In Caracas, Venezuela, President Nicolas Maduro recently won the presidential election, which gives him six more years to rule over a country that has fallen deep into economic ruin in an election that many critics believe was rigged.
Many of Maduro’s political opponents were not allowed to run, including the once prominent opposition leader Leopoldo Lopez who was imprisoned for “inciting violence” in 2014 and was later transferred to house arrest in Caracas where he remains today.
Others were at a heavy disadvantage by not having the resources or experience to take on Maduro, his state-run media platform and his promise of food to those who attended his rallies and showed up to the voting booths.
President Maduro, of the United Socialist Party of Venezuela, won with 67% of the vote in what is considered a snap election since it was initially scheduled for this December but then moved up to April and then later pushed back to the final date in May.
President Maduro took over the presidency in 2013 after the death of then-president Hugo Chavez as the former leader’s hand-picked successor.
He continued the trend set by Chavez of increasing the executive branch’s control over the other branches of government and curtailing freedom of the press and expression throughout the country.
It is widely believed that President Maduro used the country’s massive food shortage as a weapon to make people turn out and vote for him.
Venezuela is a founding member of OPEC, the organization of petroleum producing countries, with one of the world’s largest proven oil reserves of over 300 billion barrels.
Oil exports account for about 95% of the states global exports, mostly to the U.S. and China, and about half of the country’s GDP. In 2014, falling global oil prices in combination with rampant corruption and lack of efficiency led to many of the economic issues that can be seen throughout the country today.
The economic picture in Venezuela is grim, interest rates have climbed above 22% and inflation could reach 3000% by the end of this year. By foreign analysis, the country’s GDP contracted by around 9% in 2017.
PDVSA, the country’s states run oil company, has suffered massive production and quality setbacks that have added to the nations complete economic collapse. It is a common sight to see empty shelves in grocery stores around the country. People lack access to essential consumer goods like razors and shampoo, as well as for more critical needs like prescription drugs and basic medical supplies.
Doctors write their patients scripts for pills knowing that they will never be filled.
Foreign investment in the region is risky, PDVSA defaulted on a select group of its sovereign bonds in 2017, a trend that expected to continue in the future.
The EIA, U.S. energy information agency, predicts that Venezuela’s crude oil production will continue to fall until at least the end of 2019. As purchasing debt becomes riskier, foreign investors will have to make a bet on whether Maduro will remain in power over the next six years while the country continues to deteriorate.
Investors are also watching closely to see how the nation reacts to increasing sanctions pressure from the U.S. and other foreign powers.