Wikipedia Deep Dive

Crisis in Venezuela

10 min read

Venezuela is experiencing the worst economic collapse of any peacetime nation since the mid-twentieth century. To put that in perspective: this crisis is worse than the Great Depression in the United States. It's worse than the hyperinflation that destroyed Zimbabwe's economy in 2008. It's comparable to what Bosnia endured after a brutal civil war in the 1990s, except Venezuela achieved this devastation without firing a shot in battle.

By 2017, three-quarters of Venezuelans had lost an average of nineteen pounds—not from dieting, but from hunger. By 2024, roughly 7.7 million people had fled the country, representing about a quarter of the entire population. Imagine one in four Americans leaving the United States within a decade. That's the scale of Venezuela's exodus.

How It All Began

The story starts with Hugo Chávez, a former army officer who attempted a coup in 1992, failed, went to prison, and was later pardoned. In 1999, he won the presidency through democratic elections and remained in power until his death in 2013.

Chávez had a vision. He created what he called "Bolivarian missions"—named after Simón Bolívar, the revolutionary who liberated much of South America from Spanish rule. These missions built thousands of free medical clinics for the poor, provided food subsidies, and constructed housing. Between 2002 and 2008, poverty in Venezuela dropped by more than 20 percent. Quality of life improved. People had better access to healthcare and education.

There was just one problem: the entire system ran on oil money.

Venezuela sits on the world's largest proven oil reserves. For decades, this seemed like an unbeatable advantage. But that abundance created what economists call the "resource curse"—when a country has so much wealth from natural resources that it never bothers to build anything else. Venezuela never diversified its economy. It never developed robust industries or manufacturing. It just pumped oil and spent the proceeds.

When oil prices were high in the early 2000s, Chávez could afford to be generous. But he did something economically dangerous: he overspent wildly and imposed price controls on basic goods. Price controls sound appealing—who doesn't want cheap bread and toilet paper? But they create a fundamental problem. If the government forces you to sell something for less than it costs to make, you stop making it. Factories shut down. Shelves go empty.

The Economic War

By June 2010, shortages were spreading. Chávez declared an "economic war," blaming capitalist speculators and business owners for hoarding goods. This became the government's explanation for everything that went wrong: not our policies, but sabotage by our enemies.

When Chávez died in March 2013, he left behind what Foreign Policy called "one of the most dysfunctional economies in the Americas." His successor, Nicolás Maduro, won a razor-thin election—just 235,000 votes, a 1.5 percent margin—against opposition candidate Henrique Capriles.

Maduro inherited high inflation and severe shortages. Instead of changing course, he doubled down on Chávez's approach.

In September 2013, his government seized a toilet paper factory, claiming the owners were hoarding products to sell later at higher prices. In November, they seized an electronics store and imposed price controls on another. The National Assembly granted Maduro extraordinary powers to impose price controls and seize businesses he accused of price gouging.

But seizing factories doesn't create toilet paper. It just means the government now owns empty warehouses.

The Collapse Accelerates

By 2014, Venezuela had entered a recession. The economy shrank by nearly 4 percent in each of the first three quarters. Inflation hit 63.6 percent. Oil exports fell by 14.2 percent.

Then came 2015, and oil prices crashed globally. Venezuela's oil production also declined because the government had failed to maintain equipment or invest in infrastructure. Between 2014 and 2016, the country's real Gross Domestic Product—the total value of everything the economy produces—declined by an estimated 24.3 percent. By 2016, inflation reached 800 percent, the highest in Venezuela's history.

To understand what 800 percent inflation means: if a loaf of bread costs one dollar today, it costs nine dollars a year from now. Your savings become worthless. Your salary becomes meaningless. Planning for the future becomes impossible.

In January 2016, the opposition-controlled National Assembly declared a "health humanitarian crisis." They documented severe shortages of medicines and medical supplies, deteriorating hospitals, and crumbling infrastructure. They asked Maduro's government to guarantee access to essential medicines.

The government refused to acknowledge there was a crisis.

The Death Squads

As economic conditions worsened, political repression intensified. The government created special police units called Special Action Forces, known by their Spanish acronym F A E S (the letters F, A, E, S).

In 2017 alone, these units killed 5,287 people, according to United Nations investigators. In the first six months of 2019, they killed at least another 1,569.

The U N reported that these weren't firefights or accidents. The Special Action Forces would plant weapons and drugs on victims, fire their guns into walls or the air to simulate a confrontation, and claim the person had resisted arrest. Some killings were explicitly carried out "as reprisal for participation in anti-government demonstrations."

This is the technical definition of extrajudicial execution: killing without trial, without due process, as state policy.

Denial and Control

Even as bodies piled up and people starved, Maduro's government maintained there was no humanitarian crisis. They rejected offers of international aid, claiming that acknowledging a crisis would justify foreign intervention.

By 2019, The Wall Street Journal reported that Maduro was using food distribution as a political weapon, pressuring impoverished Venezuelans to attend pro-government rallies and vote for him by threatening to cut off their access to government food handouts.

