The day before my sixth birthday, February 22nd of 2003, I found my mother crying in the living room with the newspaper in her hands. As a child, I really didn’t understand what was going on. Only afterward, I would understand what happened: My mother had been fired from the state oil company, PDVSA, after 13 years of service.

Oil runs deep in my family. My grandfather worked in Shell since his sixteenth birthday, as a technical drawer. He never finished high school due to his work, but went on to work for 50 years in the oil industry, first for Shell and then for PDVSA. He raised his kids in a middle-class home with his PDVSA salary. He owned a house and two cars, and his three children went to college.

When Hugo Chávez came to power, he made the wise decision to retire. I remember, as a kid, how he bought food in bulk with his retirement pension. Every week, he bought me my favorite Hot Wheels, too. His pension was generous enough that he could help my mother and my aunt financially in raising their children.

Fast-forward 20 years and his pension does not reach $100 per month. My grandmother, who raised three children and four grandchildren with equal parts motherly love and an iron rod, earns a $6 monthly pension.

The oil industry is the blessed curse of Venezuela. It allowed the country to develop faster than most countries in Latin America. But it also became the center of state paternalism in Venezuela. In 2001, the National Assembly approved an enabling law for Chávez. In Venezuelan legal jargon, an enabling law allows the president to bypass the legislative power and legislate himself at will. Chávez used it to pass 49 laws in a single day, radically changing the oil, fishing, agricultural, and port industries. Meanwhile, unemployment sat at 17%.

The country was a ticking bomb. On April 11, 2002, after weeks of countrywide protests, Chávez was ousted in a coup only to return to power a couple of days later.

In December 2002, PDVSA went on a strike after Chávez fired the company’s board of directors and modified the Oil Law. 

In Venezuela, oil was nationalized in 1975 and, with it, PDVSA was born. The company had a strong track record of being a professional, meritocratic, and apolitical company that had fueled (pun intended) the country’s rapid development from the 70s. Thus, Chávez’s firing of the board of directors, and replacing them with left-wing ideologues, was seen as a step back.

After the nationalization in the 70s, oil minister Juan Pablo Pérez Alfonzo forebodingly said that oil was not black gold, but the Devil’s excrement.

The strike formally ended on February 9, 2003. Its main consequence was the firing of over 18,000 employees—about half of PDVSA’s payroll—who had supported the opposition in an attempt to oust Chávez. The number, of course, included my mother. Most of those 18,000 employees went abroad and provided companies such as Shell, Chevron, and QatarEnergy, with invaluable technical knowledge. The now-large Venezuelan community in Houston mostly started with former PDVSA employees, hired by American oil companies.

Those who stayed had a hard time. Most were considered unhirable anywhere else because companies were courting trouble by hiring traitors to the revolution. The school where I studied allowed my mother, along with other former PDVSA employees whose kids attended the school, to make ends meet by selling dairy in the school on the weekends. My godmother was then kind enough to take the risk and hire my mother in her company.

Chávez filled PDVSA with loyalists with no knowledge of how to run an oil company. He consolidated his control over the company to use it as his personal cash cow, through a government fund called FONDEN, which was never allowed to be audited. PDVSA had 35,000 employees at the time of the strike and produced 3.2 million oil barrels per day. In 2019, that number had risen to 140,000 employees producing around 700,000 barrels per day. It was used to fund social programs all over the country without any checks, balances, or control over how the money was spent. At least $9 billion went unreported by the Ministry of Economy—no one knows where they ended up, but quite likely, a few mansions were built and a few Ferraris were bought. Moreover, of the money that was actually spent, a large swath of it went to infrastructure projects that were never finished, such as a train system or improvements for the electrical system.

This meant PDVSA became a hotspot of corruption in Venezuela, already one of the most corrupt countries in the world.

