Venezuela is considered the “richest” country on earth, primarily since it has the largest oil reserves in the world. However, the country has been beset by mismanagement, which was exposed when its popular president, Hugo Chavez, died in 2013.
Chavez rose to power in 1998 and once in power, capitalized in surging oil prices. He instituted popular social programs fueled by oil money. But when he died in 2013, Nicolas Maduro, a former bus driver and foreign minister, took power.
Not even three years into his presidency, Maduro was best by protests due to the economic woes of his country. Since Venezuela was so dependent upon the oil boom, the fall in oil prices around the world set the country into an economic tailspin.
As a result, the Venezuelans became subject to food shortages and medicine shortages. That led to desperation which in turn led to violence. Protests soon became common, but Maduro soon sought to crush dissent and assume more power.
On Monday, March 27, Maduro announced that he was again adjusting Venezuela’s exchange rate, but experts warned that would have not real effect. Jason Marczak, director of the Latin America Economic Growth Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center, compared the economic situation in Venezuela to “sub-Saharan conditions.”
Venezuela’s money problems exist on multiple fronts:
There is a high inflation rate. It reached 800% in 2016 and is expected to more than double this year. Last year, Maduro ordered the 100 bolivar bank note to be taken out of circulation and made the 20,000 bank note the highest form of national currency.
According to the International Monetary Fund, Venezuela is expected to have a 1,660% rise in inflation for 2017. There is an expected 2,880% rise in inflation next year.
Oil prices are two low to sustain the country. Venezuela currently owes China oil. Venezuela owes $7.2 billion in outstanding debt payments.
The foreign exchange rates for the bolivar are too low. Under the Dicom rate, one dollar is worth 710 Bolivars. A dollar is worth 10 Bolivars under Dipro rate. But on the black market, a dollar is worth 3,000 bolivars.
Right now, people are buying food and other supplies via the black market.
In a 2016 article from The Guardian, the Venezuelan food shortage was shown through the eyes of Guarenas residents. Then, the country was suffering from food shorttages that had lasted close to 3 years. And mention of food would move people to stand in lines that wrapped around blocks.
The hunger has led to desperation and high crime rates in cities, especially in Caracas. The city is cited as the most dangerous in the world.
On Friday, March 24, Venzuelan President Nicolas Maduro asked the United Nations to provide his country with medical supplies. The country is unable to provide things like anti-inflammatory drugs and chemotherapy medication. According to estimates from Venezuelan Pharmaceuticals Federation, the country is unable to provide 85% of the drugs needed for patients.
The Making of a Dictatorship
In late March, Venezuela’s Supreme Court stripped power from the National Assembly. The ruling mean the court would take over the assembly’s powers. And since the court was stocked with loyalists to the government of President Nicolas Maduro, the ruling effectively gave power to the ruling United Social Party.
Opposition politicians called the government of Nicolas Maduro a dictatorship. National Assembly President Julio Borges decried the move as a coup d’état.
The National Assembly had an opposition majority since January 2016. But the Supreme Court invalidated the elections and held the legislative body in contempt for swearing in three legislators from Amazonas state. Those legislators were accused of buying votes and Maduro used the court to block legislative reforms.
In the meantime, the members of the National Assembly said that any moves the government made, like selling stocks in the government-held oil properties, were invalid.
The ruling elicited a response from countries in the Americas. Peru outright broke diplomatic ties with Venezuela, marked by the removal of Mariano López Chávarry, the ambassador to Caracas. Peruvian President Pedro Pablo Kuczynski called the ruling “an arbitrary measure that disrupts the rule of law and constitutes a breakup of the constitutional and democratic order.” The Organization of American States discussed the matter on March 28, but stopped short of reaching an agreement on sanctions and the release of political prisoners.
A Turning Point
By April First, the Venezuelan Supreme Court backtracked on its decision to strip the Congress of its legislative powers.
There are a few reasons cited as the impetus for this change. Once might have been the democratic election that occurred in Ecuador. Yet what might have pushed the court was the defection from Luisa Ortega. She was the attorney general loyal to President Nicolas Maduro but she felt the decision by the court was unconstitutional.
On Tuesday, April 11, President Nicolas Maduro participated in a parade to mark the bicentennial of the date Venezuela earned its independence from Spain. But the moment he appeared, he was being pelted with rotten eggs and trash.
The next day, a group of men tried to attack an archbishop in Caracas’ Santa Teresa Basilica. The congregation was able to stop them and the men were arrested.
Since the month began, it was beset by violence. Not only were protesters attacking authorities, some by disarming them and throwing makeshift Molotov cocktails, but the authorities have been ordered to put down protests, even those that were peaceful. Some of the officers have shot, beaten, and dropped tear gas on unarmed protesters.
Other incidents have been reported due to the overall discord in the country. People have fought for food and there were riots just last year after Maduro ordered the 100 bolivar note to be taken out of circulation.
Brodzinsky, Sibylla. “‘We are like a bomb’: food riots show Venezuela crisis has gone beyond politics.” The Guardian. 20 May 2016. Web. <https://www.theguardian.com/world/2016/may/20/venezuela-breaking-point-food-shortages-protests-maduro>.
Cawthorne, Andrew and Oré, Diego. “Venezuela’s Maduro decried as ‘dictator’ after Congress annulled.” Reuters. 31 Mar 2017. Web. <http://www.reuters.com/article/us-venezuela-politics-idUSKBN17122M>.
Charner, Flora. “Violence at parade highlights escalating Venezuela protests.” CNN. 13 Apr 2017. Web. <http://www.cnn.com/2017/04/12/americas/venezuela-protests-escalate-san-felix-bicentennial/>.
Imbert, Fred. “Venezuela announces a new exchange rate — but this one probably won’t help, either.” <http://www.cnbc.com/2017/03/28/venezuelan-just-announced-a-new-currency-rate–and-nobody-cares.html>.
Pestano, Andrew V. ‘33 detained without bail over recent violence, looting, riots in Venezuela. UPI. 23 Dec 2016. Web. <http://www.upi.com/Top_News/World-News/2016/12/23/233-detained-without-bail-over-recent-violence-looting-riots-in-Venezuela/5871482507159/>.
Phillips, Matt. “Venezuela is already the world’s worst economy — and it’s going to get much worse.” Vice. 20 Apr 2017. Web. <https://news.vice.com/story/venezuela-is-already-the-worlds-worst-economy-and-its-going-to-get-much-worse>.
Romo, Rafael. “Venezuela’s high court dissolves National Assembly.” CNN. 30 Mar 2017. Web. <http://www.cnn.com/2017/03/30/americas/venezuela-dissolves-national-assembly/index.html>.
“Venezuela: Supreme court backtracks on powers bid.” BBC News. 1 Apr 2017. Web. <http://www.bbc.com/news/world-latin-america-39468045>.