🇻🇪 From Oil Gold to Ashes

There was a time, not so long ago, when Venezuela was the envy of South America. A country rich not just in culture and biodiversity, but in wealth and promise. In the mid–20th century and into the 1980s and 1990s, Venezuela’s per-capita GDP rivaled that of developed countries, and its cities buzzed with opportunity. Its oil, the black gold beneath its soil was more than an export: it was a symbol of national pride and potential.

But by the mid–2010s, that promise had crumbled. Today, Venezuela is synonymous with economic collapse, mass migration, hyperinflation, and daily hardship. What happened? How did a country with the largest proven oil reserves in the world end up in such ruin?

The Resource That Should Have Been a Blessing Became a Curse

Oil was supposed to be Venezuela’s strength. It accounted for more than 90% of export revenue and formed the backbone of government income. And yet, instead of building a diversified economy, Venezuela became overwhelmingly dependent on petroleum exports; a textbook example of the “resource curse.”

When global oil prices were high, the government spent lavishly on social programs and subsidies. But when prices collapsed particularly after 2014, foreign income evaporated. There were no savings cushion, no thriving manufacturing or agricultural sectors to fall back on, and no economic safety net.

A well-managed oil wealth strategy (think Norway’s sovereign wealth fund) could have safeguarded Venezuela’s future. Instead, oil became a trap, bread for the people today at the expense of investment in tomorrow.

Mismanagement and Corruption: The Engine of Decay

Oil mismanagement was compounded by systemic corruption at every level of government. Transparency International’s corruption index ranks Venezuela among the most corrupt countries in the world, and much of that corruption is tied to the handling of oil revenues.

Billions meant for infrastructure and public services slipped into unmonitored contracts, offshore accounts, and private enrichment. Officials often used oil profits for political patronage rather than public investment. This siphoning undermined essential services and deepened the crisis.

Economic Policies That Broke the Nation

Two major policy trends accelerated Venezuela’s decline:

• Nationalizations and price controls:

Under Hugo Chávez and his successor Nicolás Maduro, the state seized control of key sectors, especially oil, agriculture, and manufacturing. Instead of boosting productivity, these measures dismantled private enterprise and stifled innovation. Venezuelan industries cratered; businesses went bankrupt; food and medicine supplies dried up.

• Printing money to cover deficits:

Without real economic growth, the government resorted to printing bolívars, its currency to fund spending. This unleashed hyperinflation: at points reaching levels that made the bolívar almost worthless. The result? Savings evaporated, prices soared, and poverty soared with them.

Sanctions and Geopolitics: Fuel on the Fire

International pressure, especially from the United States and the European Union added another layer of complexity. Sanctions targeted government officials and state entities, particularly in the oil sector, intending to push for political reform.

But sanctions also tightened Venezuela’s isolation from global markets, restricting access to financing and reducing oil export revenue at a time when the government could least afford it. This created a feedback loop of scarcity and economic contraction.

Lessons: How Government Choices Can Destroy a Nation

Venezuela’s story is a stark lesson in how government decisions matter:

• Dependency on one commodity with no diversification is risky.

• Corruption erodes wealth faster than any war.

• Economic policies that ignore market signals can devastate productivity.

• Short-term social spending without investment is unsustainable.

• Political instability and breakdowns in trust sap the very roots of prosperity.

  
  

When a government controls too much, manages too poorly, and prioritizes power over people, the consequences ripple through generations.

A Tragedy with a Future Yet Unwritten

Today’s Venezuela is a country in recovery limbo. With tentative reforms, debates about opening the oil sector to investment, and ongoing political shifts, there might be hope.

But the scars — economic, social, and emotional run deep. Venezuela’s descent isn’t just a regional tragedy; it’s a global cautionary tale: wealth without wisdom can quickly disappear.