The Long Decline of Venezuela
Abstract
This study offers a comprehensive reinterpretation of the contemporary Venezuelan crisis through a long-term historical perspective, with the aim of moving beyond interpretations that attribute it exclusively to the political and economic dynamics of recent decades. The central thesis argues that Venezuela’s crisis did not begin with the rise of Hugo Chávez or with Nicolás Maduro’s subsequent political tenure, but rather with the very construction of the oil state at the beginning of the 20th century. From this perspective, Chávez represents the historical effect of a systemic crisis that has developed over the course of nearly a century, rather than its root cause.
Through an interdisciplinary approach that integrates economic history, political economy, and international relations, this paper analyzes the formation and evolution of the Venezuelan rentier state, highlighting how the centrality of oil rent has progressively shaped political institutions, the economic system, and the relationship between the state and society. This configuration has produced a highly centralized and vulnerable structure, in which the distribution of wealth has supplanted the development of autonomous productive capacities and democratic accountability.
The study also traces Venezuela’s gradual integration into the major transformations of the international order in the 20th and 21st centuries: from the expansion of Anglo-American and Dutch oil companies to the establishment of the Bretton Woods system; from the Cold War to the birth of OPEC; and on to financial globalization and the multipolar redefinition of global balances with the emergence of China and the return of the Russian Federation as a systemic actor.
Within this framework, the Venezuelan crisis is interpreted not as a contingent event, but as the point of convergence between internal structural fragilities and external geopolitical dynamics, which have progressively accumulated over the course of more than a century. The economic and institutional collapse of the 21st century thus appears as the final outcome of a long-term historical process, in which dependence on oil rents has progressively transformed Venezuela from a nation-state into a space of global systemic competition.
All this without failing to give due consideration to the fact that the Venezuelan crisis is—and, from a certain point onward, has also been—the historical result of a rentier state structure which, in a context of intense multipolar systemic competition, has also gradually transformed itself into a platform of no small significance within the vast landscape of so-called proxy geopolitical conflicts.
Introduction
The prevailing interpretation of the Venezuelan crisis often tends to identify the political phase that began with Hugo Chávez’s election in 1998 as the starting point of the country’s gradual economic, institutional, and social deterioration. While this interpretation does capture evident points of rupture in Venezuela’s recent history, it nevertheless risks producing an oversimplification that isolates the present from its historical context, reducing a long-term process to a sequence of contingent political decisions.
This study adopts a different perspective. It posits as its central hypothesis that the Venezuelan crisis did not begin with either Chávez or Maduro, but with the very construction of the Venezuelan oil state in the early decades of the 20th century. The emergence of an economy heavily dependent on the extraction and export of hydrocarbons has, in fact, brought about a structural transformation of the political and economic system, giving rise to a state founded on the management of rent rather than on the diversified production of wealth.
In this context, Chávez represents the historical outcome of a systemic crisis that developed over the course of nearly a century, not its root cause. His political rise, as well as the subsequent evolution of the Venezuelan political system, must be interpreted as the result of a process of accumulating structural imbalances: the concentration of economic power, the weakness of representative institutions, the progressive dependence on oil revenues, and the growing disconnect between the state and society.
Building on this framework, this study traces the formation of the Venezuelan rentier state as a foundational element of the country’s historical trajectory. The discovery and intensive exploitation of oil fields in the Lake Maracaibo basin, the entry of major international oil companies, and the subsequent centralization of energy resource management by the state gradually transformed oil from a mere economic resource into the very foundation of the domestic political order.
This configuration has produced extremely significant long-term effects. On the one hand, it fostered the formation of a highly centralized political system, in which the distribution of rent replaced the development of an autonomous fiscal and productive system; on the other hand, it made the country’s economic development structurally dependent on fluctuations in the international energy market. In the absence of genuine productive diversification, the Venezuelan state has gradually taken on the role of an intermediary for oil rent rather than a promoter of economic development.
This model was further consolidated in the post-World War II period, when Venezuela was fully integrated into the architecture of the international economic order established at Bretton Woods and, subsequently, into the strategic centrality of the U.S. dollar. The incorporation of Venezuelan oil into the dynamics of the Cold War strengthened the country’s geopolitical role, transforming it into a major energy player within the Western global balance of power.
Over the following decades, the creation of OPEC, the oil crisis of the 1970s, the nationalization of the energy industry, the financial globalization of the 1990s, and the gradual multipolar redefinition of the international order further complicated Venezuela’s position on the global stage. Throughout this process, the country has never ceased to be a strategic hub in the management of global energy resources, even as it remained internally anchored to a structurally fragile development model.
