London—In the end, oil wasn’t enough to keep Venezuela’s hyper-populist era alive. The crash of oil prices was of course the dominant cause as government giveaways that began 16 years ago at the dawn of rule of the late Hugo Chavez were unsustainable.
That’s because during the Chavista years, Venezuela developed no other economy, not manufacturing, not services, not even, given its fantastical crime rate, tourism. The country is the classic example of the oil curse, a theory that countries that over-depend on natural resources, throw the money around in good times and build up non-productive state bureaucracies inevitably head for a devastating fall. In the end, you can’t eat oil.
So the coming legislature, dominated by the pro-capitalist opposition, is calling for investment from abroad in something else other than petroleum. Building a diverse economy takes time and it’s not clear how much patience the restive population has. Observers in Venezuela suggested that the lack of basic consumer goods was one of the driving force for the defeat of President Nicolas Maduro’s Chavista party, along with massive corruption and inclination to jail dissidents and silence critics. People are going to want to see toilet paper and baby formula on the grocery store shelves soon.
So Venezuela has a tough road ahead–tougher even than Argentina, which just ousted a populist government but where there is a real economy lurking somewhere.
Not so in Venezuela.
The Nation blames Chavista mismanagement.
The Guardian ponders how to undo socialism.
Brookings on the coming political battles.