Venezuela is experiencing critical shortages, prompting concerns that a humanitarian crisis will engulf this oil-rich South American country. Food, medicine, money, electricity, and water are all either rationed or unavailable, as Nicolas Maduro’s government confronts deep recession and drought.
The halving of the international oil price in a country dependent on oil for 95 percent of its export earnings has sharply reversed advances made in reducing poverty and inequality in the mid-2000s.
But Venezuela’s problems run deeper than an over-reliance on a volatile commodity. Since his election as president in 2013, following the death of Hugo Chavez, Maduro has significantly failed to address chronic problems of economic mismanagement, poor planning, opacity, and corruption.
His administration has retained debilitating price and exchange controls that fuel inflation, black markets, and shortages. In its ongoing quest to construct 21st-century socialism, the government has continued ad hoc and unaffordable nationalization programs.
Billions of dollars may yet be drained from the country in litigation for asset and land seizures, while an accumulation of unpaid bills and contracts have prompted speculation the state oil company, PDVSA, may default on upcoming interest payments on its debts.
Critical Shortages
No sector better represents the ambitions, limitations, and ultimately the failure of Hugo Chavez—and subsequently Nicolas Maduro—than Venezuela’s perennially rationed water. Currently struggling with drought caused by El Niño, the government announced extended Easter holidays in March, and the closure of shopping malls and a reduced working week in April.
These measures were intended to conserve electricity as water levels in the Guri hydroelectric dam, which supplies 65 percent of the country’s power, has fallen to critical levels.
In 2007, 2010, and currently, Guri’s water reserves dropped to 244 meters above sea level, just above the 240-meter limit at which it has to wind down generation, closing eight turbines at the loss of 5,000 MW.
A Troubled History
Venezuela has huge water resources, but in the wrong place. According to official estimates, 85 percent of water resources are located in the southeast of the country, home to only 10 percent of the population. By contrast, only 15 percent of water resources are in the rapidly urbanized north of the country where the bulk of the population lives.
