Tag: Oil


The History of the Venezuelan Crisis: How Did We Get Here?

Less than fifty years ago, Venezuela was the richest country in Latin America. Hard to believe when dramatic inflation numbers and deadly protests have recurrently made the headlines over the past four months. During the Venezuelan crisis, more than 100 people have been killed in protests that started in April 2017, with thousands wounded and hundreds arrested. Tensions between the local population and President Nicolás Maduro’s autocratic government have increased. Venezuela faces a deadlock. But, how did we get here?

Venezuela’s current crisis started over two decades ago. For years, the country has become trapped in a downward spiral of corruption, poor leadership, and mismanagement of its most important resource: oil. Venezuela owns the largest reservoir of extra heavy oil in the world and is the world’s fifth largest oil exporter. A rewind of Venezuela’s economic and political history offers the best chance of understanding the crisis it faces today.

Lenin Moreno and the Future of Ecuador

Ecuador’s new President, Lenin Moreno, is an unusual politician for more reasons than just his idiosyncratic first name. Moreno is a paraplegic who was shot during a robbery-gone-wrong in 1998. In the course of his convalescence, Moreno turned to laughter therapy, later setting up a foundation to encourage humour and joy. He is likely to need all his reserves of good humour in his new position as he takes responsibility for his country’s governance.

Moreno’s victory celebrations are likely to be short-lived as the challenges of government land on his desk. His dilemma will be how to satisfy the demands of his left-wing supporters for continued high spending on Ecuador’s public services, while simultaneously managing a shrinking economy, whose reliance on stagnant oil revenues and addiction to debt, limit his room for manoeuvre. If he fails to solve this puzzle there is a risk that his government will be tempted to deal with public protests through heavy-handed state intervention. This has been seen in Ecuador before when in 2015 police used tear gas and clubs to disperse protesters.

Risk Report | Nigeria: The economic and security implications of the renewed militancy in the Niger Delta.

Situating the Militancy

Located on Africa’s Western coast on the Gulf of Guinea and with an estimated population of 183 million people, Nigeria is Africa’s most populous country. Over the years, Nigeria has also emerged as Africa’s largest economy, with a GDP worth $481.07 billion in 2015. Even when ranked against other African resource-rich countries, Nigeria stands out as the leading economy on the African continent. Egypt’s GDP – despite the fact that the country is the second-largest African economy and natural gas producer – it does not exceed the threshold of $400 billion. Likewise, Angola – that led the African oil producing countries well above Nigeria in the first half of 2016 –  has a GDP worth only $102.96 billion, less than a third of Nigeria’s. Historically, the risk within Nigeria’s economic growth, has been that income and revenues have been tied to the exploitation of its resource-rich soil, with the oil and natural gas industry primarily located in the southern Niger Delta region.  Since crude oil was first discovered in 1956 in Oloibiri, in the South-Eastern Bayelsa state, the Niger Delta region has played a crucial role in the economics, politics and security of Nigeria. This has cultivated the conditions necessary for the emergence of the so-called politics of oil. A common practice of governance shared by other oil-rich countries across Africa. For Nigeria, this means that oil and natural gas revenues are the mainstays of its economy, accounting for roughly 70% of the Nigerian government’s income and 90% of foreign exchange earnings.