Can Venezuela finally reap its oil riches after election?

Over the past 10 years, Venezuela has seen a brain drain of unprecedented proportions, as 8 million people have left the South American country — about a quarter of its entire population.

Suffering from a severe food crisis, hyperinflation and a massive loss of skilled workers, Venezuela's economic and humanitarian crises are mainly the result of failed economic policies under socialist President Nicolas Maduro and his firebrand predecessor, Hugo Chavez. The situation has worsened amid sanctions imposed by the United States and Europe on the two leaders for their political repression and human rights violations.

Sunday's presidential election will Maduro against opposition candidate Edmundo Gonzalez Urrutia. A former diplomat, Gonzalez belongs to the Plataforma Unitaria Democratica, a political alliance made up of civil society, trade unions, retired military personnel and former deputies of the National Assembly.

Gonzales has vowed to curb "Chavismo," or Chavism in English, which is a kind of left-wing populist ideology introduced by Chavez advocating nationalization, social welfare programs and opposition to neoliberal economic policies such as those pursued by the International Monetary Fund.

The election will not only determine the future of politics but also whether the country can eventually reap the benefits of its oil wealth. 

Oil wealth and a promise of growth

Venezuela has the largest proven oil reserves in the world, estimated by the US Energy Information Administration at around 303 billion barrels. This puts it ahead of Saudi Arabia, which has about 267 billion barrels.

Over the course of his campaign, Maduro has promised to use oil revenues to start "a blessed and wonderful era of growth and prosperity." His agenda for a new term in office includes financial support for those willing to start businesses, with additional state funding to be earmarked for "up to a million businesses."

Venezuelan voters, however, seem to be giving little credence to Maduro's promises, as they have put Gonzalez in the lead in pre-election polls. Maduro's economic record since taking office in 2013 has been abysmal.

Venezuela's gross domestic product was $8,629 (€7,946) per capita about 10 years ago. It plummeted to $1,566 per capita by 2020, and has since only slightly recovered. A similar trend occurred in oil production, dropping from 137.9 million tons in 2013 to 34.5 million tons in 2021, before slightly rising again over the last two years.

"The Venezuelan economy shrunk by almost 80% during the Maduro years," said political scientist Ronal Rodriguez from the University of the Rosary in neighboring Colombia, adding that the country has lost a quarter of its population. Speaking with DW, Rodriguez said that it would require sustained growth of more than 15% over several years for the economy to make up for the crisis years.

What else is at stake?

Rodriguez noted that one of the biggest problems for recovery is the shortage of skilled labor.

"Unfortunately, a large portion of trained professionals has left the country," he said — an exodus that already began under Chavez, who "stigmatized" the oil sector and dismissed thousands of well-qualified professionals, replacing them with his allies.

As a result, Venezuela's oil production in the last year before Chavez's death in 2013 slumped dramatically to 1998 levels.

Restoring oil sector personnel is extremely complicated, said Rodriguez, because university faculties dedicated to oil in Venezuela "no longer have the prestige they once did."

Regardless of the election results, he believes it will be "quite difficult for Venezuela to regain economic momentum," also given the huge influence of the ruling Socialists, adherents of Chavism, on the economy.

"Economic recovery in Venezuela is only possible if Maduro steps down and a new government that respects private property and the rule of law takes over," said Venezuelan political scientist Enderson Sequera.

A victory for Maduro would be an "insurmountable obstacle" for Venezuela's economic recovery, he told DW. It would mean "six more years of poverty, a worsening humanitarian crisis, and more Venezuelans leaving the country."

Sequera believes that in contrast, a victory for Gonzalez would be a chance to speed up the recovery, attract international investment, especially in energy and oil, negotiate stabilization programs with the IMF and multilateral organizations and achieve currency stabilization.

Maduro's legitimacy faces public test

Vladimir Rouvinski from the Icesi University in Cali, Colombia, said the upcoming election will be a popular test of Maduro's legitimacy. If he wins, he could gain more legitimacy, he said, which in turn could have an effect on the US-imposed sanctions regime.

Washington has recently softened its stance toward the Maduro government and lifted some sanctions on Venezuela's oil industry. As a result, US oil company Chevron was able to increase its Venezuelan production by 70% by the end of 2023.

Rouvinski therefore thinks that even if Maduro wins, "several countries could begin to engage in greater economic activity." He considers a change of power to be unlikely.

"Chavismo will not relinquish power under any circumstances," he said.

This article was originally written in German.