Venezuela’s crisis is no unknown story; in fact, it has been prominently featured in current international news. This country holds one of the largest reserves of crude oil in the world so why, instead of being one of the wealthiest nations in the world, it is facing an economic, political and social crisis?
Let’s review the whole situation chronologically beginning with the economical drop that started after the death of former president Huge Chavez in 2013. Nicolas Maduro took over with a narrow election victory but failed to inherit his predecessor’s popularity. In 2014, this oil-rich country was hit by the oil crisis and entered economic recession. The oil prices fell from $100 per barrel to a mere $25 per barrel in the year 2016.
This fall had a cascading effect on the income levels of Venezuela. Another adding factor to the economic crisis was the high level of social security provided by the government to the underprivileged. The excess subsidies given out further ate up the government’s coffers. The international business management protocol instigated by the Maduro government had many loopholes which lead to big corporates like Pepsi, GM, and UAL pulling back or closing down their establishments in the country. This resulted in a direct hit on the unemployment levels in the country.
Inflation adversely hit the economy, crashing the currency from 8 Bolivars against one dollar to 8000 Bolivars against one dollar. Another culprit of this crisis is the use of multiple currencies. There is a DiPro, which is set at a rate of 10 bolivars per dollar which is used for import of food items and other necessities. There is a second rate called Dicom, ranging between 200 to 640 bolivars per dollar. This vast difference between the two rates created a lot of financial problems for the country’s economy.
The government spent off most of their funds to down pay debt from countries like China and Russia. Since the Chavez period, they stopped cultivating their farmland and were utterly dependent on food and medical supplies from countries like Brazil, Columbia, and Mexico. Due to this mismanagement, the population of the country starved. The medical shortage led to increasing death in hospitals caused due to epidemics of malaria and high deaths rates for post-pregnant women and newborns. Poor living conditions and fear of contagion from foreign sources lead to the fleeing of brainwashed upper middle class from the very country they were meant to lead and protect, leaving the social situation even more miserable.
The political turmoil started when the opposition won the majority of seats and threw away the Maduro government in 2015. In 2016, the Maduro supporters pressurized the national assembly to impeach the new government. This conflict forced the Supreme Court to dissolve the assembly all together leading to months of political stress and conflict causing more than 100 deaths.
The corruption in the government was another factor that has brought on the near-demise of a once economically sound country. The crisis has been then increasing, and if the world’s economists are to be believed, it is not going to improve any time soon. The country’s economic and political situation has been a constant focal point for the world media since then but any hope for improvement is yet to be seen.