2.7 million people have fled Venezuela since 2015, reported the UN on February 22, underscoring the massive socio-political crisis that has hit the country since the presidency of former president Hugo Chávez.
The crisis has also resulted in a hyperinflation that is devastating Venezuelans.
Last month, a BBC report revealed that Venezuela’s “annual inflation rate reached 1,300,000% in the 12 months to November 2018, according to a study by the opposition-controlled National Assembly”.
This phenomenon has seen prices “doubling every 19 days on average” by the end of last year, leaving “many Venezuelans struggling to afford basic items such as food and toiletries”.
Here’s a look at the series of events leading to Venezuela’s current crisis.
The Chain of Events Until 2018
1. Hugo Chávez ascended to power in 1998, implementing a socialist regime in Venezuela. He established a centralised government that controls the wealth in the country and distributes it in a “societal” fashion.
Since he believed that individuals may own private property but not control the means of production, he started to nationalise large and medium-sized corporations, while imprisoning and killing his political opponents.
2. In 2008, world oil prices dropped sharply, damaging Venezuela’s economy (about 50% of Venezuela’s GDP depends on oil exports). After a year, prices rose again.
3. In 2013, Chávez died of cancer. He was replaced by socialist Nicolás Maduro.
4. In 2014, oil prices plummeted again, crushing Venezuela’s economy completely.
The inflation rate reached over a thousand percent. Food disappeared from the shelves and hunger was prevalent (and still is). People started to flee the country en masse.
5. In 2016, Maduro decided to deal with the chaos in the country by imposing threats on the population. He also threatened to throw into jail any factory owner who shut down production. The situation continued throughout 2017.
Major Events in 2018
The authorities in Venezuela arrested five individuals associated with Oscar Perez’s militia of rebel forces and killed several others. Perez, a former police pilot and film actor, became wanted by the authorities after stealing a police helicopter and throwing grenades at government buildings in Caracas in an act of protest.
President Nicolás Maduro called to hold a “mega-election” in April, which would involve choosing the president, state legislatures and mayors (aimed at strengthening his political control).
The Venezuelan government announced that it had reached an understanding with the opposition — and the elections scheduled to take place in April were postponed indefinitely.
A general power failure paralysed Venezuela for 20 hours.
US President Donald Trump signed an executive order banning the purchase of bonds issued by the Venezuelan government or its state oil company PDVSA, or granting them loans.
An economist at the International Monetary Fund (IMF) estimated that the inflation rate in Venezuela would reach one million percent in 2018. According to another calculation, the prices of goods and services in Venezuela were doubled every 26 days on average.
Two Venezuelan army officers were arrested on suspicion of attempting to assassinate the president by a drone.
The President of Venezuela announced that the state oil company PDVSA would now transfer all its revenues directly to the Central Bank of Venezuela (from which the government gets its funds). The US Department of Treasury started prohibiting trade with companies associated with the Venezuelan president’s cronies; 11 US senators were pushing a bill that would allow the US government to sue and bring to justice Venezuelan officials who violate human rights.
The Venezuelan president announced that his government would demand airlines that land in Venezuela to pay for fuel with a cryptocurrency, launched by Venezuela (called Petro). This move could prevent foreign airlines and businessmen from reaching Venezuela.
Until the End of 2018
The Venezuelan government and state oil company PDVSA would have to repay US$3 billion (S$4.1 billion) in debt to creditors. An example is a US$500 million (S$676 million) debt to the ConocoPhillips oil & gas company. If the debt was not paid off, ConocoPhillips would be allowed to take over oil storage facilities in Venezuela and outgoing oil shipments. Other companies could also sue the Venezuelan government or try to take control of its assets. Last August, a US court gave a Canadian mining company the go-ahead to seize shares of a US-subsidiary of PDVSA.
On January 23, head of Venezuelan opposition Juan Guaidó declared himself interim president. “Since Guaidó’s declaration, he has been recognised as the country’s rightful leader by more than 50 countries, including the United States and many regional powers,” reported The Guardian.
On February 22, soldiers from Venezuela’s military shot dead two people and injured at least 15 others for attempting to keep the country’s border with Brazil open for aid deliveries. “The protesters and government forces are on opposite sides of an effort to bring aid into the country from Colombia,” said The Washington Post.
“Venezuelans face widespread hunger and medicine shortages, and hyper-inflation running at around 2 million percent a year has made salaries virtually worthless. As the country’s economic crisis deepened, more than one in ten have fled abroad,” The Guardian reported on Feb 23.