Former Ambassador: Economic Collapse Possible in Venezuela

March 3, 2016
Taxes & Trade




Mired in a profound economic recession, Venezuela is at a defining moment in its history, according to Patrick Duddy, a visiting senior lecturer at Duke University's Fuqua School of Business. Duddy was U.S. ambassador to Venezuela from 2007-2010 under presidents George. W. Bush and Barack Obama.

In December, the Democratic opposition in Venezuela won a majority in the national legislature for the first time since Hugo Chavez rose to power in 1998. That election result was widely seen as a sign of frustration with the Chavist economic and the performance of his successor and current President Nicolas Maduro.

But the new majority faces mighty social and economic obstacles.

"The economy is collapsing," Duddy said. "Inflation has been acknowledged at the present moment to be over 150 percent, and the International Monetary Fund expects inflation to surge to over 700 percent this year. The IMF also estimated the GDP contracted by 10 percent last year and it is widely expected that it will continue to contract in 2016. The currency has declined precipitously and the levels of criminal violence are extraordinary by any measure. Most international observers think Caracas may now be the single most violent capital in the world. Venezuela is probably the second most violent country in the world, after Honduras, among countries not at war."

Duddy said concerns about the deterioration of press and economic freedoms in Venezuela are also widespread, as are the human rights concerns. This has been particularly heightened by the arrest and confinement of a number of individuals outside groups consider political prisoners. Those factors have combined to intensify international concerns for the future according to Duddy, who was one of the Department of State's most senior Latin American specialists in trade, energy, public affairs and crisis management.

Duddy said the new legislature brings the opportunity for change, but that its path forward is far from clear.

"It's an extraordinarily difficult moment," Duddy said. "The economic numbers are not promising, but it's clear that within the opposition there is still faith in democracy. The question is where they go from here. With the country essentially prostrate economically, with political divisions as sharp as they are and a deep concern for the human rights situation, there are many around the hemisphere who are apprehensive for the future of Venezuela."

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