MINE CONTROL: Critics say Venezuela is making the same mistake with mining that it has with petroleum; it’s still relying on natural resources instead of building a more balanced economy.
JUAN BARRETO/AFP/GETTY
ACROSS THE globe, countries with massive oil reserves are often poor, corrupt and inefficient, relying almost exclusively on petroleum instead of investing in other industries. When prices are high, money abounds, but when prices fall, the economy often spirals into disaster.
Such a meltdown is now playing out in Venezuela, which has the world’s largest proven oil reserves. During the late 2000s, the nation’s oil and gas industry helped fund President Hugo Chávez´s ambitious social programs— from building massive housing projects to employing thousands of Cuban doctors. But not long after Chávez´s death in 2013, oil prices began to slide, and that, coupled with widespread corruption and poor economic management, has led to the country’s worst economic crisis in its history. Today, Venezuela suffers from hyper-inflation that might hit 1,660 percent this year, according to International Monetary Fund estimates. Every night, people line up in front of bakeries, pharmacies and supermarkets, hoping to buy what they need in the morning before there’s nothing left. In mid- to late April, protesters filled the streets of Caracas and other major cities to protest the government, where the police used tear gas and clashes left more than a dozen dead and many more wounded.