After Maduro: Can Venezuela rebuild its shattered economy?

Over the weekend, US Special Forces carried out a daring raid in Caracas, arresting the country’s former dictator, Nicolas Maduro, and his wife, and later transporting them to New York, where they were indicted on multiple charges, including terrorism and narcotics conspiracy and conspiracy to import cocaine.

What’s next? After Maduro’s arrest, President Donald Trump said that the United States would initially take over administration of Venezuela. “We will run the country until such time as we can make a safe, sound and wise transition,” he told reporters in Mar-a-Lago, Florida. “We cannot risk having someone else take power in Venezuela who does not have the interests of Venezuelans in mind.”

But reforming Venezuela involves some major challenges, not the least of which is its currency, the Venezuelan bolivar. This has weakened by 469% in the past 12 months alone, according to data compiled by Trading Economics.

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The country could solve that by using a so-called currency board that would peg the value of the Venezuelan bolivar to the dollar, Robert Wright, a visiting professor of history at the University of Austin in Texas, told FOX Business. “There has been a lot of success using the currency board because it often stabilizes the currency,” he said.

This stabilization, if it occurs, is likely to significantly reduce the risk of another hyperinflation. In February 2019, the inflation rate reached an all-time high of 344,509.50%, according to Central Bank of Venezuela data compiled by Trading Economics. Economists say the real rate is likely to be higher.

The economic problems facing Venezuela, including persistently high inflation, go back a long way. The events of the past decades were largely the result of poor economic policies.

The first was in 1976, when the Venezuelan government nationalized all oil and gas companies operating in the country, which were then owned and operated by the Venezuelan state-owned company, Petroleos de Venezuela (PDVSA). The nationalized companies included those previously owned by Mobil Oil, Exxon, and Royal Dutch Shell, as well as many others.

People walk on a street in Caracas on January 4, 2026, the day after Venezuelan dictator Nicolas Maduro was captured in a US raid. (Federico Parra/AFP via Getty Images)

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The Trump administration is not happy about this event, even though it happened a long time ago. “We built Venezuela’s oil industry with American talent, strength and skill, and the socialist regime stole it from us,” Trump said during a press conference on Saturday.

The current situation with PDVSA dates back to the inauguration of Venezuelan President Hugo Chavez in 1999. In 2001, Chavez introduced the so-called “enabling law” that allowed the government to bypass existing contracts and intervene directly in private projects, Pete Earle, director of economics and economic freedom at the American Institute for Economic Research, told Fox Business. “Chavez rejected market economics,” he said. In other words, the president was embracing full-blown socialism.

A Venezuelan Navy coast guard boat operates off the coast of the Caribbean Sea on September 11, 2025. (Juan Carlos Hernandez/Reuters)

The next year, 2002, it got worse. Venezuelan workers staged a general strike to pressure the president to hold another election. The result? The Chavez government fired more than 18,000 highly skilled employees, most of whom worked for the Venezuelan national oil company. “From that point on, the country stopped being industrial, and instead became political,” says Earle.

PDVSA’s crude oil production collapsed. Production peaked at 3.5 million barrels of crude oil in December 1997, then recently declined to 1.1 million barrels. Part of this is the appointment of favored political figures into the regime rather than skilled oil engineers.

Over the past few years, the economy has blighted the lives of many Venezuelans. According to the United Nations World Food Programme, “15% of the total population (about 4 million people) is in urgent need of food aid.”

A person walks past a gas station belonging to the state oil company PDVSA in Caracas, March 16, 2022. (Gaby Ora/Reuters Images)

The food shortage dates back to 2016 when supermarket food shelves were empty and zoo animals died of starvation. The following year, news spread that thieves had stolen animals from the zoo in order to eat them.

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Food shortages were primarily the result of poor economic policies. “It’s absolutely tragic,” Earle says. By 2018, the average Venezuelan had lost more than 20 pounds, he said. There has also been a sudden resurgence of malaria in nine of the country’s 23 states. “The most likely outcome is preventing chaos and making sure food and services are added to the mix,” he said.