Venezuela: a simple explanation for how things got so bad

the current crisis, by the numbers

Hyperinflation in Venezuela is at about one million percent per year, and 61 percent of Venezuelans live in extreme poverty. 89 percent say they do not have the money to buy enough food for their families. 64 percent say they have lost an average of 24 pounds due to hunger.

About 3 million people have fled the country.

1970’s: Venezuela-the-great

With the largest oil reserves in the world, immense wealth and a steady source of revenue; the headquarters for multinational corporations; a free press, and open elections: in the 1970’s, Venezuela was the place to be, with a per capita GDP higher than Spain, Greece, and Israel and only 13 percent lower than the UK.

1980’s: Venezuela on the decline

A weakened oil market–and lower oil revenue–leads to cuts in social programs, currency devaluation, increasing inflation, unemployment and hardships, mostly for the poor.

1998: Hugo Chavez seizes the moment

Chávez campaigned on inequality, poverty, and corruption, igniting a base of disillusioned voters, who felt nostalgic for an earlier, more prosperous period. He is elected president.

Chavismo

Chavez put into place a series of devastating socialist programs.

He broke up large commercial farms and turned them over cooperatives that lacked the kills or capital to produce enough food to feed the country.

He seized foreign-owned oil ventures and gave them to political appointees who lacked the technical expertise to run them.

He nationalized utilities and telecommunications, resulting in chronic water and electricity shortages. He took over steel companies, aluminum companies, mining firms, hotels, and airlines.

oil prices spike

Chavez spends money without accountability. He took out loans from China in exchange for a guaranteed supply of crude oil. He increasingly relied on imports and added regulations (more government control) and inefficient operations (government takeover of businesses) that decreased domestic output.

He also consolidated power, bypassing parliament with a new constitution. He silenced dissent.

but, oil prices tank again

With oil making up 96% of Venezuela’s exports, the Venezuela economy shrank by 30% from 2013 through 2017.

Chávez dies of cancer in 2013.

His foreign minister, Nicolás Maduro, takes over.

Violence, inflation, and chronic shortages of basic goods leads to mass protests in 2014 and 2017. The government strikes back with thousands of arrests, brutal beatings and torture, and the murder of over 130 protesters.

Drug trafficking emerges as a source of money, with high-ranking officials and members of the president’s family facing narcotics charges in the United States.

National assets are stolen, with businessmen indicted in U.S. federal courts for attempting to launder over $1.2 billion in illegally obtained funds. They are connected to the Venzuela government.

Illegal mining camps run by criminal gangs are employing desperately hungry people in unsafe conditions–all under military protection.

Maduro election is a sham

Presidential elections were held last year resulting in Maduro being re-elected for a second six-year term. However, most of the world rejects the election outcome.

Note: China, Cuba, Iran, North Korea, Russia, Syria, and Turkey recognize the election results, and consider Maduro the rightful ruler.

the constitution

Venezuela constitution states that an invalid election should result in the head of the National Assembly taking over as acting president, currently Juan Guaido. The US and 50 other countries support Guaido as the rightful leader.

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