Business

Venezuela: Top oil exporter in dire straits

Country turned to Iran due to severe fuel shortage

Updated 5 years ago · Published on 06 Dec 2020 3:20PM

Venezuela: Top oil exporter in dire straits
Venezuela is enduring a deep economic, political and migration crisis. – Pixabay pic, December 6, 2020

CARACAS – Venezuela, once Latin America’s top oil exporter and a bête noire of the United States, is enduring a deep economic, political and migration crisis. 

With a third of its 30 million people going hungry, embattled President Nicolas Maduro still hopes to retake congress from the opposition in today’s elections.

Chavez: Anti-US firebrand

Maduro was propelled to power in 2013 following the death of the hugely popular leftist firebrand Hugo Chavez.

Strongly anti-America, Chavez – first elected president in 1999 – mixed a larger-than-life personality with a man-of-the-people style. His popularity was underpinned by oil-funded social programmes.

Elected to a third term in 2012, he died the following year of cancer.

His were big shoes to fill for Maduro, who quickly lost favour, notably when a 2014 fall in oil prices sparked a major economic crisis for the oil-dependent nation.

The economic woes provoked anti-government riots that raged for months in 2014, with the authorities reacting with force. Forty-three people were killed.

Protests again calling for Maduro to step down lasted for four months in 2017, leaving 125 people dead.

Power struggle

During elections in December 2015, the opposition won control of the National Assembly by a landslide. 

Following an intense fightback from Maduro, in 2018 National Assembly leader Juan Guaido proclaimed himself acting president. 

He was immediately recognized by the US and a host of other countries. But Russia, Cuba, Bolivia, Mexico and Turkey still supported Maduro, who remains in power.

To choke off the Chavist regime, the Trump administration in Washington imposed oil sanctions in April last year. 

But the arrival of Joe Biden at the White House in January 2021 may end a hard-line US pressure policy designed to oust Maduro, analysts said.

All about oil

The Caribbean nation has the largest proven oil reserves in the world.

But lack of investment in infrastructure has meant its crude production has plummeted to less than 400,000 barrels per day from 3.2 million 12 years ago, bringing it to the same level as it was in the 1930s.

Oil accounted for 96% of exports last year and half of state revenue.

Despite its huge reserves, Venezuela recently had to turn to Iran to deal with a severe fuel shortage.

Economy in free fall

Even before the coronavirus, Venezuela’s economy had shrunk by half since 2014. Inflation hit 9,000% last year, and the national currency, the bolivar, has collapsed.

Due to plummeting oil prices, Venezuela suffers from a lack of foreign currency and has fallen into a severe crisis.

As a result, five million Venezuelans have fled shortages of food, medicines, water, fuel and electricity.

Maduro said the crisis is the result of an “economic war” waged by the right and the US to unseat him.

Teaching music

But Venezuela is not just known for its cataclysmic crises. Its internationally acclaimed “El Sistema” (The System), a musical education programme founded by the late musician, politician and economist Antonio Abreu, has been copied in more than 50 countries.

Venezuela also boasts the highest waterfall in the world, the Angel Falls, near-deserted Caribbean islands and dense jungles and the Andes mountains. But with the country in turmoil, tourists are not likely to flock there anytime soon. – AFP, December 6, 2020

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