At the start of 2014, Venezuela’s GDP stood at $371.34 billion, with nearly half of that coming from oil (it accounts for almost 100% of exports). But after a year-high of $105.54 in June, crude plummeted by more than 50% to $48.51 by the end of the year. Oil has held steady in the $50-a-barrel range since, allowing the country’s socialist policies to materialize without the guise of high crude–and economic disaster has ensued.
Just this year, Venezuela has faced shortages in toilet paper, diapers and milk (and more) forcing more than 6,000 people to cross the border in Colombia to purchase necessities. The country had to ration its electricity use because of severe power shortages. It also could no longer afford to print its own money. Come 2016, the IMF forecasts Venezuela’s inflation rate to exceed 1,600%.
A Bolivarian Republic, Venezuela turned to socialism in 1998 when Hugo Chavez was elected president after two unsuccessful coup attempts to oust his predecessor. The new regime brought not only a new constitution, but higher oil prices as well. The following year Chavez passed laws redistributing land and wealth, which he followed in 2005 with a land reform decree that would eliminate larger estates to the benefit of the poor in rural areas.
In 2007 the government took control of important oil projects in the Orinoco Delta and later expropriated two U.S. oil companies, furthering Chavez’s nationalization plans.
Nationalization continued with the Bank of Venezuela and household fuels distributors and petrol stations. In 2011, with a 27% annual inflation rate, the Venezuelan government introduced price controls of some basic goods (they would extend to other products in the following years).
By the time of Chavez’s death in 2013, inflation had grown to 50% and rose to 63.4% in the following year. Towards the end of 2014, the country entered into a recession.
Present-day Venezuela is facing a humanitarian crisis and Nicolas Maduro, Chavez’s hand-picked successor, and his socialist regime is rightly shouldering the blame. The country’s emphasis on oil exports, price controls and a heavily-controlled economy are all features found in other current and former socialist countries–features that have contributed to the demise of whole economies, or brought them close to it.
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