The United States’ pressure campaign against President Nicolás Maduro of Venezuela is extinguishing the country’s short-lived economic recovery, leading many inside Venezuela to brace for another economic crisis.
The tightening of American sanctions this year has pushed inflation back into triple digits, sent the national currency into a free fall, worsened power cuts and led the government, companies and residents to hoard dollars and slash spending.
To Venezuelans across the political spectrum, the growing signs of an economic downturn revive memories of hardships that many had hoped they had left behind.
In the past decade, Venezuela went through the deepest recession of any modern nation outside a war zone. A combination of disastrous economic policies, corruption and U.S. sanctions created prolonged hyperinflation, collapsed basic services, increased malnutrition and led millions to migrate to escape extreme poverty.
Mr. Maduro responded with a combination of political repression and a free-market economic overhaul. Those moves have stabilized prices, fueled growth and made life more bearable for most Venezuelans, at the expense of eliminating the last remaining democratic rights.
The Trump administration’s decision in July to designate Mr. Maduro’s government a drug cartel and initiate a series of military and economic measures aimed ostensibly at halting the flow of drugs from Venezuela are reversing these economic gains.
Economists estimate that Venezuela’s annual inflation rate will increase to 600 percent from 50 percent this year, and prices could begin rising exponentially, a scenario known as hyperinflation, in 2026. The country will enter a recession next year with its economy predicted to shrink 3 percent, according to the International Monetary Fund.
Venezuela’s main opposition movement and its allies in the Trump administration are betting that an economic crisis, combined with the aggressive U.S. military campaign in the Caribbean, will fracture the Venezuelan government and end 25 years of a regime now led by Mr. Maduro.
They see worsening living conditions in Venezuela as an unavoidable and short-term cost of re-establishing democracy.
But most Venezuelan economists and businessmen interviewed for this article in Caracas argue that Mr. Maduro is much better prepared for this round of external pressure. They spoke and shared data on the condition of anonymity to protect themselves from Venezuela’ government and potential U.S. sanctions.
Shortly after President Trump won re-election, Venezuela’s government authorized the country’s first cryptocurrency exchanges, paving the way for a broader shift toward financial assets that are outside the scope of traditional sanctions enforcement.
Venezuela today sells the bulk of its oil to China, gets paid in crypto and then funnels some of those revenues back into the national economy through the designated crypto exchanges. These moves have in a matter of months turned Venezuela into arguably the first nation to manage a large share of its public finances in crypto.
At the same time, Mr. Maduro’s vice president and economic czarina, Delcy Rodríguez, is privatizing Venezuela’s natural resources to bolster export revenues, including handing over dozens of small languishing oil fields to private investors.
This has helped oil output to grow 12 percent this year, raising Venezuela’s foreign currency earnings.
Such signs of resilience have led some economists and businessmen to argue that Mr. Maduro could prevent the looming recession from turning into collapse. Other experts point out that he has a track record of weathering financial crises.
