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.
Predictably, opposition to the Maduro government mounted. In a 2015 election, opposition forces won a majority of seats in the National Assembly. The government responded by consolidating power: It stacked the Supreme Court to prevent the legislature from impeaching the president, and the court then attempted to dissolve the assembly, a move that triggered months of protests and caused over 120 deaths.
Last month, the Maduro government held a vote for a new legislature that will replace the previous body and write a new constitution that should eliminate any opposition to Maduro. The national election commission reported more than 8 million votes cast, a claim that was dismissed by the opposition — independent surveys indicate the vote may have been exaggerated by as much as one half — and virtually the rest of the world. The new 545-member “Constituent Assembly” has already convened to begin the process of rewriting Venezuela’s basic government framework and many laws. Sporadic and anemic protests against the assembly suggest an opposition that is running out of energy.
There is no reason to believe that another Maduro government will have any more legitimacy nor any greater acuity in handling problems that ail Venezuela, once Latin America’s richest country. In addition to the drop in GDP, the bolivar, Venezuela’s currency, has plummeted: It lost 45 percent of its value in a week while a dollar earned twice as much on the black market. In 2010, the bolivar-dollar exchange rate was 8:1. On the black market today, the rate is now 8,000:1. Some economists fear 2,000 percent inflation next year. Meanwhile, the average income of a median worker has fallen 75 percent in the last five years, and is now just $36 a month. Unemployment could reach 25 percent this year.
The impact of that decline is stunning: According to one study, 74 percent of Venezuelans have involuntarily lost an average of 8.6 kg in weight. Infant and maternal health is worsening: The number of women who died in childbirth last year rose 76 percent over 2015 and infant mortality increased 30 percent over the year before. There was also a 76 percent jump in reported cases of malaria. Two million Venezuelans — out of a population of 30 million — have left the country since 1999. The situation will surely worsen. The country has just $9.9 billion in foreign currency reserves and must make nearly $5 billion in bond payment for the remainder of this year.
The world’s capacity to influence events in Venezuela is limited. Most countries, along with groups like the Organization of American States, have denounced the election, the convening of the new assembly and the practices of the Maduro government. The U.S. has imposed sanctions and is likely to widen them.
The only hope for change is for the Maduro government to be truly isolated. That requires an end from support by governments in Cuba, Nicaragua and Russia. That is unlikely. As a result, the situation will worsen and the suffering will intensify.