The crisis-hit South American nation is currently at the centre of a wrangling for power, with President Nicolas Maduro confronting an unprecedented challenge to his authority. Opposition leader and Popular Will party member Juan Guaido has declared himself interim president of Venezuela after accusing Mr Maduro of vote-rigging, which the leader has denied. Venezuela has also just been hit by the United States with sweeping sanctions on its oil firm PDVSA, with the move aimed at curbing exports and pressuring President Maduro to step down. The US has been the biggest buyer of Venezuelan oil despite their political differences, taking about half of the country’s export volumes.
The latest crisis for Venezuela comes following four years of economic hardship which has left citizens in their fifth year of a recession.
The financial gloom has halved the size of the economy and forced three million people to emigrate to escape hyperinflation and rampant crime.
But the turmoil could be far from over for the South American nation, with James M. Roberts, research fellow in freedom and growth at The Heritage Foundation’s Center for International Trade and Economics, predicting it will take Venezuela years to recover.
The root of the crisis, he claims, comes from the “failure” of the presidency of Hugo Chávez, who ruled Venezuela from 1999 to 2013.
Writing for The Daily Signal website, Mr Roberts cited the South American country as being second-bottom of the The Heritage Foundation’s 25th annual Index of Economic Freedom.
The only country in the world with less economic freedom today is North Korea, he stated.
He added: “Venezuela has been at the bottom of the index’s rankings for more than 15 years, reflecting the failure of Hugo Chávez’s Latin American socialism. Other economic data also vividly illustrate this epic fail.
“For example, when Chavez took power in 1999, Venezuela’s state-owned oil company, PDVSA, was producing 3.5 million barrels per day. Today, production is down dramatically.
“While the Maduro regime claims it is producing 1.3 million barrels per day, independent analysts believe that figure is much lower.”
Mr Roberts went on to claim an initial oil market surge will be sparked if President Maduro transitions from power “based on a surge of positive sentiment”.
Despite this, he maintained “given the near-complete destruction of Venezuela’s economy over the last two decades, the post-Chavista era also will be marked by many years of painful rebuilding”.
Venezuela was last night hit with sanctions from Washington on state-owned oil company PDVSA, a step that is likely to curb its crude exports to the US and ratchet up the pressure on President Nicolas Maduro.
The US government is supporting Mr Guaido and is demanding the resignation of President Nicolas Maduro.
The US Treasury said last night: “As a result of today’s action, all property and interests in property of PDVSA subject to US jurisdiction are blocked, and US persons are generally prohibited from engaging in transactions with them.”
It added: “Persons operating in the oil sector of the Venezuelan economy may be subject to sanctions.”