“I never worked in the oil industry, but oil decided I had to leave.”
Eddy, who asked to only be identified by his first name, once worked as a swimming coach in Venezuela and now lives in the Dominican Republic. He didn’t leave out of choice, but out of necessity. It was not just economic instability that cemented his decision, but the precariousness of his future. “The economy of the country revolved so much around [oil] that when the system started to fail, the rest of the sectors were pulled down with it,” he said.
Eddy never imagined leaving the country he loves, and the choice took years to make. Eventually, he could no longer continue to adjust to the country’s worsening conditions. He simply saw no future in the place he called home.
His story is not unique. Since the early 2000s, nearly 7.9 million Venezuelans have emigrated. This exodus is driven by uncertainty, as currency restrictions, nationalization, and shifting regulations have made it increasingly difficult to sustain a business or plan for the future. While the oil industry helped to shape the country’s trajectory, the deterioration of state institutions bears the ultimate responsibility.
Venezuela’s oil abundance in the mid-1900s once promised prosperity and global prominence. Instead, that resource exposed structural weakness. Harvard Political Economy Professor Ricardo Hausmann noted that in 1970, Venezuela had become “one of the richest 20 countries in the world.” However, this prosperity was short-lived. The economy plummeted sharply in the early 1980s, as both non-oil and oil GDP began a long decline.
How does a country so resource-rich end up in an economic crisis? The answer lies in the governmental framework that concentrated control over national wealth. As José Ignacio Moreno León, former Venezuelan Minister of Mines and Energy, argued in an interview with The Politic, “Venezuela’s problem has not been oil itself, but the rentier framework historically constructed to manage the resources it generated.”
A critical turning point was the nationalization of the oil sector in the 1970s. Evanan Romero, former Venezuelan Vice Minister of Energy and Mines and former Director of Petróleos de Venezuela, S.A (PDVSA)—the biggest Venezuelan oil company—explained that this policy fundamentally restructured the industry “by transferring full operational authority to the state, eliminating the autonomy that previously existed.” The 1976 nationalization gave rise to PDVSA, a fully state-operated oil company.
Romero highlighted that while Venezuela was supposed to diversify its sources of income, oil revenues were so overwhelming they “discouraged the development of other sectors.” This created a mono-productive economy.
Even as oil generated immense revenue, much of it was absorbed by the costs of sustaining production and maintaining PDVSA’s expanding bureaucracy. This created a structural tension between the company’s operational demands and the state’s broader fiscal responsibilities. “The amounts that the company demanded to continue producing came into conflict with what the country required to sustain its own structure, its bureaucracy, and its needs,” Romero said.
In the early 1990s, the state briefly pivoted. Under President Carlos Andrés Pérez’s, “La Apertura Petrolera” sought foreign investment and liberalization efforts. These policies represented a significant departure from Venezuela’s earlier state-dominated model.
Even though the “Oil Opening” was short-lived, it had long-lasting political effects.
Domestically, public dissatisfaction grew. Karen Koenig, a Jewish Venezuelan who lived in the country most of her life, told The Politic that during her time at university in Venezuela, “protests against market-oriented policies occurred regularly—many opposed the Apertura, while many of us, students, supported it.” After years of relying on oil rents—the source of over 90% of Venezuela’s exports—the economy struggled with rising debt and inflation, weakening trust in Venezuela’s traditional political parties.
Venezuelan Literature Professor Jesus Puerta at Universidad de Carabobo noted that, in this tense climate, the Apertura Petrolera quickly became politically charged. Reform-oriented officials—largely from the social-democratic Acción Democratica party—supported the opening.
On the other hand, nationalists and anti-neoliberal factions opposed privatization, believing it to be a threat to control over the country’s most vital resource. As a result, the policy was widely framed as a neoliberal initiative that risked Venezuela’s sovereignty and national wealth. The ideological divide reflected a conflict over the structural and political transformation of the oil industry.
The wave of anti-neoliberalism was rekindled when Hugo Chávez, founder of the Revolutionary Bolivarian Movement-200, and former Lieutenant Colonel, rose to power in 1998. According to Venezuelan historian Rafael Arráiz, a professor at Universidad Metropolitana in Caracas, “Chávez reshaped Venezuela’s political makeup, consolidating authority in the presidency, subordinating other branches of government, and strengthening the state’s role in political and military institutions.” Despite previous attempts at market reform, the return to heavy state involvement met relatively little resistance. Decades of oil-funded public spending made extensive state involvement familiar, leaving many citizens more receptive to state-led development.
At the same time, this reliance on oil revealed deeper problems. As Arráiz noted, when oil becomes the central pillar of the state, “oil ceases to be merely an economic resource and becomes political.”
Chávez’s 14 year-presidency marked a turning point. He did not allow for the full development of the Apertura and “returned to the stage in which [PDVSA] took 100% control of the industry.” While Romero describes operational return to full state control, Moreno León viewed the shift as more than administrative, explaining that “the original framework established after nationalization became distorted. PDVSA was assigned responsibilities unrelated to core petroleum activity, and the harmful politicization of the industry deepened.”
