'Total disaster': How Venezuela went from prosperous nation to struggling

A demonstrator seen holding the Venezuelan flag while wearing a gas mask during a demonstration against Nicolas Maduro policies this week. Photo / Getty Images

A decade ago, Venezuela was best known for its Caribbean coast, boasting the highest waterfall in the world and sitting on more oil reserves than any other country.

But Venezuela's oil has always made it very attractive to the rest of the world and leaves the country fighting off constant foreign interference.

Since 2013, when Nicolas Maduro was elected as President of Venezuela, the country has been in the grips of corruption, deep recession and hyperinflation, triggering shortages of food, medicine and any basic necessity the people desire.

And the country's lengthy crisis is about to get either much better or much worse.

Why is Venezuela in crisis?

Once one of Latin America's most prosperous nations, the oil-rich country has plummeted into crisis under its socialist President.

While Venezuela has the world's largest proven oil reserves, a fall in prices coupled with corruption and mismanagement under two decades of socialist rule have left the country in chaos.

Most migrants say they are fleeing Venezuela's imploding economy.

Maduro regularly dismisses the migration figures as "fake news" created to justify foreign intervention in Venezuela's affairs.

Venezuelan President Nicolas Maduro has dismissed the millions of people fleeing the country as 'fake news'. Photo / AP

He also urged his country's people to "stop cleaning toilets abroad" and return home.

Maduro was re-elected in May in a vote that dozens of foreign governments described as rigged.

But he insists the election was free and fair and says the situation was the result of an "economic war" led by the opposition and business leaders who are arbitrarily raising prices.

Venezuelans were previously able to enter Colombia and Ecuador using only paper ID cards. About half of those who have made the journey so far don't have passports.

But obtaining a passport in Venezuela is close to impossible with the country struggling with shortages of paper and ink.

The worth of money

In the social dictatorship of Venezuela, everything is worth more than the country's currency.

In August, stunning photographs captured by Reuters highlighted the reality of hyperinflation in the socialist dictatorship, where enormous stacks of nearly worthless bolivars were required to purchase basic goods.

A 2.4kg chicken was pictured next to 14,600,000 bolivars, the equivalent of $3.19, at a street market in Caracas on August 16.

Another photo showed a single roll of toilet paper next to 2,600,000 bolivars, equivalent to 58 cents.

At the time, economist and hyperinflation expert Professor Steve Hanke from Johns Hopkins University suggested the currency was "in a death spiral and things will get worse".

A employee accounts bolivar's bills at a gas station in Caracas, Venezuela. Hyperinflation has meant everything is worth more than the country's currency. Photo / AP

"How much worse and how much longer it lasts no one knows," he told BBC. "You cannot forecast the duration and the course of hyperinflations."

And Professor Hanke was right.

In the five months since the photographs were taken, hyperinflation has only worsened.

Inflation is forecast to hit 10 million per cent this year with the United Nations estimating more than 2.3 million people having fled the country since 2015.

Another glaring example of Venezuela's hyperinflation came when tyre giant Goodyear announced it would no longer be able to produce rubber or tyres in the crisis-wracked country.

As hundreds of Goodyear employees showed up at the gated factory, ready to work, they were offered a severance package that other countries would be taken to court over.

The US-based company said it would be giving its employees 10 tyres as part of their severance package — an item that's become incredibly valuable on the Venezuelan black market.

Kellogg, Kimberley Clark and a number of airlines previously announced operating in Venezuela was no longer viable around four years after the country was thrown into a dire economic crisis.

Week of bloody protests leaves Venezuela in limbo

Twenty-six people have been killed since the latest wave of protests against Venezuela's President Nicolas Maduro broke out four days ago.

The previous toll from the protests — which began when a group of soldiers took over a command post in the north of the capital in defiance of the socialist regime — had stood at 16.

In some places, armed forces have fired tear gas and rubber bullets to subdue protesters, some of whom threw stones.

An anti-government protester covers her face with a Venezuelan flag, and uses toothpaste around her eyes to help lessen the effect of tear gas. Photo / AP

The country hit boiling point on Wednesday when US President Donald Trump threw his support behind opposition leader Juan Guaido.

"The citizens of Venezuela have suffered for too long at the hands of the illegitimate Maduro regime," Trump tweeted earlier this week.

Washington's support for Guaido prompted Maduro to break relations with the US.

On Thursday, he said he was closing Venezuela's embassy in Washington and its consulates in the United States.

Guaido's swearing-in was the opposition's boldest challenge yet to the long-ruling Socialist Party and has given Maduro's adversaries an unprecedented diplomatic platform to press for change.

He now leads what amounts to a shadow government disavowed by the armed forces and with no influence over day-to-day administration such as importing and distributing food and medicine.

Opposition leader Juan Guaido takes the oath of office as president of the National Assembly in Caracas. Photo / AP

Guaido has repeated his proposal of future amnesties to officials and military members who disavowed Maduro, even saying the offer could be extended to government ministers and to Maduro himself if they willingly left power.

Oil revenues are crucial to the already crumbling Venezuelan economy and routing that money away from Maduro as the United State seeks to do would be a serious blow.

The US State Department on Thursday ordered some US government workers to leave Venezuela and said US citizens should consider leaving the country.

Venezuelan allies including Russia and Turkey — both important commercial partners — criticised Guaido's rise as a sign of US interference.