NEWS: Venezuela's Sanctions, Absurd Prices & Currency Circus

Illustration via The Economist.

"It was the kind of diplomatic clumsiness for which the United States has a unique capacity. On March 9th Barack Obama issued an executive order declaring “a national emergency” because of the “extraordinary threat to the national security” of the United States posed by Venezuela. Really? Is Uncle Sam scared of a country with a government that is incapable of organising a reliable supply of toilet paper, an army whose best-known capabilities are coups, petrol smuggling and drug trafficking, and a president who spent most of January touring the world to beg for cash?
The explanation is that American law requires the administration to use such language if it wants to impose sanctions on individuals in another country. Congress has voted to do this in the case of Venezuela. Critics of this initiative argued that its only practical effect would be to give Nicolás Maduro, Venezuela’s embattled president, a propaganda tool. That is what it has done." Read full article in The Economist. E.T.P. 3'

"Nowhere else has the collapse of oil prices has taken a higher toll than on Venezuela, where crude provides 95 percent of the country’s export revenue. Already facing recession, Venezuela is on the brink of economic collapse.
As that revenue dried up, the country has been thrown deeper into economic turmoil under President Nicolas Maduro. The economy is expected to contract by 7 percent this year, inflation soared to 69 percent—the highest in the world—and shortages of goods have forced shoppers to line up for hours at supermarkets to buy basic foods and products. The situation descended into the surreal earlier this week when the Prime Minister of neighboring Trinidad & Tobago proposed exchanging Venezuelan oil for Trinidadian tissue paper." Read full article in TIME Magazine. E.T.P. 2'

"In 2003, a beleaguered President Hugo Chávez imposed currency controls to try to hold down inflation and prevent a speculative run on the Venezuelan bolívar. Over the years that followed, these controls evolved into the byzantine tiered system by which the government’s oil dollars are sold at three different official prices — while hard-currency dollars fetch a fourth, higher price on the black market.

An importer who pledges to purchase basic necessities to bring into the country can buy a dollar for about six bolívars. But walk up to a bank teller and the same dollar costs 178 bolívars: nearly 3,000 percent more. For the 264 bolívars that it cost at the time of this writing to buy one black-market dollar, you could buy 42 dollars at the official rate." Read full article in The New York Times. E.T.P. 4'