Venezuela’s Economic Openness Ended Before It Began

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By FTN Editorial Team

In recent months, there has been an increasing number of voices praising a supposed economic recovery in Venezuela. These people argue that the Maduro regime has shown a willingness to lead the country towards a new period of economic openness. Specifically, they praise Maduro’s recent reforms that allow Venezuelans to set prices and use foreign currencies freely. These measures, while timid and implicit by design, have allowed the Venezuelan economy to mitigate its growth-inhibiting price distortions, ending its traumatic period of chronic shortages of food, medicines, and other essential goods.

However, as I argued in this article that I wrote two months ago, mitigating a problem is not the same as solving it, and Venezuela will not solve its economic crisis unless the nation undertakes a political transition to democracy. Among my argument is that the Maduro regime has neither the credibility nor the incentives to truly liberalize the Venezuelan economy.

Last week, time proved me right. Venezuela’s alleged process of economic openness ended before it truly began. The regime further tightened its grip over the Venezuelan economy, by not only introducing a series of new price controls but also intervening major food producers in the country. This will once again lead to the proliferation of black markets and shortages of goods in Venezuela. It will, therefore, ruin whatever is left of an already decimated Venezuelan economy.

The lesson from this event is quite simple: There is no possibility of a true and lasting economic recovery under Maduro’s rule. This, as the Maduro regime has always been willing to sacrifice economic efficiency for short-term political gains. So whatever economic improvement the Maduro regime attempts, it will be undermined in the future, and the private sector knows that. The idea of an economically prosperous but politically authoritarian Venezuela is nothing more than a mirage of the worst kind. We need political, social, and economic freedom in Venezuela. Not one of them, but all of them. Not only because it is the right thing to do but because it is the only realistic way forward.

Jorge Jraissati

Jorge Jraissati is a Venezuelan economist who graduated at the Wilkes Honors College. He is the President of the Venezuelan Alliance, he is a Visiting Fellow at the Abigail Adams Institute, and he has been invited as a guest lecturer to over 20 universities, such as Harvard, NYU, and Cambridge, to discuss the political economy of Venezuela.