Venezuela: Death-Throes of a Petrostate

Venezuela is coming apart at the seams. Reeling from the effects of a two-month national strike, the economy will contract this year by twice as much as Argentina’s did in 2001. Its oil industry is a shadow of its former self, half its businesses are going under, and a million of the best jobs may be wiped out. How did Venezuela, an oil-rich country long viewed as a model of Latin American stability and democracy, wind up in this sorry state?

The World Today Published 1 March 2003 Updated 21 October 2020 5 minute READ

Michael Rowan

Caracas-based political consultant

Francisco Toro

Journalist and founder of

The crisis has hit every part of the economy and society: a huge portion of the government’s revenue is in question. Only the black market is active, just ten percent of households are above the poverty line, formal credit is virtually non-existent, the banking system could collapse, and the value of the currency dropped by well over fifty percent in the last year until draconian controls were put in place in January. By then, tens of billions of dollars in capital had already fled.

Seeing the debacle, global companies are leaving, tens of thousands of university educated Venezuelans have gone abroad, and a mood of deep pessimism hangs over Caracas, a city deeply polarised along political lines. A once stable democracy is sliding closer and closer to outright autocracy, and grim talk of civil war dominates not just the editorial pages, but the bakeries, barbershops and bus stops.

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