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The ongoing collapse of Venezuela's economy, and the official demise of its democracy this past weekend, have brought the South American country to the brink of anarchy.

Those who can are fleeing the country, while President Nicolas Maduro consolidates his power and rounds up his opponents. Those who remain are preparing to fight back, and there is a growing dread that the violence that has killed more than 100 people since April is about to turn into something far worse.

The response from the international community, Canada included, will be critical. Push too hard on economic sanctions, and the result will only make things worse for the people of Venezuela. But to do nothing will achieve the same result.

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Read more: Ottawa says it lacks law to sanction Venezuelan government officials

The bulk of any effort to help Venezuela should be focused on restoring the country's democracy so that it can do what it was meant to do, and oust the terrible Mr. Maduro.

The president is extremely unpopular, with support as low as 25 per cent. He has ruled mostly by decree since his election in 2013, when he replaced the beloved socialist leader, Hugo Chavez, after Mr. Chavez died of cancer.

Mr. Maduro's unpopularity stems from the collapse of Venezuela's economy, which began under Mr. Chavez. Mr. Maduro has done nothing to slow the decline; in fact, he has spurred it on by recklessly printing money in response to falling oil revenues, and by allowing rampant cronyism and corruption.

Wages have dropped to what they were in the 1950s, according to The Economist magazine, while inflation is expected to be 1,600 per cent this year. Food is scarce, and the little that is available is often unaffordable. The country's GDP has fallen 35 per cent below where it was the year Mr. Maduro was elected, and oil production has dropped 17 per cent since 2015.

His unpopularity is such that the opposition Democratic Unity coalition won a majority of seats in the country's legislature in an election in 2015, a major blow to the United Socialist Party that was founded by Mr. Chavez in 2007, and which Mr. Maduro inherited.

Mr. Maduro postponed every election after that, and set about stacking the country's Supreme Court with loyalists. In March of this year, his rigged court ruled to dissolve the legislature.

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Mr. Maduro subsequently created a "National Constituent Assembly" to replace the legislature, giving it the power to rewrite the country's constitution. He did so in spite of a referendum on July 16 that was organized by the opposition, and in which an overwhelming majority of Venezuelans opposed the move.

Elections to fill the constituent assembly were held on Sunday. A boycott by opposition politicians means the assembly is now filled solely with Mr. Maduro's cronies and fellow party members.

Since then, the company that provides the technology for elections in Venezuela has stated that it knows "without any doubt" that more than one million votes were fraudulent. The European Union and a growing number of countries say they will not recognize the constituent assembly as the legitimate government of Venezuela.

It is now doubtful that Mr. Maduro will leave when his term as president expires in 2019. And yet it won't be easy for him to stay. The economy keeps getting worse, if that's possible. As well, the military's loyalty to the president is shaky, and street-level resistance to him is growing more bold. He is even said to be losing support in his own party.

The United States, meanwhile, has frozen Mr. Maduro's assets in the U.S. and banned Americans from doing business with him.

In Canada, the Foreign Affairs Minister, Chrystia Freeland, has denounced the constituent assembly as "undemocratic."

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The next steps will be crucial. The U.S. is one of Venezuela's biggest oil customers, and President Donald Trump is thinking about closing the tap. Most observers say he shouldn't, because Mr. Maduro will find another customer for the oil and his defiance of Washington will give him a boost in popularity. Regular Venezuelans, meanwhile, would be the first to feel the pain of a U.S. oil blockade.

The best course is for the democratic world to continue to demand the return of the country's legislature, and the end of the sham constituent assembly that usurped it. Impartial outsiders, working with both the opposition and Mr. Maduro, could help negotiate a schedule for the return of legitimate elections.

Canada should state clearly whether or not it will do business with the constituent assembly. And it should open its doors to anyone fleeing the president's fledgling dictatorship.

Sadly, Mr. Maduro is unlikely to co-operate with any negotiations that would loosen his grip on absolute power. For the people of Venezuela, the situation may well have to get even worse before it starts to get better.

Editor’s note: An earlier version of this editorial incorrectly said Foreign Affairs Minister Chrystia Freeland has not said plainly whether or not she recognizes the legitimacy of the new constituent assembly. In fact, a statement released by Ms. Freeland on Aug. 1 said that “the national assembly is the only legitimately elected legislative body in Venezuela.”
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