Presidential elections are being held in Venezuela on Sunday. Experts estimate that only with a change of government can the country recover. But how likely is such a scenario?
About eight million people have left Venezuela in the last decade – close to a quarter of the total population.
The Latin American country is suffering from a huge supply crisis, high inflation and a shortage of workers. In addition, both the US and European states have imposed sanctions on Venezuela due to violations of fundamental rights.
At the same time, however, Venezuela has about 300 billion barrels of oil (with a capacity of 159 liters each), making it the country with the largest oil reserves in the world – even surpassing Saudi Arabia. And the country’s oil industry has faced significant problems in recent years.
On Sunday, citizens are invited to elect the country’s next president – and the stakes of the election obviously also concern Venezuela’s economic future.
Maduro promises development
Socialist President Nicolas Maduro promises a period of growth and prosperity. How is this going to be done; Among other things with the financial support for those who establish businesses – the president of Venezuela intends to subsidize even one million businesses within the framework of this plan.
Of course, it remains unknown whether this promise can actually be realized. In any case, the opinion polls give a clear lead not to Maduro, but to the opposition candidate Edmundo Gonzalez.
A devastating balance sheet
When Maduro took office in 2013 GDP per capita was still around US$9,000 according to the IMF – by 2020 it had fallen to US$1,500. And while economic output has improved somewhat in recent years, it remains much lower than in 2013.
The course of oil production was similar, which decreased from 138 million tons (2013) to 34.5 million tons (2021), showing a small increase in recent years as well.
“Under Maduro, Venezuela’s economy shrank by almost 80 percent,” Ronal Rodriguez, a political scientist at Rosario University in Bogotá, told DW. “And let’s not forget that the country lost a quarter of its population.” According to the expert, in order to get out of the current crisis, Venezuela would have to have an annual economic growth of more than 15% for years.
Severe labor shortage
One of the biggest obstacles on the road to recovery is the lack of labor force, adds Rodriguez: “Unfortunately, a large part of the skilled labor force left the country because of the crisis.”
This mass “exit” had already begun during the presidency of Maduro’s predecessor, Hugo Chávez. Chávez had used oil revenues to fund social programs without investing in the oil industry itself.
In addition, he dismissed specialized industrial workers and replaced them with people loyal to the party, who, however, did not have the necessary know-how. The fact that in 2012 the state-owned oil industry had triple the number of personnel compared to 1998 is characteristic, but also reduced production.
Recovering lost know-how is a complex business. Besides, “higher education departments whose subject matter is related to the oil industry have now lost their former glory,” Rodríguez reports.
Regardless of the election result, Venezuela will have a hard time finding a new economic dynamic, the political scientist estimates. Because in addition to the demographic problems, the development of the most important branch of the country’s economy is also hampered by the prevailing political culture. The oil industry is controlled by chavistas, who even in the event of a change of government will remain in their positions.
Chavismo is a leftist, populist ideology, which is based on the positions of former president Hugo Chavez and is promoted by his successor and current president Nicolas Maduro.
Edmundo Gonzalez on the other hand is seen as a moderate. The former diplomat is running as the candidate of the opposition Plataforma Unitaria Democrática, succeeding María Corina Masado, who sought to bring the Maduro government to justice for human rights abuses it has committed – and who was subsequently disqualified.
Recovery only if power changes hands
“An economic recovery is only possible if Maduro hands over power and is replaced by a new government that respects private property and the rule of law,” says Anderson Sekera of the Venezuela Policy Institute.
“A Maduro victory would be an insurmountable obstacle to the country’s economic recovery. Six more years of Maduro means more poverty, a worsening of the complex humanitarian crisis and a greater flight of many residents abroad,” Sekera adds to DW.
The expert is on the contrary convinced that a possible victory of Gonzalez would give a new chance for recovery, would facilitate the attraction of foreign investment, especially in the energy and oil sectors, and the negotiation of aid programs with the IMF and other organizations, while contributing and the stabilization of the national currency.
Chavismo refuses to hand over power
But at the same time, if Maduro wins the election, he is likely to have more legitimacy, as Vladimir Ruvinsky of the Icesi University of Cali observes to DW. And this could lead to the lifting or reduction of some of the sanctions that have been imposed on the country.
Recently the US government decided to lift some of the sanctions against the Venezuelan oil industry. The American company Chevron, which operates in the country, has increased its production by 70% by the end of 2023. In the event of Maduro’s victory, it is possible that there will be other countries that will begin “to be more active in Venezuela.”
In any case, Rovinski believes that a change of government is a rather unlikely scenario: “Chavismo does not want to hand over power at all.”
Edited by: Giorgos Passas
Source :Skai
With a wealth of experience honed over 4+ years in journalism, I bring a seasoned voice to the world of news. Currently, I work as a freelance writer and editor, always seeking new opportunities to tell compelling stories in the field of world news.
