The Impact of Populism and Rentierism on the Geoeconomy of the Bolivarian Republic of Venezuela

Oil, as one of the most critical energy resources, is deeply intertwined with geoeconomics and geopolitics. Since its discovery, the relationship between oil and democracy has been a subject of interest, particularly with the emergence of rentier states. Oil has played a pivotal role in shaping major developments in oil-rich nations, including Venezuela. Dependence on oil revenues significantly influences a country’s political system. This research focuses on Venezuela’s political systems and historical periods, particularly the Bolivarian Republic of Venezuela in the 21st century, established shortly after the collapse of the Soviet Union. The study aims to analyze the interplay between populism and rentierism in Venezuela and their impact on the country’s geoeconomic landscape. The necessity of this research lies in Venezuela’s influence on global oil geopolitics and political economy. As the country with the largest oil reserves and a founding member of OPEC, Venezuela’s democratic model, especially during Hugo Chávez’s era, has garnered support from socialists worldwide. Examining the relationship between oil, democracy, and geoeconomics in Venezuela offers valuable insights for other oil-rich nations. This article first explores Venezuela’s left populism and flawed democracy, followed by an analysis of its rentier state. Finally, it examines how populism and rentierism have shaped Venezuela’s geoeconomic conditions.

The theoretical framework of this article is rooted in critical realism, which views the social world as interplay between structure and agency. In Chávez’s Venezuela, the interaction between these elements has led to a critical geoeconomic situation, hindering the achievement of geopolitical goals. While geoeconomics is often seen as the economic dimension of geopolitics, it is more accurately understood as the use of economic power and investment to achieve geopolitical objectives. Geoeconomics and geopolitics share commonalities in politics and geography, with their relationship being deeply interconnected. Thus, studying geoeconomics without considering geopolitics lacks meaning. The research employs process tracing as its data analysis method, prioritizing written documents such as books and articles on populism, rentierism, Chavismo policies, and Venezuela’s geoeconomic conditions. The central question of this study is: How have populism and rentierism influenced the geoeconomic situation of the Bolivarian Republic of Venezuela? This research distinguishes itself by offering a comprehensive analysis of the impact of populism and rentierism on Venezuela’s geoeconomy, considering mechanisms of influence and significant international developments, such as the Ukraine War, to provide a deeper understanding of Venezuela’s geoeconomic and geopolitical challenges.

The rise of left populism in Venezuela has undermined democracy, creating a flawed democratic experience. Sanctions have weakened the private sector and civil society, while the government has become increasingly mafia-like, with rent-seeking permeating various sectors. Oil sanctions and declining revenues have devalued Venezuela’s national currency, drastically reducing the purchasing power of its citizens. As long as Venezuela’s economy remains oil-dependent, the prospects for democracy remain bleak. While citizens’ desire democracy, their protests are primarily economic, rooted in the financial crisis exacerbated by the undemocratic Bolivarian system and its rentier policies. Populism and rentierism in Venezuela are mutually reinforcing. Oil price fluctuations and inefficient governance have led to recurring corruption and financial crises, preventing the institutionalization of democracy. In the Bolivarian Republic, oil sanctions and left populism have resulted in hyperinflation and a growing demand for democracy. However, the complex structure of oil-dependent states and foreign support for the Chávez and Maduro regimes has left the Venezuelan people in a state of stagnation.

The hypothesis of this article is that populism and rentierism have weakened Venezuela’s geoeconomy, preventing the country from transforming its sphere of influence in socialist and anti-American nations into a sphere of interests. Venezuela has failed to achieve its geopolitical goal of exporting Chavismo to neighboring Latin American countries. Due to oil sanctions, Dutch disease, hyperinflation, and systemic corruption, Venezuela lacks the economic power to invest in critical situations. Chávez’s leftist rhetoric, which framed the U.S. as a symbol of liberalism and capitalism, led to adversarial policies and oil sanctions under the Trump administration. Exporting Chávez’s leftism to Latin America requires Venezuela’s economic recovery and the defeat of right-wing forces in the region.