Venezuela in crisis: with its economy in free fall and a government looking more and more like a dictatorship, Venezuela is on the brink of disaster.

Author:Smith, Patricia
Position:INTERNATIONAL
 
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Kevin Lara Lugo died last July, on his 16th birthday.

With his mother and her boyfriend out of work and penniless, the teenager had spent the previous day foraging for food in an empty lot near his home in Maturin, Venezuela. The bitter yuca * he found and ate made him gravely ill and sent him to the hospital.

Hours later, Kevin was dead on a gurney, his mother watching helplessly as doctors rolled his lifeless body away. She says the hospital lacked the most basic supplies needed to save her son.

Kevin's death and his family's struggle to survive (see "One Family's Tragic Tale," p. 15) are symbols of everything that's gone wrong in Venezuela, a once-prosperous nation that's now on the brink of collapse.

The economy has ground to a halt. Crime is out of control. And the former democracy seems to be descending into dictatorship, as President Nicolas Maduro tries to cling to power.

"This goes beyond an economic and political crisis," says Ian Vasquez, a Venezuela expert at the Cato Institute in Washington, D.C. "This has turned into a humanitarian crisis."

Venezuela's turmoil has been a long time in the making. With the world's largest proven oil reserves, it was once one of Latin America's richest nations. But there's also been vast inequality between the rich and the poor. In 1998, those poor people rallied around a controversial socialist politician named Hugo Chavez and helped elect him president.

An Anti-American Populist

Chavez was a charismatic populist who vowed to break the grip that the elite had on power and redistribute the country's wealth. He nationalized many parts of the economy, seizing the assets of American agricultural, oil, and power companies. He used oil revenue to fund health care, education, and food subsidies for the poor. At the same time, Chavez became famous for his anti-American rhetoric. He once called former president George W. Bush "the devil."

When Chavez died of cancer in 2013, Maduro, his vice president, took over. But Maduro lacked Chavez's charisma, and the country's many long-festering problems began to come to a head. For years, Venezuela's economy had been kept afloat by oil exports. But the price of oil has plummeted in recent years, leaving the Venezuelan government effectively broke.

Even before the price of oil collapsed, Venezuela's economy was in deep trouble, largely because of a system of government-imposed price controls. The policy was meant to keep Venezuelans happy by requiring that certain basic goods, such as cooking oil and milk, be sold at low prices. The problem is that most importers stopped bringing goods into the country since they couldn't make a profit, and the price controls left no incentive for local producers to fill the gap either. This means factories haven't been able to get the raw materials they need and stores have nothing to sell.

Hyperinflation has made the country's currency, the bolivar, virtually worthless. The International Monetary Fund estimates that by the end of 2017, Venezuela's annual inflation rate (the rate at which prices increase) will be...

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