Does socialism cause inflation?

That's behind the chaos in Venezuela

What has happened politically in Venezuela in recent years?

A good 20 years after Hugo Chávez was elected president, Venezuela has left little of the dream of "socialism of the 21st century" propagated by the left-wing populist. With the help of extensive social programs and redistribution financed by oil revenues, Chávez tried to shape Venezuela according to his ideas.

Chávez's political vision was in contrast to the behavior of many of the parties before him - this made him overly popular with the Venezuelan population and brought him further electoral successes until his death from cancer in 2013. On the international stage, however, he was judged controversially due to his authoritarian leadership style, the nationalization of the media and an unsustainable economic policy.

Under Nicolás Maduro, who was appointed successor by the terminally ill Chávez in 2012 and then elected president in a controversial 2013 election, the problems that had already started under his predecessor intensified. The country developed more and more towards a dictatorship, accompanied by systematic suppression of the free press and a dramatic economic decline.

Nicolás Maduro in front of a portrait of his predecessor and mentor Hugo Chávez

Why has Parliament President Guaidó declared himself interim head of state just now?

Despite protests at home and abroad, Maduro was sworn in at the beginning of January for a second term as president, which will last until 2025. The international community believes that the elections on May 20, 2018 were not democratic. Independent election observers were not allowed. Most of the opposition boycotted the election and did not recognize the result, as did numerous states and international organizations.

Already in 2017, Maduro overtook parliament in the midst of months of protests with more than 100 dead, in which the opposition has had the majority since the end of 2015. At the latest since Maduro took up his second term in office, the People's Assembly sees itself as the only democratically legitimized representation of the Venezuelans and, shortly before its swearing in, adopted a project for a transitional government and new free elections.

Now the President of the Parliament, Juan Guaidó, who was an unknown MP himself in Venezuela until recently, has taken it seriously and named himself interim president in front of thousands of demonstrators. The USA and numerous Latin American countries promptly assured the 35-year-old of their support. However, since the opposition parties are at odds with one another and the military apparently continues to support Maduro, observers are skeptical as to whether Guaidó can actually take over the business of government.

Has quickly become Maduro's fiercest opponent: Juan Guaidó

Why is Venezuela economically on the ground despite huge oil reserves?

Venezuela has the largest oil reserves in the world - however, the country has produced less and less in recent years. Oil production, responsible for 95 percent of all foreign exchange income in Venezuela, has fallen from 3.5 million barrels (159 liters each) to a good one million barrels per day. The refineries hardly produce any gasoline either. Observers see the reason in mismanagement and corruption in the state monopoly PDVSA.

The fact that the oil price fell to a historic low in 2013 can be described as bad luck for Maduro, who took power that year. The regime was largely responsible for its massive dependence on oil. When Chávez took office, the share of exports was a good 70 percent, in 2013 it was 98 percent. The country hardly produces any other goods.

Critics see this development as the result of massive government intervention in the economy. Maximum prices, for example, have driven en masse entrepreneurs to give up their business. Mining, industry, and agriculture and the timber industry have all but come to a standstill. As early as 2013, the economy only grew by a meager percent, and in 2018 it shrank by almost 20 percent.

The inflation of the national currency Bolívar was one million percent. The IMF has forecast inflation of ten million percent for 2019. For comparison: even in the crisis country Argentina it is only just over 30 percent, in the rest of Latin America the price increase is around six percent, in Germany just under two percent. In addition to the Bolívar, there has been a state crypto currency for almost a year. The so-called Petro should stabilize the economy - so far it has failed to achieve this goal.

What are the consequences of the crisis for the population?

The majority of citizens are extremely impoverished as a result of the economic crisis, and many are starving. Even those who still have a job can afford just a few basic products with the new minimum wage of 18,000 bolivars per month (the equivalent of around 5.90 euros) - if these are available at all, since the state hardly ever has any food or everyday items import, let alone manufacture. There are hardly any private companies that do this in other countries.

Millions of people suffer from symptoms of years of malnutrition. There is also a drastic shortage of medication, diseases such as malaria and tuberculosis that were pushed back decades ago are said to be on the rise again. Child mortality has almost doubled since 2011.

It is estimated that 5,000 Venezuelans emigrate every day; according to the International Organization for Migration (IOM), a total of around three million have fled abroad since 2014 - because of the ongoing supply crisis, the high crime rate, rampant inflation and state repression.

Because many well-educated and young people have also left the country, there would currently hardly be enough workers to rebuild the economy - even if the political situation were to change, according to a forecast by the research institute Brookings Institution.