By Hai Do
28 January, 2019

The United States says recognition of opposition leader Juan Guaido as Venezuela's interim president is the only way to restore democracy in that country. Russia and China, however, continue to support President Nicolas Maduro.

Venezuelan Elizabeth Pineda is preparing for things to get even worse. A retiree, Pineda receives a monthly retirement pay of 18,000 bolivars, or about $6. She also earns money as a fortune teller, telling people what she sees in their future. And, she says, the future is telling her that President Nicolas Maduro will not leave quickly or quietly.

"The government is going to strangle us even more with their bad decisions and shamelessness," Pineda said while sharing a meal with two friends. The food cost under two dollars. But, the three friends said they did not have enough money individually to buy it.

Economists agree that Venezuelans are likely to suffer as the current situation between Guaido and Maduro continues.

A cardboard life-size cut out of Venezuelan President Nicolas Maduro stands at the entrance of a public park in Caracas, Venezuela, Friday, Jan. 25, 2019. (AP Photo/Rodrigo Abd)

Maduro appears to have the support of the country's military. He has accused the U.S. and Guaido of plotting to overthrow him. Maduro says the U.S. then led other nations to recognize Guaido as Venezuela's leader.

That makes it very hard for Maduro's government to get and control its oil money and holdings overseas. The U.S.-based oil company Citgo is a subsidiary of Venezuela's national oil company PDVSA. And Venezuela has $1.2 billion in gold in the Bank of England.

Maduro was elected to a second six-year term in hotly disputed elections held last May. Many opposition candidates were barred from competing for the office. Opposition parties boycotted the voting as a result. And the country's National Assembly did not recognize the results.

Over the weekend, some European Union nations threatened to recognize Guaido as interim president if Maduro does not announce new elections soon.

Francisco Rodriguez is chief economist of New York-based Torino Capital. He said, "If Maduro stays in power, Venezuela could suffer a humanitarian catastrophe."

Rodriguez compared the situation in Venezuela to what happened to Libya in 2011. At that time, the U.S. government froze Libya's assets in answer to Libya's campaign against protesters during the Arab Spring uprising. The U.S. action led to a more than 70 percent drop in the North African country's oil production.

Venezuela has one of the world's largest oil reserves. But its current oil production is only one third of what it was when the late Hugo Chavez took power in 1999.

The country currently sells 500,000 oil barrels a day to processors in the U.S. Without the U.S. market, the Maduro government can sell them to friendly countries like Russia and China, or even India, Malaysia and Thailand.

Maduro is still supported by China and Russia. Both would likely veto any international restrictions proposed by the U.N. Security Council. But processing international payments is difficult without American or European banks. And the cost of oil shipping would be much higher to more distant markets.

Venezuela depends almost entirely on oil exports for money. This means there will be even less money for food. The country of 29 million people is already facing a severe economic crisis and food shortage.

Russ Dallen is with the investment bank Caracas Capital. He said a loss of fast money from Citgo and the U.S. market will crush already weakened oil production in Venezuela. The country's economy would shrink and inflation will rise, he said, leading to "more starvation and more people fleeing the country."

For Elizabeth Pineda, the workings of the economy make little sense. But to remove Maduro from leadership, she said, "We're ready to eat bread and water if we have to."

I'm Caty Weaver.

The Associated reported this story. Hai Do adapted the story for Learning English. Caty Waever was the editor.


Words in This Story

interim - adj. accepted for a limited time, not permanent

shamelessness - n. having or showing no shame

subsidiary - n. a company that is owned or controlled by another one

assets - n. something that is owned by a person, company, country... (usually plural)

reserve - n. a supply of something that is stored