Venezuela: Rich in Oil Yet Struggling with Economic Crisis
Despite possessing one of the largest natural resource reserves in the world, Venezuela is currently enduring a severe economic and humanitarian crisis, among the worst in Latin American history.
The country, which holds the world's largest proven oil reserves (over 300 billion barrels), is grappling with rampant inflation, a massive exodus of its population, and a near-total collapse of basic services.
The lingering question is: how can such immense wealth fail to rescue the nation?
* Oil: A Burden Rather Than a Blessing
For decades, Venezuela's economy has been almost entirely reliant on oil, with oil revenues accounting for over 90% of its exports.
This heavy dependence has left Venezuela vulnerable to global energy price fluctuations.
When oil prices plummeted in 2014, the country suffered a significant blow, losing its primary source of revenue, while its public institutions, particularly the state oil company "PDVSA," were weakened by decades of corruption and mismanagement.
In the face of this crisis, successive governments, notably those of Hugo Chávez and Nicolás Maduro, have clung to an oil-based economic model to fund social programs and provide widespread support, a system that collapsed as international conditions shifted.
* U.S. Sanctions Worsen the Crisis
Since 2017, the United States and its allies have imposed strict sanctions on the Venezuelan government and its oil sector.
These sanctions have restricted the country's ability to sell oil freely, reduced foreign investment, and hindered the national company from obtaining essential spare parts and technology for production.
However, some economists argue that the crisis began before the sanctions, due to a collapse in productive structures caused by corruption, the politicization of the oil sector, the appointment of political allies to key technical positions, and a lack of maintenance and investment.
* Mutual Accusations
The opposition blames Maduro's government for the economic collapse, labeling the regime as "dictatorial" and reliant on security forces to suppress protests, while the government accuses the opposition of attempting to overthrow it with U.S. support.
The opposition points to widespread corruption within the national oil company and mismanagement that has led to a drop in production from over 3 million barrels per day in 1998 to fewer than 800,000 today, alongside electricity and water crises stemming from neglect and uncontrolled money printing, which has resulted in hyperinflation.
Conversely, the government claims the opposition is using sanctions to shift blame for external measures aimed at "suffocating the country economically."
* Five Key Factors Behind the Crisis
Experts identify five main factors that have contributed to Venezuela's crisis:
1 _ Total Dependence on Oil: The lack of robust industries or economic alternatives has created a situation known as the "resource curse."
2 _ Lack of Professional Management: Reduced investment in equipment and technology, coupled with the replacement of specialists with political allies.
3 _ Corruption and Mismanagement: Losses in the oil sector are estimated to be in the billions of dollars annually.
4 _ International Sanctions: These have restricted oil exports and limited access to global markets, disrupting technical partnerships.
5 _ Emigration of Skilled Workers: Over 7 million Venezuelans have left the country, including engineers and technicians essential for the continuity of the oil industry.
As a result, there are severe shortages of food and medicine, frequent electricity and water outages, and increased emigration. The minimum wage is insufficient to purchase a kilogram of meat, while most of the population relies on remittances from abroad.
* Is There Hope for the Future?
The answer is complex but not impossible.
Experts believe Venezuela needs massive investments to revitalize the oil sector, potentially reaching $200 billion, along with political openness to ease sanctions and restore global business relations, as well as economic diversification through agriculture, industry, and tourism, alongside structural reforms and anti-corruption measures.
Until then, Venezuela remains a striking example of a nation with vast wealth facing one of the most intricate contemporary crises due to a lack of sustainable economic and political policies.
