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Unbelievable isn’t it, but its true. You heard it right. But Right behind this low price there are other painful factors which makex this country vulnerable to economic changes.

What the Data Say:

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It might seem hard to believe, but it’s true. The country’s facing an economic crisis despite lower prices.

Let’s dive into the facts. Venezuela’s economy heavily relies on oil—over 90% of its exports and more than half of its government revenue come from it. When oil profits go up, the economy thrives. But when they drop, so does the country’s overall economic output.

Between 2012 and 2020, Venezuela’s oil revenues plummeted by a staggering 93%, leading to a whopping 72% decrease in per-person income. This collapse happened as the country ran out of foreign money to pay for vital imports.

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The decline started with falling oil prices between 2012 and 2016. Prices tanked from $103 to $36 during this time. The government’s excessive spending and poor management worsened the situation, making the country unprepared for the downturn.

Then, when oil prices began to recover in 2017, most expected a rebound in the economy. But that didn’t happen. Instead, oil production in Venezuela dropped significantly, a decline that sanctions likely played a role in.

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Analyzing oil production data reveals three critical points—when the U.S. imposed financial and oil sanctions and when it restricted foreign partners’ involvement in selling Venezuelan oil. Each time, there was a notable drop in oil output.

Another study showed that firms involved in joint oil ventures in Venezuela were hit hard, especially those that relied on international funding before sanctions.

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Some argue that Venezuela’s crisis began before sanctions, so sanctions couldn’t be the sole cause. But economic problems often have multiple triggers. Evidence suggests that before 2016, falling oil prices drove the crisis, while after 2017, sanctions stopped the country from recovering despite rising oil prices.

Sanctions weren’t the only strategy used against Venezuela. The U.S. also recognized an interim government, blocking Venezuela’s access to offshore assets. This choked its ability to trade internationally, affecting not just the government but also the private sector.

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Recently, Venezuela’s National Assembly ended the interim presidency, marking the end of a strategy aiming to change Venezuela’s leadership through international support. This approach failed due to flawed electoral boycotts, corruption scandals, and a lack of engagement with moderate forces.

To truly help Venezuela, a new strategy is crucial. It should focus on grassroots mobilization, work with civil society, and engage Maduro through fair elections, keeping the country’s interests at heart and avoiding actions that harm its economy.

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