World Economy

'Maduro approach' to Venezuelan crisis is not fixing the problem

Protestors clash with Venezuelan police as a response to the recall referendum of President Nicolas Maduro and the economic crisis in Caracas on June 09, 2016.
Carlos Becerra | Anadolu Agency | Getty Images

With severe food shortages, riots in the streets, and exploding inflation, Venezuela has entered a full humanitarian crisis, and its government is failing to fix the problem.

"For a number of years, the Chavista government has figured out how to put on bandages to keep the wound from completely opening up," said Jason Marczak, director of the Latin America Economic Growth Initiative at the Atlantic Council's Adrienne Arsht Latin America Center.

The majority of Venezuelans have no choice but to endure the economic and social hardships of each day, but President Nicholas Maduro, who took over the country following the death of long-time strongman Hugo Chavez, appears to have taken a wait-and-see strategy that pins its hopes on global oil markets.

"Nicolas Maduro is essentially waiting out the crisis and waiting for oil prices to go back up. In the meantime, he's relying on his security forces for protection," said Reggie Thompson, a Latin America analyst for geopolitical intelligence firm Stratfor.

"The Maduro approach is unsustainable," Thompson said.

If the United Kingdom votes to leave the European Union on Thursday, Thompson believes "it could drive down oil prices" — further devastating the Venezuelan economy, which relies on oil sales for roughly 95 percent of its revenue.

But even if the U.K. remains in the EU, the Venezuelan economy is still projected to spiral further out of control.

In a report released in April 2016, the International Monetary Fund forecast that Venezuela will have "an unemployment rate of 17 percent in 2016 and nearly 21 percent next year." The IMF also estimated that the annual average of inflation in Venezuela is projected to reach "481 percent in 2016 and a staggering 1,642 percent next year."

"There is a physical shortage of food, obviously, because imports have been cut substantially," Thompson said, "but there's also a shortage based on prices."

Consequently, the increasingly hungry Venezuelan population has turned to violence in desperation, as evidenced in reports of increased food riots and mass looting throughout the country.

"When people are literally going hungry and children are dying at birth because there aren't the right medical supplies … when basic things like Tylenol aren't even available … this causes a huge amount of angst in the population," said Marczak.

He urged that the world first focus on the immediate, humanitarian needs of Venezuela.

"Time is ticking quickly and Venezuela needs to have a rapid response from the international community," Marczak, "but none of that can happen without the Venezuelan government requesting it."

The likelihood, however, of Maduro altering his approach is slim, however, since "Maduro is clinging onto power as best as he can," Thompson said, and public recognition of the crisis would directly threaten his power.

If that power were lost, Maduro and a parts of his inner circle could face legal prosecution, Marczak said, "not only over corruption, but also over human rights abuses."

Foreign assistance seems to be an obvious solution, but Marczak hypothesized that such aid would have to be delivered by a third party — such as the United Nations — directly to the regular citizens who need it.

Marczak's fear, he said, is that if the assistance is associated with the Venezuelan government, "they will find a way to politicize it."