Since his reelection in late July of this year, Nicolás Maduro’s expanded term has raised concerns for Venezuelans and the international community, who are already disgruntled with his careless, anti-developmental policy. Citizens have seen no change in Maduro’s harmful political priorities, prompting a new question: Can Venezuela be saved?
Time is money, but in this new term, Maduro finds himself in a position with more time and significantly less money. Venezuela’s economic collapse can be traced directly to early Maduro antidemocratic measures. Since 2019, the “forced disappearance” policy and stifling of opposition made Venezuela a quasi-military regime under Maduro’s leadership. Consequently, after protests over Maduro’s tightening grasp that same year, the nation’s GDP contracted by 25%. In the following years, this sharp decline in GDP has more than doubled. These early measures became the single, traceable origin of the leader’s money problems.
Today, the persistence of antidemocratic, authoritarian measures that prioritize Maduro’s military and oil-centric control over the people’s economic needs continue to prompt sanctions from international actors. These sanctions imposed by international parties have and continue to slow the nation’s transition to democracy. The United States in 2015 imposed sanctions on Venezuela under the Obama administration. The consequences of this were economic turmoil impacting an import-reliant middle and working class and Maduro’s shift to illicit markets. The period in which sanctions were the worst for Venezuelans was also a time of Venezuela’s strongest diplomatic ties with Iran, Russia, and China. NATO allies reacted in response to this, creating a dangerous cycle of economic punishment through sanctions. As is the case in present-day Russia, The Economist finds the imposed sanctions to have a disproportionately negative impact on the working and middle-class rather than higher-class, corrupt officials. This has led to devastating hyperinflation affecting the general population of Venezuela.
In some cases, forms of inflation can be interpreted as signs of a growing economy, but Venezuela under Maduro has seen overexpansion with resource constraints. The nation itself has for decades overinvested in national oil as its main source of income, with no notable expansion occurring in other sectors. Since 2016, the Central Bank of the Nation has been expanding monetary supply by 20-30%, decreasing currency value. Oil exports, previously 80% of the nation’s total exports, have dropped to a fourth of that amount. Since former U.S. President Donald Trump’s, and more recently, President Biden’s bipartisan push to cut off oil trade with Venezuela, an oil surplus within the nation has created an artificial price drop. With the introduction of sanctions, OPEC-reported oil revenue in Venezuela dropped by over 90% between 2012 and 2020. As the nation’s main source of income struggles, no new growth in sectors outside of crude oil have developed enough for locals or the government to rely on. This, combined with the aforementioned trade deficit caused by devalued currency, creates domestic economic turmoil. Because of this, Venezuelans must rely on international trade to source their basic goods, all of which have skyrocketing prices in times of economic turmoil. The result of the failed policy is unlivable hyperinflation that does not look to be improving any time soon. The projected inflation rate in 2025 under Maduro’s new term is 150%, three times the rate necessary for a hyperinflation crisis. Under an overly oil-centric economy, Maduro fails to support other potentially successful business endeavors, disrupting the nation’s prosperity and cementing its downfall. Maduro even refuses humanitarian aid, hurting the middle and working class now driven to unlivable poverty and forced to flee.
This is not an issue that Maduro can fix through his new wave of military control. Economic reform directed at hyperinflation would first require a drastic shift in economic policy emulating 2008-09 Zimbabwean shifts in response to an almost 100% daily inflation rate. A common thread that connects Zimbabwe back then to Venezuela now involves a leader who must, to save a natural resource-reliant nation, engage in radical reform unlike any other to save the national economy. In response to an 80% unemployment rate and hyperinflation, Zimbabwean President Robert Mugabe had to dramatically shift his over-expansionist policy, adopting research-backed practices of dollarization and regulation of the central banking authority of the nation. Similarly, Maduro’s expansion of currency production continues to hurt his oil-centric state. Unfortunately, international actors cannot facilitate reform of such scale without violating the region’s sovereignty. Additionally, it seems unlikely Maduro himself would engage in such a shift. The solution for Venezuela is radical. Either a new leader or a Maduro with a dramatically different policy is urgently needed to cap resource extraction and currency production. The clear first step to this would be reversing Maduro’s decision to refuse international, expedited humanitarian aid. All of these steps require the Venezuelan leader’s participation, an unlikely best-case scenario.
More urgently, Venezuela’s decline threatens bordering nations. This is evident with Maduro’s quest to annex Guyana’s Esequibo region for its oil, which began in October 2023. Following military expansion, a region housing almost two-thirds of the nation’s population has experienced mass displacement and environmental degradation. While the dispute has been ongoing, recent claims in an NPR interview with Maduro reflect a colonial claim to ownership over the land, echoing harmful rhetoric. The Esequibo takeover seems to be a last-ditch attempt for Maduro to bolster popularity through Venezuelan nationalism. So far, it has not worked. On an interregional scale, Brazil and Colombia continue to reinforce their borders in anticipation of Venezuelan offensive action. These regions have also borne the brunt of displaced Venezuelans seeking temporary residence.
When returning to the issue of saving Venezuela, the stakes are clear. The post-election situation in Venezuela has only worsened citizens’ trust in governing bodies and destabilized surrounding regions. The first steps to regain confidence in the government start with demanding that the National Election Authority of Venezuela release official tallies instead of blindly declaring Maduro the winner. From there, entertained hypothetical responses to the crisis are in disagreement, spanning from state collapse and military intervention to regional partnerships and reinstatement of democratic policy. It is empirically clear that trade isolation and international sanctions in place of humanitarian aid are not the solutions, so instead, the international community must look beyond to strategies that have worked. From the outside, nations can support independent media and domestic civil rights groups. Nations can step in to support displaced Venezuelans while the nation awaits a transition of power. The most ideal way a transitional state may be reached is through collaboration. Parties should collaborate with Venezuela’s allies, including Russia, in times of economic pressure, and nations could even form an ICC reconciliation commission to push for the creation of long-term institutions and economic diversification. Once Venezuela starts accepting international funding for apolitical growth, the nation will move to accept humanitarian aid. This recommended framework draws from previous successes to chart a challenging but necessary course forward.