Venezuelas

Folks confuse the medicine with the symptoms when they ask for dollarization or argue against it, as if the magic wand of switching to the dollar would cure the deep debt and the fiscal imbalances of the broken State-led model that crippled Venezuela.

Marcos Planchart wrote on this site last week that “it is certainly not the paper where the bolívar is printed the element that corrupts people or destroys the economy: it is the system behind it.” I agree with that sentence entirely. However, dollarization is not the first decision. There is a sequence that comes before it, and it is the sequence, not the currency, that determines whether any of this holds.

Antonio Ecarri and Steve Hanke want to change the unit of account. Planchart wants to keep it and repair the institutions standing behind it. Both are arguing about the currency. The currency is the second question, and it answers itself once you have answered how to fix the fiscal imbalance. 

Those imbalances have four fixes: a legitimate and credible government, a closed deficit, restored conditions for private investment, and an open and transparent market for trading bolívares and dollars. Or you can dollarize. Notice that the first four require no change in the unit of account at all.

Here is the simplified mechanism: A government running a deficit it cannot finance has the Central Bank issue bolívares to cover it. The new money goes looking for dollars and for hard assets, and the rate moves. Running an official rate alongside the market one does not stop that. It only decides who captures the difference.

Dollarization is a reasonable destination after the fiscal work and a ruinous substitute for it. Do the work and you may not need it, because the inflation it was sold to cure will already be gone. Skip the work and it will cost you more than the bolívar does. Redundant or ruinous. There is no third case.

The three consequences, one at a time

Planchart lists what the case for dollarization claims: eliminating inflation, forcing fiscal discipline, eradicating corruption. Take them in that order.

First: it does eliminate inflation. This is Hanke’s most popular claim, and it is true. Ecuador dollarized in January 2000. Inflation averaged 39% a year through the 1990s and 2.9% from 2003 to 2024. The policy does achieve inflation reduction, and it does so quite fast.

Now notice what that concession costs the other side. Inflation is the entire platform. It is why the argument is popular in Caracas, and why anyone is listening to Ecarri in 2026. The harder thing to see is this: if we stabilize the fiscal accounts and jump-start private investment, inflation can be tamed and the case for dollarization goes with it. You cannot sell a cure for a disease the patient no longer has.

Second, it does not force fiscal discipline. Ecuador ran deficits in twelve of the thirteen years from 2013. The one exception was 2022, by four hundredths of a percentage point. Public debt went from 19% of GDP in 2011 to 64% in 2020, and Ecuador defaulted that year. It is 54% now. Growth averaged 6.4% a year from 2011 to 2014 and 1.4% from 2015 to 2019.

The mechanism is the one Planchart names himself. He warns that dollarization leaves a country “even more vulnerable to external shocks, such as a sudden plunge in oil prices.” That is precisely what happened to Ecuador after 2014. Oil fell, Ecuador could not devalue, and the shock had nowhere to go except the budget, and from the budget into debt and into lost growth. He states the fear and never uses the country it happened to. It is the best evidence in his own case and he leaves it on the table.

The deficit does not disappear when the currency changes. It simply has to be paid in a currency you cannot print.

Dollarization took away the printing machine, not the deficit, so the adjustment fell on debt instead of on prices. Ecuador does not show that dollarization is harmful. It shows that it is not enough. Of its two defaults, 2008 is the weaker example: it fell in a surplus year and was a choice rather than a financing crisis.

Third, regarding corruption, Planchart has already answered it, and I will not repeat a good argument badly. The exchange differential was never an oversight. It was an instrument. Change the currency and the people who built it still hold the pen.

What getting the sequence wrong costs

Planchart says a failed dollarization would force the government into more debt and severe cash shortages. He is right. Here is the size of it.

We ran the model with the same economy twice from the same starting position, $13.4 billion of reserves in 2026, changing one thing. Dollarize now on today’s deficit, alter nothing else, and the state’s dollar position will fall through zero in the third year and reach minus $24 billion by 2034. Dollarize after fiscal consolidation, with private investment recovering, and the same position accumulates to plus $127 billion. Same reserves, same model, one difference.

The deficit does not disappear when the currency changes. It simply has to be paid in a currency you cannot print.

Why 576% inflation sits on a deficit near 6%

Planchart gives the number: inflation reached 576% year on year in July. The mechanism above explains the direction. It does not explain the size, and the size is the interesting part.

The bolívar base has collapsed; measured at the parallel rate, it was around $15 billion in 2011 and 2012. In July 2026, it was $1.7 billion. The base that can be monetised is a ninth of what it was.

In 2013, Gino Bettocchi and I wrote about a State running a consolidated deficit of 15% to 20% of GDP, including PDVSA and FONDEN. On the narrower central government measure that is still published, the deficit has roughly halved since then, from 9.9% in 2012 to 5.8% last year. A far smaller deficit now carries the inflationary force that an enormous one carried then, because there is so little left to dilute. That cuts against both camps. It is not evidence that the bolívar is cursed, and it is not evidence that only the dollar can fix it. It is arithmetic about a very small base.

Where I actually disagree

Planchart wants to keep the bolívar permanently, in part to preserve room for industrial policy. The unit of account does not carry that weight, in either direction.

What breaks or holds a monetary regime is the deficit, private investment, and the institutions behind them. Those three decide the outcome, whether prices are quoted in bolívares or in dollars.

