Can Venezuela move beyond crisis?

What is the current situation?

Venezuela is a “mono-product economy,” relying on oil and gas for 95 percent of its export revenue. The crash in the price of oil – from more than $100 per barrel in 2014 to a low of about $30 per barrel earlier this year – has thus deeply affected the country’s ability to finance imports.

This led to the world’s highest inflation rate in 2015 – about 275 percent – and the International Monetary Fund is predicting it will surpass 1,600 percent next year. For those living in Venezuela, that means a life dominated by “standing in ... lines, waiting for basic commodities – if they’re even there,” says Eric Farnsworth, vice president of the Council of the Americas, who is based in Washington. The country is suffering chronic shortages of food and medicine – something that is also the result of past policies that discouraged production.

The situation began to deteriorate in 2013, when then-President Hugo Chávez died, leaving in charge his chosen successor, Nicolás Maduro. Since then, “the population has been living in a permanent state of crisis,” says Michael McCarthy, a fellow at American University in Washington and an international associate at the Caracas-based polling firm Venebarómetro.

Polls indicate that between 70 and 80 percent of the population wants a change in government. The march in Caracas on Sept. 1 was the most successful protest to date, yet it appeared to have little effect on the political situation.

How did it reach this point? 

Most analysts agree that oil prices alone are not to blame. Instead, it is the “predictable result of failed economic policies,” says David Smilde, an expert on Venezuela at the Washington Office on Latin America, a human rights advocacy group.

Over the course of more than a decade in power, Mr. Chávez implemented a socialist “Bolivarian Revolution,” bending the private sector to the government’s will. With little effort made to diversify from oil, reliance on importing many basic commodities became cemented into the system. 

Although there are international groups eager to step in, it has proved difficult for foreign aid to find its way into Venezuela. Without the government’s official declaration of an emergency, aid from organizations such as the United Nations cannot be dispensed. As Dr. Smilde says, welcoming aid would “undermine one of the central tenets of their political ideology” – the hardening of the country’s sovereignty.

How has the current government lasted so long?

In light of Mr. Maduro’s apparent unpopularity, as well as the economic hardships facing Venezuelans, some wonder at the government’s longevity: “Chavismo,” the brand of socialism ushered in under Chávez, has been in place since 1999. 

Chávez himself was charismatic, and his programs were popular with much of the country. But that may have masked the nature of his rule: “a dictatorship ... a modern, 21st-century one, but a dictatorship nonetheless,” says Carlos Blanco, a professor of international relations at Boston University and formerly Venezuela’s minister for Reform of the State.

When Maduro took the reins, he had a year or so of implicit support as Chávez’s successor. But then things began to sour.

The opposition – which has struggled with internal divisions but in recent years has come together more – has found common cause in attempting to precipitate a recall referendum. But its efforts have been frustrated by the National Electoral Council, which has delayed the process at every turn. The referendum would have the power to remove Maduro from office, but such a vote would trigger elections only if it is held by Jan. 10, 2017. That date heralds the final two years of his term. After that, if he were voted out, regulations state he would simply be replaced by his vice president, thus perpetuating the same party’s rule.

How can the country move forward?

“International engagement is the only way a sub-optimal outcome can be avoided in Venezuela,” Smilde says. So far there have been few such efforts. The United States has targeted Venezuelan officials with sanctions, but that has been blamed for supplying Maduro with a more committed and loyal core. The US has been unwilling to do more unilaterally. Also, Venezuela’s neighbors have shown little appetite for intervention, but that may change with a shifting political landscape in Argentina, Brazil, and Peru. 

One body, however, has regularly entered the fray: the Organization of American States. In particular, Secretary-General Luis Almagro has been vocal, saying in June, “The situation facing Venezuela today is the direct result of the actions of those currently in power.”

Still, the country holds much promise: It has the world’s largest proven oil reserves, and its population is well educated. With these resources, and a shift in policies, its prospects could change, although probably not overnight.