It is from this perspective that this study introduces a central interpretive framework for understanding the contemporary crisis: Venezuela’s transition from a rentier state to a space of global systemic competition. This transition does not imply the disappearance of the rentier model, but rather its gradual overlap with increasingly complex geopolitical dynamics, in which Venezuelan territory becomes a point of intersection between energy interests, monetary strategies, competition among powers, and new forms of economic and hybrid conflict.
The true novelty of this paper
The main interpretive innovation of this work lies in analyzing Venezuela not only as an emblematic case of the so-called “resource curse,” but as a structural node in the transformation of the contemporary international order.
From this perspective, the Venezuelan crisis is reinterpreted as the result of a long historical transition leading from a classic rentier state to a space of global systemic competition. Venezuela thus becomes a point of convergence where, over the course of more than a century, diverse processes have stratified and intertwined: the expansion of major international oil companies; the establishment of the dollar-based monetary order following Bretton Woods; the Cold War and the strategic centrality of energy; the birth and evolution of OPEC; financial globalization; the return of the Russian Federation as a geopolitical actor and the rise of China as a systemic power; as well as the emergence of forms of unconventional conflict, including the growing role of informal economic networks and transnational criminal networks.
If this chain of factors is considered in its entirety, the Venezuelan crisis ceases to be interpreted as a mere internal breakdown or as the result of individual misguided political choices, and instead takes the form of a structural historical process in which domestic vulnerabilities and international dynamics reinforce one another.
The theoretical implication of this approach is significant: Venezuela is not merely a state in crisis, but a paradigmatic case through which to observe the transformation of the relationship between natural resources, state sovereignty, and the international order in the era of multipolar competition.
Figure 1. Analytical framework proposed in this paper. The figure illustrates the five historical phases through which Venezuela evolved from a classic oil rentier state into a space of systemic geopolitical competition. Rather than depicting isolated political events, the framework highlights the cumulative interaction between institutional development, oil dependency, international power dynamics, and structural economic fragility
PART I – 1908–1958: Construction of the Venezuelan Rentier State
Venezuela entered the 20th century still as a fragile agricultural periphery, characterized by a subsistence economy and a weak, fragmented state structure that was deeply dependent on caudillist power structures. It was in this context that, beginning in 1908 with Juan Vicente Gómez’s rise to power, a phase of transformation began that involved not merely the modernization of the state, but its gradual reconfiguration as an apparatus for managing oil revenues.
The first decisive step occurred in 1914 with the discovery of the Mene Grande oil field, followed in 1917 by the production boom in the Lake Maracaibo area. It was here that oil ceased to be a mere geological possibility and became a concrete economic structure. The Gomecista regime quickly realized that oil was not merely a resource but a lever of power: from that moment on, sovereignty was no longer built on taxation or representation, but on the ability to attract foreign capital and negotiate concessions.
The concession system was formally consolidated between 1918 and 1922, when extensive exploitation rights were granted to companies such as Royal Dutch Shell and Standard Oil of New Jersey, which became key players in the Venezuelan economy. This model was further stabilized by the Ley de Hidrocarburos of 1920, which introduced the first comprehensive regulatory framework, and especially by the reform of 1922–1923, when tax conditions were adjusted to ensure greater predictability for foreign investment.
The structural turning point came in 1928, the year Venezuela became the world’s second-largest oil exporter after the United States. This development was not merely economic: it marked the birth of a completely new political order, in which the state’s wealth no longer derived from domestic production but from external rent. It is here that the embryonic form of what, in subsequent literature, would be defined as a “rentier state” takes shape: a state that subsists on the difference between control of the resource and the distribution of its value, without relying on a genuine domestic tax system.
The structure that emerges is profoundly asymmetrical. On the one hand, a highly technological oil sector, integrated into global circuits dominated by large Anglo-American and Dutch companies; on the other, a stagnant domestic economy, unable to diversify and increasingly dependent on imports of finished goods. This duality is not accidental: it is the very heart of the model.
With Gómez’s death in 1935, the Venezuelan state did not change in nature, but it did change the way it managed its revenue. The crucial turning point came in 1943 with the new Ley de Hidrocarburos, which represents one of the most important moments in the country’s economic history. This law introduced the “fifty-fifty” principle—that is, the equal division of profits between the state and oil companies. This was not yet nationalization, but rather a structural rebalancing of the balance of power: the Venezuelan state gradually became a central fiscal actor in the global oil supply chain.
This transition was decisive because it marked the state’s transformation from a mere guarantor of concessions to an active intermediary in the global oil revenue stream. In other words, Venezuela does not merely own the oil: it begins to own its political transformation into public revenue.
