Venezuelan President Hugo Chavez and I go way back. In the late 1990s, as a young political risk analyst, I traveled down to Houston to talk to one of the oil majors about a large investment they were planning to make in Venezuela.

“Venezuela is risky,” I confidently informed them. “Hugo Chavez has a radical agenda.” Meanwhile, my colleague cooked up various disaster scenarios involving political violence or the loss of assets.

The oil company’s project team, several of them Venezuelans, sat through our presentation in stony silence. Walking us to the elevator, though, they had something to get off their chests. “You don’t know anything about Venezuela,” they said. “Hugo Chavez is a pragmatist, not a radical.”

“And,” they continued, “you don’t even know how to pronounce Chavez. It’s ‘TCHA-VEZ’!”

In the long term, I was right (except about pronunciation). I wouldn’t, of course, be telling this story otherwise. The assets of most foreign oil companies operating in Venezuela were indeed expropriated, with limited compensation, on the orders of Chavez.

But I admit it was the oil company’s project team that had the better grasp of the situation in Venezuela. Chavez was indeed a pragmatist. He did not jump right in and start nationalizing things, as I had predicted. At first, his economic policies were relatively moderate.

But over time, he began to change direction. Not necessarily because he had planned to. But Chavez had made a lot of promises he could not keep. “So much riches,” he had said, “the largest petroleum reserves in the world, the fifth-largest reserves of gas…and 80 percent of our people live in poverty. What scientist can explain this?”

The Venezuelan people believed him, to an astonishing degree. Opinion polls found 91 percent of Venezuelans agreeing that corruption was the only factor preventing all Venezuelans from living “very well.” A full 78 percent of respondents believed that Venezuela was “one of the richest nations in the world.”

But of course, Venezuela was not rich—nowhere near it. Truly oil-rich states such as the United Arab Emirates and Kuwait have per-capita oil revenues in excess of $9,000 per annum. Venezuela’s hovered at around $330.

Pretty soon, Chavez’s popularity was plummeting. He had promised Venezuelans he would make them rich, and he couldn’t. So he started to take the populist route of redistribution. This didn’t jumpstart the economy, of course—quite the opposite. But it provided some instant handouts.

Before long, Chavez the pragmatist was becoming a radical. As the economic situation worsened, further handouts were needed. “Venezuela…is heading in the same direction, toward the same sea to which the Cuban people are heading: a sea of happiness,” he said, in 2000. At around that time, I was working on the Aon political risk map, which created a new risk category to reflect the deteriorating situation in Venezuela. Chavez denounced the map as an imperialist ploy, saying, memorably, “what political risk is there in Venezuela? I don’t see any.”

Shortly thereafter, Chavez was nationalizing any foreign investment he could get his hands on (one anecdote has him marching into the lobby of a foreign-owned hotel and declaring it lovely and therefore the property of the Venezuelan people).

With this kind of economic stewardship, it was not, of course a “sea of happiness” that awaited Venezuela. As of this week, prices for credit default swaps have Venezuela as the country most likely to suffer sovereign default—worse off even than Ukraine (see graph, below). When your economic policies are so bad that you perform worse than a country recently invaded by Russia, it’s an accomplishment.

CDS graph

I do believe, though, that Chavez remained, at heart, a pragmatist. It was just that circumstances pushed him down a path from which he could not depart. The more radical he became, the more the economy collapsed; the more the economy collapsed, the more he depended on radical measures—including the seizure of the assets of the oil company I spoke to in Houston—to shore up his support.

For resource-rich nations, radical economic nationalism is a leadership formula that works. You seize private assets to reward your supporters; your economy does not grow; you blame foreign powers for the people’s misfortune. No matter how badly you alienate the rest of the world, someone will always buy your oil, so you never run out of money to pay the military, secret police or whoever else keeps you in power.

Which brings us to Vladimir Putin. The invasion of Ukraine has given Putin a hard push down the path towards radicalism—a path he was inching down already. Putin was already overseeing the seizure of private assets (most recently, billionaire Vladimir Evtushenkov’s Sistema). As the resulting lack of investment, foreign sanctions, and low oil prices bite, the Russian economy is duly imploding—still some way from default, but the risk is rising rapidly (see graph, above).

Putin may not have a more radical agenda. But whether he does or not, it’s getting harder and harder for him to change course. Retaining support may require further radicalism, and further radicalism closes off more liberal options. It will be distinctly unpleasant to have a large, nuclear-armed country headed in such a direction on the edge of Europe. Even more unpleasant for Russian citizens, of course. In that direction, a “sea of happiness” isn’t what awaits.