7 January 2025, NIICE Commentary 12227
Shradha Arjyal Joshi
Donald Trump had consistently regarded Venezuela as unfinished business during his presidency, and the country remained a focal point of US foreign policy. In early January 2026, the United States reportedly initiated a covert operation in Caracas that resulted in the seizure of Venezuelan President Nicolás Maduro and his spouse, Cilia Flores. The development has intensified international debate over sovereignty, regime change, and the limits of external intervention.
The crisis in Venezuela can be examined through the institutional framework developed by Daron Acemoglu and James A. Robinson in Why Nations Fail. Their work establishes a theoretical foundation for understanding how political and economic institutions shape national trajectories, distinguishing between inclusive institutions that promote broad-based participation and extractive institutions that concentrate power and wealth. The authors note that while democracy in Latin America is, in principle, opposed to elite rule, its institutional roots often remain grounded in extractive systems. As they observe, democratic rhetoric in the region frequently coexists with entrenched elite dominance, limiting meaningful redistribution of rights and opportunities.
Political History and Democratic Foundations
Venezuela’s modern political history reflects this institutional tension. Rómulo Betancourt, widely regarded as the “Father of Venezuelan Democracy,” served as president during two critical periods (1945–1948 and 1959–1964). His leadership was instrumental in establishing democratic institutions, promoting political reforms, and safeguarding human rights and civil liberties. Betancourt’s era marked a deliberate effort to move Venezuela away from authoritarian rule toward representative governance.
A decisive shift occurred with the rise of Hugo Chávez, one of the most influential political figures in contemporary Latin America. A former military officer inspired by the ideals of nineteenth-century revolutionary Simón Bolívar, Chávez founded the left-wing Revolutionary Bolivarian Movement within the armed forces. His 1998 presidential campaign centered on promises to eradicate corruption, reduce poverty, dismantle the existing political system, and create opportunities for independent political actors. His electoral victory in 2000 secured one of the largest vote shares achieved by any Venezuelan leader in four decades.
Under Chávez, Venezuela became the first Latin American country to establish extensive political and economic partnerships with China. His frequent visits to Beijing and declarations that “the world will be multipolar” drew global attention and were widely interpreted as a challenge to US hegemony. Following Chávez’s death in 2013, Nicolás Maduro—his close ally who had served as vice president and foreign minister—assumed the presidency in 2014. Although Maduro’s ascent to power was framed as a continuation of Chávez’s revolutionary project, his leadership coincided with worsening political polarization and economic decline.
From Populism to Prolonged Decline
From the Chávez era through Maduro’s presidency, Venezuela experienced limited institutional reform and increasing economic mismanagement. Once the richest country in Latin America, Venezuela’s prolonged political turmoil eroded democratic norms and weakened state capacity. Centralization of authority, combined with an inability to stabilize the economy, steadily undermined the pillars of democracy.
The administrations of Chávez and Maduro were marked by what critics describe as persistent class conflict and extensive state interference in the economy. Rather than fostering inclusive institutions, government policies increasingly concentrated power within the executive, marginalized opposition voices, and constrained civil society. These trends deepened political divisions and contributed to institutional decay.
The 2018 presidential election further intensified the crisis. While countries such as Mexico, Turkey, Iran, Bolivia, Nicaragua, China, and Russia continued to recognize the Maduro government, the United States and the European Union instead acknowledged opposition leader Edmundo González. By 2019, Washington had imposed a series of sanctions and trade embargoes aimed at pressuring the regime. Cuba’s continued reliance on Venezuelan oil and its longstanding political alliance with Caracas provided additional support for Maduro, even as economic conditions deteriorated.
Despite international pressure, the Venezuelan crisis persisted without a clear resolution. Government rigidity compounded the hardships faced by ordinary citizens, while political stalemate prevented meaningful reform. The socialist model initiated under Chávez in 1999 and sustained under Maduro failed to deliver long-term political stability. As a result, Venezuela’s global rankings for political freedom declined sharply, accompanied by severe human rights concerns and deepening social and humanitarian crises.
Oil Dependency and Domino Effect on Economic Downfall
Venezuela’s economic downfall is inseparable from its historical dependence on oil. In the 1950s, the country ranked among the world’s wealthiest nations. The perception of vast oil reserves as an economic multiplier fueled rapid growth during the oil boom of the early 1970s. By 1982, Venezuela recorded the highest GDP per capita in Latin America, at approximately $8,690.
However, reliance on oil revenues proved unsustainable. When oil prices declined, the government faced limited options: raising taxes, imposing austerity, or increasing borrowing. Debt accumulated rapidly, and economic vulnerabilities intensified. In February 1989, widespread protests erupted against government policies, culminating in riots and social unrest that claimed nearly 300 lives.
Since the 1990s, Venezuela has experienced multiple economic downturns, accompanied by rising inequality and public dissatisfaction. Chávez capitalized on this discontent by presenting himself as a nationalist reformer committed to curbing inflation and restructuring the economy. Yet his policies failed to address underlying structural weaknesses.
Infrastructure deteriorated, economic output contracted, and Venezuela became poorer than it had been in the early twentieth century. Price controls, property seizures, and widespread nationalization severely restricted economic freedom. Beginning in 2000, Chávez launched an ambitious nationalization program designed to expand state control over key industries. The policy drove private investment out of the country, deprived industries of technical expertise and capital, and led to declining efficiency within state-run enterprises.
To offset these consequences, Chávez strengthened ties with China, Russia, and Cuba, securing financial and political backing. Subsidized distribution of goods and expanded welfare programs temporarily alleviated poverty. Between 2003 and 2013, poverty rates reportedly fell from 61 percent to 34 percent. However, these gains were heavily dependent on high oil prices and unsustainable public spending.
When oil prices collapsed after 2014, Venezuela was unable to finance essential imports. Inflation surged beyond 50 percent, forcing Maduro to cut public expenditure. By mid-2016, mass demonstrations erupted across the country. The failure to diversify the economy or encourage domestic production left Venezuela highly vulnerable to external shocks.
Humanitarian Crisis and Mass Migration
The prolonged economic collapse triggered one of the largest migration crises in Latin American history. By 2024, nearly eight million Venezuelans—approximately 20 percent of the population—had fled the country due to shortages of food, water, medicine, and basic services. The exodus placed significant strain on neighboring countries and highlighted the severity of Venezuela’s humanitarian emergency.
Intervention, Resource Conflict, and Global Power
US involvement in Venezuela has reignited debate over the motives behind foreign intervention. While framed as support for democracy and human rights, critics argue that access to natural resources—including oil, minerals, and agricultural land—remains a central consideration. Historically, US foreign policy in the Western Hemisphere has been shaped by the Monroe Doctrine, introduced by President James Monroe to deter European interference.
In recent years, the doctrine has been reinterpreted as an assertion of US influence across Central and South America. Critics contend that this approach has increased regional instability rather than promoting democratic governance. The Venezuelan case illustrates the limits of coercive strategies, as decapitating political leadership does not automatically transform entrenched institutions.
Conclusion
Lasting change in Venezuela depends on rebuilding institutions, restoring economic credibility, and fostering inclusive political participation. External pressure alone is unlikely to deliver sustainable reform. The international community’s response to recent developments will be critical in shaping Venezuela’s future and the broader contours of a multipolar global order. Establishing democracy through coercion remains profoundly challenging, underscoring the enduring importance of institutional reform from within.
Shradha Arjyal Joshi is an MPhil/Phd scholar at the Central Department of International Relations and Diplomacy, Tribhuvan University, Kathmandu, Nepal.
