Venezuela’s economy has been poorly managed for decades, with the full support of the US, and no analysis of its present condition is accurate without detailing that support. Oil alone is useless as a resource to base an economy on. Without refining capabilities, Venezuela was totally dependent upon its relationship with the US. This reliance extended to the method of payment for its single economic anchor, the oil it traded via our Federal Reserve.
Even Venezuela’s extensive gold reserve that it had built up with its oil trade was handed over to the US and England. The country was nudged steadily into being ripe for the picking by nations totally unfriendly to its economic system and lulled into a false sense of security by the IMF with loans in currencies it didn’t control. Not since post-WWI Germany has a nation been more economically beholding to foreign powers.
Many economists and traders believe that the US and the UK used Venezuela’s gold to leverage future pricing and that releasing it now, when the people need it, would cause the market to plummet. Both have locked down their holding of Venezuela’s gold via sanctions. The central banks of both have also locked down large numbers of payments to the country for oil shipments within their clearing systems.
Maduro has few options at this point. His best move to protect his people would be to sell off the nation’s oil reserves with a heavily front-ended payment that would fund some badly needed restructuring of Venezuela’s infrastructure and economy, as well as absolve its foreign denominated debt. Once the US oil industry is appeased the people of Venezuela can begin rebuilding, but even the help of Russia and China won’t let the country wiggle out of its predicament otherwise. The US is simply too well practiced and adept at economic warfare and this is playing out along lines we know well. Invasion and a full blockade is the next step if Maduro doesn’t capitulate and there seems to be no authority willing to confront the US in its economic imperialism.