The argument about maintaining the unit of account in bolívares is about the State’s capacity to protect and nurture strategic industries. But industrial policy is paid for by a State with fiscal room, and Venezuela has neither. It becomes possible after stabilization, not instead of it.

Without credible rules, there is no private investment. Without investment, there is no oil and no tax base. Without revenue, there is a deficit. And a deficit breaks any exchange rate regime, whether it is denominated in bolívares or in dollars.

Planchart may well be right. His is a claim about what Venezuela becomes over the medium and long term; mine is about what stops the bleeding now. Our hope is that between the two visions, readers get the order of operations.

His best line is that starting dollarization under chavista rule is like handing the reconstruction of the oil sector to a man who helped destroy the electricity grid. I would make it structural rather than personal, because it is an argument about order.

Stage one is not monetary. It is a legal framework credible enough that private capital comes back. Without credible rules, there is no private investment. Without investment, there is no oil and no tax base. Without revenue, there is a deficit. And a deficit breaks any exchange rate regime, whether it is denominated in bolívares or in dollars. Once those policies are in place, they will open the market and the premium will close on its own. Then, the decision about Venezuela adopting the dollar formally can be taken calmly, from strength, rather than desperately as a rescue.

In 2013 we wrote that the choice was reform or hyperinflation. Maduro chose hyperinflation, and it ran from 2017 to 2021. The 2026 version of that choice is not dollar or bolívar. A currency is imported. A State is built.

“The Kangaroo Peg” was written by Gino Bettocchi and Jesús Bolívar, Second Year Policy Analysis, Harvard Kennedy School, 2013, advised by Ricardo Hausmann. The thirteenth year update, with both figures, the model and its sources, is available here.

You can also track all macroeconomic metrics in the UnoPago monitoring website.

The oil “mega-deal” signed between the US and Venezuela has caused major repercussions on plenty of themes: from the legality and timeframe of the agreement to the economic and political implications and, last but not least, the controversial role of Alejandro Betancourt.

A couple of issues are also missing from recent discussions: the effects of these new deals on Venezuela’s environment and its implications for the global climate crisis.

One exception was the coverage made by the NPR’s “All Things Considered” program, where energy and climate correspondent Julia Simon interviewed Paasha Mahdavi, a political science professor at University of California, Santa Barbara, who has this to say about what the new Orinoco Belt developments by major oil company Chevron could do.

“This expansion is effectively a carbon bomb. And so if Chevron does produce this field, that’s roughly 52 million tons of carbon dioxide equivalent per year additional. That is a huge number.”

On September 2nd, the same day those deals were signed in Miraflores Palace, the United Nations Environmental Program released the report “Limiting Overshoot,” which indicates that the 1.5° threshold to limit global warming established in 2015 by the Paris Climate Accords was already crossed and therefore the world must prepare for the fallout.

But in the last few days, several Venezuelan environmental NGOs and other civil society groups are sounding the alarm about the negative consequences that those agreements could produce here. Mongabay published this map about the areas that are impacted by oil extraction in Venezuela.

Venezuelan NGOs Clima 21 and Provea made public a joint statement in which they say that “the economic recovery cannot be made at the expense of environmental human rights. No economic interest can prevail over the constitutional and international right to a healthy, safe and sustainable environment…”

They proposed five points of commitment for all involved, which include transparency and public information, effective enforcement of environmental obligations, urgent management of oil spills, protection of vulnerable communities and a transition to a sustainable model for the country.

Local NGO Azul Ambientalistas claimed that in recent months there have been visible signs of spills and gas leaks in the Lake Maracaibo area, which increased after the reactivation of activities there earlier this year.

Alejandro Alvarez, director of NGO Clima 21 told Caracas Chronicles about what this overall commitment could entail: “It must take into a medium-to-long term strategic plan of reducing the fiscal dependence of the oil rent through investment in areas not related to the extraction and use of fossil fuels. There are already forecasts that could define alternative economic areas to generate currency without the extraction of petroleum.”

In similar terms, Transparencia Venezuela mentioned the need to adjust any oil investment and development to what’s established in Article 129 of the Constitution, including “environmental and socio-cultural impact studies” and “the obligation to preserve the balance…”

But some went further and openly denounced the US-Nabep deal as the surrender of our national sovereignty and civic rights, as Venezuelan sociologist Emilianio Teran-Mantovani wrote in an article for the Venezuelan Observatory of Political Ecology, an organization that he co-founded. 

“The new Oil Agreement is the result of this process of political decomposition that has been unfolding in Venezuela for years; and it is the crowning achievement of the capitulation and dismantling of oil nationalism, which had already begun under Maduro and is now being fully unleashed through U.S. intervention…

“Ultimately, this means that Venezuelans themselves have no place. They hardly matter. Their decisions, expressed, for example, in the July 28, 2024 elections, do not matter. Neither do their social and labor rights. And the environment is even less relevant, an area that has been rendered completely invisible in this conflict.”

“There is no National Policy, National Strategy, nor a National Plan of Adaptation and Mitigation to Climate Change. There’s neither a Climate National Budget nor a National System for an Inventory of Greenhouse Gases…”

Besides these statements, the issue of how this oil deal will affect our surroundings has taken a backseat to other concerns while clouded by a lack of details and overall uncertainty around it, despite the promises of a prosperous recovery made by government officials in Caracas and Washington. 

