Venezuela is a South American country plunged into turmoil because of their inefficient economic system. It borders a few other countries, namely Colombia, Brazil, and Guyana (with whom it has an unresolved border dispute; more on that below). It also shares maritime boundaries with a few Caribbean island nations to the north.
It can be hard to get reliable news from Venezuela thanks to their state-sponsored media. Furthermore, Venezuela is a "communist" country, and is thus unpopular among Latin expats.
As a result of Chávez's policies, Venezuela reached a 98% literacy rate, which is slightly above the average of Latin America. Life expectancy is one of the lowest of the continent, along with the poorest countries in the region, like Bolivia and Haiti and, despite official propaganda, the country is also the third most violent in the region. When oil prices started to fall in around 2014, the Venezuelan economy began a serious decline, with inflation rates over 100,000%, a GDP drop of 75% and three in four living in extreme poverty. According to apologists, this happened because the price of oil tanked. However, other coutries that rely so much on this single commodity didn't face such a serious crisis since 2013.
Venezuela is a huge exporter of petroleum. The Venezuelan government owns the oil company, PDVSA, which in turn owns Citgo. When you buy gas from Citgo, you're filling up on socialism! (Though since 2019 due to U.S. sanctions, PDVSA does not economically benefit from Citgo.) However, since the alternatives though are the likes of ExxonMobil, BPAmocoArco, ConocoPhillips, MarathonAshland, UltramarDiamondShamrock, FinaTotal, and ChevronTexaco, maybe Citgo is not too awful a choice.
Venezuela is quickly running out of money and it's unlikely that the oil prices will ever go back up. At the same time, inflation is growing rapidly (70% a year), though the government forcibly says that 10 Bolívares Fuertes (their currency) is equal to $1 USD.
They basically have no options left, since their entire economy depends on oil. Pretty bad timing since their old refineries and tankers are breaking down, and they can't afford to maintain them. They can't diversify (despite Chávez's big talk) since they lack the facilities to refine their own crude, let alone manufacture it into oil-based products. Worse yet, Venezuela's exports have become even more dependent on oil under Chávez than they were before and what little agriculture there was before is now so definitely wrecked, that Venezuela is a net importer (sometimes of nearly 100%) in most basic foodstuffs. The millions spent on diesel and natural gas power plants have curiously gone missing. Unless oil somehow bounces back up to over $100, and the whole world forgets fracking exists, Venezuela is headed down.
Venezuela is what happens when people elect charming incompetents who then refuse to leave when asked. In fact, their Finance Minister denies the very concept of inflation. And their Environmental Minister denies that zoo animals dying is related to food shortages. They're like Wile E. Coyote having run off the edge of a cliff. As soon as they admit to the facts, everything will start falling so it's better to just believe the lie.
Officially recognized Monopoly money
Through the regulated institutions, you can only get 10 bolívar per dollar, but on the black market it's more like
4,000 40,000 800,000. Thus people will pay with USD, or exchange via the black market.
At the same time the government is mismanaging the economy (for ideological reasons), the exchange rate is being used as a money-laundering scheme for drug traffickers and the nation's elites. The government gets money by selling oil. They turn around and give the money to importers in exchange for Bolívares. The importers were supposed to take that money and import goods, but instead, they pocketed no less than $122 Billion of it. That's just what we know of; we don't know where the rest went.
Now, let's say you're an importer of medicine. You go to the government and say you want to import antibiotics at $1USD per unit. The government agrees and gives you $100,000USD in exchange for anywhere between 400,000 and 1,000,000 bolívares. That's great, except you're actually buying the antibiotics for $0.10 per unit. So you only spend $10,000 on antibiotics but tell the government that you spent it all. The other $90,000 is offloaded on the black market at 2000 bolívares per dollar or more. Rinse and repeat. Congratulations, you now have zillions of bolívares
fuentes soberanos and have helped contribute to the hyperinflation of Venezuela.
I drink your milkshake
The army has shown that, if they feel like it, they'll "expropriate" private property. Now, while it can seem revolutionary and fun, the downside is that nobody is going to invest any serious amount of money in a new industry, because they can't be certain the government won't hoover it up.
