Skip to main content
Forecast and analysis from the brightest new minds
Monthly Archives: February 2019

A Brief Background on the Venezuela Crisis: A Country Dependent on Oil

In the late 1970s, Venezuela thrived economically thanks to high oil prices, which allowed it to be one of the most prosperous countries in South America. Then came an oil crisis in the 1980s that significantly raised inflation. The economy continued to suffer throughout the 1990s. In 1992, Major Hugo Chavez attempted to stage a coup d’état which ultimately failed.In 1998, he was elected president after promising to reform the government and answer the needs of the people. One of his first acts as President of Venezuela was to rewrite the Venezuelan Constitution, which consolidated power in the Executive Office. The early 2000s saw Venezuela receiving vast amounts of equity as oil prices soared once again. Hugo Chavez took some of the wealth, and the other part went into paying foreign debts; however, not much went into infrastructure or the people. By March 2013, President Hugo Chavez was nearing death from cancer. One of his last appearances as president was speaking directly to the Venezuelan people to ask them to elect his newly appointed Vice President and former Foreign Minister, Nicolas Maduro. Nicolas Maduro was elected in April 2013 by an extremely narrow margin. Since his election, Maduro has had a difficult time. The economic situation his government inherited has been in a slow decline since 2010 when oil prices began to drop. Almost 90% of Venezuela’s foreign income is from oil. Even though it boasts the biggest reserve of oil in the world, in recent years it has seen a decline. One reason for this decline was the nationalization of the oil industry. He did not improve machinery, infrastructure, or employee training and conditions. In January 2016, Venezuela produced 2.3 million barrels a day, which dropped to 1.6 million barrels a day in January 2018. Production of oil continues to drop and as a result, almost 3 million Venezuelans have fled the country for lack of employment. In 2016, the country had 70 operating oil rigs which has now dropped to only 43 operating rigs. In 2018 alone, as the nation was hurting for funds, Maduro reportedly sold 40% of the nation’s gold reserves. He also implemented a cryptocurrency called petro which is tied to the Venezuelan oil industry. Petro was introduced to spur investment into the country’s oil reserves and supplement its national currency.

The country’s economy has suffered on many levels due to this drop in oil production and global oil prices. Inflation has increased and is set to reach 10 million percent in 2019. Poverty rates have followed the inflation rates rising to 87% and staying around 75% to 85%. Violence also increased from 53 homicides per 100,000 in 2012 to 73 per 100,000 in 2017. The quality of medical care has diminished as hospitals experience electricity shortages, do not provide food for patients, and lack proper medical supplies. The country is short 85% of its necessary medicine, and it has a 90% deficit of other medical supplies. 13,000 doctors have left in the past four years. Infant mortality has risen 30% and malaria infection rose 76%. This has caused the exodus of almost 3 million Venezuelans to neighboring countries.

In 2015, the national assembly elections could have been a turning point for the country. The main opposition to Maduro won a majority of its seats. They were most likely going to impeach President Maduro. So, the exiting assembly in its last weeks of office created a new “National Communal Parliament” and filled it with pro-government political figures. Then they stripped the National Assembly of most its power and gave it to the Parliament. As a result, Maduro has largely ignored the National Assembly.

In 2018, the presidential election was set to be held in December. Maduro, hoping to keep power, put some of his political enemies in jail causing others to flee the country to avoid imprisonment. He prevented others from running for office by giving them criminal records. He also created a plan to reschedule elections in May, hoping this would not give the opposition time to create a plan. This caused opposition politicians to refuse participation in elections, because they believed that it was not legitimate. Henri Falcon decided to run against Maduro to give him some opposition. Quickly after the election, Falcon claimed that the elections were illegitimate as well. With Maduro claiming victory after the elections, many political figures and foreign countries called the elections a sham.