In the meantime, the problem of incidents like oil spills continues to be present to this day, with the most recent one occurring on the coast of Lake Maracaibo near Cabimas, as local NGO Azul Ambientalistas claimed that in recent months there have been visible signs of spills and gas leaks in the lake, which increased after the reactivation of activities in the area earlier this year.

Oil spills have sadly become commonplace over time, but reliable data on the matter is hard to come by, with NGOs like Clima 21 and the Venezuelan Observatory of Political Ecology filling the gap that the State is not providing. 

“This possible impact (of the pollution produced by the projects of the oil deals) would add to the systemic chronic environmental crisis of the Venezuelan oil industry, which has a very high accident rate because of the abandonment of safety protocols and protections to the communities and ecosystems in the most affected areas. Our concern is the absence of guarantees in those agreements that these problems will be attended to and solved.”

And then there’s the concern of climate change and its already visible effects around the world. At the moment, the ongoing El Super Niño climate event is exacerbating temperatures, causing historical heatwaves like the recent one in Europe and creating serious worries about food crops and other essential natural resources in many nations, including here in Venezuela. 

Evidence of how climate change has directly affected Venezuela can be found in the second academic report on climate change (DRACC), which was formally presented last December by the Venezuelan Academy of Physics, Mathematics and Natural Sciences. In its findings is the acknowledgment that the average temperature in the country has risen 0,22 °C per decade between 1980 and 2015, while global warming is responsible for anomalies in rainfall.

But the most damning conclusion is the complete disregard coming from the Venezuelan State.

“This is an important theme in which the government has made failed or incomplete advances” Alvárez, mentioning two failed projects: wind farms in Paraguaná and solar panels for  an indigenous community in Amazonas state, which ended up abandoned.

“There is no National Policy, National Strategy, nor a National Plan of Adaptation and Mitigation to Climate Change. There’s neither a Climate National Budget nor a National System for an Inventory of Greenhouse Gases… …the climate institutional weakness accentuates the vulnerabilities of the national territory to the physical threats of the current climate change…”

“The climate change issue has completely disappeared from the Venezuelan political agenda. We have no information on the position of the government in the next international meetings on the matter,” Alvarez told us. He added that “in any case, we need a commitment of the State to fulfill the obligations of the Paris accords and the COP30 (the most recent UN’s climate change conference held in Brazil in November 2025) that promote an energy transition outside of fossil fuels.”

Given this assessment and the Trump administration’s doubling-down on the exploitation of fossil sources of energy, this oil deal could simply make those physical effects even worse. 

Parallel to this is the inclusion of how clean energy sources like solar or wind could not only assist in alleviating the electricity shortage but create new opportunities for our economy. Now, it seems like the only one considered is the hydroelectric power that we largely depend on.

“This is an important theme in which the government has made failed or incomplete advances” Alvárez, mentioning two failed projects: wind farms in Paraguaná and solar panels for  an indigenous community in Amazonas state, which ended up abandoned.

Overall, any discussion about the environmental consequences that this controversial oil deal could have for all Venezuelans is not at the forefront. It is not entirely erased from view, however. 

The short-term argument also brings a long-term one that our society has been dodging for many years: finding a suitable compromise between the needs of our economic apparatus that require immediate attention and that our hydrocarbon industry can provide, while keeping safe basic things like the air we breathe or the water we use and even trying to preserve the natural wonders that this beautiful country of ours offers.

Venezuelan political junkies witnessed an amusing phenomenon in the past few weeks: former presidential hopeful Henrique Capriles embraced a derisive meme about himself that suddenly became popular. Or more precisely, he, too, started joking about his own memefied persona, el manguanguas, the weirdly energetic, repetitive and even creepy politician that appears at your doorstep and, if you let him inside, sits down for hours to hablar de la situación while emptying your family’s coffee reserves. 

Capriles is one of the most memeable characters in our universe and the manguanguas moniker is not a rarity. It comes from a 2019, early Juan Guaidó era livestream where he praises Guaidó and rants at Maduro for virtually terminating political competition a year before: “¡Coño, qué manguangua! ¿Ah?” (an indignant “hell, that’s convenient, huh?”).

The whole thing does say a couple of things about our (still overwhelmingly digital) public sphere and the memefication of Venezuelan politics. First, it seems many people were more eager to have a laugh and scroll down the manguanguas rabbit hole than to learn, say, about the US-Nabep deal and the involvement of bolichico king Alejandro Betancourt, a material architect of the crisis that remains the biggest handicap to the quality of life of Venezuelans. To put it another way, el manguanguas was getting an insane amount of attention while the US overlords faced their biggest reputational crisis in Venezuela since January 3.

The meme emerged because Capriles has been touring Miranda while Venezuelan politics become increasingly defined by what a group of gringos in navy blue suits decide to tweet on a Friday evening.

We’re not making a great discovery here—most people know memes can have spectacular traction when it comes to political messaging and campaigning. The Venezuelan jodita, the national propensity to make jokes about everyone and everything even in the midst of tragedy, can make memes an even stronger weapon in our digital sphere. It seems someone made Capriles aware of that: he first reacted by complaining on X, accusing “those who are paying a millionaire campaign in production and publicity” of attacking him on social media. Then he acknowledged it in a friendlier fashion: “They say I visit your homes to steal your coffee,” he said in a September 1 video in Barlovento. “They mock me because they don’t want to see me coming here.” In a later post, he made a toast with other townspeople raising tiny coffee cups: “Por la manguangua!”

