For 40 years, Víctor Urbina has sold sweets from a stand outside a shopping centre in Caracas. Now 80, his hair white, he lived through the city’s infamous “Caracazo” of 1989 — a week of riots and looting, sparked by price rises, in which hundreds of people died. But as he grapples with the introduction of new bank notes and a huge currency devaluation, Mr Urbina said he has never seen anything quite like Venezuela’s current economic implosion. “It’s incredible what’s happening to us,” said Mr Urbina. “This guy [President Nicolás Maduro] is driving us all crazy. No one knows what he’s doing.”
A week after Mr Maduro announced his latest plan to rescue the country’s economy, few believe it will get the country back on track. There is nothing in the measures that will truly tackle hyper-inflation and an acute shortage of dollars, economists said. Indeed, some announcements, such as a 3,000 per cent rise in the minimum wage, could fuel price rises further. In many countries, an economic catastrophe of this scale would unseat the president, but more than five years into his rule, Mr Maduro stands firm. He won with ease a deeply flawed presidential election in May and the opposition is in disarray amid a government crackdown in the wake of an assassination attempt involving two drones packed with explosives.
Mr Maduro blamed the attack on Colombians and the “far-right”, backed by Venezuelan exiles living in Miami. “Why does Maduro persist? The answer is that while the crisis is bad for government capacity, it is much worse for society’s capacity,” said Ricardo Hausmann, the Venezuelan director of the Center for International Development at Harvard University. “People are hungry, afraid and trying to survive.” Although oil exports have plummeted, they still offer Mr Maduro a valuable lifeline paid in dollars, while the armed forces, co-opted into the regime, remain largely loyal despite swirling rumours of discontent within the lower and middle ranks.
Migration has also helped Mr Maduro stay in power. The UN estimates that 2.3m people — 7 per cent of the population — have left Venezuela since 2015. Many are prominent opponents of the regime and while their voices are still heard from exile, they are no longer on the ground in Caracas orchestrating protests. For those still living in Venezuela, the most immediate impact of the economic plan is the rollout of new bank notes, with five fewer zeros on them. Still, the biggest denomination bill, the 500-bolívar note, is worth only $8.3, even at the official exchange rate.