In a major development that further diminishes the value of the U.S dollar, Venezuela is entirely abandoning the dollar for transactions in the foreign exchange market, and these will be made with the euro. The announcement was made by Tareck El Aissami, the country’s vice president of economics.
This was a similar move as that made by Saddam Hussein right before Iraq was invaded. Similarly, the move also comes at a time when US and EU relations on foreign matters were significantly divergent. What is different now, however, is that Russian and Venezuelan military ties have significantly increased. While there exists yet no mutual defense agreement between the two states, analysts speculate that something along these lines will emerge in the near future.
This would place Russia back in Latin America in a significant way not seen since the Cold War, during the period of the USSR.
Meanwhile, US President Trump has repeatedly raised the possibility of a military invasion of Venezuela.
The sanctions, recently introduced by Washington against Caracas, “block the possibility of continuing to trade with the US dollar in the Venezuelan exchange market,” El Aissami said, adding that US restrictions are “illegal and against international law.”
#ANUNCIO || Vicepresidente Sectorial de Economía @TareckPSUV: Todas las transacciones del mercado nacional, incluyendo las subastas de @dicomve, van a estar referenciadas con euro, yuanes o cualquier otra moneda convertible. #RegionesEstratégicasProductivas pic.twitter.com/jVYeoM4Aj3
— Vicepresidencia Vzla (@ViceVenezuela) October 16, 2018
The US “financial blockade” against Venezuela affects the country’s public and private sectors, including pharmaceutical and agricultural sectors, shows “how far imperialism can go in its madness,” said Tareck El Aissami.
Venezuela’s floating exchange rate system, Dicom, “will be operating in euro, yuan or any other convertible currency and will allow the foreign exchange market to use any other convertible currency,” El Aissami said.
The vice president added that all private banks in Venezuela are obliged to participate in the Dicom bidding system, RT reported.
The government is going to sell 2 billion euros between November and December to allow the public to purchase the European currency “at a real, non-speculative rate,” he said.
Washington does not hide its desire to see the socialist president of Venezuela, Nicolas Maduro, removed from power. The Trump administration even talked about the possibility of so-called “humanitarian intervention” in the country.
Last year, the US imposed sanctions prohibiting trading new debt and equity issued by the Venezuelan government and state oil company, PDVSA. The Department of Treasury also introduced several rounds of restrictions againt Venezuelan top government officials. Maduro was among those blacklisted and called it “an honor.”
The US pressure has contributed to the severe social and economic crisis in Venezuela in recent years as it was hit by hyperinflation, the devaluation of the national currency and a shortage of basic necessities, RT explained.
The harsh situation forced more than 2.3 million to people leave the country this summer in search of better life in Colombia, Ecuador, Peru and Brazil, according to the UN.