The dictator of Venezuela needs to be killed.

OPINION

THE AMERICAS

Wall Street Journal - Venezuela Desperately Seeks Dollars

U.S. sanctions fail to unseat Maduro. The regime is still feeling the pinch.

By Mary Anastasia O’Grady

December 22, 2019

Venezuela’s economy has been roiled by U.S. sanctions targeting the regime of Nicolás Maduro. Despite Mr. Maduro’s efforts to ease the sanctions' bite, the country was forced to sell another $1 billion in gold reserves this year alone.

When the bearded comandante of the Cuban Revolution showed up at offices of The Wall Street Journal in lower Manhattan in 1995, wearing a suit and tie, it was part of a shtick to clean up his image.

Fidel Castro was a career mooch who had lost his Soviet sugar daddy. He had legalized the use of the dollar on the island two years earlier. In New York he was saying—and wearing—whatever might bring him more hard currency.

Nicolás Maduro’s Venezuelan dictatorship is doing something similar today. After more than two decades spent trampling the rights of foreign investors and destroying the price mechanism inside the country, the Bolivarian Revolution is turning to markets to survive.

A popular media narrative these days is that Mr. Maduro has outfoxed the Trump administration. U.S. sanctions put in place earlier this year prohibit most Americans from doing business with the regime or with most foreigners that do business with the regime. The policy was supposed to deny Mr. Maduro the resources he needs to stay in power. That hasn’t happened, leading some to conclude that the socialist dictatorship is impervious to the financial squeeze.

But actions speak louder than press reports, and the evidence is that Mr. Maduro is hard up for dollars, not unlike Castro in 1995. How that will play out, ahead of a parliamentary election next year, remains unclear. Immediate capitulation was never in the cards given that the sanctions target the legal financial transactions of a criminal regime that has Cuban-Russian backing. Nevertheless the sanctions are biting.

Last week Bloomberg.com cited unnamed sources in a report that Mr. Maduro secretly met with “several American financiers” to talk about a plan to repay U.S. creditors, who hold some $60 billion in defaulted Venezuelan debt. According to the story, the idea is to engage a “foreign oil-drilling company” and bring up “billions of barrels of oil” to repay “a group that includes some of the biggest names in U.S. finance: Goldman Sachs, Pimco and T Rowe Price.” The dictatorship and the investment firms declined to comment, according to Bloomberg.

Bloomberg didn’t invent the story but one wonders about its provenance. The Venezuela Creditor Committee, representing some of the bondholders, told Bloomberg that “neither the Committee nor its members have engaged in any discussions or negotiations with the Maduro regime or its delegates.” It added: “Moreover, to our knowledge, no proposals exist.”

Any such deal would violate the sanctions. But what’s important for whoever leaked the story is that it creates the illusion that serious foreign investors are eager to do business with the thuggish Maduro regime.

Domestically Mr. Maduro has adopted market measures that contradict his socialist ideology. In November he endorsed the use of the dollar. “I don’t see it as a bad thing . . . this process that they call ‘dollarization,’ ” he said in a national television broadcast. “It can help the recovery of the country, the spread of productive forces in the country, and the economy. . . . thank God it exists.”

Venezuelan law still prohibits the circulation of the dollar. But the dictatorship has been forced to recognize that, together with the de facto easing of price controls, dollarization has restored some minimal order. The economy is still shrinking, but grocery shelves are no longer bare. Of course this largely helps the upper class. By one estimate at least half the nation still pays in bolívars, putting the price of most goods out of their reach and making malnutrition common. Utility services—water, electricity and gas—are disappearing. Gasoline is in short supply.

That’s of little concern to Mr. Maduro. His big challenge is to scare up enough dollars to maintain support among the military and organized crime. With oil prices down sharply from 2013 highs and production capacity dwindling due to lack of investment and poor management, income from the state-owned oil monopoly, Petróleos de Venezuela, has plummeted.

The sanctions have made it more difficult, though not impossible, to export what crude is produced, and it sells at a large discount to the market. The Russian oil company Rosneft facilitates shipments and provides financing. Tanker-to-tanker transfers of the oil at sea disguise the origins of the cargo. Sometimes tankers turn off their transponders as a way of smuggling oil abroad.

The regime’s criminality is more relevant than ever. Pro-Maduro gangsters run illicit gold mines in the rain forest. Drug trafficking to Europe and the U.S. generates billions of dollars for Mr. Maduro and his enforcers annually. Yet the clearest sign that Mr. Maduro remains desperate for dollars is the sale of central-bank gold reserves. Ten years ago the monetary authority held some $20 billion in gold. This year Mr. Maduro sold another $1 billion. Reserves are now under $5 billion.

Unilateral sanctions alone won’t bring Mr. Maduro down. But it would be a mistake to conclude that they are not pinching.

Write to O’Grady@wsj.com.