Venezuela’s President Nicolas Maduro holds up a small copy of the constitution as he speaks during his swearing-in ceremony at the Supreme Court in Caracas, Venezuela
CARACAS, Venezuela (AP) — Venezuela’s President Nicolas Maduro started a second, six-year term Thursday despite international cries urging him to step down and return democratic rule to a country suffering a historic economic implosion.
Maduro says he’s going to turn around an economy whose collapse he blamed on US sanctions. However, few experts see signs that his policies will rescue the once-wealthy OPEC nation. Inflation is soaring, internal political divisions are deepening and millions of Venezuelans have left the country.
This explains Venezuela’s economic and political crisis:
WHAT’S WRONG WITH THE ECONOMY?
Venezuela has the world’s largest underground oil reserves, but crude production continues to crash. Its natural wealth made it once, one of Latin America’s wealthiest countries, pumping 3.5 million barrels of crude daily when President Hugo Chavez took power and launched the socialist revolution.
Oil has been Venezuela’s prime source of hard cash, and leaders historically haven’t developed other sectors of the economy. Output now has plummeted to less than a third of its historic high, and critics blame that on years on rampant corruption and mismanagement of the State-run oil firm PDVSA.
WHAT’S HAPPENING WITH INFLATION?
The economy in 2019 will continue to contract and inflation will skyrocket at a staggering 23 million per cent, forecasts Francisco Rodriguez, a former Venezuelan official who is now chief economist at the New York-based Torino Capital. That is a result of low oil prices compounded by the declining production, Venezuela’s growing financial isolation, years of price and currency controls and heavy government spending in the collapsing local currency.
Many Venezuelans struggle to afford food and basic goods. Today, the minimum wage that amounts to less than US$5 a month — and is shrinking.
WHAT’S THE POLITICAL BACKDROP?
Maduro has successfully maintained power, opposed by a fractured opposition. The hand-picked successor of Chavez won a second term in a May election that opponents and many in the international community reject as a sham. Maduro’s Government has jailed or driven into exile its most popular opposition leaders. Among them, Leopoldo Lopez remains under house arrest. Government opponents consider him a political prisoner.
Internationally, the United States and a coalition of a dozen Latin American countries reject Maduro’s Government. However, leftist allies such as Cuba and Bolivia maintain their support, while Maduro has deepened economic and political ties with Russia, China and Turkey.
HOW ARE VENEZUELANS RESPONDING?
An estimated 2.3 million people have fled hyperinflation, food and medical shortages over the last two years, according to the United Nations, most going to nearby Colombia, Brazil, Peru and Ecuador. Leaders in those countries say they struggle to handle the influx. Many of the migrants arrive sick and hungry, needing medical care.