The European Union announced it has set up an “International Contact Group,” including members of the EU as well as four Latin American countries, to help find solutions to the ongoing political crisis in Venezuela. The group, set to meet in Uruguay on Thursday, will pressure Venezuela’s current president to set a date for new elections.
Lourdes Casanova, academic director of Cornell University’s Emerging Markets Institute, says that on top of the uncertain political situation, Venezuela’s economic realities also do not leave much room for easy solutions.
“The world seems split, unevenly, between those who have backed Juan Guaido as the new Venezuelan leader and those – like China, Turkey and Russia – who have backed Maduro.
“China’s position is not a surprise. China has been a source of loans for Venezuela in exchange for oil and recently bought almost 9 percent of Venezuelan oil company PdVSA, in exchange for the latest loan. This is at a time when – despite numerous attempts to diversify its economy – Venezuela continues to depend on oil and the global oil price has dropped to $60 per barrel. Inflation, at 1,700,000 in December, is the highest rate on record. Moreover, the U.S. has issued new sanctions to PdVSA which, de facto, bars exports of Venezuelan oil to the U.S. Such realities do not leave the country much room to solve its current economic challenges.
“We all hope that a peaceful solution can be found to this tremendous economic crisis affecting all of Venezuelan society and hitting the poor the hardest.”