The Story of Venezuela's Poisoned Chalice
At the heart of Venezuela’s problems lay its most precious resource: oil. Understanding Venezuela’s issues necessitates examining the nation’s history, going back to the Maracaibo Basin. It was there that Venezuela discovered oil, inflicting upon them the Dutch Resource Curse. This curse, present in Venezuela and other Latin American countries, manifests when a country finds a resource before forming a stable government. When this happens, foreign investment causes the domestic currency to appreciate, and the country becomes entirely reliant on commodity exports. The price of oil became Venezuela’s ride-or-die, setting the stage for decades.
In the 70s, oil prices skyrocketed, and Venezuela’s newfound profits and faulty government led to massive corruption. Their government wasn’t equipped to deal with oil prices crashing a decade later, creating a massive economic crisis and hyperinflation. From there, it only got worse. China, looking to take Venezuela’s oil, entered. A stream of Chinese loans to Venezuela exacerbated corruption, decreased transparency, and led to a debt cycle. Due to a combination of low oil prices and a disastrous government, massive malnutrition plagued the country and millions fled. Even then, when it seemed like Venezuela was at rock-bottom, the Dutch Resource Curse struck again. In a failed attempt to oust Venezuela’s current leader, Maduro, the US imposed sanctions, imploding Venezuela’s oil production, and subsequently, their economy. Currently, Venezuela is attempting to cope with decades of mismanagement through vast government restructuring and oil-for-debt deals, selling out to foreign powers. Moreover, even though it’s not a complete replacement, they’re avoiding US sanctions and staying afloat by sending oil to China through third-party pit-stops.
However, they can’t survive forever; the key to Venezuela’s revival is government restructuring. Such plans will inevitably involve Guaidó and his capitalist ideas, for instance, Plan País (a program that revitalizes Venezuela’s economy through humanitarian aid, government subsidies, and economic policy). An overhaul is necessary to end mismanagement and stop US sanctions, but such a prospect is daunting. Maduro manages to cling onto power, and he shows no signs of letting go, despite international pressure and worsening conditions. For Venezuela’s future, Chinese presence and loans also pose a significant concern. Even though foreign intervention has helped in places such as Europe and the Koreas, in Venezuela, Chinese loans led to an increase in corruption and mismanaged debt.
When examining Venezuela’s future, it’s necessary to look toward their government and potential changes. Maduro claims he’s beginning to privatize and diversify the economy. Therefore, before making predictions, it’s imperative to see whether he actually follows through on these promises or if it’s merely a farce to appeal to the international community. Additionally, analyzing the extent of foreign influence in Venezuela will help determine if these countries will increase political mismanagement or provide capitalist change. Even though Venezuela is currently surviving with China’s help, the future will continue to look extremely bleak unless Maduro somehow decides to step down. Until that happens, the nation is poised for a decades-long battle with humanitarian crises and a struggle against foreign takeover.
