Venezuela continues to slide deeper and deeper into crisis. Rather than take constructive action to remedy a worsening humanitarian situation, President Nicolas Maduro has instead instituted a power grab, convening a constitutional assembly to eliminate the vestiges of opposition to his rule. This is the last desperate act of a dictator and will plunge a troubled country further into chaos and dysfunction.
The Venezuelan economy has imploded in recent years, with the International Monetary Fund reporting that GDP this year will be 35 percent below that of 2013, a drop of 40 percent in per capita terms. This is a greater contraction than that experienced by Russia at the end of the Cold War and the United States during the Great Depression of the 1930s. Only countries ravaged by war, such as Libya, Rwanda and South Sudan, have fared worse.
The decline reflects the free fall in the price of oil, the mainstay of the Venezuelan economy, but mismanagement has contributed as well. The government has used its oil revenues for profligate social spending — needed to some extent, but used primarily for the purpose of waging class war. Economic managers ignored maintenance to keep the oil industry in business; not surprisingly oil production fell 17 percent between 2013 and 2017. Attempts to impose socialist economic practices antagonized businesses and their reaction gave the government excuse to double down on policies that strangled growth. When oil prices collapsed, the government drained cash reserves to pay debt rather than import goods or cut spending. Inflation spiraled out of control and goods vanished from shelves.