Venezuelan President Nicolas Maduro's first stop at last week's Summit of the Americas in Panama City was a monument honouring victims of the 1989 U.S. invasion of the central American country.
"Never again a U.S. invasion in Latin America," he told a crowd of supporters, many of them reportedly flown in from Venezuela. "Maduro, stick it to the Yankee," they chanted. Mr. Maduro has railed for weeks against the imposition of U.S. sanctions on several Venezuelan officials, and arrived at the summit demanding U.S. President Barack Obama repeal them.
Instead, Mr. Maduro's antics were largely overshadowed by the historic face-to-face meeting between Mr. Obama and his Cuban counterpart, Raul Castro, who praised the American President.
Also overlooked were new measures introduced by Mr. Maduro's government on Friday that reduce foreign-exchange allocations permitted to Venezuelan travellers – the latest step designed to conserve cash as the OPEC country struggles to cope with the 50-per-cent plunge in world oil prices.
With foreign cash reserves shrinking, the government has already slashed imports of many basic goods, leading to widespread shortages of everything from toothpaste to powdered milk. Meanwhile, inflation, already among the world's highest at roughly 70 per cent last year, is expected to worsen. On the black market, the bolivar has weakened to roughly 258 bolivars per U.S. dollar, according to the widely tracked Dolartoday.com website. The official rate is 6.3 bolivars for priority imports.
In practice, the new foreign-exchange limits mean Venezuelans can take fewer U.S. dollars with them when they travel abroad. Effectively, the government is curbing subsidies for international travel.
Under the current system, Venezuelans seeking to travel outside the country must get permission to buy a fixed amount of foreign currency at the official rate of 12 bolivars to the dollar to pay for expenses, using credit cards and cash. The upper limit is set at $3,000 (U.S.) per person, per year.
That has not changed. However, the maximum amount Venezuelans can take per trip has been reduced to $2,000 for trips to Europe, Africa and Asia, and to $1,500 for Caribbean excursions.
For trips to the U.S. – by far the most popular destination for Venezuelans, many of whom own property in Miami – the allotment has been slashed by more than 70 per cent to $700, from $2,500 previously, according to Barclays. The bank estimates the changes could save the government $2.8-billion this year by reducing foreign-exchange allocations to less than $1-billion, compared to $3.8-billion last year.
The move reflects Mr. Maduro's strategy thus far as he seeks to alleviate a cash crunch without denting his government's already weakened popularity.
The number of travellers from Venezuela has already been halved in the past year, Barclays said, citing data from the International Air Transport Association. And since last year, the government had effectively stopped allocating foreign currency for the purchase of airline tickets.
At home, Mr. Maduro has so far been loath to raise the price of gasoline – hefty subsidies mean it is effectively free – for fear of stoking unrest among the country's poor, traditionally the government's power base. Similarly, the latest currency restrictions are likely to affect middle-class Venezuelans more than the poor, limiting the political cost of the adjustment and potentially allowing the government to ease import constraints.
"Nonetheless, we think burdening one sector of the population with a high portion of the cost of the adjustment could also be a risky strategy," Barclays analysts Alejandro Arreaza and Alejandro Grisanti wrote in an April 10 note to clients.
"Subsidizing trips abroad by selling cheap FX was clearly not an efficient policy; however, limiting people's ability to choose to travel and where to go is not, either, in our view," they said.
"We see this as the result of a significantly inefficient exchange regime that has a spread of almost 4,000 per cent between its strongest and weakest rates," fuelling graft and compounding the risk of painful adjustment down the line.
Mr. Maduro returns to Caracas from Panama City having so far avoided any criticism from other Latin American leaders. Many have kept silent despite charges of human-rights abuses, as the Associated Press's Joshua Goodman and Peter Orsi have reported.
One reason might be oil subsidies, which keep allies close but aggravate Venezuela's fiscal troubles at home. The government has curbed some sales, but its generous policies mean Venezuela is still foregoing as much as $1.4-billion per year at current prices.