Lifting Venezuela’s Veil of Forgotten Turmoil
The abrasive heat of the Venezuelan coast envelops a brave, gentle mother as she stirs what little food she could find in an open fire. She hasn’t eaten in days but refuses to watch her five-year-old miss a single meal, however meager. Standing beside his noble protector, the boy looks upwards at an old red billboard, meeting the eyes of that dead man whose policies brought a lifetime of pain to the children of the most oil-rich country on Earth. He begins to release a tear, and his mother, whose eyes have long gone dry, sighs quietly.
While the COVID-19 pandemic has rightly seized the attention of minds around the world, the plight of the Venezuelan people has only intensified in recent years. After nearly a decade of social and economic collapse and three years of explicit dictatorship, the country’s prospects remain bleak. Any paths to recovery remain uncertain at best, despite the efforts of the Trump administration to restore democracy. The roots, scope, and scale of the crisis are all worth considering, since it began well before the pandemic and will likely demand close attention for years to come.
Background: The Rise of ‘Chavismo’
The socialist movement controlling Venezuela rose to power in 1998 with the election of former president Hugo Chavez, the man whose all-perceiving eyes appear on walls, billboards, and cars across Venezuela today. He built a profoundly anti-establishment platform, deriding free trade, the United States, and the pro-market orthodoxy that had, until then, prevailed in Latin America since the fall of the Berlin Wall. Chavez’s time in power, lasting until he died in 2013, considerably overlapped with rapid increases in the per-barrel price of oil—by far Venezuela’s most important export and fueled primarily by China’s rapid industrialization. Between 2002 and mid-2007, inflation-adjusted WTI (West Texas Intermediate) oil prices rose continuously from $28 to $96, and remained well above $80 until November 2014, with a brief exception in the winter of 2008-2009.
This sharp increase in oil revenues granted Chavez a generous, albeit unsustainable, source of discretionary funding, reaching about a trillion dollars over the course of 14 years. While he spent much of this money on popular social welfare programs, such as his Bolivarian Missions, to secure the loyalty of millions of voters, he scarcely invested in improving the productivity of Venezuela’s non-oil economy to ensure a lasting source of prosperity. Instead, his policies tended to undermine the cause of productive diversification. His uncompensated expropriation of all industries deemed “strategic,” ranging from steel mills to textile factories, made potential investors fear the arbitrary seizure of their businesses and deterred future investment. These nationalized industries, inefficiently managed, would ultimately prove to be burdens on state coffers, generating net annual losses of 481 billion Venezuelan bolívares by 2017. Simultaneously, over one million people, mostly highly skilled workers, fled the country between 1999 and 2009, fearing the seizure of their assets and fleeing the increasingly unreliable judicial system. By 2014, even the oil industry had seen its crude production fall by 20 percent relative to 2003, partly due to the firing of 19,000 skilled employees in 2003.
By eroding the foundations of the Venezuelan economy and increasing its dependency on the state-controlled oil industry, Chavez left his country unprecedentedly vulnerable to changes in oil prices. Chavez never experienced the full consequences of these failures, since the price of WTI oil remained at around $100 when he passed away. His successor, Nicolás Maduro, remains in effective control of Venezuela, and his followers are still known as “Chavistas,” reflecting the unfading political influence of the former president.
The Ongoing Catastrophe
Over the course of 2014, inflation-adjusted oil prices fell from over $100 to about $53. They would continue to oscillate between $35 and $76 for the next four years, ending the age of high prices that had provided a fragile scaffolding for the ‘Chavista’ economy.
The economic collapse that followed in Venezuela would result in a decline in gross domestic product to about one-fourth of its 2013 levels by 2020, according to a reconstruction by The Politic using data from the International Monetary Fund. For comparison, this is a deeper and more lasting collapse than the United States faced during the Great Depression, which, at its worst, reduced the American GDP to about 70 percent of its 1929 levels. In 2018, the fifth year of continued recession, it seemed that Venezuela’s crisis could find its closest historical parallel in the economic collapse of neighboring Cuba in 1989 after the dissolution of the Soviet Union. However, projections for 2019 and 2020 reveal that the Venezuelan crisis has turned out to be even deeper, with no end in sight. This is all the more disturbing considering that, unlike Cuba, which has endured an economic embargo from the United States since 1960, Venezuela had faced no U.S. sanctions with broad economic impacts, such as on specific sectors or broadly barring access to the U.S. financial system, until the Trump administration imposed them gradually starting in late 2017. Any significant sanctions began long after the Chavez and Maduro administrations had triggered the deepest economic crisis Latin America has experienced in recent memory.
This economic crisis has inflicted unbearable social harms for millions of Venezuelans. Over a third of Venezuelans now face extreme poverty, living on less than $1.90 a day, whereas in the rest of South America, great strides have been made to reduce this figure to an average of 6 percent. Moreover, 91 percent of the rural population now faces extreme poverty, placing Venezuela’s rural extreme poverty rate second only to the Republic of the Congo. Understandably, this has also made hunger much more pervasive, with undernourishment rising from 10.5 percent of the population in 2004 to 21.2 percent in 2018, according to the Food and Agriculture Organization.
