Political instability and economic downturn in Venezuela

Political instability:

The present insecurity at the political level did not arise out of a vacuum but could be attributed to actions taken by Nicolas Maduro during his first term as the President. He began centralizing power at the executive level, utilising violence, and intimidation to suppress dissent and gained the support of the military by awarding them control of key industries in the country.

The economy was in doldrums due to mismanagement and corruption which lead to large scale protests in 2017  with slogans such as “Maduro dictator”. The response by Maduro was side-lining the national assembly which is under opposition control by commanding the creation of a constituent assembly and jailed members of the opposition.

A year later, Maduro won a re-election in May 2018 “which was boycotted by the opposition and only 46 percent of the registered voters cast their vote and out of them 68 percent voted for Nicolas Maduro. A smaller percentage of people voted for Henri Falcón, the opposition candidate but the large part of the opposition did not show up”.  

The presidential election was also criticised due to widespread coercion and rigged voting. Juan Guaidó who became the national assembly leader months prior in January declared himself interim President until the new elections which he argues is permitted by the constitution.

In Venezuela, President Nicolas Maduro, and opposition leader Juan Guaidó are competing for power and influence. Mr Maduro enjoys support from the country’s military at the domestic level as well as Russia and China at the international level while Mr Guaidó is recognised as the legitimate President by the American goliath as well as other countries on the continent, but he does not enjoy as much support at the national level. The political instability is leading to a huge economic and humanitarian crisis in the country.

Economic Downturn:

Hugo Chávez who became the President in 1998 promised to utilize the vast oil wealth to tackle poverty and inequality. The social programs launched by his administration did reduce poverty by 20 percent, but it did not lead to a vibrant economy since the country was heavily dependent on oil price. Since Chávez aim was to enhance his power, he fired thousands of PDVSA (Petroleum of Venezuela) workers who took part in the 2002-2003 strike which left the firm void of technical experts.

“He also ended Presidential term limits, took control of the supreme court, harassed the press, closed independent outlets and nationalised hundreds of private businesses and foreign-owned assets such as oil projects run by ExxonMobil and ConocoPhillips”. Nicolas Maduro became the President after Hugo Chávez death in March 2013, when the oil prices crashed in 2014 to $70 per barrel, he concentrated more power through political repression, censorship as well as manipulation of elections.  

As the oil price plummeted to less than $30 per barrel in 2016, the economy tanked and the situation worsened due to high inflation and shortage of goods leading to protests. The regime reacted by arresting opposition leaders, shutting down news websites and detaining journalists. By 2017, Supreme court which was filled with loyalist of the regime announced the dissolvement of the nationalist assembly where the opposition held power.

The United States slapped sanctions on the regime in 2019 in the bid to oust Maduro from power and the coronavirus pandemic led to lockdowns in early 2020 leading to decline in oil prices which made it increasingly difficult for the economic to get back on its feet. However, the oil price this year are on a recovery but since the oil production capacity has dwindled the economy is in dire state. The economic crisis is so harsh that it is leading to a humanitarian crisis in the country. 

Consequences of instability:

The fall in oil prices and the currency crisis sent the economy into hyperinflation which implies that the value of Venezuelan bolivar has reduced for instance $1 is worth 401,603,609,302.01 Venezuelan Bolívares. There is shortage of goods as well as necessities such as food and medical supplies, President Maduro responded to the crisis by recommending that citizens grow their own food to avoid starvation.

The situation is so awful that organized crime has increased with the national security forces resorting to violence and murder against their citizens and thereby the capital, Caracas is now considered the most dangerous city in the world. 

According to United Nations High Commissioner for Refugees 2020 report, about 5.5 million people or 1/6^th of the population has fled the country since 2014. The covid induced lockdowns forced about 130,000 Venezuelans to return but they have forcefully been held in overcrowded and unsanitary quarantine centres. In addition to that, the pro-government armed groups such as ‘colectivos’ not only threatened but also verbally harassed and mistreated them.

The Maduro government even utilized the state of emergency measure put in place to control covid-19 as a ploy to supress dissent, arbitrarily detain and prosecute those who oppose his regime including but not limited to legislators, journalists, and healthcare workers. 

The country was going through a health crisis before the pandemic and now the situation is even worse as the health system is collapsing leading to rise in case of vaccine preventable diseases with shortage of medical facilities and health supplies. According to a survey done by World Food Program before the advent of the pandemic, one out of three people are food insecure and require assistance. With COVID-19, the economic and health crisis has amplified and there would no respite for the average citizen unless the political crisis is resolved which has no end in sight.

Final Perspective:

Venezuela was once one of the wealthiest nations on the South American continent, with political instability and the resultant economic downturn it has become one of the worst nations in the world in terms of life standard, health and economic security. The appetite for power never quenches as is evident by the reign of Hugo Chávez and Nicolas Maduro, both tried to enhance their control and ended up ruining the economy and with it the life at home.   

The south American country is going through the worst period in its history as more than 5 million citizens have fled the country in the last seven years. The current political deadlock does not appear to be resolved anytime soon as Maduro refuses to step down and Guaidó unable to attain influence at the domestic level although at the international level more countries recognise him as the legitimate President. With Maduro having the support of the military and the Supreme court behind him, things look tough for Guaidó whose influence at the national level is dwarfed by that of the President. Until the political feud is resolved, there would be no respite for the average citizen in the country.

End Notes

1) https://www.bbc.com/news/world-latin-america-36319877

2) https://penntoday.upenn.edu/news/venezuelan-crisis-explained

3) https://www.nytimes.com/2019/04/30/world/americas/venezuela-crisis.html

4) https://www.reuters.com/article/us-global-poy-venezuela-idUSKBN1DU1KQ

5) https://www.cnbc.com/2014/12/01/falling-crude-oil-prices-crush-venezuelas-ailing-economy.html

6) https://www.history.com/news/venezuela-chavez-maduro-crisis

7) https://www.statista.com/statistics/1115833/monthly-average-price-merey-crude-oil/

8) https://reliefweb.int/report/colombia/continuing-venezuela-exodus-and-covid-19-highlights-need-global-solidarity-most

9) https://natoassociation.ca/exploring-the-effects-of-economic-instability-in-venezuela/

10)https://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=VEF

11) https://www.hrw.org/world-report/2021/country-chapters/venezuela

12) https://disasterphilanthropy.org/disaster/venezuelan-refugee-crisis/

Pic Courtesy- Ronal Labrador at unsplash.com

(The views expressed are those of the author and do not represent views of CESCUBE.)