After the nationalization in the 70s, the oil minister and one of the fathers of OPEC, Juan Pablo Pérez Alfonzo, forebodingly said that oil was not black gold, but the Devil’s excrement. Venezuela goes where oil goes. Though it had been an oil-dependent country for almost a century, Chávez and Nicolás Maduro only increased this dependency. In 1999, when Chávez came to power, oil represented 80% of Venezuelan exports. Now it is 95%.

If the oil industry is corrupt, the rest of the Venezuelan state will be too.

Now Venezuela is having its first purge within the ruling party in years. First, Heriberto Perdomo, a fairly unknown businessman and attorney, was allegedly found to have $36 million dollars (enough to pay baseball star Mike Trout’s salary for a year) in cash in his house to bribe judges in Caracas.

Then, Joselit Ramírez, the President of the National Cryptoassets Superintendence, was arrested because $3 billion (about the amount of Aruba’s GDP) in oil sales simply disappeared. A Venezuelan policy expert calculated that the amount would be enough to build 12,000 outpatient clinics, raise the salaries of the over 500,000 teachers in the country up to $490 per month, or raise the public retiree pension to $62.5 per month.

Ramírez was the right-hand man of Tareck El Aissami, the oil minister of the government—and its main link with the Iranian regime, which helped Venezuela circumvent American sanctions.

With a complex system that involved cryptocurrencies, Iran, and many intermediaries, El Aissami and Ramírez created a system that allowed Venezuela to avoid sanctions and sell oil, while also creating new opportunities for corruption.

El Aissami tendered his resignation as oil minister. No charges were brought against him.

This man was long considered one of Maduro’s closest allies, and his party had links with terrorist groups in the Middle East such as Hezbollah, allegedly providing them with Venezuelan passports and IDs while he was head of the Venezuelan ID office.

Moreover, Reuters revealed that an audit of PDVSA showed that out of $25.27 billion in oil exports between January 2020 and March 2023, the company could only account for the reception of $4.08 billion in payments. Of the unpaid $21.19 billion, about $3.6 were deemed unrecoverable by the audit.

Over 20 PDVSA directives were jailed for this—but there were no high-ranking officials among them.

Some might welcome this news, as evidence that Maduro is taking corruption seriously. That is what a State Department spokesman seems to have hinted when he said that the US supported “the efforts to root out corruption, including in Venezuela.” Sadly, this is far from true. What we see in Venezuela is one regime faction trying to destroy the other. After all, no one is interested in investigating what happened to the money that disappeared from FONDEN. Or to the $300 billion or so that the former Minister of Planning, Jorge Giordani, declared to have been stolen from the currency control system, CADIVI, over the course of a decade.

If the amount stolen from CADIVI were a US state it would have the 25th biggest GDP in the Union. 

Plundering is the only appropriate word for what happens in Venezuela under Chávez and Maduro. The Venezuelan regime complains on a daily basis about US sanctions, but with these levels of corruption and sheer incompetence, it seems that the country’s destiny would hardly be different without sanctions. There would be just more bounty to loot.

But Chavismo was not the source of these issues, only its worst symptom. Venezuela was not a free-market paradise that Chavismo destroyed, but most of the paternalistic and corrupt practices that Chavismo exacerbated were already there on a smaller scale.

At a certain point in the 90s, even horse racetracks were state-owned. The bigger the state, the bigger the opportunities for corruption. That same corruption eroded trust in the democratic system in Venezuela. Rising poverty amid an economic crisis worsened the problem in the 90s, eventually propelling Chávez to power.

Even if most Venezuelans agree that oil dependency is a bad thing, however, it is the asset available to start a recovery of the economy of the country. 

The year 2022 was supposed to see a recovery in Venezuela. Since 2019, the government had loosened some of the most extreme socialist measures in the country, such as currency and price controls, and importation tariffs. The economy started to de facto dollarize, slowly but surely. Salaries improved slightly, and the downtowns of the biggest cities in the country were filled with restaurants, discos, cafés, and bodegones, small shops filled with imported products.