In the post-World War II period, between 1945 and 1948, the brief democratic experiment of the “Revolución de Octubre” sought to broaden the political base of rent distribution by introducing elements of participation and social reform. However, even during this phase, the underlying structure remained unchanged: oil continued to be the only true source of state legitimacy.
The return to authoritarian stability under the regime of Marcos Pérez Jiménez (1952–1958) marked the final phase of the pre-democratic rentier model of modernization. During these years, the state used oil rents to finance a massive infrastructure transformation of the country: highways, the accelerated urbanization of Caracas, and major public works. It was a genuine modernization, but one completely disconnected from productive diversification. Growth was impressive, but it remained entirely tied to oil price volatility.
At this point, what can be unambiguously defined as the original architecture of the Venezuelan rentier state is definitively consolidated. This is not a subsequent deviation or a developmental aberration: it is the very form in which the state was constituted.
And it is precisely here that the next phase begins.
In 1958, with the fall of Pérez Jiménez, Venezuela did not enter a phase of rupture with the previous model, but rather one of institutional stabilization. The Puntofijo Pact, signed between Acción Democrática, COPEI, and Unión Republicana Democrática, did not simply usher in Venezuelan democracy: it cemented the rentier state in a stable political form.
The system that emerged between 1958 and 1989 was therefore not a new phase, but the institutional embodiment of the model established between 1908 and 1958. The logic is simple yet decisive: instead of taxing the population and building consensus through taxation, the state redistributes oil revenues to ensure political stability. It is in this choice that the most profound feature of Venezuelan modernity is consolidated.
From this perspective, the theory of the resource curse and the rentier state is not an external interpretive lens, but an almost mechanical description of the historical process: the presence of a resource with extremely high rents, combined with centralized political institutions and a weak tax system, inevitably produces a structure in which politics becomes the administration of distribution, not the production of wealth.
Venezuela does not simply “endure” this dynamic: it internalizes it, institutionalizes it, and turns it into a political system.
And it is in this sense that it becomes clear that the dynamics leading to the current crisis did not emerge with Chávez or Maduro, but are rooted in the formation of the Venezuelan oil state at the beginning of the 20th century, when an economic and political structure based on rent took shape.
Hence the crystallization that—not coincidentally—leads into PART II, where the Puntofijo Pact does not appear as the origin of democratic stability, but as the mechanism through which rent becomes the exclusive foundation of the political order—and of everything that stemmed from it, right up to Venezuela’s total systemic implosion.
This full-scale implosion can no longer be sustainably interpreted as the direct consequence of the Chavista era alone.
PART II – 1958–1973: Institutionalization of Puntofijo
The post-World War II period marked a decisive transformation in Venezuela’s political trajectory. The end of World War II, the emergence of the bipolar system, and the gradual rise of oil to a position of strategic centrality within the Western economic architecture redefined the country’s role within the international order. Domestically, however, this phase did not usher in a transition toward an autonomous and diversified development model, but rather the stabilization of a political system based on the centralized management of oil revenues.
The turning point came with the crisis of the Marcos Pérez Jiménez regime and the subsequent establishment of Venezuela’s democratic system beginning in 1958. The so-called Punto Fijo Pact, signed between Acción Democrática (AD), COPEI, and the Unión Republicana Democrática, was not merely an agreement on democratic alternation in power, but a genuine mechanism of institutional engineering aimed at stabilizing the political system through the controlled distribution of oil rent.
From this perspective, Venezuelan democracy is not based on a process of fiscal consolidation between the state and its citizens, as in the classical models of the modern European state, but on a unique form of redistributive legitimation. The growing availability of oil revenues—driven by the expansion of production in the postwar period and by rising global energy demand—allows the state to build political consensus not through taxation and representation, but through the provision of direct and indirect economic benefits.
Oil thus becomes the material foundation of the political compromise. The stability of the system does not depend on competition among autonomous productive interests, but on the ability of political elites to guarantee differentiated access to rent. The party system is consequently structured as a mechanism for rotating the allocation of public resources, in which electoral competition does not call into question the nature of the economic model, but only its management.
This configuration produces a long-term structural effect: the gradual identification of the state with rent. Public institutions do not merely regulate the distribution of oil wealth; they themselves become the primary channel for accessing that wealth. In this sense, the Venezuelan state establishes itself as a distributive state even before it becomes a productive or fiscal state.
The period spanning the 1950s and 1960s is often described as a phase of democratic stability and economic growth. In fact, the combination of high oil prices, expanding production, and Venezuela’s integration into Western energy markets led to a significant increase in per capita income and a process of accelerated urbanization, particularly in the Caracas area. However, this growth did not translate into a structural transformation of the economy.
