The story of Venezuela’s descent into autocracy is not one tale; it is two stories linked together by little more than a transfer of power and an overreliance upon the volatile oil industry to promote the growth of a nation. Hugo Chavez took charge of a democracy that was saddled with corruption, promising to work for the benefit of the common people. His regime lowered corruption and poverty, but it also weakened democratic norms across Venezuela and threatened the country’s stability. His death in 2013 placed Nicolas Maduro in control, and where Chavez was devoted to the people, in his first decade in power Maduro has devoted his regime to solidifying himself as a dictator. Whether Venezuelan democracy can return will depend on whether Maduro can be ousted, and more importantly on whether the country can develop a sustainable democracy and escape their complete economic reliance on oil.

Hugo Chavez rose to power in 1999, proclaiming a strong populist message of ending government corruption and bringing both representation and aid to poor rural people across the nation. He ended up succeeding admirably at those missions, and in the 2000s Venezuela’s poverty rate was halved, its literacy rate rose over 95% for the first time, and the country made genuine progress towards economic and social equality. At the same time, Chavez made significant steps away from democracy, including jailing opposition leaders and suppressing opposition-friendly press, in the name of the social movement.

Chavez’s greatest accomplishments, and the seeds of his greatest failings, came with the oil price boom in 2004 and the associated economic growth in Venezuela. As explained in Vox’s video “The collapse of Venezuela, explained”, Chavez utilized those economic gains to create extensive social programs to benefit the poor, whose loyalty had helped him sweep to power in 1999. They rewarded him with further loyalty, continuing to re-elect Chavez until his death in 2013. However, Chavez’ economics were not prepared to adjust to a drop in oil prices, and ultimately when his successor Maduro didn’t change economic policy to adjust to changing oil prices, the economic reforms imploded.

Under Nicolas Maduro’s leadership from 2013 through to today, democratic institutions have continued to fail, while the economic gains made under Chavez have vanished entirely and poverty rates have surpassed 90%. Venezuela has entered into an economic death spiral of hyperinflation, with most basic resources virtually unavailable to the common people. Political resources have also become largely unavailable for the average citizen. Upwards of 80 percent of the nation’s population wants to have Maduro removed from power, but Maduro himself remains firmly seated in control through electoral manipulation, as described excellently by José Ignacio Hernández in a piece for the Electoral Integrity Project.

Maduro has also taken advantage of economic turmoil to benefit his supporters, though where Chavez was supported by and worked to benefit the poor, Maduro is supported by and works to benefit the military and those with power. Maduro’s allies use currency manipulation to purchase goods internationally using the government’s official exchange rates before selling them at the true exchange rate, which is staggeringly high and only growing as the inflation crisis continues. Indeed, inflation is so bad across Venezuela that in 2021 the government released a new currency, identical in value to the previous one but with the final six zeroes removed.

Both Chavez and Maduro led what the Council on Foreign Relations calls a “petrostate”, in which government funding and economic performance is provided primarily by oil money. These states are prone to weak institutions, the concentration of power in a narrow elite, and what is called “Dutch Disease.” This is where a state with an abundance of natural resources devotes their economic growth to extracting that natural resource while neglecting the rest of their economic development. This produces a positive feedback loop where foreign and domestic investment focus exclusively on that resource and further worsens the state’s reliance on that resource. Eventually, a state with Dutch Disease will be so reliant upon their natural resource that their entire economy crumbles when that resource eventually suffers a downturn in value.

This exact pattern has occurred repeatedly in Venezuela. When oil economics are strong, leaders utilize the profits to benefit either the nation or themselves; when oil economics are weak, leaders have repeatedly failed to adjust their spending plans and have suffered economic collapse. As the Council on Foreign Relations also expects from a resource-dependent state, Venezuela’s historical leadership has a clear history of autocracy, corruption, and democratic backsliding, even before the current era of Chavez and Maduro. When Chavez took power, he was replacing a democratically elected government that had exploited social divisions and left much of the population out of the wealth generated from oil; Maduro is following in that regime’s footsteps and yet again consolidating power and wealth at the top.

Another factor in Venezuela’s economic woes is the extensive sanctions placed upon them by most of the Western world. Through the 2000s and 2010s, the United States in particular laid extensive sanctions on Venezuela intending to force Maduro out of power. A Congressional Research Service report details these efforts, and explains that sanctions have not changed Venezuelan state policy but have instead “exacerbated an ongoing economic and humanitarian crisis… that has prompted 7.7 million Venezuelans to flee.” This same report details the recent efforts by the Biden Administration to loosen these sanctions in exchange for electoral changes, including requiring that Maduro allow the opposition candidate to run in the election. So far, it is not known to what extent Maduro plans on following the Biden Administration’s requirements.

With Maduro having held power for over a decade now and showing no signs of giving it up despite the appearance of elections, Venezuela may well have become what Larry Diamond would classify as an “Electoral Hegemonic Authoritarian” state. If we are to hold out any hope for Venezuelan democracy, it must come from economic rather than political reform. Other petrostates, such as Norway, have managed to avoid the pitfalls of autocracy through a careful balance of policies to weather the storm of oil price fluctuation and prevent power concentration, along with efforts to diversify the economy. The efforts of the Biden administration to connect economic assistance with liberalizing political reforms are the most effective efforts seen to date in working against the Maduro regime, but those are just a beginning. Long-term change will require Venezuela to rebuild its economy away from its reliance on oil commodities and towards a more diverse economy capable of supporting a modernized country through economic turmoil.