The Three Speeds of the Venezuelan Crisis

President Nicolas Maduro

By Leonardo Vivas

Any candid observer visiting Venezuela five years ago could hardly anticipate what the country has become under Nicolas Maduro’s government. Enjoying the longest oil boom in recent history, vast internal support and a strong international network, Chavez built a well-knit political system granting him and his successors what at the time seemed destined to be a long-lasting reign. But, modeled to a large extent on a variation of 20th century socialism with a tropical flavor and the largesse of an oil economy, the economic model began to show signs of instability even before Chavez’s 2012 second reelection and his passing away the following year. Today the system is in ruins and the entire edifice of 21st Century Socialism—as it was branded—is on the verge of collapse. But, will it effectively collapse? Has the democratic opposition gathered enough strength to produce a transition out of the complex system Chavez built or will the regime survive with the backing of the military? Will it evolve into a clearer autocratic regime, in the liking of Turkish President Recep Tayyip Erdogan’s post-coup cleanup operation? The answers to these questions are unclear. What comes next is an attempt to provide some context to illustrate possible scenarios.

The economic legacy of the Chavez revolution
With coffers full as a result of the oil boom of the past decades and the political advantage of a brief coup attempt in 2002, Chavez established a draconian exchange rate control in order to hold a tight grip on the economy and exercise a greater domination over society as a whole. What began as a provisional measure became over time the essence of the economic system and eventually an important clue to its demise, when it happens. Over the years, several combinations