Nicolás Maduro replaced the most charismatic Latin American leader of the 21st century. During his government, the worst economic crisis in the recent history of Venezuela began and despite everything Maduro has survived in power. Many accused this bus driver and trade unionist of the economic collapse of Venezuela and socio-political conflict. Though, the main issue is that Maduro was facing a completely different economic panorama compared to Chávez.
By 2013 the world was suffering a collapse in global oil prices triggered by the economic crisis that many countries were suffering. However, for Venezuela this was even more devastating as oil revenues are basically the country’s sole source of income.
Oil revenues account for approximately 95% of export earnings, 60% of budget revenues and 12% of GDP. The country’s economy was thus overwhelmingly reliant on income from this sector, which the Chavistas had used to fund ambitious social programmes at a time the prices were consistently high in the mid 2000s. However, fall in the oil price was compounded by a decline in production levels. In the foreign policy scope; this period of economic decline meant that the money was no longer there to pay for initiatives like ALBA or PetroCaribe.
Foreign debt burden had substantially risen from $37 billion in 1998 to an estimated $123 billion in 2016, and Maduro is heavily struggling to cover the cost of repayments. Inflation sky-rocketed and the IMF at the start of Maduro’s mandate predicted that it would be over 700%. The lack of dollars became so chronic that it has undermined all economic capacity, especially the capacity to import. Moreover, droughts during the first year of Maduro’s mandate had caused severe blackouts and shortages in the country, which is dependent on hydroelectric power for 70% of its energy needs.
In turn, Maduro and his allies accuse the opposition of engaging in “economic warfare” and blame them for the crisis. However, in reality and by the images we have seen on the news, it is evident that food, medicine and basic household goods were difficult to obtain due to the government controlled prices that were imposed. Therefore, citizens had to spend hours queuing, or resort to the black market, where the same goods could be obtained but at a huge mark-up. Nowadays, with the US sanctions on oil companies trading with the Venezuelan PSVDA, oil tankers are sitting alongside the coasts of Venezuela without being used. Therefore, people are doing overnight queues in order to fill in only 30 litres of gasoline.
Being oil rich is it good or bad?
For Venezuela oil is its devil’s excrement. Actually it can be suggested that it is a natural curse that during Maduro’s government it has reached its peak and brought the whole country into ruin.