Economic Situation of Venezuela

Categories: EconomicsEconomy

Venezuela is known for its abundant oil reserves, but somehow it is on the brink of economic collapse (Forero, Juan). The recent Venezuelan economic crisis has led to massive hyperinflation, as well as an increase in unemployment and poverty nationwide, and many citizens are blaming President Maduro’s socialist regime for these issues (“From riches to rages: Venezuela’s economic crisis”).

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These issues have caused unhumanitarian living conditions for the Venezuelan population, and it is effectively increasing the total of lives being lost in the country (“How Venezuela’s crisis developed and drove out millions of people”).

All of these events and issues have stemmed from the social policies and programs started by Hugo Chaves and expanded upon by President Maduro (“From riches to rages: Venezuela’s economic crisis”).

There was a growing disparity between the rich and poor in Venezuela. Hugo Chaves made promises to fight poverty and inequality, which inevitably gained him the poor vote and enabled him to win the presidency of 1998.

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He would then enact a number of social programs, nationalize industries, and load state bureaucracies in the process. He would call these transformations of the government “21st century socialism” (“From riches to rages: Venezuela’s economic crisis”). These policies and changes were very expensive to produce, so Chaves relied on high oil prices and poor borrowing practices to meet his ends. The nation’s huge oil supply fueled his boldness. Venezuela ended up stacked with astronomical debt as oil prices went down. Chavez died in 2013, giving his power and ticking bomb of an economy to his hand-picked successor, Nicholas Maduro (“From riches to rags: Venezuela’s economic crisis”). As a result, “Nearly 20 years after its launch, the late Hugo Chávez’s Bolivarian Revolution appears to have ruined Venezuela”, according to Julia Buxton.

Continuing the poor policy trends of Chaves, Maduro is leading Venezuela deeper into an economic abyss. The International Money Fund predicts that countries inflation will reach the ludicrous amount of one million percent in 2018 (Reuters). The state of the country has led to dangerously high rates of infant mortality, maternal mortality, and malaria cases (“Venezuela’s infant mortality, maternal mortality and malaria cases soar.”). This is due to the food and medicine shortages the nation is enduring (Tamara Taraciuk Broner, Rafael Uzategui). Venezuela reported an unemployment rate of 7.3% in April of 2016 (“Unemployment Rate | America.”). According to a survey in 2017, 87% of households in Venezuela were poor; 9/10 Venezuelans could not afford food; 8.2 Venezuelans could barely afford 2 meals or less a day; 6/10 Venezuelans lost 24lbs at least because of food scarcity (Rafael Acevedo). Another result of Venezuela’s economic ruin is that some of the nation’s creditors are trying to seize one of its most important assets, Citgo (Jeanne Whallen, Anthony Faiola). These aren’t the only groups that are upset with the country; protestors are becoming more prevalent and dangerous towards Maduro’s administration (Rafael Romo, Marilia Brocchetto).

Experts have come together to predict what outcomes might come from Venezuela’s current situation. The two main factors of these scenarios are the stability of Maduro’s regime and the amount and type of pressure exerted on the regime by international powers. One of these scenarios occurs when the now-split opposition groups unite to tackle specific elements and systematically attack Maduro’s regime. This pressure will need to be teamed with internal pressure within the country, as well. Maduro’s “inner circle” will then have to split, allowing a well-organized coalition of Anti-Chavismo groups to democratically elect a new leader who the United Nations accepts, and the new leadership will then find ways to solve Venezuela’s economic problems. This scenario is possible, but difficult due to the splintered nature of the opposition of Maduro’s regime and support of various groups towards his regime. A second scenario happens when opposing forces dwindle, allowing Maduro’s regime to maintain and gain control. This will lead to Venezuela’s transition into a communist state that will have characteristics of North Korea and Cuba. Another scenario takes place when the military successfully implements a coup d’état. Then the military can maintain power over Venezuela, to the United Nations dismay, or the military can quickly start democratic elections to pick new leadership. The worst scenario comes about when polarization within the nation leads to armed conflict and havoc. Maduro’s desperate clings to eroding power and international pressure lead to more strife. The economy continues to worsen as famine and mortality increases. Violence increases as desperate citizens try to survive (Moises Rendon, L. Schneider).

Venezuela’s dispossessed citizens were born into a nation that was so poorly managed, economically, that they must survive in disastrous conditions despite their nation owning one of the most plentiful oil reserves in the world. This is a sad example of how world leaders making careless decisions for personal gain and ideology can lead to chaotic situations for millions of people. Specific conditions must be met for Venezuela to make a full rebound or they could suffer exponentially more as time goes by. The Venezuelan government needs to take the welfare of its people into account and work to solve the economic issues in a systematic fashion. This does not look like President Maduro’s main agenda. The future of Venezuela is dark, unless some extreme changes in direction of policy or power happen.

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Economic Situation of Venezuela. (2021, Sep 22). Retrieved from https://studymoose.com/economic-situation-of-venezuela-essay

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