The recent strategy of the United States toward Venezuela consists of controlling oil sales and managing the dollar revenues under strict conditions. According to Ricardo Hausmann, a Venezuelan economist and director of Harvard University\u2019s Growth Lab, the scheme operates as a form of cash-flow control.<\/p>\n
“The current arrangement is as follows: Venezuela is forbidden to sell its oil, but is allowed to deliver it to the United States. Washington sells it at market price and deposits the proceeds into accounts under its control. It then transfers those dollars to the Venezuelan government with conditions,” Hausmann explained.<\/p>\n
This mechanism allows the Venezuelan government to access more dollars, but with restrictions on how and when they can be used \u2014 something Hausmann describes as an \u201caspirin\u201d. In other words, it temporarily relieves the lack of liquidity but does not cure the structural problems.<\/p>\n
De facto dollarisation<\/p>\n
In parallel, Venezuela is experiencing a “de facto dollarisation”, according to Hausman, who also served as Minister of Planning from 1992 to 1993.<\/p>\n
Hyperinflation and the devaluation of the bol\u00edvar mean that most transactions, from food purchases to service payments, are carried out in dollars, while electronic bol\u00edvars function as a secondary means of payment.<\/p>\n
“Nobody wants to save in bol\u00edvars, so it disappeared as a savings currency,” the economist explained. This dollarization facilitates daily transactions, but the country has not accepted the greenback as its legal currency.<\/p>\n
Unlike officially dollarized countries, Venezuela\u2019s financial system cannot offer savings or credit in dollars, which limits economic recovery. According to the economist, without a functioning financial system, and without the restoration of basic rights, the inflow of dollars does not translate into sustainable growth.<\/p>\n
The inflow of US currency does not automatically lead to an improvement in living standards. The state adjusts salaries and pensions, paid in bol\u00edvars, to contain the deficit, while prices continue to be set in dollars. The result is a sharp loss of purchasing power. <\/p>\n
\u201cI have acquaintances who are retired university professors, and their pension is about three dollars a month,\u201d Hausmann said.<\/p>\n
Added to this is the fact that prices in Venezuela are surprisingly high, even compared with Europe.<\/p>\n
\u201cVenezuela is not cheap; things cost what they cost in dollars, plus the risk of operating in a country as uncertain as Venezuela,\u201d Hausmann explained.<\/p>\n
This combination of low incomes and high costs reinforces dependence on remittances. More than eight million Venezuelans have emigrated, many of whom send money back home, reflecting the scale of the humanitarian crisis and the vulnerability of those who remain in the country.<\/p>\n
Rights are the basis for recovery<\/p>\n
Hausmann warned that recent injections of dollars from oil sales do not solve the structural problems of the economy under a \u201chyper-repressive\u201d regime.<\/p>\n
\u201cNow it will have a somewhat better cash flow than it had before. That\u2019s the aspirin. But that doesn\u2019t cure the patient. You have to give Venezuelans back their rights,\u201d he said.<\/p>\n
Beyond money, Hausmann stressed that real recovery requires fundamental rights and a legitimate political regime.<\/p>\n
\u201cIn Venezuela there is no freedom. And when there is no freedom, you have no rights. You have no property rights. You have no rights at all. So you operate with extremely high risk, and that’s not the way to recover the economy,\u201d he argued.<\/p>\n
The economist noted that restoring rights would allow Venezuelans to invest, produce, and envision a sustainable economic future, multiplying the country\u2019s potential far beyond what the current flow of dollars can achieve.<\/p>\n
The former minister explained that raising wages or pensions will not be enough if the country\u2019s electricity, water, transportation, and production infrastructure are not rebuilt. <\/p>\n
\u201cIt\u2019s not just a matter of decreeing a salary increase\u2026 what we need is the restoration of productive capacity,\u201d he concluded.<\/p>\n","protected":false},"excerpt":{"rendered":"The recent strategy of the United States toward Venezuela consists of controlling oil sales and managing the dollar…\n","protected":false},"author":2,"featured_media":269762,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,1096,969,113,132305,61,60,38950,812,92549],"class_list":{"0":"post-269761","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-currency","10":"tag-donald-trump","11":"tag-economy","12":"tag-foreign-exchange-market","13":"tag-ie","14":"tag-ireland","15":"tag-u-s-dollar","16":"tag-usa","17":"tag-venezuela"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/269761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=269761"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/269761\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/269762"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=269761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=269761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=269761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}