It is always dangerous writing about unfolding events. With that in mind, Part I is just about where we are now. Part II is about the future.
Assuming for the moment that Nicholas Maduro has indeed fallen from power and his regime is crumbling, everything that happens in the next few weeks are details. Venezuela’s constitutional system of government has been suspended to shattered since at least the mid-2000s, and any new government will literally be making things up as it goes along. Even if the new government is truly representative of the popular will and makes no mistakes whatsoever, Venezuela’s mid-term future is for chaos and degradation. The damage of the Chavez/Maduro years has simply been too deep-rooted and catastrophic for this story to unfold any other way.
Four main problems:
First, food. Venezuela used to be a significant food exporter, but a combination of outright theft, corruption, supply chain breakdown and state expropriation of private assets that resulted in those assets lying fallow, has reduced the country to importing roughly three-quarters of its foodstuffs. As other economic sectors decayed the ability of anyone to afford what food is available has shriveled and starvation set in.
In the best-case scenario with perfect management, political unity and deep international assistance, bringing Venezuela back to food-neutral will take three years. Venezuela is in the tropics, and when tropical lands lie follow they tend to go riotous pretty quickly. Add in the infamous low fertility of tropical soils and the Venezuelans will need to reform all the supply chains for fertilizers and pesticides and such just to get things started. That all takes time. And money.
In the meantime, the 30-million(ish) people who remain in Venezuela will either continue to starve or live on handouts. Either way, the political system will remain fragile and so very, very desperate for years to come.
Second is oil – both a problem in its own right and perhaps a partial solution to the money issue. The money part is obvious – oil brings in income that could be used to regenerate Venezuela’s agricultural sector. But neither is this quick or easy.
Venezuelan crude is some of the most expensive to produce in the world, and fetches some of the lowest prices. It is high in sulfur and thicker than toothpaste. Only highly-specialized technicians can coax it out of the ground, and many Venezuelan crudes require specialized equipment just to get it to port. There are also very few countries that can process it. Add in economic chaos and a whiff of political desperation and there will not be a long line of companies wanting to pour large volumes of cash into the country in the near-term. Adding as little as a million barrels per day of new output is likely at least a five-year project. Venezuela currently produces only about 1.6 million bpd, down from 3.4 million bpd when Chavez took power.
(Side topic: When the Saudi government saw Chavez angling for power, they did everything they could to encourage him, hoping his economic populism would wreck the country’s oil output. They picked the right horse.)
Making matters worse, technically – legally – Venezuela owes any new production to Chinese and Russian entities who have provided the Chavez and Maduro governments with billions of dollars of loans. Loans that were to be repaid with crude oil.