TheEconomistDecember 21st 2019 491T
he humboldt, a pencil-shaped luxury
hotel overlooking Caracas, has long
symbolised broken promises by Venezue-
lan governments. Built in 1956, during the
military dictatorship of Marcos Pérez Jimé-
nez, it has been empty most of the time.
The cable car to its mountaintop location
keeps breaking down. The current regime,
a socialist dictatorship led by Nicolás Ma-
duro, promises that the Humboldt will
soon be relaunched as Venezuela’s first
“seven-star” hotel.
On December 14th it threw a party.
Christmas lights twinkled. A djpumped
out reggaeton hits. Models cavorted
around the empty swimming pool. Enchu-
fados (plugged-ins), made rich by their
connections to the regime, sipped import-
ed vodka at tables with panoramic views
while two green laser lights beamed down
upon the capital of a country that is suffer-
ing from the world’s deepest recession.
“Caracas has become like something out of
‘The Great Gatsby’,” said Karina González, a
young secretary, as she looked up at the
light show. “Decadence alongside penury.”
The Humboldt bash is a sign of change.
It is not a return of prosperity, which does
not spread beyond the party-goers and
their sort. Nor is it the democratisation de-
manded by the opposition and by the 60-
odd countries that back it. Rather, it points
to the regime’s growing confidence that it
will survive international pressure aimed
at toppling it, which has been led by the
United States.
Its policy of “maximum pressure” on
the regime began last January, after Juan
Guaidó, the head of the opposition-con-
trolled legislature, proclaimed himself
Venezuela’s interim president on the
grounds that Mr Maduro had rigged his re-
election in 2018. Most Western and Latin
American countries recognise Mr Guaidó’sclaim. The Trump administration banned
purchases of Venezuelan oil by the United
States—once Venezuela’s biggest custom-
er. It widened sanctions on individuals to
include almost everyone in Mr Maduro’s
inner circle.
The oil sanctions have been porous.
Venezuela has found non-American cus-
tomers, such as Russia’s Rosneft. Produc-
tion by pdvsa, Venezuela’s state-owned oil
company, is showing signs of recovery
after plunging by three-quarters since 2015.
It has signed an agreement with an Indian
company to help boost it further and repair
refineries. Venezuela gets extra money
from selling gold (both from illegal mines
and from its reserves) and narcotics.
The sanctions have had unintended
consequences. Officials whose travel is re-
stricted and whose foreign bank accounts
are frozen spend more of their time and
money at home, one explanation for the
Humboldt blowout. More important, the
oil sanctions were enough of a shock to
force the government to retreat from so-
cialism. Mr Maduro has lifted nearly all the
economic controls first imposed by Hugo
Chávez, the charismatic leader of the “Boli-
varian revolution”, who died in 2013. Sanc-
tions have “made the government more
flexible”, says Luis Oliveros, an economist.
It has stopped trying to dictate the ex-
change rate and control prices. Private
firms can now import whatever they
choose and set their own prices. Supermar-Venezuela
Turning the taps on—a bit
CARACAS
Sanctions have led the regime to retreat from socialism, but not dictatorship
The Americas
50 Canada’scannabiscomedownAlso in this section— Bello is away