On the contrary, dependence on the oil sector intensified further. Domestic industry remained weak, uncompetitive, and heavily dependent on imports. The agricultural sector, which in other historical contexts might have served as the basis for a gradual industrial transition, is progressively marginalized. The entire economic system is organized around the state’s ability to capture and redistribute rents derived from hydrocarbon exports.
In this context, economic policy inevitably becomes a policy of distribution. The Acción Democrática and COPEI governments have alternated in managing the same model, without altering its underlying structure. The ideological differences between the two main parties are gradually reduced to variations in the management of public spending and access to patronage networks, while oil remains the unchanging linchpin of the entire system.
It is precisely this apparent stability that, in the medium term, creates the conditions for future instability. The absence of genuine economic diversification prevents the formation of an autonomous, productive middle class and limits the development of modern fiscal institutions. Political legitimacy is based on the ability to redistribute resources rather than on building sustainable productive capacity. In other words, consensus is bought through rent, not built through productivity.
At the same time, the international context reinforces this dynamic. In the 1960s, Venezuela assumed a central role in the Western oil market, becoming one of the main suppliers of crude oil to the United States and to Europe during its industrial reconstruction. During this period, the role of large international companies also solidified; they continued to operate in close collaboration with the Venezuelan government, even as the sector underwent a gradual process of implicit nationalization.
The creation of OPEC in 1960—in which Venezuela participated as a founding member alongside Iran, Iraq, Saudi Arabia, and Kuwait—marked another turning point. For the first time, oil-producing countries sought to collectively coordinate the management of oil production and prices, marking the beginning of a new phase in global energy policy. Venezuela thus found itself at the center of a structural transformation of the international oil market, which further reinforced its strategic centrality, without, however, altering the fragility of its internal structure.
The fundamental contradiction of this period lies precisely in this dual dynamic. Internationally, Venezuela is a leading energy player, integrated into the mechanisms of the global economy and central to Western energy security. Domestically, however, it remains a system highly dependent on rent, incapable of transforming its wealth into autonomous structural development.
This disconnect between geopolitical centrality and institutional fragility constitutes the very core of Venezuela’s future crisis. It is during this period—seemingly stable and prosperous—that the structural conditions are taking shape that will make the collapse of the rentier model possible in the next phase.
PART III – 1973–1989: Oil Boom, Nationalization and the Structural Expansion of the Rentier State
The 1970s marked a decisive turning point in Venezuela’s historical trajectory. During this decade, the rentier model entered a phase of unprecedented expansion, driven by a combination of international factors and domestic transformations that amplified its scope to the point of creating a genuine illusion of structural stability. The Venezuelan political and economic system was no longer limited to redistributing oil rents; it began to be built entirely around the expected growth of those rents.
The first major disruption came with the 1973 oil shock, followed by the one in 1979. The global energy crisis triggered by the Yom Kippur War and OPEC’s decisions caused an extraordinary surge in oil prices, multiplying the revenues of oil-producing countries within a few years. Venezuela, already established as a key player in the Western energy market, benefited significantly from this trend, experiencing a sudden and massive increase in fiscal resources.
This situation produced an immediate political effect: the perception of oil revenue as a structurally abundant and potentially unlimited resource. The Venezuelan state thus entered a phase of accelerated expansion of its functions, its administrative scope, and its capacity for economic intervention. The growth in public spending was not accompanied by a parallel strengthening of the domestic productive base but was directly fueled by the increase in oil revenues.
It is within this context that one of the most significant events in contemporary Venezuelan economic history took place: the nationalization of the oil industry in 1976 and the creation of Petróleos de Venezuela S.A. (PDVSA). This process is often interpreted as a moment of full affirmation of national economic sovereignty. However, from a structural perspective, it rather marks the definitive transformation of the state into the direct manager of oil revenues.
Nationalization does not alter the nature of the economic model, but rather reinforces its centralization. Control over resources shifted from international companies to a state-owned enterprise embedded at the heart of the political apparatus, further tightening the link between political power and the management of oil revenues. PDVSA quickly becomes not only an energy company but a strategic institution, where economic, political, and international interests converge.
At the same time, the Venezuelan state embarked on an unprecedented process of expansion. The growth in oil revenues allowed for a significant increase in public spending, social spending, and infrastructure investments. This process led to rapid urban modernization and a visible improvement in indicators of consumption and material well-being, especially in urban centers. Caracas became the symbol of this transformation, taking on the characteristics of a rapidly Westernizing capital.
