Venezuela Country Report 2022
Date of Publication
2022 12:00 AM
Security Theme
Political Stability
Keywords
Humanitarian crisis, Venezuela, COVID-19, Inflation, political stability
Description
By the close of the review period, Venezuela continued to have two presidents and two legislatures. The de facto power-wielding President Nicolás Maduro and the National Assembly elected in an unfree and unfair process in December 2020 had been recognized by about 20 countries, while nominal interim President Juan Guaidó and the legitimate National Assembly elected in 2015 had been endorsed by about 60 countries as of January 2021. A petrostate in decay, the country is characterized by the amassing of political and economic power in the hands of an autocratic ruling elite, unfettered corruption, patronage networks, weak institutional arrangements and the brutal repression of dissent. Gross mismanagement of fiscal, monetary, budgetary and foreign exchange policies, as well as extensive graft, has thrown the country into a complex humanitarian crisis. Under President Maduro’s watch, the economy came to a grinding halt, with the GDP plummeting by 86% and inflation topping 65,000% (in 2018). The IMF forecasts further GDP contractions of -10% in 2021 and -5% in 2022. The complex humanitarian crisis has left over 1 million children between three and 17 years of age out of school, and about 350,000 migrant children and youth at risk of lagging behind. Severe structural constraints such as extreme poverty, the lack of a skilled labor force and a decaying infrastructure restrict the regime’s governance capacity. But these constraints did not exist when the regime came to power. They are the result of irresponsible macroeconomic management characterized by excessive state interventionism, arbitrary expropriations, and the destruction of the price system and market rules, all of which resulted in the strangulation of the private sector. The share of citizens living under conditions of extreme poverty surged to 79.3% in 2019, and the proportion of the workforce deemed skilled labor dropped to 42.3%, a consequence of the decaying education and training system, as well as the massive exodus of well-educated and skilled Venezuelans who have fled the country’s crisis. With oil production down to a trickle, other products such as gold took center stage in generating foreign exchange. The quasi-legitimization of irregular gold mining in collusion with criminal syndicates, along with the stealth sale of the gold produced for cash, helped the regime’s leaders survive but also implied that they are involved with criminal gangs. The regime has been effective in clinging to power, while evidently insensible to the complex humanitarian crisis affecting the population. Even the recent steps to loosen the tight controls on the economy, such as de facto dollarization and the stealth reprivatization plan via the Anti-Blockade Law, are intended to serve as lifelines for the cash-strapped regime rather than a move toward liberalization. The country’s strategic partners, including Cuba, Russia, China, Iran and Turkey, have provided the regime a real lifeline. Thus, the government has been extremely effective in the use of international support for its overarching strategic goal, namely securing and tightening its own grip on power. The support is not an integral part of a long-term socioeconomic development strategy. Russia, China and Iran consider Venezuela a bridgehead for their own longer-term geopolitical interests in the region. At first sight, COVID-19 infection and fatality rates appear to be fairly low in Venezuela. However, the data is probably incomplete, and even so, the pandemic is exacerbating the ongoing humanitarian crisis in Venezuela. According to a report by the Center for Strategic & International Studies (CSIS), the already dismal humanitarian situation has further worsened over the course of the pandemic. The government did not act transparently, but rather with a mixture of misinformation and conspiracy theories, and used the state of emergency as cover for repressive measures against the opposition and to punish dissenters.
Venezuela Country Report 2022
By the close of the review period, Venezuela continued to have two presidents and two legislatures. The de facto power-wielding President Nicolás Maduro and the National Assembly elected in an unfree and unfair process in December 2020 had been recognized by about 20 countries, while nominal interim President Juan Guaidó and the legitimate National Assembly elected in 2015 had been endorsed by about 60 countries as of January 2021. A petrostate in decay, the country is characterized by the amassing of political and economic power in the hands of an autocratic ruling elite, unfettered corruption, patronage networks, weak institutional arrangements and the brutal repression of dissent. Gross mismanagement of fiscal, monetary, budgetary and foreign exchange policies, as well as extensive graft, has thrown the country into a complex humanitarian crisis. Under President Maduro’s watch, the economy came to a grinding halt, with the GDP plummeting by 86% and inflation topping 65,000% (in 2018). The IMF forecasts further GDP contractions of -10% in 2021 and -5% in 2022. The complex humanitarian crisis has left over 1 million children between three and 17 years of age out of school, and about 350,000 migrant children and youth at risk of lagging behind. Severe structural constraints such as extreme poverty, the lack of a skilled labor force and a decaying infrastructure restrict the regime’s governance capacity. But these constraints did not exist when the regime came to power. They are the result of irresponsible macroeconomic management characterized by excessive state interventionism, arbitrary expropriations, and the destruction of the price system and market rules, all of which resulted in the strangulation of the private sector. The share of citizens living under conditions of extreme poverty surged to 79.3% in 2019, and the proportion of the workforce deemed skilled labor dropped to 42.3%, a consequence of the decaying education and training system, as well as the massive exodus of well-educated and skilled Venezuelans who have fled the country’s crisis. With oil production down to a trickle, other products such as gold took center stage in generating foreign exchange. The quasi-legitimization of irregular gold mining in collusion with criminal syndicates, along with the stealth sale of the gold produced for cash, helped the regime’s leaders survive but also implied that they are involved with criminal gangs. The regime has been effective in clinging to power, while evidently insensible to the complex humanitarian crisis affecting the population. Even the recent steps to loosen the tight controls on the economy, such as de facto dollarization and the stealth reprivatization plan via the Anti-Blockade Law, are intended to serve as lifelines for the cash-strapped regime rather than a move toward liberalization. The country’s strategic partners, including Cuba, Russia, China, Iran and Turkey, have provided the regime a real lifeline. Thus, the government has been extremely effective in the use of international support for its overarching strategic goal, namely securing and tightening its own grip on power. The support is not an integral part of a long-term socioeconomic development strategy. Russia, China and Iran consider Venezuela a bridgehead for their own longer-term geopolitical interests in the region. At first sight, COVID-19 infection and fatality rates appear to be fairly low in Venezuela. However, the data is probably incomplete, and even so, the pandemic is exacerbating the ongoing humanitarian crisis in Venezuela. According to a report by the Center for Strategic & International Studies (CSIS), the already dismal humanitarian situation has further worsened over the course of the pandemic. The government did not act transparently, but rather with a mixture of misinformation and conspiracy theories, and used the state of emergency as cover for repressive measures against the opposition and to punish dissenters.