Just as Argentina claims the Falkland Islands as theirs, Venezuela also claims two thirds of neighbouring country to the east Guyana, what Venezuela calls Guayana Esequiba (after the Esequibo River, whose basin lies largely there).
Of course, just like in Argentina, the Venezuelan government waves the Guayana Esequiba flag whenever there's a problem at home so that they can distract the people.
- "Literacy rate, adult total (% of people ages 15 and above) | Data".
- "Life expectancy at birth, total (years) - Latin America & Caribbean | Data".
- "Intentional homicides (per 100,000 people) - Latin America & Caribbean | Data".
- Wells, Miriam, "Venezuela Government Admits Keeping Crime Figures Secret",Insight Crime 13 July 2013.
- See the Wikipedia article on Hyperinflation in Venezuela § Inflation rate.
- "Has Venezuela’s economy bottomed out?". Financial Times. 2021-05-05.
- "Venezuela crisis: Three in four in extreme poverty, study says" (in en-GB). BBC News. 2021-09-30.
- Citgo's profits propped up Venezuelan leaders--until now Mufson, Stephen. Washington Post. January 30, 2019
- "Venezuela oil refineries face operating woes, PDVSA launches tenders", Reuters (26 April 2016, 5:42pm EDT).
- Gramer, Robbie, "Venezuela Is So Broke It Can’t Even Export Oil", Foreign Policy (26 January 2017, 3:59 pm).
- "Chinese bullet train in Venezuela stalls as alliance derails", Business Standard (14 May 2016, last Updated 12:57 IST).
- Coggin, John, "Venezuela’s Oil Sword", International Policy Digest 26 May 2011.
- U.S. v. Rincon, Shiera Indictment
- Nasralla, Shala, "Venezuela finds new front in attack on U.S. fracking: water", Reuters (3 June 2015, 11:04am EDT).
- Ellsworth, Bryan, "For economy czar of crisis-hit Venezuela, inflation 'does not exist'", Reuters (7 January 2016, 1:32pm EST).
- Kai, Daniel, "Venezuela denies zoo animals starving, says one happy family", Reuters (1 August 2016, 10:01pm EDT).
- "Venezuela currency tanks 60 percent in month on black market", Reuters (28 November 2016, 10:42am EST).
- Leff, Gary, "Mystery Solved: Flights Out of Venezuela Are Full — But Nobody Is Flying", View From the Wing 24 September 2013.
- Alvarado, Francisco,"How the Feds Blew a Case Against an Alleged South American Drug Money Launderer", Vice 14 January 2016, 9:30am.
- Campbell, Alexia, "Drug money laundered in South Florida fuels U.S.-Venezuela trade", Sun-Sentinel 18 December 2011.
- William Neuman and Patricia Torres, "Venezuela’s Economy Suffers as Import Schemes Siphon Billions", NYT 5 May 2015.
- "Venezuelan Private Sector Siphoned Off $259B in Public Funds", TeleSUR 19 June 2016.
- Chinea, Eyanir, "Venezuela ex-ministers seek probe into $300 billion in lost oil revenue", Reuters (2 February 2016, 1:31pm EST.
- "Venezuela Investigates 7,000 Companies for Currency Scams", TeleSUR 14 April 2015.
- The "Bolivar Soberano" is the third currency they've had to introduce due to rampant inflation.
- Lohmann, Dietrich, "Venezuela's Health Care Crisis", Human Rights Watch ()>
- Buitrago, Daisy, "Chavez orders army to seize Venezuela rice mills", (28 February 2009, 3:28pm EST).
- Sanchez, Fabiola, "Venezuela's farm seizures show little results", San Diego Union-Tribune via Associated Press (24 May 2009, 8:58 am).
- Cawthorne, Andrew, "Venezuela takes over brewer's land, sugar mills", Reuters (28 April 2010, 4:52pm EDT).
- Crooks, Nathan, "Venezuela Expanding Military Influence Over Oil and Mining", Bloomberg (12 February 2016, 7:11 AM PST).
- Expropriate it!"
- "The Sickly Stench of Corruption", Economist via The Americas 30 March 2006.
- Editorial board, "Venezuela's Military Needs to Get Out of Business", Bloomberg (6 May 2016, 10:42 AM EDT).