Venezuela is an oil-rich country and it was doing pretty well at one point in history. Can you trace the trajectory of the rise and decline of Venezuela and the role of oil production behind this?

The discovery of oil fields in Venezuela led to a rapid transformation of an agrarian economy to one focused on oil in the twentieth century. This massive transformation led to rapid modernization and dependence on oil and even today approximately 90% of the country’s hard currency comes from oil. Venezuela became a net exporter of oil and was a founding member of OPEC (Organization of the Petroleum Exporting Countries). The downside was that Venezuela became so dependent and focused on oil that other strategic sectors such as tourism, telecommunications etc. were ignored and thereby remained underdeveloped. Eventually, this harmed the economy as it became addicted to oil revenues. The expectation was that the rent and revenues from oil and gas would be everlasting - which did not turn out to be true. Now we are seeing the menace of this economic addiction of oil which comes with corruption, clientelism, nepotism and the near disappearance of the national currency - with no end in sight.

A lot of research has been done on this phenomenon called the “resource curse” in which countries with high deposits of natural resources often fall victim to corruption, aggressive foreign interests, internal disputes, and all of this causes its decline - can you tell us if this phenomenon was at play in Venezuela?

Venezuela is certainly a case of a country plagued by the resource curse - as is a petrostate like Russia, which is another iconic example of a state that is exclusively dependent on the rents and inflow of revenue from oil, gas and the extraction and mining of other natural resources. Such phenomena occurs due to the state’s will to maximise their role and power in the national and international arena, consequently creating distortions on the global geopolitical order. Many intellectuals and political leaders in Venezuela have labelled this resource curse as a longstanding disease of the Venezuelan economy. Even the former oil minister and founding member of OPEC - Juan Pablo Perez Alfonso called Venezuelan oil “the Devil’s excrement”, as he referred to the various problems and distortions that Venezuelan oil has caused and continues to cause the country. Venezuela thus, has both historically and continually remained an explicit illustration of the resource curse and the Dutch disease, causing the entire Venezuelan economy to exclusively depend on import revenues from oil exports which consequently enormously harms the entire economy of Venezuela.

Where do you think Maduro went wrong? Can we attribute the current state of Venezuela to him and to what extent?

The roots of this Venezuelan crisis reside in the socialist project and ideology which was inserted by the former President - Chavez. The numerous controls over the economy and the constant reinforcement of the state position’s against corporations and conglomerates contingent on a long term of high oil prices allowed this project to unfold in the country, with implications for the region for more than a decade. This resulted in the perversions and distortions of the entire economy which then led to further encroachment on oil prices, inflows, and exchange controls until oil prices more or less tumbled. When Maduro conceded power after Chavez’s death, it unleashed the worsening of the crisis that persists today. The crisis is characterised hyperinflation, corruption, looting of the national assets, destruction of the national currency, violence, and the entire chaotisation of the Venezuelan public’s situation today. Maduro is depending almost exclusively on backing from Russia, China, Turkey, drug smuggling, and the firesales of gold reserves in order for him to gain more time in power, especially against the ongoing attempts by the U.S. and the EU to remove and replace him with a figure like Juan Guaido as interim president.

Who are the political forces backing each side right now externally and internally?

Following the onset of the Bolivarian Revolution and their ideological alignment, Maduro’s survival is now dependent on the support of Russia, China, Turkey, and Iran, along with the diplomatic support from blocs like the OPEC, the African Union and the Arab League. Although the support from these states will further depend on how Maduro continues to manage the ongoing crisis, whilst simultaneously satisfying Moscow and Beijing’s interests and investments which are at stake along with the political future of Venezuela. Meanwhile, Maduro still relies on the support of a significant part of the armed forces - particularly the Army and the National Guard at the higher and medium ranks. He is also relying on the strong support from pretorian militias and the groups which control any attempts of protests by civilians on the streets.

Moreover, Guaido is the current leader of the opposition’s strategy and the potential candidate for Venezuela’s presidency, and he is backed by Washington, a majority of the European Union, South America and Canada. These nations have continually denied the recognition of Maduro as Venezuela’s President. While the opposition might be fragmented due to the various political parties and organisations failing to amalgamate and capitalise on public discontent they might have a great chance to oust Maduro this time if they act smart.

Do you think Juan Guaidó has chances of succeeding in orchestrating a change of power?

Undoubtedly, this could be the best chance for the opposition. Under the strength of a young leader like Juan Guaido, with his team gaining direct political and financial support from Washington, the opposition definitely has the potential to exercise control and devise a strategy which works against Maduro and his forces. Yet, much will depend on Guaido’s ability to capitalise on the current scenario and strategize in a smarter way vis-a-vis previous attempts by the opposition. He must also avoid societal and organisational fragmentation, and personal or group aspirations if he aspires to displace the current administration. The critical move will also depend on how Guaido attempts to gain backing from the armed forces before any potential transition, and convinces them to eventually turn their backs against Maduro.

If there is a change of power in Venezuela and the country were to rebuild itself, how do you think it should protect the utilisation of its natural resources in a manner that it prevents disharmony and discord in the nation?

If the country fails to undergo a political transition soon, and if Maduro remains in power until the end of his term with no major economic reforms being enacted by his administration, then it is inevitable that the economy will worsen due to the eventual deterioration of oil production, infrastructure, and exports. The ongoing pulverisation of the currency, and the lack of basic services like water, healthcare, and electricity which produce power outages nationwide, might lead Maduro to depend exclusively on foreign loans and financial aid from Moscow and Beijing. These actors continue to view Maduro as the safer bet for their investments as opposed to when (and if) Guaido concedes power. If massive restructuring of the oil and gas sector is not enacted efficiently and quickly, then more problems will undoubtedly continue to hit Venezuela in the mid- and long-term.

To recover the oil sector and utilize natural resources in a sustainable manner, the primary input that is required is crucial investment from multilateral institutions to recover the aging and deteriorating national infrastructure. Wells, ports, fields, platforms need to be directed in the correct way. Following this, clear rules of the game for local and foreign investors are needed to enhance the ease of doing business. We also require the joint participation of the state and its holdings through PDVSA (Petróleos de Venezuela, S.A. is the Venezuelan state-owned oil and natural gas company.), who otherwise direct their efforts exclusively to exploiting and producing oil, gas, gold, silver, and aluminium - not for political purposes and ideological projects or to divert money to fund dark projects and keep the administration in power - but to work earnestly for the development and modernisation of the energy sector. Most importantly, there is a need to enhance education and training in these areas and to employ skilled personnel for these highly specialised sectors. Essentially, we must continue our efforts to diversify Venezuela’s economy in order to avoid the crisis caused by the resource curse and prevent it from harming the country in the future. We must also prevent the military from managing these sectors in exchange for political support from any upcoming administration.