Capriles decided to tag his recent posts with #OperaciónManguangua and the whole thing has been helping him—engagement around his account grew and became more positive as a result, though he still doesn’t dare to open the comments section in his X handle. It’s good news for him after a few years of unpopularity, when he formally joined the faux opposition camp. If not for the events of January 3 and a still dim opening of the political arena, Capriles would be flirting with irrelevance, just a washed-up face in the parliamentary seat Jorge Rodríguez gifted him in 2025, begging Iris Varela or Jorge Arreaza for a chance at the chamber’s microphone. We wrote about his acts and decisions extensively—or his lack of courage and effectiveness—in the late Maduro era. But Capriles is not yet irrelevant, at least in my opinion.

The meme emerged in the first place because Capriles has been touring the state of Miranda this summer—a post-Maduro redemption tour, if you will—while Venezuelan political events again become increasingly defined by what a group of gringos in navy blue suits decide to tweet on a Friday evening. A few years ago, Capriles campaigned strongly about “bringing politics back to the country” in a not-so-slight dig at Guaidó, Leopoldo López, and the Trump-backed interim government they led. He now recognizes María Corina Machado as the rightful opposition leader and criticizes her exclusion from the so-called negotiations, so this is not about a plot against her.

Venezuelan politics started to see some interesting movements a few months ago, but these have become less and less intense as the rest of the opposition waits for Machado’s return or the green flag of an election date.

As weak and isolated as he may look, Capriles is one of the few opposition people with actual freedom to call things what they are when it comes to the United States and Venezuela. That is not the case for Machado, Juan Pablo Guanipa, or other figures who might be playing a role behind the scenes. Capriles didn’t have to wait for Marco Rubio’s explanations five days later to make his case about the US-Nabep deal. He was quick to assert that the oil belonged to the people on the day of Trump’s bombastic announcement, and made some sensible questions: What’s the deal’s scope? What’s its legal basis? What do Venezuelans receive, and under which conditions? Elliott Abrams, the GOP hawk and special envoy in Trump’s first term, noted Capriles’ almost lonely stance as a sign of the country’s worrying lack of politicians who are truly independent from Washington (to make his point, the former operative of Ronald Reagan also quoted the Venezuelan Communist Party in his Washington Post op-ed).

Will the manguanguas joke give him an enhanced platform? Maybe for a bit, though Capriles has a habit of messing things up and making people grow tired of him rather quickly. Right now, he is being noisier than at that time he was supposed to run for the 2023 primaries, only to chicken out in the final stretch, knowing he stood no chance against Machado. However, the videos he has been posting of rural communities in the state he once governed do carve out an accurate picture of how the country looks outside a few big cities. In the Barlovento area, Capriles is seen visiting a ramshackle school where the roof looks about to fall down, with a disgusting pile of books and furniture eaten by heat and dust as a library, its walls and windows looking flimsy when not broken. Another post shows a nearby ghost town, Tacarigua de la Laguna, where Capriles records an empty beach in front of him and an abandoned building behind—the only living thing nearby being a baby cat. Mire, aquí lo único que quedó es el gatico, he says.

In March, we wrote that the political heat map of Venezuela was starting to see some interesting movements, but these have also become less and less intense while the rest of the opposition waits for María Corina’s return or the green flag of an electoral calendar to light up the party. Maybe, if the people are kept waiting, angry or disappointed with the Americans as the opposition watches from the dugout, Capriles will remain the only cat making noise. Mire, pues vamos a ver.

Caracas, September 9, 2026 (venezuelanalysis.com) – The president of Venezuelan state oil company PDVSA, Héctor Obregón, backed the recent agreement with the Trump administration as a “win-win relationship” on Monday.

“We signed Productive Participation Contracts where we put forward crude reserves and qualified personnel. What were we missing? Foreign capital,” he said in an interview with Unión Radio.

Productive Participation Contracts (CPP) are concession-type agreements whereby energy projects are turned over to private corporations which run operations and commercialization while paying a negotiated portion of proceeds to the Venezuelan state.

The recent oil deal, hailed by Trump as “the biggest in history,” will see Venezuela transfer 17 prime oilfields, containing 65 billion in proven crude reserves, to private operator NABEP. The projects are split between extra-heavy crude fields in the Orinoco Oil Belt and mature light- and medium-crude ones in the Lake Maracaibo basin.

Obregón insisted on the mutual benefits, explaining that Venezuela will collect taxes and royalties while the US will be able to supply its domestic demand. Regarding the agreement’s timeline, which the White House has claimed to span 100 years, Obregón stated that the concession is for 25 years but may be renewed for similar periods “as many times as necessary.”

After initially vowing that NABEP would invest US $100 billion in the oilfields, a figure repeated by Venezuelan officials, the Trump administration changed the pledge to “more than $10 billion.” 

According to a White House “fact sheet” on the deal, the US State Department will be able to secure 20 percent of the NABEP’s output at cost and have a right of first refusal over the remaining 80 percent.

Obregón suggested that Washington could secure additional benefits, indicating that a reference $65 barrel would have a $15 “sales discount.” The oil official likewise estimated capital and operational expenditures at $12-15 and stated that NABEP would never secure a smaller portion of proceeds than the Venezuelan state, with the percentage increasing for greenfield projects.

