under Hugo Chavez, Venezuela went through drastic changes both in its economic as well as constitutional system. But now, once the richest oil refinery, the state is battered in economic as well as socio-political crisis. After the death of Hugo Chavez in 2013, the country has faced its worst crisis ever after the Great Depression of 1930 that affected the United States. This is under the Nicolas Maduro government.
The country’s socialist policies, on one hand, have helped the poor in many ways. Under the Chavez government, the country managed to reduce its poverty rate from 23.4% in 1999 to 8.5% in 2011 as well as the GDP hiked from $4,105 to $10,810 in 12 years. But what lead the Bolivarian Republic of Venezuela to reach utter economic crisis despite having good oil resource?
In the year 2014, the global price for oil plummeted and it directly affected Venezuela where 95% of revenue depends on oil. It was the Chavez government that concentrated the country’s oil export revenue as central to its economy. The shortage of foreign currency made it difficult for Venezuela to import basic goods and necessities. The major crisis confronted by the country now is hyperinflation. There are more hands for limited products in the country.
The situation has become uncanny for citizens as well as daily wage workers. As of now, the country’s minimum wage is equivalent to $6.70 a month, making basic necessities unaffordable for many. As the BBC reports, prices are doubling in every 26 days and most of them have started using electronic transfer for even small transactions. The rapid depreciation of local currency in black market has also made way to inflation. A study conducted shows that 90% of Venezuelans live in poverty and 60% do not have enough money to buy food.
The economic crisis has also hit the public health system making medicines inaccessible for people. The opposition-controlled National Assembly claims the country faced an annual inflation rate of 83,000% in July while the International Monetary Fund has calculated an inflation rate of 80,000% at the end of 2018. In order to cope up with the rise for the basic necessities, the government introduced ‘sovereign bolivar’ – a new currency which is worth Bs.S 100,000 and also began circulating new banknotes and two new coins. The new currency is launched with the state-backed crypto-currency called the ‘petro.’
According to the United Nations, 2.3 million people have left the country since 2015 when the economy started to decline. Majority crossed the borders to neighbouring Colombia, Ecuador, Peru and Chile. But these neighbouring countries are also witnessing a crisis in accommodating the migrants. Venezuelans with passports were prevented from entering Ecuador made them to move to Peru which has already sheltered 400,000 Venezuelans.
Apart from all these, crime rates, murders and kidnappings are flourishing due to the distress. Venezuelan Violence Observatory, an independent group has recorded a death rate of 81.4 per 100,000 citizens in 2018 and observed that Venezuela ranks second in highest murder rate in the world after El Salvador. Homicides in Venezuela are thriving as a large number accounts from the hands of the security forces amid the widespread accusation of the extrajudicial killings.
Over the years, Colombia has exported criminality and conflict over trade of cocaine and even organised crimes. Venezuelan women had been found engaged in sex work across Colombia in an investigative field study did by InSight, an organisation that study the threats to national and citizen security in Latin America and Caribbean. They observed that the immigrant Venezuelans who are penniless and little of education and marketing skills are an easy prey for organised crimes.
Venezuela and United States had a strong bilateral relationship over trade and investments and even in combating the transit and production of illegal drugs between the countries. Tensions between the two nations started from the presidential period of Hugo Chavez and more apparently due to his socialist policies and friendly diplomatic relations with Cuba, Bolivia and Iran. Chavez accused the then US President George Bush for supporting the failed coup attempt during April 2002.
Despite the vociferous relationship between the two countries, US remained the major oil importer of Venezuela with an import rate of more than $40 billion in oil from the country. Venezuela’s alliance with Iran and Cuba in nuclear and trade deals triggered US many times and that often ended up in debates between the former US President Obama and Chavez. After Nicolas Maduro took over, he expelled two US officials out of the country following which the US to threw three Venezuelan diplomats from their country.
In May 2014, Venezuelan Human Rights and Democracy Protection Act, a bill that would impose economic sanctions to Venezuelan officials who were involved in the mistreatment of the protestors in the 2014 Venezuelan protests was passed by the United States House of Representatives. Many Latin American countries denounced the sanctions put forth by US on the Bolivarian Republic of Venezuela which was suffering from internal conflicts and economic conditions that it cannot single-handedly deal. An uncanny incident that happened was a gift worth $500,000 was presented by a US based oil company owned by Venezuela for the inauguration of Donald Trump as the 45th President of United States, amidst the rising crisis of poverty within the former country.
An attempt for a coup on January 23 by the US when it decided to recognise a member of the Opposition, Juan Guaido as the President of Venezuela has created a serious backlash from the other Latin American countries as well as Nicolas Maduro. The newer diplomatic talk with China throws a light a hope for the country to emancipate from the current crisis.
Venezuela is considered as one of the biggest voices from Latin America that stands against US intervention. The future of the country depends more on how it tackles its hyperinflation and crime rates. Otherwise, like any other country, Venezuela might also face a civil war at any moment and a replacement of the government with a people’s republic.
Note: This article was first published on the author’s blog. To read, click here.