However, this expansion took place in the absence of a structural transformation of the economy. The industrial sector remained weak, uncompetitive, and heavily dependent on imports. Agriculture continued to lose relative importance, while domestic production capacity failed to keep pace with the growth in demand fueled by oil revenues. The result is an increasingly unbalanced economic model, in which the state becomes the primary intermediary between oil revenues and domestic consumption.
This dynamic produces a long-term systemic consequence: the gradual expansion of the state. The public sector is no longer limited to regulating or redistributing, but becomes the main driver of the national economy. Public-sector employment grows rapidly, social programs multiply, and the population’s dependence on state resources intensifies in a structural way.
At the same time, an increasingly fragile financing mechanism takes hold. The expansion of public spending is supported not only by oil revenues but also by a growing reliance on foreign debt. This introduced a new element into Venezuela’s trajectory: simultaneous dependence on the energy market and international financial markets.
The combination of high oil revenues and easy access to international credit creates a strong illusion of sustainability. For the first time, the Venezuelan state appears to be a system capable of expanding indefinitely without immediate structural constraints. However, this very expansion contains within it the seeds of future fragility: the increase in public spending is not accompanied by a corresponding increase in productivity, but rather by a growing dependence on external flows.
On the political front, the two-party system of Acción Democrática and COPEI continues to ensure institutional stability through the shared management of oil revenues. However, the nature of the Punto Fijo compromise gradually began to reveal its internal tensions. Rising social expectations, fueled by the economic boom, make it increasingly difficult to maintain a stable distributive balance. The state’s ability to meet the population’s growing demands becomes the new center of political legitimacy.
It is precisely during this phase of maximum expansion that a decisive transformation takes place: economic growth is gradually perceived as an acquired right, while any reduction in it is experienced as a systemic crisis. This created a structural asymmetry between social expectations and the economic system’s actual capacity, a disparity destined to emerge in full force in the decades that followed.
On the international stage, Venezuela continues to occupy a strategic position in the global energy system, reinforced by OPEC’s growing role and the centrality of oil in advanced industrial economies. However, this centrality does not translate into greater structural autonomy, but rather into growing exposure to the cyclical dynamics of the global energy market.
By the late 1970s, the Venezuelan model thus appeared to be a system that was both expanding and structurally fragile. The combination of an overgrown state, dependence on oil revenues, foreign debt, and a lack of productive diversification defined an equilibrium that was apparently stable but intrinsically unstable. It is precisely this contradiction that sets the stage for the next phase, in which the crisis will no longer be latent but fully visible.
PART IV — 1989–1999: The Crisis of Puntofijo and the Historical Rise of Chávez
Throughout the 1980s and 1990s, the trajectory of the Venezuelan state entered a phase of progressive structural tension that marked the transition from a relatively stable rentier model to a system increasingly exposed to shifts in the international economic order. During this phase, the centrality of oil did not diminish, but its significance changed profoundly: from a resource capable of ensuring internal redistributive stability, it became the primary source of external vulnerability.
The end of the Bretton Woods system and the full establishment of the dollar as the global hegemonic currency represented not merely a technical transition in the international monetary system, but the construction of a power infrastructure in which oil liquidity was progressively integrated into Western financial circuits. Venezuelan oil, like that of other producing countries, thus enters a value chain that is no longer exclusively industrial but increasingly financial—and therefore inherently political.
In this context, Venezuela becomes a paradigmatic case of dual dependence: on the one hand, dependence on oil revenues as the almost exclusive source of the state budget; on the other, dependence on dollar-denominated international financial markets, which regulate access to credit, debt stability, and the capacity for public investment. Economic sovereignty is thus progressively squeezed between internal and external constraints, in an increasingly fragile balance.
The political crisis that erupted between the late 1980s and early 1990s—with events such as the Caracazo of 1989 and the coup attempts of 1992—cannot be viewed as mere episodic instability, but rather as a visible manifestation of this structural contradiction. The social pact of Puntofijismo, based on the distribution of oil revenues in exchange for political stability, entered a crisis when the state’s capacity for redistribution diminished while, at the same time, pressure from foreign debt and international financial institutions increased.
It is within this space of fracture that the subsequent phase of political transformation—embodied by the rise of Hugo Chávez—takes place. From this perspective, Chávez does not represent the origin of the crisis, but rather the political focal point of a long-standing systemic crisis that developed over the course of the 20th century and was brought to a head by the combination of the decline of the inclusive rentier model and the redefinition of the global economic order.