At the beginning of 2019, Maduro took office for his second term. The National Assembly believed that the elections were unfair, which made the Presidency void and left it to the National Assembly to appoint Juan Guaidó as the interim president. A relatively unknown political figure and only 35 years old, Juan Guaidó has stepped up to the occasion to put the pressure on Maduro to step down. Maduro has accused the U.S. of backing Guaidó and trying to overthrow his government. Many nations in the European Union, along with the U.S, Brazil, Colombia, and other countries have recognized Guaidó as the true President of Venezuela. On the other hand, Russia, Turkey, Bolivia, and Cuba have supported Maduro. The E.U. asked Maduro to hold a free and fair election, but when he refused they recognized Guaidó as President of Venezuela. The U.S. has placed sanctions on Venezuelan oil, cutting off the majority of its revenues, causing Venezuela to turn to China to buy most of its oil. China has put most of this money into repayment of debt, which has seriously impacted Venezuela’s economy. After the U.S. placed its sanctions, Maduro demanded that all U.S. diplomats leave the country in 72 hours. He has also refused to receive aid shipments from the U.S, not allowing for food, clothing, and medicine sent from the U.S. to cross the border. This outraged citizens and gave Juan Guaidó more traction in his movement. Guaidó has called for the military to allow the aid to enter the country, causing the military to pick a side.

Maduro has said he would like to talk to the opposition, and Guaidó, in a mediated meeting. Mexico and Uruguay offered to be the mediator but Guaidó refused the offers. Guaidó and the opposition have asked for the people to protest in the streets but other than that he does not have much power. The true test for the country will be who the military decides to support. It seems they are still supportive of Maduro’s side. He has been giving bonuses, land, and other gifts to the army in hopes to keep their support. Similarly, Guaidó has promised amnesty to anyone in the army that decides to side with the opposition. This was met with mixed reviews due to the corruption in the army, and some of the acts that Maduro has had the army commit against the people, such as their methods of putting down protests and riots in 2017. Guaidó’s plea seems to be taking effect as Francisco Yanez, General of Venezuela’s Air Force High Command, voiced his support of Guaidó. After this, Guaidó called for more military officers and soldiers to leave Maduro and join the opposition.

With all these issues building upon each other it has put Maduro’s back against the wall. His own people are fleeing the country, more protests keep happening in the streets every day, and a growing number of citizens are becoming frustrated with the current conditions in the country. Maduro’s group of supporters are strong even though they are dwindling. Guaidó is calling for Maduro to be taken out of office and for a new election to be held. Many citizens agree with Guaidó and other countries agree with him as well. With so much going wrong in the country and Maduro trying to hold onto power by any means necessary, the situation is likely to get worse before it gets better.


Herrero, Ana Vanessa, and Megan Specia. “Venezuela Voices: ‘We Are Starving Here’.” The New York Times, The New York Times, 1 Feb. 2019,®ion=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection.

Al Jazeera. “What Is Venezuela’s New Petro Cryptocurrency?” GCC News | Al Jazeera, Al Jazeera, 23 Mar. 2018,

(n.d.). Retrieved from

Raphelson, Samantha. “Venezuela’s Health Care System Ready To Collapse Amid Economic Crisis.” NPR, NPR, 1 Feb. 2018,

“U.S. Energy Information Administration – EIA – Independent Statistics and Analysis.” Factors Affecting Gasoline Prices – Energy Explained, Your Guide To Understanding Energy – Energy Information Administration,

Al Jazeera. “UN: Number of Migrants, Refugees from Venezuela Reaches 3 Million.” GCC News | Al Jazeera, Al Jazeera, 8 Nov. 2018,

Rueda, Manuel, et al. “Venezuela’s Guaido Urges Military Defections amid Protests.” Midland Daily News, Midland Daily News, 7 Feb. 2019,

“The Battle for Venezuela’s Future.” The Economist, The Economist Newspaper, 2 Feb. 2019,

“Washington Post: Breaking News, World, US, DC News & Analysis.” The Washington Post, WP Company,