The term “failed state” usually refers to a country whose state apparatus is not capable of effectively controlling and policing its territory, and is unable to provide basic social and public services to its citizens. These types of states are generally characterized by rampant corruption and socioeconomic plights.  However, they also become generators of internal conflicts, organized crime, terrorism, refugees, and arms proliferation, among others, thereby impacting the well-being of their neighbors. Failed states are usually associated with places like Afghanistan and sub-Saharan Africa, as well as with the conflict-ridden countries of the Middle East and North Africa, such as Yemen and Libya. The year 2019, however, has the potential of adding another country to that list. This country, however, lies in South America, as thanks to political mismanagement, Venezuela has started moving in the direction of being a failed state.  This lies in great contrast to its days as one of the wealthiest countries in South America.

The seeds of Venezuela’s current troubles were planted during the time of the late socialist President Hugo Chavez (1999-2013). When Chavez took over power, he did so under the promise of tackling extreme socioeconomic inequality in the country. However, in order to do so, Chavez embarked on a path of extreme socialist policies of state interference in the market and economy. A typical example of such was Chavez’s policy of controlling the prices of domestic wholesale and retail, and even of commodities like oil, in order to make them accessible to the population, violating market laws of supply and demand. Chavez also tried to reign in foreign exchange rates by establishing a fixed rate for the US dollar. Chavez’s years in power were characterized by a democracy deficit and the gradual introduction of authoritarianism. The factor that best played into Chavez’s hand was high oil prices, as Venezuela has the world’s largest oil reserves.

Indeed, as Venezuela’s economy is largely dependent on oil exports that constitute the bulk of national exports and half of the government’s revenues, Venezuela was able to pursue such socialist policies without paying a price. When Chavez died from cancer in 2013, he was replaced by Nicolas Maduro Moros, who carried on with Chavez’s domestic policies, particularly in the economic domain. However, the decline of oil triggered a chain of events that led to Venezuela’s socioeconomic descent. Namely, the price of oil in the global market declined drastically in 2014. This resulted in a steep decline of revenues and a fiscal deficit. The sanctions that the Obama administration introduced against Venezuela certainly did not help.

The Venezuelan government began printing its national currency, the bolivar, resulting in some of the greatest hyperinflation ever, with an annual inflation rate estimated by Forbes in October 2018 to be at 60,324%, with a monthly rate of 94%. In November 2018, Business Insider estimated an even higher annual inflation rate of 830,000%. Meanwhile, the national economy shrank by 15.7 percent in 2017. The Venezuelan government has clumsily tried to reign in hyperinflation by tying the value of bolivar to the petro, the first ever cryptocurrency issued by the state. The effectiveness of the petro is highly questionable and the US government suspects the petro is a scam.

For the average citizen of Venezuela, the effects of hyperinflation have been devastating. The purchasing power of citizens is practically nonexistent, and they lack basic necessities such as food, toilet paper, medicine, and electricity. In 2017, the average Venezuelan citizen reported a loss of weight of 11 kg in weight due to malnutrition and lack of calories, while 87% of the population lives in poverty.  This has grown since 2016, when the number was 82%, or 2014, at 48%. Venezuelans are already fleeing to other countries in Latin America, generating a genuine migration crisis for the region. Since 2015, 3.3 million Venezuelans have left the country, and it is estimated that this number could reach 5.3 million by the end of 2019. The estimated cost for the UN High Commissioner for Refugees to tackle the crisis is USD 738 million. Overall, it is estimated that an astounding ten percent of Venezuelans have fled the country.

At the same time, Maduro’s ability to govern is far from clear, and indeed, it is deeply questionable, both from domestic and international standpoints. In August 2018, Maduro survived an assassination attempt through a drone armed with explosives. This can be regarded as a major indication that Maduro and his government do not have competent control and governance over their own country. On 11 January 2019, the US National Security Advisor Ambassador John Bolton issued a statement declaring that the US does not recognize Maduro’s government as legitimate nor its electoral victory from May 2018, as the latter is deemed irregular.  As such, the Venezuelan National Assembly is regarded as the only legitimate branch of government. The EU has also introduced its own set of sanctions against members of the Maduro government, further indicating that they do not have necessary international legitimacy.

However, while the Maduro government has proven that it is not able to govern its society effectively and in a way that provides well-being to its citizens, it is far from clear that Maduro’s government will end. Namely, the domestic opposition appears to be ineffective and in a state of disunity. Outside the country, it is still not evident that international sanctions would remove the regime. Despite Trump’s 2017 statement considering a US military intervention in case the situation in Venezuela deteriorates, it is difficult to envision that prospect and more difficult to imagine that intervention would not worsen the situation on the ground and further destabilize it. Therefore, at this point, the Venezuelan tragedy continues, generating new flows of migrants to Latin America throughout 2019 and beyond.