With the start of the 21st century, and particularly after the Bolivarian Revolution, Venezuela entered a new phase of structural conflict that was no longer merely internal but increasingly internationalized. The central role of oil is intertwined with the progressive politicization of energy markets and the emergence of a new cycle of global competition.
Relations with the United States gradually took the form of multilevel pressure combining financial, diplomatic, and regulatory tools. In this context, the sanctions regime becomes not a one-off measure, but a genuine mechanism for governing international relations. Through the control of dollar transactions, access to capital markets, and the regulation of energy exports, the sanctions regime helps redefine the Venezuelan state’s room for maneuver.
At the same time, the gradual realignment of international alliances is introducing new actors into the conflict’s dynamics. The Russian Federation and the People’s Republic of China are assuming an increasingly important role as strategic partners, both in the energy and financial sectors, helping to transform Venezuela into an arena of global systemic competition. In this scenario, the country is no longer merely an oil producer, but a hub where geopolitical, financial, and strategic dynamics on a global scale intersect.
This dynamic is also intertwined with the growing significance of informal economies and illicit transnational networks, which emerge as side effects—but also as structural elements—of the fragmentation of the economic and institutional order. These networks do not replace state logic but overlap with it, contributing to a more complex distinction between the formal economy, political power, and transnational networks.
Ultimately, the current phase of the Venezuelan crisis can be understood as the result of a historical stratification in which three levels overlap: the inherent fragility of the rentier model, the restructuring of the global monetary and financial order, and the growing competition among powers in the international system. It is at this intersection that Venezuela assumes its current configuration as a highly politicized space within the global energy rentier system.
The transformation of Venezuela into a proxy battleground is not an exogenous deviation from the rentier model, but the final systemic phase of rentier state vulnerability under conditions of fragmented multipolarity. As domestic fiscal capacity weakens and oil revenues become increasingly securitized within global financial and geopolitical architectures, external actors progressively internalize Venezuelan instability as a strategic instrument rather than a policy externality.
This occurs in a context in which “proxy competition” is defined as the indirect contest between systemic powers through the exploitation of state fragility, financial dependence, and resource governance in third countries, without this leading to a direct military confrontation
PART V – 1999– 2026: From the Bolivarian State to Systemic Geopolitical Competition
Venezuela’s transition from a classic rentier state to an arena of global systemic competition cannot be understood without situating its recent trajectory within the reconfiguration of the international order following the end of the Cold War. With the collapse of the Soviet Union and Russia’s gradual transformation into the Russian Federation, as well as China’s entry into the full maturity of its global projection strategy, the international system has moved away from its relatively rigid bipolar structure to enter a phase of asymmetric multipolarism, in which control over strategic resources has once again become a central factor in competition among powers.
In this context, Venezuela occupies a structurally ambivalent position. On the one hand, it remains one of the world’s leading holders of proven oil reserves; on the other, its ability to translate this endowment into domestic stability and international power is gradually eroding, just as the geopolitical value of oil increases in a global market that is increasingly interdependent yet politically fragmented.
The crisis that emerged at the beginning of the 21st century is therefore not the result of a sudden rupture, but rather the point of saturation of a long-standing historical structure founded on three interconnected elements: structural dependence on oil exports, the concentration of rent within a narrow political-institutional circle, and the gradual outsourcing of economic sovereignty through dependence on international energy and financial markets.
It is in this context that the international dimension takes on an increasingly decisive role. The consolidation of the dollar system as the global reserve currency—a direct legacy of the Bretton Woods agreements and the subsequent central role of the United States in the international financial system—has made Venezuela’s oil revenue not only an economic resource but also an inherently political asset. Venezuelan oil has never been merely a commodity: it has been a vehicle for integration into the Western monetary and strategic system.
With the crisis of the bipolar model and the gradual rise of new systemic powers, this balance is cracking. The redefinition of energy and financial spheres of influence has led to a gradual hardening of relations between Venezuela and the United States, which has resulted—especially since the 2000s—in the adoption of an increasingly stringent, multi-tiered sanctions regime. Sanctions not only serve as a tool for political pressure but also contribute to a profound reconfiguration of Venezuela’s economic structure, affecting the state’s ability to access financial markets, export oil under normal conditions, and maintain the stability of its productive infrastructure.
At this stage, the concept of an “internal crisis” is becoming increasingly inadequate. The Venezuelan crisis is increasingly taking the form of a hybrid phenomenon, in which endogenous dynamics and exogenous pressures overlap to the point of becoming indistinguishable. Institutional fragility, inherited from the long rentier cycle, combines with growing exposure to instruments of economic and financial coercion that are fully in line with the logic of contemporary systemic competition.
