Venezuela on the Edge of Bankruptcy: Prospects for Political Change

Abstract

Venezuela, a South American petro-giant and the home of the Bolivarian socialist experiment, is in the grip of a grave crisis and an unprecedented political and institutional conflict, which has led to profound economic and social paralysis and a food and health emergency. As of 2019, Venezuela has the highest rate of inflation in the world and is struggling with an economic and social crisis characterised by violence and extreme poverty. In a paradoxical political situation, despite the crisis, the incumbent president Nicolas Maduro refuses to relinquish power while a new figure, Juan Guaidò, virtually unknown a year ago, having proclaimed himself president in January 2019, has been recognised politically by 54 nations, and is seeking a way out of the country’s ills. In the first quarter of 2019 alone in Venezuela, 96% of companies had to drastically reduce their staffing levels and commercial activities, while the average salary of a worker now corresponds to about four euros a month. In addition, in the last twenty years, i.e. since the arrival in power of the previous president, Hugo Chavez, four fifths of Venezuelan companies have closed down or ceased operating after being nationalised. Lastly, 84% of those who once had employment have now lost it. What the solutions to this situation may consist of is hard to say. This brief paper will look at the series of social and cultural obstacles that hamper any form political change. Cultural and social changes that can help resolve the current political and institutional conflict as soon as possible are required. The country has the largest oil reserves in the world, put at 296.5 billion barrels, and the fourth largest natural gas reserves in the world. In addition, it has the third largest reserves of fresh water on the planet and even possesses huge mineral resources, including gold and diamonds. Despite the variety of resources available, the Venezuelan economy is weighed down by the socialist policies of the government which has neither opened up to more liberal economic policies nor diversified economic investment, thus consolidating the country’s complete dependence on petroleum exports, which now account for 96% of the income from exports and 50% of state revenues.