The Crisis in South America: Venezuela

Jacob Houston

Venezuela, a country located in northern South America, near the Atlantic coast, was one of the richest places in the entire continent due to immense natural resources. In addition, it was one of the World’s fastest growing economies; but starting in the mid-2010s, everything that had made Venezuela great began to crumble.

In 1922, oil was found in the Maracaibo Basin in western Venezuela, producing 10,000 barrels per day. Consequently, more than 100 foreign oil companies settled in Venezuela, and the country became the second largest producer in the world. Over the years 1930-1973, Venezuela earns approximately 34 billion dollars off of the petroleum trade, and in 1973, due to the Organization of the Petroleum Exporting Countries (OPEC) embargo against the United States, oil prices drastically increase, causing Venezuela’s per capita GDP to boom for the rest of the decade and into the 1980s.

Due to a glut in the late 1980s, the Venezuelan government under Carlos Andres Perez struggles to deal with $33 billion in foreign debt, and, as a result, the country is set on a downward path, with protests erupting into the streets with the rise in consumer good prices and Hugo Chavez, a populist leader, is elected president in 1998.

The Chavez administration increased government spending on oil exports, causing the entirety of the Venezuelan economy to hang on the thread of oil exports and a consistent supply of resources. However, the Chavez administration also hires many services foreign doctors, teachers, and universities in exchange for subsidized oil. At the same time, however, Chavez neglected spending money on renovating and repairing oil facilities, and production steadily declined.

Nicolas Maduro was elected leader of Venezuela (by the narrow margin of 1.6 national votes) after Chavez died of cancer in 2013, and was faced with the decline of oil prices. Maduro, however, focused on silencing any opposition to his administration, and consolidated power by the abilities given to him by the Venezuelan National Assembly to rule by decree. As a result, the Venezuelan economy, gone unchecked, plummeted.

Maduro allows for the arrests of foreign journalists and the shutting down of news websites that denounce his administration. In 2017, The Venezuelan Supreme Court (filled with Maduro loyalists), dissolved the National Assembly, giving even more power to Maduro. In the resulting presidential election, Maduro won by an overwhelming margin (which, according to the rest of the western hemisphere, “lacked legitimacy”).

As a response to this, opposition leader Juan Guaido, former head of the National Assembly, uses the Venezuelan constitution to declare himself the interim president of Venezuela, which has put a power struggle into play that has lasted to this day.