A Ferrari dealership opened in Caracas, as did a store called Avanti, specializing in high-end brands such as Gucci, Alexander McQueen, Versace, and Valentino. These wares sold for over $1000 apiece. Most of the people who can afford this are, of course, linked to the government.

Venezuela has become the most unequal country in Latin America. The poorest 10% in Venezuela survive on $8 a month; the richest 10% earns $553.

The projected GDP growth was expected to be close to 20%, while a tightening monetary policy would finally get inflation under three digits. The government announced major plans to recover the oil industry and the electrical system in the country. The first occurred, as GDP grew by 17% in 2022. The rest, not so much. However, this comes after an 80% drop in the GDP between 2013 and 2021. The economy would need to continue growing for two decades at this rhythm to reach the level it was at before the crisis started in 2013. As the local political analyst Enderson Sequera told me: “It’s not an equivalent to China growing at 10% per year, but more like a malnourished person who goes from weighing 50 lbs to 55 lbs.”

Inflation closed at 305% because of strong growth in November and December when the government started printing money to pay the Christmas bonuses of public employees. Thus, many analysts believe that in 2023, Venezuela could be back to hyperinflation.

The local currency, the Bolívar, devalued by 73% in the year. According to a study by CEDICE, a local think tank, a family of three needs at least $507 per month for basic expenses, which is a 310% increase in bolívares from 2022 and a 27% increase in USD. While government-connected attorneys have stacks of cash in their houses and launder money with high-end buildings in Caracas, a public school teacher earns $6 per month. Meanwhile, the Minister of Education (who was accused of stealing $100,000 while serving as governor of Delta Amacuro) told teachers to put their “conscience” before “material goods.” 

Thus, Venezuela has become the most unequal country in Latin America. The poorest 10% in Venezuela survive on $8 a month; the richest 10% earn $553. That might not seem like much in the US, but it is 69 times more than the poorest 10%.

And to continue growing at this rate or more, structural reforms are needed. It’s about rooting out corruption, for real, and providing trust to investors. It’s about strengthening property laws and selling many government assets.

The Venezuelan state owns banks, airlines, supermarkets, oil companies, mining companies, cement companies, airports, ports, phone companies, electrical companies, and more. There’s been plenty of talk about privatization in Venezuela after the leading opposition candidate for the 2024 election, María Corina Machado, came out in favor of privatizing all state-owned companies, especially PDVSA. In principle, this would be a step forward, but without any institutional strength and transparency whatsoever, such privatization processes may leave the country in the hands of a few oligarchs, as happened in Russia after the Soviet Union.

Plus, without access to credit, local investment is nothing short of impossible (unless you have $36 million in cash in your home, of course). The problem is that Maduro has been slowly but surely raising the reserve ratio in the banking system from 17% in 2013 to 73% in 2023. This means that banks must hold onto at least 73% of the money their customers deposit instead of lending it or investing it. They’re also prohibited from lending in US dollars, which renders it almost useless. Maduro did this to limit spending, thus reducing liquidity and keeping inflation at bay.

However, 2023 seems to be a year of high oil prices, which will likely mean that none of these structural reforms will be implemented. The Devil’s excrement continues to rule the destinies of Venezuela. Improvisation and corruption will continue to run rampant.

Bochinche is an untranslatable slang term in Venezuelan Spanish. It means “party,” but it also means an uproar or a fracas. It is an attitude of not taking anything too seriously—not even when you should. Venezuela itself is a bochinche where nothing works as it is supposed to, while the poor dance and smile with an empty stomach, and the rich dance and smile paying $140 per sitting in a (literally) floating restaurant. It is not strange to see why Francisco de Miranda, one of our national heroes, said after being betrayed, captured, and shipped to Spain amid our Independence War: “¡Bochinche, bochinche! Esta gente no sabe hacer sino bochinche!” (¡Bochinche, bochinche! These people do nothing but bochinche!)