The once booming Venezuela economy is near collapse. Basic necessities like oil and food are in short supply. Political parties are fighting over rewriting the constitution while citizens turn to gas smuggling, bitcoin, and selling their hair to get by.

What is Happening in Venezuela?

While the world is paying attention to the Middle East, after the U.S slammed the U.N resolution that supports Palestine, few realize that what is happening in Venezuela is even worse than ever imagined. 

The country’s opposition parties accused the current Nicolas Maduro administration of ruining democracy. The accusations came after Maduro stripped three opposition parties of their rights to take part in the presidential election next year. In October, the Maduro-backed Socialist Party won the country’s regional poll, gaining votes from 18 out of 23 governorships.

The ruling party’s win was such a surprise as the government is struggling to overcome the prolonged economic crisis that has forced many residents to seek a better life abroad. Venezuelans have to rely on Chinese counterfeit goods to fulfill their needs as the inflation rate has reached 7,000  percent in the last six months.

Thousands of Venezuelans are turning to virtual currency bitcoin to survive. They convert their bolivar currency to bitcoin to pay their daily expenses and to pay larger expenses from medical bills to a holiday plans.

Venezuela, once an oil-rich nation, is teetering on the brink of collapse. Food and gasoline are in a severe shortage. Some people even cut and sell their hair to buy food. 

What is happening in Venezuela? It’s the economy…

The disastrous situation in Venezuela is stunning considering the country was formerly the wealthiest economy in South America. After the passing of President Hugo Chavez in 2013, whose pro-people welfare programs garnered worship by fanatical supporters, the economy plunged.

The opposition accused the socialist Chavez party of being corrupt and authoritarian. While the Chavistas, the followers of Chavez, blamed the opposition for being backed by Western media and the U.S.

In November 2014 oil prices reached its lowest in four years. This forced the government to slash public spending. A year later, in December 2015, an opposition party coalition won a two-thirds majority in Congress, ending the 16-year-old Socialist rule in the parliament.

In March 2017, the Supreme Court took the legislative powers from the opposition-stocked National Assembly, triggering nationwide protests. A month later, a massive demonstration claimed 13 lives outside the capital of Caracas over a 24-hour period.

In May, Maduro signed an order that called for rewriting country’s constitution. The plan was vehemently opposed by the opposition, fearing that the changes were merely steps to strengthen the president’s position.

In July, the opposition-lead National Assembly called for an unofficial and non-binding referendum in response to Maduro’s constitutional crisis. Reports claim nearly 7.2 million Venezuelans participated. Results showed 98 percent of voters were against Maduro’s proposed assembly to rewrite the constitution and demanded that the military protect the existing constitution. Voters also wanted an election before 2019. The government slammed the referendum, labelling it as illegal.

Two weeks later Maduro organized a national vote to elect the members to partake in the assembly to rewrite Venezuela’s constitution. Maduro celebrated the vote as a victory and called the 8 million voters who partook in the vote a sign of support for the constitutional rewrite. Opposition parties claim Maduro hugely inflated the voter turnout and consider the vote to be illegal.

The Economic impact of the crisis and the war against corruption.

According to OPEC data, Venezuela had the world’s  largest crude oil reserve in 2015 (300 billion barrels), exceeding that of Saudi Arabia (266 billion barrels), Iran (158  billion barrels), and Iraq (142 billion barrels).

Around 96 percent of Venezuela’s export is in the oil industry. This sector helped to finance Venezuela’s social welfare program under Chavez. When the oil price dropped from US$115 per barrel to ultimately below $50 per barrel in late 2016, the country’s economy suffered drastically.

In October 2017,  Venezuela’s oil production slumped to just 1.9 million barrels.

In November 2017, the global rating body S&P declared Venezuela was officially in default after the country failed to make payments on bonds due in 2019 and 2024 within the 30-day grace period.

S&P added that it had slashed the country’s foreign currency rating to “SD” and lowered the long- and short-term foreign currency sovereign credit rating from ‘CC/C (currently vulnerable) to SD/D (selective default).

In a supposed attempt to purge the country of corruption dozens of oil executives have been arrested. Venezuela announced this past December a criminal investigation had been opened into Venezuela’s former oil minister Rafael Ramirez. The former minister was once a boss of state-run oil firm PDVSA from 2002 to 2014.

Ramirez was a former close aide of the late Hugo Chavez. But he has never gotten along well with Chavez’s successor, Maduro. He publicly criticized Maduro’s handling of Venezuela’s failing economy.

The latest updates: there is no oil in Venezuela.

A day after Christmas, the Maduro administration announced that it would restrict gasoline sales in the country’s western part. It’s an effort to undercut the oil smuggling industry which Venezuela blames for creating a lack of oil supply.

According to the energy ministry, residents in the states of Apure, Lara, Cojedes, Portuguesa, and Barinas are filling their gas tanks and selling it in neighboring Colombia.

Poor natural resource management has contributed to the collapse of Venezuela, according to Ivan Freites who is the secretary of the United Federation of Venezuelan Petroleum Workers. Freites claimed  80 percent of oil refineries in the country ceased their operations due to bad management.

Venezuela releases political prisoners and looks to move forward.

In what many are calling a Christmas gesture, Venezuela released anywhere from 36 to 44 political prisoners who were detained on charges of plotting to overthrow the government and inciting violence. Maduro’s opposition claims they are fighting a dictatorship, while Maduro claims they are part of a global coup to topple him.

The release of the political prisoners comes days before leaders from the Venezuelan government and opposition leaders are due to meet in the Dominican Republic. The upcoming talks will be held on Jan. 11 and 12. Many hope the release of the political prisoners will help the negotiations prove more successful.

Do you know anyone in Venezuela? Can you share any personal experiences you’ve had with the Venezuela crisis?