The $19 revenue estimate offered by Venezuelan officials as the government’s take for a reference $65 barrel is significantly lower than the benchmarks established under the 2001 Hydrocarbon Law approved by former President Hugo Chávez and subsequent reforms. Under the previous framework, only PDVSA or PDVSA-majority joint ventures were allowed to operate oilfields, with the Venezuelan state securing as much as $0.80 for every $1 of oil proceeds in the latter case.

NABEP, owned by Venezuelan oil mogul Alejandro Betancourt, will grant a 35 percent stake at no cost to the Pentagon’s Office of Strategic Capital (OSC). Washington will likewise have veto power over NABEP’s board of directors. Betancourt has faced corruption accusations in Venezuela, with authorities issuing an arrest warrant in 2022 that was later dropped. For its part, the Trump administration has sought to halt money laundering investigations against the Venezuelan businessman both in the US and in Switzerland.

Obregón went on to acknowledge that Venezuelan export revenues are currently deposited in a US Treasury account before US officials decide on the disbursement amounts and timings back to Caracas.

“There is a state-to-state agreement to receive Venezuelan funds in Treasury accounts,” he disclosed, echoing Washington’s assertion that its seizure of Venezuelan export proceeds aims to protect them from potential creditor claims. 

“The channeling of revenues through the US Treasury could be considered a protection measure, since there are debt claims against PDVSA and creditors could target our accounts,” he argued.

Neither US nor Venezuelan authorities have disclosed the amount of revenue collected and disbursed back to Caracas. Luigi Pisella, an advisor to Acting President Delcy Rodríguez, claimed that the Trump administration is deducting the costs of its January 3 military operation against Venezuela from the country’s funds.

The costs of goods and services supplied by US-based exporters to Venezuela are also being directly deducted from the funds held in the Treasury accounts.

Apart from controlling export earnings, US officials have publicly participated in a pro-business overhaul of the Caribbean nation’s hydrocarbon law and regulations, including reviewing drafts of the legislation.

The Trump administration has maintained sanctions on the Venezuelan oil industry while issuing licenses for select Western corporations. US Energy Secretary Chris Wright oversaw the signing of agreements with Chevron, Eni, and smaller US-backed energy firms during a visit to Caracas earlier this month.

Edited by Lucas Koerner in Philadelphia, USA.

A few weeks ago, non-chavista politician Antonio Ecarri and American economist Steve Hanke managed to unearth one of Venezuela’s longstanding and unsettling debates: whether the country’s economy should be formally dollarized. After decades of economic hardship brought by repeated devaluations, hyperinflation and scarcity, the country’s monetary regime is heavily fragmented. 

De facto dollarization rules most of the transactions, while the bolívar, crypto stablecoins, euros and the currencies of neighboring countries split the rest of the monetary market share used to maneuver through Venezuela’s complex economy. With the US pushing for the country’s economic stabilization to increase trust in foreign investors, the fragmented monetary ecosystem can be detrimental to the process made so far.

Venezuela’s economic outlook has improved after Maduro’s capture and since the US took control over Delcy’s decisions. Mainly because of a sharp recovery of oil exports to the US recovered sharply; by April, these were up 192% from their 2025 average. The energy sector is spearheading the recovery while attempting to partially compensate for the devastation caused by the twin earthquakes. GDP growth projections for Venezuela are forecasted at 5.8%, almost four times the country’s 2025 growth (1.5%). Yet the threat of inflation and instability compounds investors’ worries about entering the country. After repeated announcements by the interim regime promising to close the exchange gap and tackle inflation, their actions show otherwise.

Delcy continues to erode the bolívar by stimulating the money printer needed to feed chavismo’s patronage system. Exchange rate controls, which have long incentivized corruption and inflation, are still there. On the dollar side, credit loans and transactions remain “officially” forbidden, creating an artificial tax on USD transactions and fear amongst businesses who can be punished for their use.

Eliminating inflation would require abolishing all existing exchange rates and creating a new one based on an agreed technocratic approach.

The result of this unaddressed monetary disaster has been a persistent rise in inflation, which increased by 6.1% in July, bringing year-on-year inflation to 576% and 2026 cumulative inflation to 175.5%.

This is not the first time the call for dollarization has been in the spotlight in Venezuela. Nonetheless, US control over the country’s economy may increase the possibility of it becoming a reality. While dollarizing might be an effective measure to rapidly generate trust and reduce inflation, it raises important questions about its implementation under the interim regime and the future of Venezuela’s monetary sovereignty. Similar to Trump’s oil deal or the post-earthquake reconstruction, all discussions and actions are taking place behind the scenes, sidelining the very population that will have to deal with its consequences. 

The US dollar is not the solution

Discussions regarding dollarization have primarily focused on three benefits: eliminating inflation, forcing fiscal discipline, and eradicating corruption. However, as long as those managing the dollarization process are the same ones who have guided Venezuela to the worst economic crisis in the region’s history, the result might be equally as bad but with a different set of consequences. 

Hanke asserts that no preexisting institutional, fiscal or political conditions are necessary for dollarization to be successful. However, this process requires the willingness of all three areas to move forward. Eliminating inflation would require abolishing all existing exchange rates and creating a new one based on an agreed technocratic approach. Currently, there is no incentive for anyone in the interim regime’s leadership to converge the exchange rates.

A struggling or failed dollarization plan could further erode trust while leaving the country even more vulnerable to external shocks.

