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How Venezuela Fell From the Richest Country in South America into Crisis

May 9, 2019 in History

By Patrick J. Kiger

Overspending, lower oil prices and political unrest all combined to trigger a decline for the once-prosperous nation.

It wasn’t that long ago that Venezuela, which possesses the and The Enduring Legacy: Oil, Culture, and Society in Venezuela. “Land was monopolized by a handful of powerful families, infrastructure was lacking and the country lacked a nationally integrated economy.” But, Salas explains, oil and the rise of cities such as Caracas enabled people to flee rural poverty.

Venezuelan President Romulo Betancourt, circa 1958.

1958: Venezuela Elects President Betancourt

After the overthrow of brutal, corrupt Venezuelan dictator Marcos Pérez Jiménez, the nation’s three political parties agree to the Punto Fijo Pact to accept the results of popular elections, and opposition leader Rómulo Betancourt—widely regarded as the father of Venezuelan democracy—is elected president. But, as anthropologist Iselin Åsedotter Strønen has written, the power-sharing agreement also helps establish a system in which each of the parties is guaranteed a slice of government ministries, jobs and contracts, and keeps oil revenues in the hands of the government.

1973: OPEC Embargo Brings Billions

The OPEC embargo against the U.S. and other countries causes the price of oil to quadruple, and Venezuela becomes the beneficiary. As billions more flow into the state treasury, its per-capita GDP soars throughout the rest of the decade. Two years later, Venezuelan President Carlos Andrés Pérez signs a law nationalizing the oil industry, creating a state-owned oil company called owned Petroleos de Venezuela, S.A. (PDVSA), and compelling foreign companies to give it a 60 percent ownership share in oil projects.

1989: IMF Bailout

After oil prices plummet due to a glut in the late 1980s, President Perez’s government struggles under the weight of $33 billion in foreign debt. Ultimately, Venezuela is forced to accept an International Monetary Fund bailout and impose austerity measures that result in sharp rises in the prices of consumer goods and fares for public transportation. Protesters take to the streets for demonstrations that turn violent, leading to a nationwide curfew and suspension of civil liberties.

Venezuelan President Hugo Chavez speaking to citizens in 2000 regarding his economic plan.

1998: Hugo Chávez Elected

Firebrand populist leader Hugo Chávez, a former lieutenant colonel in the Venezuelan military who six years earlier led a failed coup attempt, is elected president, upending a political establishment that had controlled the nation for decades. Over …read more


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