Venezuela’s economic and political crisis originated from decades of internal mismanagement, oil dependency, and authoritarian policies under Hugo Chávez and Nicolás Maduro, long before significant U.S. sanctions intensified in 2019. These roots trace back to policy decisions that eroded the economy despite vast oil reserves.
Chávez’s Rise and Policies
Hugo Chávez won the presidency in 1998 amid public discontent with traditional parties, promising to redistribute oil wealth through Bolivarian missions that expanded social services. These programs reduced poverty initially but relied heavily on high oil prices, funding massive spending without economic diversification. Nationalisation of PDVSA in 1976 had already centralised oil control, but Chávez fired thousands of expert workers during a 2002-2003 strike, crippling production expertise and leading to a steady decline in output.
Oil Dependency Exposed
Venezuela’s economy became a classic petrostate, with oil financing up to two-thirds of government budgets and exports dominating over 90% by the 1930s. Price controls, currency manipulation, and excessive spending during the 2000s oil boom created unsustainable distortions, fostering inflation and shortages by 2010 when Chávez declared an “economic war.” Oil production peaked in the late 1990s but halved by the 2010s due to underinvestment and poor maintenance.
Maduro’s Continuation and Collapse
Nicolás Maduro assumed power in 2013, inheriting high inflation and shortages, which he attributed to capitalist sabotage rather than policy failures. The recession hit in 2014, hyperinflation reached 800% by 2016, and GDP shrank dramatically as oil prices fell and production dropped further. Price controls worsened food and medicine shortages, with 75% of the population losing significant weight by 2017 amid widespread poverty.
Political Turmoil and Authoritarianism
Chávez expanded presidential powers, ended term limits, controlled the judiciary, and nationalised businesses, paving the way for authoritarianism. Under Maduro, opposition victories in 2015 led to a constitutional crisis in 2017, with a loyalist assembly sidelining the National Assembly and rigged 2018 elections. Protests faced violent repression, including extrajudicial killings, eroding democracy before major U.S. oil sanctions in 2019. Corruption and military control over food distribution fueled black markets and inequality