The exchange rate differentials have not been an economic policy mistake overlooked by chavismo. These have been an integral part of chavismo’s strategy to undermine and replace old political elites with select, loyal ones. Long ago, they became crucial to maintain the status quo. There are no signs in favour of change in this area, as economist Juan Comella argued in May. Doing so would compromise the structure that keeps her in power.

A struggling or failed dollarization plan—which forces the government to take on further debt, experience severe cash shortages and fundamentally depend on its commodity exports—could further erode trust while leaving the country even more vulnerable to external shocks, such as a sudden plunge in oil prices. The neoliberal constraints posed by dollarization, like an extremely limited Central Bank to aid the government, will not fix decades of institutional erosion, but only try to avoid it while possibly unleashing a fresh round of obstacles that menace an already fragile economic recovery.

The bolívar is not the problem

Decades of monetary policy failures made the population skeptical of the bolívar. For long enough, the system and institutions have incentivised and even rewarded the wrong people to take advantage of its vulnerabilities at the expense of the population and evading any personal consequences.

It is certainly not the paper where the bolívar is printed the element that corrupts people or destroys the economy: it is the system behind it. It is not far-fetched to think of a plan that grants the Venezuelan Central Bank complete independence, empowering the correct people to safeguard the economy from the risks of inflation while maintaining government spending in line and preparing for external shocks.

Relinquishing our monetary sovereignty would be a mistake in a world where governments actively participate and spend to tackle modern challenges, including AI and natural disaster relief. China’s rise as a global power has been, in part, a consequence of decades of industrial policy under intense government intervention. The US and EU have started to catch up in recent years. The US has done so with the CHIPS and Inflation Reduction Act under Biden and, most recently, with the Trump administration imposing protectionist tariffs and taking equity stakes in major companies with the aim of safeguarding US interests in key sectors. The EU aims to increase competitiveness under the Clean Industrial Deal and the Industrial Accelerator Act. If Venezuelan leaders seek to move past the country’s commodity dependence, climb up in the global value chain, become competitive and diversify the economy, industrial policy will be crucial. Dollarization would compromise those goals.

Starting a dollarization process under chavista rule is similar to entrusting the reconstruction of Venezuela’s oil sector to a businessman who contributed to the destruction of the country’s electricity grid.

Foreign investment will be the driver of short- and medium-term recovery and growth for Venezuela. However, industrial policy will be crucial to guide the long-term objectives of the country. For this, Venezuela needs the bolívar, even if it’s in an open and competitive currency market where the people decide which currency earns their trust.

The Ecarri-Hanke duo surprised public opinion not only because of their proposal but also because of the odd pairing. Ecarri represents the efforts of Venezuelan politicians with limited legitimacy to enter the spheres of influence in Washington, and also chavismo’s ability to neutralize them. Hanke only views Venezuela as part of a larger plan to promote and deepen the use of the dollar internationally, in a global context that increasingly mistrusts the US currency and is hedging against it.

Ecarri is the result of a system that empowers the wrong people. Hanke represents the oversight of the reality on the ground and the impact Venezuelans will have to absorb. Both display the same shortcomings of Venezuela’s monetary institutions over the past decades. Their proposal simply tries to hide the sun with one finger instead of addressing the historical root causes of Venezuela’s monetary instability.

Starting a dollarization process under chavista rule is similar to entrusting the reconstruction of Venezuela’s oil sector to a businessman who contributed to the destruction of the country’s electricity grid. Policy should depart from both trauma-instilled calls for complete dollarization and a patriotic defense of the bolívar. Instead, it should focus on economic stability and our capacity to meet the challenges of tomorrow.

One of the most complex concepts in political science is democracy. While we all have a feel for what it is, whether it is elections, civil liberties, freedom of speech, or a combination of all of the above, it’s rather complicated to measure how democratic a country is. In a context like Venezuela’s rapidly evolving political environment, it’s essential to have a benchmark to evaluate whether the transition the country is experiencing is toward democracy or toward something entirely different. 

Now, a group of political scientists is proposing one way to measure it: comparing it to the installation of an operating system.

“Installing Democracy” is a project led by political scientists Beatriz Fernández and Pablo Hernández Borges to operationalize democracy in Venezuela. It’s part of Umbral, an initiative created by Hernández Borges after January 3rd to evaluate the possible outcomes of Venezuela’s political crisis, drawing from experts and the public. 

Hernández Borges said the initiative emerged partly as a way to combat misinformation, “with the goal of showing citizens that a transition is a very complex process and that it will not happen quickly. This platform sheds light on the path toward transition at a moment when people feel that democracy is at the threshold of possibility.”

A group of experts then independently evaluates each action on a scale from 0 to 100% based on the available evidence. Their assessments are aggregated into a common estimate.

The new branch of the project, rather than presenting potential outcomes, shows a progress bar from 0 to 100%. The project’s creators envision democracy holistically, rather than as an “on and off switch.” Their methodology divides the transition into 11 pillars, ranging from human rights, security, and institutions to political competition, elections, justice, and the economy. 

To calculate the percentage shown on the dashboard, the project identifies 60 key variables consisting of tangible events, timeframes, and verifiable indicators. These include the release of political prisoners, the opening of the electoral registry, press freedom, the renewal of electoral authorities and, eventually, the holding of free elections. Drawing from existing proposals for Venezuela’s democratic transition, the project organizes these actions along an 18-month timeline starting in August 2026, with each one assigned a deadline, an indicator, and a source of verification. A group of experts then independently evaluates each action on a scale from 0 to 100% based on the available evidence, and their assessments are aggregated into a common estimate.