This sudden collapse of millions into misery, alongside the pervasive corruption present amongst police and military forces, has resulted in a simultaneous security crisis. The estimated homicide rate in Venezuela had risen to 81.4 per 100,000 inhabitants by 2019, even higher than the 79 per 100,000 inhabitants facing neighboring Colombia in 1991, at the height of its War on Drugs. By 2018, Venezuela’s capital, Caracas, had the highest murder rate of any capital city in the world; three out of the ten most dangerous cities in the world were in Venezuela by that measure. The situation is particularly dire in so-called “Peace Zones,” such as the Cota 905 Sector of Caracas, where police are barred from entering due to government agreements with criminal gangs that exercise effective control. This has all caused a second ‘Chavista’ exodus, as nearly five million Venezuelans have left since 2015, seeking a better life in countries like Colombia, Peru, Ecuador, and Chile.
In 2015, as all of these problems began to escalate in conjunction, a coalition of parties opposing the Maduro government won control of the National Assembly, Venezuela’s legislative body. However, Maduro rendered this body ineffective in 2017 with his establishment of the National Constituent Assembly, an alternative legislative body composed of people loyal to the government, thus consolidating an effective dictatorship. In May 2018, following the persecution and imprisonment of potential opposition candidates, Maduro won re-election and claimed a mandate lasting until 2024. However, the opposition-controlled National Assembly rejected the legitimacy of these elections, accused Maduro of usurping the presidency, and, citing the Constitution of 1999, inaugurated the center-left Juan Guaido as the legitimate president of Venezuela. While Guaido’s government is recognized by over 50 countries, including the United States, it lacks any effective control in Venezuela, where Maduro and his United Socialist Party remain fully accountable for the social, economic, and political crisis that has unfolded.
Facing the Pandemic:
While most of the world’s countries face severe limitations in addressing the onslaught of the COVID-19 pandemic, Venezuela is particularly vulnerable. It already faced acute healthcare shortages well before the pandemic—in 2017, as many as twenty percent of drugs required by doctors were unavailable. The sudden increase in people requiring medical attention will further strain the limited resources of the Venezuelan healthcare system, causing a currently inestimable loss of human life. Intensive care beds are in particularly short supply—according to Dr. Freddy Pachano, who leads Venezuela’s National Board of Directors for Postgraduate Medicine, Venezuela requires about 2,500 intensive care beds to address the pandemic, but only has 80.
Perhaps just as distressingly, the economic collapse at the root of Venezuela’s crisis is likely to intensify even further, since the decline in global demand for oil induced by lockdowns around the world has caused oil prices to plummet well below the $30 benchmark, reaching their lowest level, adjusting for inflation, since at least the 1940s.
U.S. Policy and Prospects for the Future
Aware of the growing difficulties facing the Maduro regime, the United States government has recently taken several measures to hasten its demise. In early April, following the indictment of Maduro and other Venezuelan government and military officials for conspiring to traffic nearly 300 tons of cocaine annually into the United States, President Trump, with the support from 22 U.S. allies, deployed an anti-narcotics mission near the Venezuelan coast containing enough navy ships to double U.S. anti-narcotics capacity in the Western Hemisphere.
However, in a more conciliatory spirit, the Trump administration proposed a plan to end the political crisis on March 31. In exchange for the gradual removal of all U.S. economic sanctions, both on Venezuelan officials and on the broader economy, Washington requested that Maduro cede power to an inclusive transitional government selected by the National Assembly but including ‘Chavista’ allies; neither Guaido nor Maduro himself would participate in the process. Free and fair elections would be organized within the 12 months after this transition, ending the dictatorship and potentially enabling a new government to pursue the reforms needed to overcome Venezuela’s monumental social, economic, and security problems.
The Maduro government, however, swiftly rejected this plan, and according to The National Interest, there is a strong incentive for core ‘Chavista’ officials to remain loyal, since they stand to lose from their indictments by the U.S. government should the Maduro regime lose control. Given Maduro’s past rejection of a similar proposal by Guaido himself, and considering the ability of Maduro’s movement to hold on to power for over two decades—withstanding a coup attempt as early as 2002—it seems unlikely that the Maduro regime will yield from within.
President Trump has maintained that all options remain on the table regarding Venezuela, including a U.S. military intervention. However, such a response is implausible given the difficulties of defeating an army of 160,000 men and 100,000 paramilitaries loyal to the government, known as colectivos, and occupying a country twice the size of Iraq and with a much more diverse and rugged terrain. Furthermore, it is also unclear that an invasion would produce its desired outcome—to end the problems facing the Venezuelan people—and may instead intensify them.
Finally, while some governments have succumbed to popular pressure in cases of hardship, such as those of Poland and East Germany in the 1980s, the Venezuelan crisis appears much more analogous to those of Cuba and North Korea in the 1990s, where the governments of the Castro and Kim dynasties remain intact. A series of chronic protests since 2014 has tempered the government’s ability to withstand popular pressure, and it is unlikely that this will change in the coming years.
With few possibilities for political change, it appears that the Venezuelan crisis will persist for the following years as one of the most significant large-scale human catastrophes of the 21st century, outside of countries facing war. It will require the continued attention of the international community; long after people across the world are once again able to leave their homes and visit the public spaces that the pandemic has deterred us from enjoying, there will remain Venezuelan mothers who struggle daily to feed their children.