The transition was not seamless. Many foreign oil companies that refused to cede control saw their assets expropriated. Major players like ExxonMobil and ConocoPhillips were forced to abruptly abandon their operations and filed for international arbitration to recover compensation from the Venezuelan government.
Even with international opposition, Chávez appealed to many Venezuelans through his left-wing populist political style, which was charismatic and confrontational. Arráiz explained that Chavez “framed his movement as a political moral struggle between the marginalized majority and a corrupt elite.” The country soon polarized between pro-Chávez supporters (chavistas), largely drawn from lower-income communities and public-sector workers, and an opposition coalition of business leaders, the urban middle class, and university students.
While oil revenues financed social programs and strengthened Chávez’s political goals, the lack of oversight led to further corruption. The non-profit organization Transparencia Venezuela has identified more than 400 cases of corruption tied to the Chavista government. As of March 2023, known corruption transfers totaled USD 68 billion—an amount seven times larger than Venezuela’s national reserves.
The consequences of these policies eventually trickled down into everyday life. Alongside her husband Boris Shamis, Koenig recalled how “the effects weren’t instant; you would be in a mall, and the escalators wouldn’t be working because the companies that once maintained them had either left the country or no longer existed.” She elaborated that “even though we knew things in the country were getting worse…every time something happened, you got used to it, so your new reality became worse and worse over time.”
For Koenig and Shamis, the breaking point was the economic uncertainty generated by the Exchange Administration Board (CADIVI). Created in 2003 to limit capital flight, CADIVI restricted access to U.S. dollars. Because the exchange board could not process foreign currency requests efficiently, the Central Bank supplied only a fraction of authorized currency. This forced businesses to rely on the volatile bolivar or a prohibited black market for dollars—an arrangement Koenig notes the government was well aware of.
Chávez further squeezed the private sector with the 2011 Law on Fair Cost and Prices. While the law aimed to curb inflation by setting price caps on consumer goods, it ignored the reality of importers who had to purchase goods using expensive black-market dollars. As a result, many business owners experienced unsustainable losses.
Former Minister Romero argued that many of Chávez’s policies contributed to Venezuela’s institutional collapse. Trust was completely lost, he explained, as Venezuela became “the extreme example of what happens when absolute control over strategic resources is placed in the hands of those in power.”
When Nicolás Maduro assumed the presidency in 2013, he did not reverse this model.“ Under this new leadership, Venezuela entered a period marked by hyperinflation, a dramatic collapse in oil production, and a decrease in human rights protections,” Koenig noted. Oil production declined drastically: once pumping as much as 3.5 million barrels per day in 2012, Venezuela’s crude production is now roughly 640,000 per day, a 70% decrease. Given that oil is the state’s central revenue source, this decline had profound consequences. As Moreno León observed, “the politicization of the industry has pushed the sector to the brink of bankruptcy, into heavy indebtedness, and into disgraceful levels of corruption.”
Maduro met this crisis by extending Chávez’s previous restrictive price control legislation. Romero explained “the law made it a crime to use foreign currency acquired through official mechanisms for purposes other than those authorized, with penalties.” This only fueled the black market for U.S. dollars, further depreciating the bolivar and stoking hyperinflation.
Beyond economic ruin, Maduro’s authoritarian government oversaw wide human rights abuses. While the country experienced a serious economic decline, physical safety became a major concern. As a father, Eddy stressed that the loss of utilities was manageable, but the lack of rule of law was not. “What scared me most was sending my kids to school, because you would hear about someone being shot outside a school one day,” he said. “There was no safety or rule of law in the country. If Maduro decided one day he wanted to imprison a friend of yours who owns a business for not selling at the proper price, there was no one to stop him.” This existential insecurity, rather than just economic hardship, pushed thousands to flee.
The international response shifted dramatically when President Donald Trump intensified his stance against the regime. On January 3, 2026, Trump announced that the intervention was necessary to protect U.S. interests and ensure stability in the Western Hemisphere, asserting that American involvement would prevent hostile forces from threatening regional security. This move received surprising widespread support among some Venezuelan immigrants. “Many Americans assume that we, Venezuelans, oppose Trump’s intervention in the country, yet it was our government that first violated the law and continues to do so,” Koenig said. “His measures represent accountability for those in power who caused us so much damage.”
The case of Venezuela offers a lesson for the rest of Latin America and the world: when absolute control over strategic resources is concentrated in the hands of the state without institutional safeguards and accountability, corruption becomes systematic. Once seen as Venezuela’s ticket to economic security, oil instead uncovered systematic vulnerabilities that restructured institutions and upended the lives of citizens. For Eddy, institutional weakness was not theoretical; it was the reason he had to leave home.
*All interviews were translated from spanish