At the same time, the entry of extra-hemispheric actors such as China and Russia further alters the structure of the geopolitical game. Venezuela is no longer merely a peripheral producer integrated into the Western market but is gradually becoming a contested space, where lines of credit, energy agreements, military supplies, and political alliances intertwine in a dynamic that transcends the traditional distinction between domestic and foreign policy. This transformation does not necessarily imply stabilization, but rather a new, more complex, and multilevel form of dependence.
It is within this overlap of levels that informal and para-institutional dynamics also emerge, contributing to making the Venezuelan case even more difficult to frame within the classical categories of political science and international economics. Non-transparent financial flows, parallel economies, transnational networks, and illicit circuits become an integral part of the political system’s survival ecosystem, further widening the gap between the formal economy and the real economy.
In this scenario, Chávez does not represent the origin of the crisis, but rather its political crystallization. Chavismo emerges as a historical response to a long-standing crisis, but at the same time it amplifies certain structural dynamics, accelerating internal polarization and highlighting the distributive—rather than productive—nature of the Venezuelan economic model. In this sense, Maduro does not usher in a new phase, but rather inherits and manages the point of maximum tension in a system that is already structurally compromised.
The 21st-century Venezuelan crisis must therefore be interpreted not as a mere national implosion, but as the intersection of three simultaneous processes: the long-term formation of the rentier state, the transformation of the global economic order, and the reconfiguration of competition among powers in the energy and financial spheres. It is precisely at this intersection that Venezuela transforms from a national case into a paradigmatic one.
A case that, when examined in depth, speaks not only of Venezuela but of the very nature of the contemporary international order and its structural contradictions.
Venezuela as a Systemic Case Study
On closer inspection, this work does not describe a situation strictly unique to Venezuela. On the contrary, it proposes an interpretive framework that can be extended, mutatis mutandis, to numerous states that have built—or have sought to build—their economic and political sovereignty primarily on the availability of energy revenues.
Among these—despite the profound differences that characterize them—are Libya, Nigeria, Angola, Iraq, Iran, the Russian Federation, and Kazakhstan; that is, systems in which the availability of vast natural resources has profoundly shaped the relationship between the state, the economy, and society.
This category may also include—albeit with all due caution given the diversity of their respective historical and institutional contexts—those countries that, while not relying on oil revenues, have progressively built their macroeconomic stability on economies strongly oriented toward the tertiary sector, financial services, and the expansion of credit leverage, supported by high levels of public and private debt. From this perspective, we can cite, among others, numerous advanced Western countries, including Italy, as well as economies of continental scale such as the People’s Republic of China, in which credit, the real estate sector, and finance have taken on increasing importance in the creation of national wealth.
The situation in Venezuela, however, takes on further significance because it allows us to observe a development that transcends the classic paradigm of the rentier state. As illustrated in the preceding pages, the crisis in Venezuela is not a recent political development, nor can it be attributed exclusively to the political eras of Hugo Chávez or Nicolás Maduro. Rather, it is the historical outcome of the construction of the Venezuelan oil state during the early 20th century and the gradual accumulation of vulnerabilities inherent in an economic system based on rent.
It is precisely this structural vulnerability that has gradually transformed Venezuela into one of the main arenas of contemporary geopolitical competition.
The presence of the world’s largest proven oil reserves, the country’s geographical location in the Caribbean basin, and its proximity to the United States have, in fact, endowed the country with a strategic value far exceeding its economic stature.
Throughout the 21st century, this centrality has facilitated Venezuela’s gradual entanglement in the competition between the United States, the Russian Federation, the People’s Republic of China, and, to an increasing extent, the Islamic Republic of Iran.
On the one hand, Washington has resorted to increasingly sophisticated economic, financial, and diplomatic pressure tactics, culminating in the imposition of a sweeping sanctions regime aimed at limiting the Venezuelan government’s ability to access international financial markets and freely trade its energy exports.
On the other hand, Moscow has progressively strengthened military cooperation with Caracas through the supply of advanced weaponry, technical and operational assistance, joint exercises, and naval and air missions in the Caribbean Sea, projecting a Russian military presence close to the continental United States for the first time since the end of the Cold War.
At the same time, the People’s Republic of China has consolidated its presence through a primarily financial and economic strategy, granting Venezuela loans totaling tens of billions of dollars, largely secured by future oil supplies. These operations have helped to alleviate Caracas’s financial difficulties in the short term, but they have also led to a growing dependence on Chinese credit—a phenomenon that some international scholars interpret as part of the dynamics associated with so-called “debt-trap diplomacy.”
