After last Sunday’s election that the United States and others have labeled as unfair, Venezuela’s new Constituent Assembly will hold its first meeting today. The Trump administration has already placed new sanctions on the regime and may impose further sanctions. Here is what you should know about the ongoing Venezuela crisis.

What’s going on in Venezuela?

Because of high inflation and unemployment, Venezuela has the most miserable economy in the world. For the first five months of 2017, the country had an inflation rate of 127.8 percent, and the unemployment is set to surpass 25 percent.

The country has also been crippled by shortages of goods and services for several years. Last year Venezuela’s President Nicolás Maduro instituted a two-day workweek for state employees because of power shortages and declared a state of emergency, threatening to seize factories and jail business owners who have stopped production.

Shortages of basic goods like food, toilet paper, and medicine have devastated a nation where more than 80 percent of citizens already live in poverty.

This ongoing economic crisis sparked a political crisis this year, as opposition leaders clash in almost daily protest with Maduro supporters. To date, more than 125 people have been killed in the fighting.

On Sunday Venezuelans went to the polls to choose the more than 500 representatives who will make up a Constituent Assembly. According to the BBC, the Constituent Assembly was convened by President Maduro to rewrite the existing constitution, which was drafted and passed in 1999 when his mentor, President Hugo Chávez, was in office.

Leaders of the opposition to Maduro’s government fielded no candidates for the election and encouraged voters to stay home in protest. Claims by the National Electoral Council that there was an “extraordinary turnout” of more than eight million voters was met with derision both inside and outside of the country.

“Maduro is not just a bad leader, he is now a dictator,” said National Security Adviser H.R. McMaster in response to the election results.

What caused the crisis? 

The answer depends on whom you ask.

For years Maduro and his allies have blamed plots by business leaders in Venezuela and the United States, claiming they are trying to subvert the president and his government.

Many outside observers lay the blame on low oil prices and mismanagement of oil revenues by the government.

But the real problem appears to be the left-wing political ideology “chavismo,” which has crippled the economy and destroyed the rule of law (more on that below).

How bad is the financial crisis?

According to the International Monetary Fund, Venezuela’s GDP in 2017 is 35 percent below 2013 levels, or 40 percent in per capita terms. As Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Ban, notes, that’s a significantly sharper contraction than during the 1929-1933 Great Depression in the United States, when U.S. GDP is estimated to have fallen 28 percent.

“Put another way, Venezuela’s economic catastrophe dwarfs any in the history of the US, Western Europe, or the rest of Latin America,” adds Hausmann, “And yet these numbers grossly understate the magnitude of the collapse.”

Non-oil tax revenues declined by 70 percent in real terms between 2012 and 2016, while inflation caused a 79 percent real decline in the banking system’s monetary liabilities in the same period. Income poverty also increased from 48 percent in 2014 to 82 percent in 2016.

The increased inflation has meant more people are skipping meals, and the percentage of malnourished Venezuelans is growing rapidly. According to CNN, many have dubbed this phenomenon the “Maduro diet,” a reference to the embattled President, who has said that doing without “makes you tough.”

Isn’t the Venezuela’s economic crisis mostly caused by a decrease in oil prices?

The drop in oil prices has certainly exasperated the problems in Venezuela—but it’s not the primary cause.

The country has the world’s largest oil reserves (totaling 297 billion barrels), surpassing even Saudi Arabia. Over the past few decades, it has become increasingly dependent on oil for its economic prospects, which has made the country susceptible to “Dutch disease.” Currently, oil accounts for 95 percent of Venezuela’s exports and 50 percent of its GDP.

Venezuela had budgeted for oil at $40 per barrel (the price is currently close to $50), but is still not able to cover revenue. The country also failed to save the surplus when oil was at $100 a barrel. Now, the price of oil would have to rise to $120 for the country to balance its budget.

So it if it’s not about oil, what caused the crisis?

The primary problem is the authoritarian socialism derived from chavismo. Named after Hugo Chávez, Maduro’s predecessor, chavismo (or Bolivarianism) is a left-wing political ideology that incorporates nationalism with democratic socialism and anti-imperialism.

The result is a system of government that is politically and financially corrupt, and that fails to protect its citizens. As Gustavo Coronel wrote in 2008:

Three major areas of corruption have emerged during the Chavez presidency: grand corruption, derived from major policy decisions made by Pres. Chavez; bureaucratic corruption, at the level of the government bureaucracy; and systemic corruption, taking place at the interface between the government and the private sector.

According to Transparency International, Venezuela is the most corrupt country in the Americas, and the ninth most corrupt in the world.

This state-based corruption has lead to a massive crime wave throughout the country. Venezuela has the world’s second highest murder rate (behind only Honduras), and its capital and largest city, Caracas, has been ranked as the most murderous city on Earth. As Juan Carlos Garzón explains:

There are many causes of the spiraling homicide problem in Venezuela. Political and economic crises have undermined the legitimacy of institutions. The military and police have been largely discredited. State security agencies are said to both commit and ignore lethal violence. Impunity is rife and the cost of murder low, with an estimated 92% of homicides not resulting in a conviction. And gang violence has soared in the capital city.

How has the U.S. government responded?

Last week the U.S. Treasury imposed financial sanctions on Maduro, which freezes his assets under U.S. jurisdiction and prohibit U.S. citizens from doing business with him.

“Yesterday’s illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people,” said Treasury Secretary Steven Mnuchin. “By sanctioning Maduro, the United States makes clear our opposition to the policies of his regime and our support for the people of Venezuela who seek to return their country to a full and prosperous democracy.”

According to Reuters, the Trump administration is considering imposing U.S. sanctions on Venezuela’s oil sector. The sanctions would likely not include a ban on Venezuelan oil shipments to the United but could block sale of lighter U.S. crude that Venezuela mixes with its heavy crude and then exports.

Joe Carter is an adjunct professor of journalism at Patrick Henry College, an editor for several organizations, and the author of the NIV Lifehacks Bible.

Photo Credit: Protester facing the Venezuelan National Guard during a protest in May 2017. Via YouTube and Wikimedia Commons.