Venezuela’s Economy Was On the Rise. Then the Earthquakes Struck.

The blows just keep coming.

Venezuela’s economy began crumbling so badly more than a decade ago that hospitals were hollowed out, blackouts were everywhere and even the most basic goods disappeared from store shelves.

Soon, millions of Venezuelans fled the country, often on foot, scattering across the hemisphere and beyond. Faced with the nation’s steep decline, Venezuela’s already repressive government clamped down even harder, stealing an election and people’s hopes for change.

Next came American military strikes on boats off the nation’s coasts, a partial blockade of its oil and a stunning intervention: The Trump administration raided the capital, seized Venezuela’s authoritarian leader and declared that the United States would run the country, effectively turning it into a vassal state.

After all the head-spinning crises, Venezuela finally appeared to be on the cusp of an economic rebirth this year. Oil was flowing again, its leaders were mending ties with global lenders and energy executives were flocking to Caracas, the capital, to explore potential deals.

Then, the twin earthquakes this week upended everything.

The cash-strapped Venezuelan government, already struggling to tame the world’s highest inflation rate, must now somehow muster an enormous disaster response: clearing vast amounts of rubble; finding and caring for countless, newly-homeless survivors; and restoring basic services to a nation in crisis.

“This is a country that already had massive reconstruction needs,” said Francisco Rodríguez, a prominent Venezuelan economist. “Now, on top of that, they need to rebuild without having ready access to resources.”

The tragedy is likely to raise the expectations on the United States, especially since the Trump administration took control of Venezuela’s oil industry after seizing Venezuela’s leader, Nicolás Maduro, in January.

President Trump has portrayed Venezuela’s transformation into a resource-rich client state led by Delcy Rodríguez, Mr. Maduro’s Washington-picked successor, as a tremendous success. But even before the earthquakes struck, frustration was mounting in the country over the lack of improvement in living conditions under the new American regime.

Mr. Trump says that the United States is “ready, willing and able to help” the country in the wake of the quakes. But Venezuelans are already criticizing their government’s response to the disaster, noting that civilians have been leading many of the rescue efforts in hard-hit areas.

“This definitely increases the pressure on Delcy Rodríguez’s government and its sponsor, the United States government, to start delivering more results,” said Omar Zambrano, an economist at Andrés Bello Catholic University in Caracas.

As Venezuelans sift through the rubble, the shock from the earthquakes is staggering. The official death toll is already near 1,000 and certain to climb. About 1,400 buildings have been damaged, including 13 hospitals, according to the Venezuelan government, and with hundreds of aftershocks rattling what is left of apartments, stores and offices, many people are sleeping outside. Economic losses could range from less than $10 billion to as much as $100 billion, according to estimates from the U.S. Geological Survey.

To put those estimates into context, if final losses settle around the $10 billion mark, they could amount to 10 percent of Venezuela’s total annual economic output.

If the losses somehow reach $100 billion, that is what Mr. Trump said international oil companies needed to spend to revive Venezuela’s oil industry over a multiyear span, potentially pitting the recovery effort against Mr. Trump’s goals for the nation’s oil sector.

On the ground, highways fractured after the earthquakes, making everything harder to accomplish. Even the international airport near Caracas is closed after sustaining damage, paralyzing travel, commerce and other logistics.

Many people in zones hit by the earthquakes have stopped working and are simply picking up the pieces or participating in civilian-led searches for survivors.

Antonieta Martínez, the owner of a small grocery shop in the coastal town of Morón, said she had no option but to temporarily shut down.

“We don’t have any electricity or water, and on top of that, two employees had their homes severely damaged, walls and floors completely cracked,” said Ms. Martínez, 48. “It’s incredibly difficult to work under these conditions.”

Small neighborhood businesses, like Ms. Martínez’s, account for about 70 percent of the supply chain in the areas affected by the earthquakes, making them a vital part of any economic recovery, according to José Gregorio Rodríguez, the president of Consecomercio, one of Venezuela’s leading business organizations.

“This tragedy is going to generate enormous public spending needs for reconstruction that the Venezuelan state is simply not in a position to undertake or handle,” said Mr. Zambrano, the economist.

So far, the Trump administration has offered Venezuela a fraction of the post-earthquake aid the country needs: $150 million in combined assistance channeled through aid groups and the United Nations.

