Do you know the country which once had the highest GDP in its continent now is virutally destitute and has an inflation rate of 686.4%. Venezuela, the country with the highest oil reserves on earth has suddenly become one of the poorest countries in the world. Today, I would like to introduce how this resource-abundant country became the country to with the highest inflation rate (after Zimbabwe) and it’s growth and collapse.
Venezuela’s“golden era” had its roots in 1922 when massive amounts of oil were found by Royal Dutch Shell. In 1973, with the oil shock made after Middle eastern countries stopped exporting their oil, there was a huge interest by foreign oil companies in Venezuelan oil This made the Venezuelan oil price increase sharply and brought huge amounts of money into the country, with Venezuela eventually gaining the fourth highest GDP in the world. This soon led to President Carlos Andres Perez’s mass investment in oil facilities, but then as oil prices stopped rising, he wasn’t able to be reelected. Later, as oil prices had a massive decrease, the next president, Luis Herrera Campins, wasn’t reelected either, and instead, Carlos Andres Perez was again elected President. During his second term, he asked assistance from the IMF (The International Monetary Fund), to stabilize it’s financial market. However, this led to inflation and many Venezuelan companies were sold to foreign companies, while Carlos had even used the country’s taxes for his own benefit. Eventually, in Caracas, the capital of Venezuela, there were civilian protests and approximately 3500 citizens were killed. Soon the coup-d’etat movement MBR-200, led by Hugo Chavez appeared. Hugo Chavez’s coup-d’etat failed, and a second coup-d’etat started by the remnants Hugo Chavez’s movement also failed, Chavez’s movement had huge popular appeal.
Hugo Chavez and his supporters
Almost, immediately after Hugo Chavez was out of jail, he ran for president. Due to his coup-de-tat, his approval rate was very high., and he easily won the presidency. At first, he was not such a bad president, as there was a higher increase in the oil price. However, with the money made from oil, he initiated expensive social welfare programs for citizens and enacted populistic policies, perhaps to ensure a longer term in office for himself. Hugo Chavez used almost all of the tax revenue for social welfare programsand meanwhile his populistic policies were in progress. Also, he soon started brainwashing Venezuelan citizens that their enemies were the US and foreign companies. Hugo Chavez’s policy to brainwash citizens was successful. Hugo Chavez saw a huge boost of his popularity, and would start socialist policies. Plus, he’d throw offensive words to the US, for instance “Go to hell” and also started having closer relationships with North Korea, China, and many Middle Eastern countries. Eventually, in 2002 there was a another coup d’etat, but it failed. In 2012, Chavez got cancer and rumors of his impending death circulated. One Spanish news channel reported that Russian and Cuban medical teams were sent to treat Chavez’s cancer, but finding no cure cure, retreated. A year later Chavez died of cancer and chose Nicolas Maduro Moros as his heir before he died. Unfortunately, when Maduro became president, the US didn’t need any Venezuelan oil, as the US had plentiful reserves of shale oil. Plus, Trump, seeking restitution for American companies whose properties were nationalized, initiated huge economic sanctions. This vilified the United states in the eyes of the Venezuelan populace. Soon, in just a few years, Venezuela’s economy crashed, and its’ currency, the bolivar, crashed too. 2018 saw hyperinflation, with an inflation rate of 33,151%.
Due to this, Chevron and many foreign oil companies retreated from Venezuela. Plus, as 80% of oil company workers fled to other countries, Venezuelan oil, which needed many complex machines to pump oil out from the mud, was unable to be extracted. This made Venezuela unable to sell any oil and the coountry fell into an oil crisis,making the oil useless.
Soon, Venezuela’s crime rate become NO 1 and is now one of the poorest countries in the world. Even, John Bolton, US National Security Advisor, ny company or country trading with the Maduro Venezuelan government will face the consequences of the US.” and said, “Venezuela would from now on be the main enemy of the US.
From what is happening in Venezuela, we can know why populism is often detrimental to a country and what can happen under a populist president. With just one populist president, a country with the fourth highest GDP can easily become one of the poorest countries in the world. All in all, we should well know how destructive populism can be to a country and how the selfishness of one leader can starve many to death rather than sustain them.