The resulting score places each action into one of four categories: completed, in progress, pending or unfulfilled, or not yet evaluable. This structure allows the dashboard to capture an uneven transition. Currently, it lists the installation of democracy at 7%.  

The identities of the 13 expert evaluators are kept anonymous. “They are a highly qualified group. They are Venezuelan academics, both inside and outside the country. There’s also a group of Spanish academics with expertise in transitions and knowledge of the Venezuelan context,” said Beatriz Fernández.

“These are not variables like measuring a kilo of sugar, whether it’s 800 or 783 grams. We don’t have the precision of the hard sciences. This is an informed approximation…”

Fernández joined Umbral with “Installing Democracy” after previously working with Varieties of Democracy, or V-Dem, a leading global research project that measures different dimensions of democracy across countries using hundreds of indicators and assessments from country experts. Her experience with V-Dem helped inform the project’s approach, alongside elements drawn from presidential performance trackers.

Still, Fernández acknowledged that measuring democracy is particularly complicated. “These are not variables like measuring a kilo of sugar, whether it’s 800 or 783 grams. We don’t have the precision of the hard sciences. This is an informed approximation, which is what experts do and which is valid.”

When users log into “Installing Democracy”, they can see the individual variables, the entity responsible for each aspect of the transition, the verifiable indicators, and the overall progress bar for each of the “milestones” of Venezuela’s potential democratic transition. In addition, it’s possible to see the progress, stagnation or backsliding of each milestone. Moreover, the dashboard includes countdowns for the scheduled end of the negotiation table between the interim authorities and the 2015 National Assembly, the US Midterm elections, and the end of the proposed 18-month roadmap.

Ultimately, the purpose of the project is to show audiences that the discussion of democracy goes deeper than whether elections are held or not. Fernández and Hernández Borges emphasize that the conditions under which those elections take place, and whether their results are respected, are just as important. In fact, they argue that projects like this one invite citizens to think beyond elections as the “be-all and end-all” of a democratic transition and, as their press release puts it, to evaluate “the forest rather than the latest event.” At 7%, the forest is still very much taking shape.

Ousted Venezuelan President Nicolas Maduro has urged a United States judge to dismiss the criminal drug trafficking charges against him, arguing he should be immune from prosecution as the head of a sovereign country.

Maduro’s lawyer, Barry Pollack, made the appeal in a Manhattan district court on Wednesday.

His legal team has petitioned District Judge Alvin Hellerstein to dismiss the case, which will test the willingness of US courts to apply international law to criminal cases.

Maduro was abducted and imprisoned on January 3, after US President Donald Trump authorised a military raid in Caracas. The former Venezuelan leader, who has been held in a Brooklyn federal jail, has pleaded not guilty and is scheduled to go on trial on June 1, 2027, if his effort to dismiss the case is unsuccessful.

The principle that sitting heads of state are immune from prosecution abroad is a longstanding tenet of international law, seen as fundamental to diplomacy.

Judge Hellerstein had given Pollack a Wednesday deadline to file his motion to dismiss the case.

Pollack has argued that Hellerstein lacks jurisdiction, both because sovereign heads of state enjoy complete immunity and because the acts that Maduro is accused of would have been part of his official duties.

“This unprecedented prosecution violates the absolute immunity from criminal jurisdiction to which heads of state and foreign officials acting in their official capacities have been entitled for hundreds of years,” Pollack wrote.

Pollack added that Maduro was falsely accused and “vehemently denies” the allegations.

A spokesperson for the Manhattan US Attorney’s office, which brought the charges, did not immediately respond to a request for comment.

Maduro faces uphill battle

Legal experts have told the Reuters news agency that Maduro faces an uphill battle.

Washington has not recognised Maduro as Venezuela’s president for years, due to disputed elections. Courts tend to defer to the US president and his cabinet in disputes over who is recognised as a foreign country’s leader.

US criminal cases involving heads of foreign states are extremely rare, but precedent offers little encouragement for Maduro. In 1990, a federal judge in Miami rejected former Panamanian military leader Manuel Noriega’s attempt to assert head-of-state immunity, in part because he never officially held the title of president.

The US stopped recognising Maduro in 2019, when he was inaugurated for a second time after a 2018 election that critics say was rigged. Washington also called his 2024 re-election fraudulent.

Maduro says both votes were fair and has long accused the US of seeking his ouster to gain control of the South American country’s oil wealth.

Pollack, however, wrote that Washington’s assessment that Maduro lacked legitimacy was not relevant.

“Unlike in Noriega, the Executive Branch does not dispute that Mr Maduro was Venezuela’s head of state, but instead merely claims that, after 2019, he did not occupy that position legitimately,” Pollack wrote.

Venezuela run by Maduro’s vice president

Since Maduro’s abduction, his former vice president and socialist ally, Delcy Rodriguez, has run Venezuela as its interim leader.

She has also increased cooperation with the Trump administration. Last month, the two countries reached an unprecedented deal that would see the US take over about one-fifth of Venezuela’s oil reserves.

Pollack wrote that it was “incongruous” for the US to recognise Rodriguez, who was appointed by Maduro, and not Maduro himself. He pointed to statements by Rodriguez and officials in her government, made in January and February, indicating that they still considered Maduro Venezuela’s legitimate head of state.