The U.S. Treasury Department also temporarily lifted sanctions on Venezuela to allow its government to conduct financial transactions related to earthquake relief that would otherwise be blocked by the United States.

This exemption is in effect until Oct. 23 and comes after the Trump administration lifted sanctions on Venezuela’s oil industry, which it is trying to redevelop. Other U.S. sanctions targeting Venezuela remain in place.

A senior U.S. administration official who was not authorized to speak publicly said that with the earthquake still so recent and rescue crews still at work, it was too early to speculate about the full extent of the damage and the resources that would be needed for the country’s recovery.

Venezuela’s past clashes with multilateral organizations like the International Monetary Fund are also limiting the fast-tracked responses that global lenders can offer right after a catastrophe, as they did for Ecuador after an earthquake in 2016 left hundreds there dead.

The disaster, and its aftermath, showcase an epic decline decades in the making.

Chafing at U.S. influence, Hugo Chávez, the country’s former leftist leader, forged ties with Iran, Russia and Cuba after rising to power in 1998. Timing was on his side: his oil-rich nation profited from booming commodities prices, allowing Mr. Chávez to plow proceeds into antipoverty projects and international alliances aimed at blunting U.S. sway in Latin America.

But Mr. Chávez also shredded the checks and balances in Venezuela’s once-democratic political system, consolidating his grip on power. He purged opponents from the civil service and eviscerated judicial independence. By the time he died in 2013, Venezuela was exceptionally polarized.

Mr. Maduro, his chosen successor, did not have Mr. Chávez’s luck when it came to timing.

Shortly after Mr. Maduro took office, a sharp decline in oil prices devastated the economy. But instead of embracing reforms to ease the crisis, Mr. Maduro doubled down, embarking on more expropriations of private companies. He grew even more authoritarian than Mr. Chávez, imprisoning political opponents and refusing to accept election results.

Stifling opposition while mismanaging the economy, Mr. Maduro oversaw one of the largest peacetime economic contractions in recent history, leading to the exodus of millions. By the time U.S. forces seized Mr. Maduro in January, many in the now-impoverished country were simply exhausted by one crisis after another.

Mr. Maduro clashed with the I.M.F., viewing it as a tool of U.S. influence. Venezuela formally re-engaged with the I.M.F. only a few weeks ago, after Mr. Maduro was ousted, and so far the country is initially drawing $200 million from the I.M.F. for reconstruction efforts.

Venezuela’s ability to secure additional funds now, from the I.M.F. and other lenders, faces greater hurdles because it is only at the start of one of the largest and most complex sovereign debt restructurings in modern economic history.

Before the earthquakes, Venezuela’s total liabilities were thought to be in the range of $240 billion. This debt pile, which includes defaulted bonds and legal awards to U.S. companies that had assets nationalized, makes it harder for Venezuela to obtain even emergency loans.

Still, there are a few bright spots amid the destruction and disarray. A huge refining hub on the Paraguaná Peninsula, not far from the tremors’ epicenters, appears to be operating normally, despite the quakes. This could allow Venezuela to continue exporting oil, the lifeblood of its economy.

The U.S. oil giant Chevron also said that its business in Venezuela remained operational. Chevron accounts for about a quarter of the country’s oil production, making it the most important private company by far for Venezuela’s economy.

Oil production and oil exports had been climbing in the months before the disaster. That led to predictions that Venezuela could register double-digit growth this year, potentially placing the economy on more solid footing.

Even so, a boom has yet to materialize.

Foreign oil giants, burned in expropriations, have been hesitant to commit to major new projects. The economy grew just 2.5 percent in the first quarter, its slowest rate in five years. It could still end up growing as much as 8 percent this year, if reconstruction gets underway and oil revenues bolster activity, Mr. Rodríguez, the economist, estimated.

But such statistical growth could also mask Venezuela’s enormous challenges from the earthquakes.

That is because of a so-called disaster paradox. The physical collapse of buildings is often not reflected in gross domestic product calculations because they were counted years or decades ago, when they were originally built.

Instead, a country’s economic output often experiences a sharp increase after a natural disaster, as spending from rebuilding occurs. But the widespread loss of life, homelessness and trauma that linger for years are often left out of the strict economic calculations.

“The Venezuelan state is in an incredibly precarious position to meet the needs that will arise from this,” Mr. Zambrano said.

Tibisay Romero contributed reporting from Valencia, Venezuela.