The government found creative ways to generate cash. According to The Economist, they sold gold—both from illegal mines and from the nation's reserves—and trafficked narcotics.

The Constitutional Crisis

In the 2015 parliamentary elections, Venezuelan voters gave the opposition a majority in the National Assembly for the first time in years. Before the new members took office, the outgoing assembly—still controlled by Maduro's allies—packed the Supreme Tribunal of Justice, Venezuela's highest court, with government loyalists.

In 2017, Maduro simply stopped recognizing the National Assembly as legitimate. He called for a new constituent assembly to draft a new constitution, replacing the one from 1999. But this constituent assembly wouldn't be elected through normal voting. Members would be selected from social organizations loyal to Maduro.

More than forty countries refused to recognize this assembly. The opposition boycotted the election entirely. Maduro's United Socialist Party of Venezuela won almost every seat by default.

On August 4, 2017, the new constituent assembly was sworn in. The next day, it declared itself the supreme power in Venezuela and banned the National Assembly from taking any actions that would interfere with it.

In February 2018, Maduro called presidential elections four months ahead of schedule. Major opposition parties were banned from participating. When Maduro was declared the winner in May, politicians around the world—including the Lima Group, the United States, and the Organization of American States—said the election was fraudulent and Maduro was not legitimately president.

Two Presidents

On January 5, 2019, a new National Assembly was sworn in with Juan Guaidó as president of the assembly. Citing several clauses of the 1999 constitution, the Assembly declared that the May 2018 presidential election results were invalid and that Guaidó was now acting president of Venezuela.

For months, Venezuela had two men claiming to be president: Maduro, backed by the military and security forces, and Guaidó, backed by the National Assembly and recognized by dozens of foreign governments.

Guaidó's claim to power eventually fizzled without military support. Maduro remained in control.

The 2024 Election

In 2024, Maduro ran for a third consecutive term. The opposition united behind Edmundo González Urrutia, a former diplomat, after the government barred their leading candidate, María Corina Machado, from running.

On July 29, the government-controlled National Electoral Council announced that Maduro had won a narrow victory. The opposition released evidence—including voting receipts from thousands of polling stations—suggesting González had won by a wide margin.

According to The New York Times, the disputed result "plunged Venezuela into a political crisis that has claimed at least 22 lives in violent demonstrations, led to the jailing of more than 2,000 people and provoked global denunciation."

Maduro launched "Operation Tun Tun"—named after the sound of knocking on doors—a massive crackdown arresting opposition figures and protesters while refusing to release detailed vote counts.

Why Did This Happen?

Supporters of Chávez and Maduro blame an "economic war" waged by business elites, falling oil prices, and international sanctions. Critics point to economic mismanagement, corruption, and authoritarian governance.

Both sides have some truth. International sanctions—particularly U.S. sanctions on Venezuela's petroleum sector starting in 2019—did cause severe damage. One study estimated sanctions cost Venezuela thirty-eight billion dollars between 2016 and 2019 and contributed to approximately 40,000 excess deaths between 2017 and 2018.

But the crisis started before sanctions. It started with an economy built entirely on oil, price controls that destroyed production, massive overspending funded by oil revenues, and a government that seized businesses and denied reality when the money ran out.

Life During the Crisis

By 2021, a national survey found that 95 percent of Venezuelans were living in poverty based on income, with 77 percent in extreme poverty—the highest figure ever recorded in the country. Venezuela reached the highest level of income inequality in the Americas.

People increasingly abandoned the worthless bolívar currency and started using U.S. dollars for transactions. In 2022, the government finally abandoned strict price controls and currency controls—the very policies that helped cause the crisis. The economy grew for the first time in eight years, and poverty decreased slightly.

But the damage was done. Hyperinflation has ended, but inflation remains high. Food shortages have eased, but 7.7 million Venezuelans—a quarter of the pre-crisis population—are gone, scattered across South America and beyond.

The U N estimated in 2019 that one in four Venezuelans needed humanitarian assistance. Hospitals lacked medicine. Water and electricity were unreliable. Crime soared as desperate people competed for scarce resources.

A Nation Unraveled

Venezuela's crisis is a case study in how quickly a country can collapse when leaders prioritize power over policy, deny reality over accepting failure, and maintain control through violence rather than legitimacy.

It demonstrates what economists call the resource curse—how an abundance of oil can paradoxically destroy a nation by eliminating the need to build a real economy. It shows what happens when price controls meet shortages, when printing money meets inflation, when authoritarianism meets desperation.

And it reveals something darker: that a government can kill thousands of its own citizens, starve millions more, and drive a quarter of the population into exile while still maintaining power—as long as it controls the military and is willing to use violence without restraint.

The crisis that began during Hugo Chávez's presidency and accelerated under Nicolás Maduro has transformed one of South America's wealthiest nations into one of its poorest, created the largest refugee crisis in the Western Hemisphere, and shown the world how quickly prosperity can turn to ruin when ideology trumps economics and power trumps truth.