Written by Nis Hamid and Sahej Verma
Venezuela is a state in turmoil. It is not only undergoing an economic crisis but also a humanitarian one. The recent images of Venezuelans crying at the sight of well-stocked shelves in Colombia shows a tearful decline of the country. Besides the lack of basic commodities such as toilet paper, grains and textiles, Venezuela also lacks resources to provide its citizens safe medical care. Daniel Rodriguez, a neurosurgeon in Caracas, stated “I know colleagues who have ended their operations using the flashlights from their phones. Patients have to bring their own food and their own medicines because the hospital does not have any of it”, in an interview with NPR. The standards of living have been deteriorating: infant mortality is rising and avoidable communicable diseases like tuberculosis and malaria are on the rise too. The International Monetary Fund has forecasted the Venezuelan economy to shrink by 10%, worse than its previous estimate of 8%.
So how did the situation in Venezuela develop to this point? In the early 2000s, Venezuela under its revolutionary leader Hugo Chavez, was the shining star of South America. A decade ago, Venezuela posted an admirable GDP growth rate of 18.3% in 2004, owing to its abundant oil reserves. Chavez used this oil revenue to fund his socialist policies and public programs. The Venezuelan government invested in food subsidies, education, healthcare and low-interest credit for the poor people in the country. However, the dependence on this oil revenue was the downfall of the country according to many experts. Venezuela focused on oil production and ignored almost all other industries. As a result, Venezuela became dependent on imports for all commodities. This is a toxic combination. The situation worsened further when Hugo Chavez died in 2013 and the price oil crashed in 2014, from $104/gallon to $53/gallon over two months. Chavez was succeeded by Nicolas Maduro, who had been Foreign Minister under Chavez.
The Venezuelan people did not take to Maduro like the passionate Chavez. In 2014, Maduro even used military action to repress demonstrations by workers in the state-owned oil refinery PDVSA. Financial mismanagement and high levels of corruption has catapulted inflation to 700% this year, much higher than the earlier estimate of 480%. Another detriment is the sharp increase in organized crime. Recently, Financial Times reported that the gangs in Caracas have recently led to a rise in the rate of kidnapping, theft and drug trafficking. Many gangs, according to the report, are even backed by the government and provided by arms and ammunition. Many experts believe this is because the government wants to maintain control in the rural and urban areas, where the army is very expensive to deploy. These experts also think that if conditions continue to worsen, we could even observe a reduction in democratic freedom in Venezuela.
The solution for this crisis will be excruciating for the people of Venezuela since loans from international organizations such as the World Bank will require implementation of austerity measures that will inflict an even harsher reality on the Venezuelan people. It is up to Maduro’s Cabinet to analyze past actions and their consequences to create an effective plan to this pressing crisis.