A Political, Economic and Humanitarian Crisis: Venezuela Crisis

This study examines the causes and consequences of the political, economic, and humanitarianHumanitarian crisis crisisCrisis that has unfolded and continues to unfold in Venezuela, in recent years, in light of macroeconomic and social indicators, a country with the world’s largest oil reserves. An analysis of the reasons behind the humanitarianHumanitarian crisis crisisCrisis, focusing on the eras of Chávez and Maduro in chronological order, reveals several factors: the concentration of all power and key institutions in one hand by deviating from the principle of separation of powers, corruptionCorruption and nepotism, the Dutch diseaseDutch disease, increasing nationalizations and exclusion of the private sector, populist public spendingPopulist public spending without fiscal disciplineFiscal discipline, price controls and rigid currency policies. During the Chávez era, these negative factors were masked by high oil prices and the resultant abundance of foreign currency. The same approach continued and even intensified during the Maduro era; combined with a sudden drop in oil prices, the establishment of a constituent assembly that disregarded the election-winning national assembly, and international sanctions, these developments rendered the political, economic, and humanitarianHumanitarian crisis crisisCrisis inevitable. An examination of the consequences of the crisis through macroeconomic and social indicators reveals deeper chaos: starting from 2014, Venezuela experienced consistent economic contraction each year, with three-digit inflation from 2015 onwards. By 2019, the country faced a 35% economic contraction, 10,000,000% hyperinflation, a 44.3% unemploymentUnemployment rate, and the migration of 4.6 million citizens (15% of the population), all indicative of a profound state of chaos.