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The audacious U.S. special forces raid to capture Venezuelan leader Nicolás Maduro and bring him to the U.S. to face charges related to drugs and weapons trafficking could potentially lead to economic relief for average Venezuelans struggling under the regime’s socialist economic policies.
Venezuela’s economy is heavily reliant on oil exports and experienced a sharp downturn in the last decade as mismanagement of the state-owned oil company caused production to fall and the rest of the Venezuelan economy struggled under sanctions and socialist policies.
The Venezuelan economy contracted in terms of real gross domestic product (GDP) on an annual basis each year from 2014 through 2020 – including declines of more than 15% in 2016, 2017 and 2018; as well as declines of 27% or more in both 2019 and 2020, according to data from the International Monetary Fund.
Jorge Jraissati, president of the Economic Inclusion Group, told FOX Business that those dynamics have created very difficult economic circumstances for average Venezuelans, and that, “Average wages in Venezuela are extremely low in real terms. The official minimum wage remains frozen at 130 bolivars per month, equivalent to less than $1 per month at common exchange rates.”
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“Even when combined with government bonuses such as food or hardship stipends, many public sector workers only reach roughly $160 per month, while private sector employees often earn around $230-$240 per month on average,” Jraissati said.
“Household surveys also show average family income clustered in the low $200s per month in many regions,” he added. “These levels sit well below the cost of a basic food basket and essential goods. This is why 70% of people are in poverty.”
Jraissati noted that Venezuela’s economic struggles in recent decades are a stark contrast to the economic dynamism the country experienced for much of the last century before Hugo Chávez’s regime rose to power in 1998 and installed socialist economic policies over the ensuing decade.
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“For much of the 20th century, Venezuela was not a poor country,” he said. “Between 1920 and 1980 it was the fastest growing economy in the world, with GDP per capita expanding at an average of 6.4% per year, placing it among the 20 richest nations globally.”
“Living standards reflected this reality. Broad access to consumer goods, rising wages and sustained middle class expansion were the norm. That trajectory was reversed by socialist economic policies,” Jraissti said.
Chávez died in 2013 and was succeeded by Maduro, who consolidated power to establish a dictatorship through fraudulent and undemocratic elections.
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The dire economic conditions fueled an exodus of Venezuelans over the last decade, as rampant hyperinflation led to shortages of necessities like food and medicine. Inflation peaked at more than 130,000% in 2018, though it slowed to 190% as of 2023, according to the central bank.
“Since 2013, Venezuela has lost roughly 70% of its GDP, the largest peacetime economic collapse in the modern history of the western hemisphere,” Jraissati said. “Hyperinflation, expropriations, price controls and currency controls destroyed productive capacity and household purchasing power.”
Venezuela’s oil industry has experienced a significant decline over the past 20 years, and Jraissati added that broader economic collapse “occurred despite an extraordinary windfall” from oil exports.
“Between 2003 and 2013, the country received close to $1 trillion in oil revenues,” he said. “Today, more than 80% of Venezuelans live in poverty, and extreme poverty affects roughly half the population. This does not even count the 8 million people who left.”
Data from the Organization of the Petroleum Exporting Countries (OPEC) shows that Venezuelan production of crude oil was consistently above 2 million barrels per day from 2005 through 2016, when it began a marked decline – dipping below the 1.5 million barrel threshold in 2018 and falling under 1 million barrels in 2019.