Added to this has been the gradual strengthening of cooperation with the Islamic Republic of Iran, which has developed primarily in the sectors of oil refining, energy logistics, and technological assistance, as a joint response to the intensification of Western sanctions.
Taken together, these dynamics therefore lead us to view Venezuela not merely as a rentier state in crisis, but as one of the primary battlegrounds of 21st-century systemic competition.
Based precisely on an analysis of the Venezuelan case, this paper also proposes a theoretical distinction between two different ideal-typical models of proxy war.
The first, primarily associated with conflicts in the second half of the 20th century, is characterized by the use of local armed forces supported militarily, financially, and logistically by external powers, which indirectly pursue their own strategic objectives while avoiding direct confrontation.
The second model, which this study defines as a “systemic proxy war,” unfolds, however, in a profoundly different context. In this model, the theater of conflict no longer necessarily coincides with the traditional battlefield. Competition is gradually shifting to financial markets, energy infrastructure, logistics chains, monetary systems, information and digital networks, cognitive warfare, the use of economic sanctions, technological competition, and even the use of transnational criminal networks capable of affecting the political and economic balances of the states involved.
From this perspective, Venezuela represents one of the first fully developed examples of this transformation. The war is not being fought primarily in Venezuela, but rather through Venezuela. Venezuelan territory thus becomes the intersection of global strategic interests, where control over energy resources, international finance, and geopolitical alliances is gradually replacing traditional direct military confrontation.
SPCM — Systemic Proxy Competition Model
This paper introduces a conceptual model to describe the transformation of classical rentier-state vulnerability into a structurally embedded form of systemic geopolitical competition.
The Systemic Proxy Competition Model (SPCM) refers to a configuration in which great power rivalry is no longer primarily expressed through direct military confrontation or traditional proxy warfare, but through the interaction of five interconnected domains:
1.Energy Governance Domain
2. Financial and Credit Architecture Domain
3. Military Signaling and Asymmetric Presence Domain
4. Informational and Cognitive Domain
5. Transnational Illicit Network Domain
In this framework, state fragility is not an external byproduct of geopolitical competition but becomes one of its operational inputs. Rentier states with high resource concentration, weak fiscal diversification, and external financial dependency are progressively transformed into systemic nodes where competing powers project influence through differentiated instruments across multiple domains.
Unlike classical proxy warfare models, SPCM does not require the presence of active armed conflict between non-state proxies. Instead, competition is distributed across financial dependency structures, energy flows, sanctions regimes, credit lines, and strategic signaling mechanisms.
The Venezuelan case represents a paradigmatic empirical instantiation of this model, in which each of the five domains is simultaneously activated and mutually reinforcing.
OPERATIONAL INDICATORS
To move beyond conceptual abstraction, the SPCM can be operationalized through a set of observable indicators:
I1 — External Financial Anchoring
Sustained reliance on bilateral or multilateral credit structures secured by future commodity exports.
I2 — Resource Collateralization
Transformation of strategic commodities into geopolitical collateral within sovereign or quasi-sovereign lending frameworks.
I3 — Sanctions Systematization
Transition from episodic sanctions to structurally embedded, multi-layered financial and trade restrictions.
I4 — External Military Signaling
Persistent non-combat military presence, exercises, or logistical cooperation by extra-regional powers.
I5 — Dual Circulation Economy
Coexistence of formal state-controlled economy and stable transnational informal/illicit economic networks.
I6 — Monetary Dependency Constraint
Restriction of sovereign monetary autonomy due to dominance of external currency settlement systems.
The simultaneous presence of multiple indicators suggests the transition from classical rentier vulnerability to systemic proxy competition.
POLICY IMPLICATIONS
The Venezuelan case under SPCM conditions generates three major strategic implications.
First, economic sanctions must be re-evaluated not as isolated coercive instruments, but as structural components of systemic competition architectures. Their cumulative effect is not merely economic pressure but the reconfiguration of financial sovereignty.
Second, credit-based engagement strategies—particularly those involving resource-backed lending—create long-term dependency structures that extend beyond traditional debt dynamics, embedding geopolitical alignment within financial architecture.
Third, military presence in systemic proxy environments operates primarily as signaling rather than direct deterrence. Its function is to stabilize influence asymmetries rather than to project conventional force.
At the systemic level, rentier states exposed to multipolar competition do not simply oscillate between external alignments, but evolve into contested infrastructural nodes within global political economy networks.
This implies that traditional binary interpretations of alignment (pro- or anti-Western blocs) are analytically insufficient.
CONCLUSION
The Venezuelan case is therefore not an anomaly of state failure, but a structural expression of how resource-dependent states behave under conditions of fragmented multipolar competition.
