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Already plunged into an economy in free fall that has alarmed its neighbors, Venezuela is under renewed international pressure after President Nicolás Maduro’s contested reelection last Sunday, opening a chapter of profound uncertainty about the future of the South American country.
Facing a five-digit hyperinflation that could reach 16,000% by the end of the year—the International Monetary Fund ( IMF ) expects the economy to shrink by 15%, and expects unemployment to rise to 36% by 2022 —, power and water outages , food and medicine shortages , an estimated three million people have left Venezuela since 2014 to Colombia (nearly 550,000 at the end of 2017), Brazil , Peru , and Chile .
As EL UNIVERSAL has reported, Mexico is also a growing foreign destination for the economic refugees, many of them young women who end up working illegally on the sex industry.
Maduro vowed to start an “ economic revolution ” to restore prosperity and defiantly, he said he is ready “to make history” in the face of U. S. sanctions .
However, hyperinflation, along with a USD$70 billion bond default means that foodstuffs and medicine cannot be imported.
The regime is struggling to avoid defaulting on its foreign debt, an “end of game” scenario that financial analysts in Caracas and New York have been predicting since 2016.
The military is in charge of food distribution and the government is running out of cash, despite the new Petro cryptocurrency and the revaluation of the traditional currency Bolivar launched by Maduro in March.
The innovative Petro is collateralized on Venezuela’s mineral resources: the world’s largest oil reserves and large reserves of gold and other precious metals , yet the domestic oil sector is currently failing to meet local needs.
The Organization of the Petroleum Exporting Countries ( OPEC ) says oil production is down to a 30-year low of around 1.4 million barrels a day , plus insufficient investments, U.S. sanctions, and the fall of global prices—the oil-dependent revenues melted away from USD$121 billion to USD$48 billion between 2014-2016—have hammered the energy industry.
American company ConocoPhillips
has seized assets belonging to the state-owned Petróleos de Venezuela, S.A. ( PDVSA ), over a USD$2 billion dispute .
Crippling sanctions
On Monday, the 14 nations that are part of the Lima Group , including Mexico , said in a joint statement that they would be limiting diplomatic ties with Caracas and would study blocking all future loans and commercial transactions to the country that did not have prior approval from the opposition-held National Assembly, elected in 2015 but replaced by the government with the National Constituent Assembly.
The Lima Group said its members did not recognize the legitimacy of the vote and next month, Peru will host a high-level meeting between migration authorities from the 14 nations to discuss a comprehensive response to the massive number of Venezuelans leaving their country.
The joint statement added the Lima Group would back the medicine supply through independent institutions and the epidemiological monitoring in Venezuela and neighboring countries, due to the reappearance of diseases such as measles , paludism , and diphtheria .
For its part, U.S. President Donald Trump signed an order prohibiting U.S. citizens and people in the country from purchasing Venezuelan debt or accepting any equity stake in property that is majority owned by Caracas.
The last provision seems aimed at CITGO , the U.S. oil company that is majority owned by PDVSA . Washington had already slapped more than 60 former and current officials with sanctions.
Last week, the Trump administration for the first time publicly linked Maduro to drug trafficking , accusing him of profiting from illegal shipments and imposing sanctions against the No. 2 official in the ruling United Socialist Party of Venezuela ( PSUV ), Diosdado Cabello , his wife Marleny Contreras , who heads the national tourism organization, and his brother, José David .
Secretary of State Mike Pompeo
said the U.S. would bring “swift economic and diplomatic actions” to support democracy in Venezuela, as part of a verbal escalation which confirms the prevailing hawkish stance in Washington from the North Korean and the Iranian issues to the relationship with Caracas, fostered by the same Pompeo and John Bolton , National Security Advisor .
Juan Cruz
, Special Assistant to the White House and Senior Director for Western Hemisphere Affairs , declared that in the history of Venezuela “there’s never been a seminal moment that did not involve the military.”
At least twice, Trump himself has raised the “ military option ” for Venezuela, surprising the moderate Latin American diplomats who believe there is still room for a peaceful solution, given the support that Maduro maintains among the poorer Venezuelans.
The brief and unsuccessful coup in 2002 against President Hugo Chávez was backed by intelligence provided by the U.S. Navy; this time, according to information leaked to the website Voltairenet , the Pentagon Southern Command has a plan calling for “increase internal instability” that would justify a military intervention.
The Venezuelan conflict represents a unique opportunity for multilateral diplomacy which Latin America cannot afford to lose out; for Mexico it is also the moment to regain its regional leadership, helping stop the exacerbation of the developing humanitarian crisis .
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