Venezuela Crisis
Formerly one of the wealthiest countries in South America, a sharp decline in oil prices in the early 2010s plunged oil-dependent Venezuela into a downward spiral, engulfing the country in a deep political and economic crisis that persists today. Following the death of socialist leader Hugo Chavez’s death in 2013, his hand-picked predecessor, Nicolás Maduro, attempted to curb Venezuela’s economic collapse by printing money, pushing the country into years-long hyperinflation. Skyrocketing prices led to severe shortages of necessities, such as medicine and food, inciting country-wide protests and riots and forcing millions of Venezuelans to flee the country. After a widely discredited election led to Maduro’s reelection in 2018, aggressive U.S. sanctions further devastated Venezuela’s economy. The upcoming elections on July 28 could see opposition candidate Edmundo González Urrutia oust incumbent Maduro, who trails significantly in recent polls. However, Maduro-sponsored electoral fraud and voter repression will reduce the freeness and fairness of elections and could inhibit a democratic transition of power.
Hugo Chavez came to power in 1998 and leveraged Venezuela’s immense oil reserves and rising crude prices to provide subsidized goods and services to the Venezuelan people, cutting the extreme poverty rate by 15 percent. However, years of economic mismanagement and corruption under Chavez transformed the capably managed state-owned PDVSA oil company into a dysfunctional, corrupt, and bloated institution run by military and political allies that lacked experienced technicians. Chavez also deepened Venezuela’s dependence on oil exports, with fuel as a percentage of total exports rising from around 71 percent in 1998 to nearly 98 percent in 2013. Therefore, the collapse of global oil prices in 2014 led to a rapid economic decline.
After Chavez’s death in 2013, then–Vice President Nicolás Maduro assumed the presidency and was subsequently elected to office. His government attempted to address the economic crisis by printing money. This policy pushed the country into years-long hyperinflation, which was on pace to hit ten million percent in 2019 and led to a de facto two-currency system in which the U.S. dollar is dominant. By 2014, large-scale anti-government protests erupted across the country. In 2015, voters expressed dissatisfaction by electing the first opposition-controlled National Assembly in two decades, setting the stage for a standoff between the legislature and Maduro.
Maduro was reelected to a second six-year term in May 2018, despite boycotts and accusations of fraud in a widely condemned election, including by a group of fourteen countries known as the Lima Group, and was officially sworn into office in January 2019. Two weeks later, on January 15, the National Assembly declared Maduro’s election illegitimate, and opposition leader Juan Guaidó announced that he would assume office as interim president until free and fair elections could be held, in accordance with succession rules in the 1999 constitution. Guaidó was quickly recognized as interim president by the United States, Canada, most of the European Union, and the Organization of American States. However, Maduro retained the support of several major countries, including China, Cuba, Russia, and Turkey.
The resulting political standoff saw an increase in U.S. sanctions against the Maduro government, including targeting oil shipments to Cuba—Maduro has increasingly relied on Cuban military and intelligence support to stay in power—as well as threats of sanctions on third parties linked to Venezuela’s oil sector and the discussion of potential military intervention, which ultimately did not occur. Venezuela’s allies and partners have undercut U.S. efforts to exert pressure on the country. Russia has continued to support the Maduro government, sending Russian troops to Venezuela in March 2019 and helping the government evade sanctions on the oil industry. China has continued to back the Maduro government, offering to help rebuild the national power grid.
Amid a humanitarian crisis, thousands fled the country daily by early 2019, mostly on foot. Exacerbating Venezuela’s economic woes, its poorly maintained infrastructure led to country-wide blackouts in March 2019 that left millions without power. Moreover, because the government has been unable to provide social services, Venezuelans face severe food and medicine shortages and the continuing spread of infectious diseases. In April 2019, after years of denying the existence of a humanitarian crisis and refusing to allow foreign aid to enter the country—calling aid shipments a political ploy by the United States—Venezuelan President Nicolás Maduro allowed the entry of a shipment of emergency supplies from the Red Cross. However, the U.S. State Department maintains deep concerns regarding Maduro’s human rights record, over which he is being investigated for crimes against humanity by the International Criminal Court (ICC), and the employment of armed gangs, known as colectivos, to suppress opposition.
Since the crisis escalated in 2015, an estimated seven million Venezuelans have fled the country, with six million resettling in other Latin American countries, including nearly 2.5 million in Colombia alone. Armed groups operating across the porous Colombia-Venezuela border have further worsened security conditions for migrants. The exodus has also caused a regional humanitarian crisis as neighboring governments have struggled to absorb refugees and asylum seekers and failed to provide access to services.
Despite the increased pressure and sanctions of early 2019, Maduro managed to maintain and even solidify his grip on power. Maduro suddenly implemented economic reforms, including ending price controls, allowing dollar transactions, slashing bolivar currency circulation, initiating privatizations, and starting to publish economic indicators after a four-year hiatus. In September 2021, Venezuela announced the launch of a new currency, dropping six zeros from its bolivar notes. While these drastic shifts in economic policy left Venezuelans struggling to secure bolivars and adapt in the short term, hyperinflation slightly subsided. The bolivar stabilized in early 2022, with annualized inflation briefly falling below 50 percent, though more than 60 percent of transactions were carried out in dollars. After falling [PDF] by 75 percent since 2014, Venezuela achieved 15 percent growth in 2022, the highest in Latin America. However, inflation began to rise again in late 2022, and by 2023, consumer prices were tripling annually, an improvement from hyperinflation but still one of the highest inflation rates in the world.
Politically, international support for interim president Guaidó has weakened, with the Biden administration following the lead of the Venezuelan opposition in revoking recognition of Guaidó as Venezuela’s legitimate leader. Meanwhile, Maduro’s position has somewhat recovered internationally. Western officials have reopened dialogue, and he has benefitted from the election of leaders who are more friendly to him in Mexico, Colombia, and Brazil.
After years of boycotts and challenges to maintaining unity, the opposition has decided to contest the 2024 presidential election. Maria Corina Machado emerged as the most popular opposition figure, though the government barred her from holding public office. Edmundo González Urrutia is now considered the opposition frontrunner. Maduro agreed to hold free and fair elections in 2024 in exchange for oil sanctions relief from the United States. But Maduro’s widespread electoral fraud, including blocking independent election observers and banning popular opposition candidates, led the United States to reimpose sanctions. With Maduro trailing significantly in polls ahead of the vote, the government continues to repress the opposition. It has retaken full control of the National Electoral Council (CNE), meaning elections will not be free or fair. Millions of Venezuelans living abroad—the majority of whom would likely not cast their ballots for Maduro—have also encountered tremendous difficulties in registering to vote due to strict rules imposed by the government.
After a pandemic-induced decline, Venezuelan migration is on the rise again, with over half a million Venezuelans attempting to cross the treacherous Darien Gap to Central America in 2023, more than double the number of crossers in 2022. UNICEF estimates that 90 to 95 percent of those crossing the Darien Gap aim to reach the United States. Inflation slowed to a ten-year low of 59 percent ahead of the July elections, but the rate remains one of the highest in the world.
