Venezuela’s Economic Collapse: How US Sanctions Deepened a Crisis Born of Mismanagement
Venezuela’s economic freefall is a tale of two culprits: decades of domestic policy failures and the tightening grip of US sanctions. This analysis unpacks how external pressures worsened an already dire situation, offering crucial insights for policymakers and global observers alike.
Venezuela’s economic collapse stems from prolonged domestic mismanagement and was significantly exacerbated by U.S. sanctions. According to a UN special rapporteur, while the severe crisis predated broad sanctions, newer measures have deepened humanitarian suffering. The Washington Office on Latin America attributes over half of Venezuela’s economic contraction to policies like nationalizations, hyperinflationary spending, and corruption, noting sanctions further constrained recovery.
Practical impact: Sanctions limited oil revenue and access to global markets, intensifying shortages and inflation. This complex interplay underscores that resolving the crisis requires addressing both internal governance and external economic pressures.
Next steps: Future analyses should differentiate between pre-existing vulnerabilities and sanction-induced effects to inform targeted policy responses.
Venezuela’s economic collapse stems from long-standing domestic mismanagement but has been severely exacerbated by U.S. sanctions. Pre-existing issues—such as widespread nationalizations, hyperinflation, price controls, and corruption—had already crippled the economy prior to sanctions, with GDP contracting by half under the Maduro administration [source]. However, sectoral sanctions, particularly on oil exports and financial transactions, deepened the crisis by restricting Venezuela’s primary source of foreign revenue and impeding access to global markets [source]. UN Special Rapporteur Alena Douhan notes that while the crisis predates sanctions, newer measures have worsened humanitarian conditions and hindered recovery efforts [source].
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