Rodriguez’s government has since gone silent on the matter. Some murals of Maduro in Caracas have been painted over in recent months.

Prosecutors have until October 2 to respond to Maduro’s motion to dismiss the indictment, and Hellerstein will hold a hearing on the dismissal effort on November 17.

Caracas, August 28, 2026 (venezuelanalysis.com) – US President Donald Trump has announced a major energy agreement with Venezuela to “more than double US oil reserves.”

“The US has just entered into the biggest oil deal in history with Venezuela,” he wrote on social media. “Working with highly respected [Venezuelan Acting President] Delcy Rodríguez, and through a partnership with private business, [the US] has secured majority control of more than 65 billion barrels of proven Venezuelan oil reserves.”

Trump added that the purported agreement would lower US fuel prices “long into the future” while setting Venezuela “on a course toward tremendous success and great prosperity.”

US Secretary of State Marco Rubio called the reported deal “a huge win for both the American and Venezuelan people” and claimed it would bring “nearly US $100 billion in private investment” to the Caribbean nation. Trump and Rubio disclosed no specifics about the arrangement.

Venezuelan Acting President Delcy Rodríguez confirmed the “historic agreement” via a social media message on Friday night.

“I extend my deepest gratitude to Trump, Rubio, and the US government for their support in developing this agreement, which represents a historic milestone in US-Venezuela relations,” she wrote.

Rodríguez stated that the deal will involve private corporations developing 17 “strategic fields” with 65 billion barrels of proven reserves. She echoed Rubio’s $100 billion investment claim and pledged that the projects would yield $209 billion in tax revenues. According to the acting president, the announced agreement “ushers in a new era of growth and prosperity.”

The high-level negotiations were first reported by Axios on Thursday.

The Venezuelan Constitution establishes that all mineral and hydrocarbon resources are “inalienable public domain” goods. Transferring ownership of oil reserves would require a constitutional reform.

According to Reuters, the deal could take the form of a long-term lease, with the Trump administration then auctioning or allocating fields to select corporations. Bloomberg reported that the lease could be as long as 100 years.

The seventeen fields in question are said to include undeveloped extra-heavy crude projects in the Orinoco Oil Belt and mature light crude fields in Lake Maracaibo. The resulting supply would be “guaranteed” for the US as part of efforts to rein in rising fuel costs amid the ongoing standoff with Iran in the Persian Gulf.

Bloomberg additionally reported that Washington’s direct involvement in Venezuela’s oil industry could be conducted by the Pentagon’s Office of Strategic Capital (OSC) in partnership with Venezuelan oil mogul Alejandro Betancourt. The Biden administration created the OSC in 2022 to fund private sector initiatives deemed vital for US national security interests. 

Since the January 3 US military strikes and kidnapping of Venezuelan President Nicolás Maduro, the acting Rodríguez administration has fast-tracked a diplomatic rapprochement with Washington while also opening the country’s energy and mining sectors to Western companies. 

A new Hydrocarbon Law and associated regulations were drafted in consultation with oil executives and US officials. The reform slashed royalties and taxes and ceded control over operations and sales to private firms under joint venture or concession-type models. Caracas also acceded to foreign companies’ demands in allowing for legal disputes to be settled by international arbitration bodies.

The legislative overhaul replaced the 2001 Hydrocarbon Law approved by former President Hugo Chávez and subsequent decrees that established a leading role for the Venezuelan state in the energy sector, which in turn fueled the country’s economic and social progress in the 2000s.

The US Treasury has maintained wide-reaching sanctions in place while issuing licenses to hand-picked companies and barring the participation of enterprises from China, Iran, and Russia. Furthermore, Venezuelan oil revenues are presently deposited in a US Treasury account, with the disbursement timings and amounts left at Trump officials’ discretion.

On Thursday, the US Treasury’s Office of Foreign Assets Control (OFAC) amended eight sanctions waivers concerning oil, mining, and telecommunications. OFAC removed a requirement that contracts signed with Venezuelan state entities be drafted in accordance with US laws or jurisdiction. The agency stated that “investment-related reforms” by the acting Rodríguez government had made the clause unnecessary.

Venezuela’s investor-friendly regulatory environment has led to industry giants, including Chevron, Repsol, and Shell, striking new deals or renegotiating existing ones for crude and natural gas exploration. Companies with no energy track record such as Lionheart Capital and Crossover Energy are likewise set to take control of strategic oilfields.

Oil services company SLB, formerly Schlumberger, recently signed an agreement with PDVSA for reservoir studies and service provision. SLB has set the reactivation of 15 oil rigs in the South American country as a short-term priority.

According to Reuters, the multinational firm will also access prized data on Venezuela’s oilfields, from reservoir characterization to real-time output information. SLB allegedly seeks to “make Venezuela’s oil data reliable again.”

In another indication of Caracas’ dramatic diplomatic realignment with Washington, Venezuelan officials are reportedly mulling the possibility of exiting the Organization of Petroleum Exporting Countries (OPEC).

Venezuela played a leading role in the creation of OPEC in 1960 as it sought to bring together Global South oil-producing nations to secure better and more stable oil prices in global markets. Former President Chávez also prioritized revamping OPEC after a prior “Oil Opening” under US-aligned governments had oriented the industry toward US interests and undermined the organization.

Edited by Lucas Koerner in Philadelphia, USA.

[Updated on August 28 at 8.30 pm ET following Trump’s announcement.]