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Opposition leader Juan Guaido speaks to supporters at a rally in Caracas on Jan. 23, 2019.CARLOS GARCIA RAWLINS/Reuters

Venezuela’s crisis quickly escalated Wednesday as an opposition leader backed by the Trump administration declared himself interim president in a direct challenge to beleaguered socialist Nicolas Maduro, who retaliated by breaking off relations with the United States, his biggest trade partner.

For the past two weeks, ever since Mr. Maduro took the oath of office for a second six-year term in the face of widespread international condemnation, the newly invigorated opposition was preparing for nationwide demonstrations on Wednesday, the 61st anniversary of the end of a Venezuelan military dictatorship in 1958.

While Mr. Maduro has shown no signs of leaving, his main rival, National Assembly President Juan Guaido, upped the ante by declaring himself interim president before masses of anti-government demonstrators – the only way, he said, to rescue Venezuela from “dictatorship.” Outside the capital, seven demonstrators were killed amid disturbances during protests that rocked several cities.

In a seemingly co-ordinated action, Washington led a chorus of Western Hemisphere nations, including Canada, Brazil, Argentina and Colombia, that immediately recognized Mr. Guaido, with U.S. President Donald Trump calling on Mr. Maduro to resign and promising to use the “full weight” of the U.S. economic and diplomatic power to push for the restoration of Venezuela’s democracy.

“The people of Venezuela have courageously spoken out against Mr. Maduro and his regime and demanded freedom and the rule of law,” Mr. Trump said in a statement.

Also in a statement Wednesday, Foreign Affairs Minister Chrystia Freeland said Canada recognizes Mr. Guaido as the interim president of Venezuela. She said Canadians stand with the Venezuelan people and their desire to restore democracy and human rights.

“We support his commitment to lead Venezuela to free and fair presidential elections,” Ms. Freeland said. “We reiterate that a resolution of the crisis in Venezuela can only be achieved through the leadership and courage of Venezuelans themselves.”

Canada also joined the Lima Group – an alliance that includes Argentina, Brazil, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay and Peru – in expressing their support for Mr. Guaido and calling for elections soon. They also urged the Maduro regime to adopt measures to guarantee the rule of law and the fundamental rights of the Venezuelan people while the transition of government takes place.

The stunning move, which to some harkened back to dark episodes of heavy-handed U.S. interventions in Latin America during the Cold War, drew a strong rebuke from Mr. Maduro. He responded by swiftly cutting off diplomatic relations with the United States, the biggest importer of the OPEC country’s oil, giving American diplomats 72 hours to leave the country.

Venezuelan President Nicolas Maduro announces he is breaking relations with the U.S., to supporters from a balcony at Miraflores presidential palace in Caracas, Venezuela, Wednesday, Jan. 23, 2019. Maduro is giving American diplomats 72 hours to abandon the country after breaking diplomatic relations with the U.S. over its decision to recognize an opposition leader as interim president. (AP Photo/Ariana Cubillos)Ariana Cubillos/The Associated Press

“Before the people and nations of the world, and as constitutional president. … I’ve decided to break diplomatic and political relations with the imperialist U.S. government,” Mr. Maduro thundered while holding up a decree banning the diplomats before a crowd of red-shirted supporters gathered at the presidential palace.

“Don’t trust the gringos,” he said, rattling off a long list of U.S.-backed military coups – Guatemala, Chile, Brazil – in decades past. “They don’t have friends or loyalties. They only have interests, guts and the ambition to take Venezuela’s oil, gas and gold.”

Not to be undone, Mr. Guaido issued his own statement, urging foreign embassies to disavow Mr. Maduro’s orders and keep their diplomats in the country. A few hours later, U.S. Secretary of State Mike Pompeo said the United States would abide by Mr. Guaido’s directive and ignore Mr. Maduro’s order to withdraw its diplomats.

The 35-year-old Mr. Guaido, a virtually unknown politician at the start of the year, has reignited the hopes of Venezuela’s often beleaguered opposition by taking a rebellious tack amid a crushing economic crisis that has forced millions to flee or go hungry.

Raising his right hand in unison with tens of thousands of supporters, the fresh-faced leader of the opposition-controlled congress took a symbolic oath to assume executive powers he says are his right under two articles of Venezuela constitution to take over as interim president and form a transitional government until he calls new elections.

“Today, January 23, 2019, I swear to formally assume the powers of the national executive as president in charge of Venezuela,” he told the cheering crowd as he stood behind a lectern emblazoned with Venezuela’s coat of arms.

“We know that this will have consequences,” he shouted, moments before quickly slipping away to an unknown location amid speculation he would soon be arrested.

The price of oil slipped for the third time in four days Wednesday, an indication that international energy markets are not overly concerned yet that the situation in Venezuela – the No. 3 source of U.S. oil imports and owner of Houston-based Citgo – will disrupt global crude supplies.

A vehicle is overturned as demonstrators block a freeway during a protest against the government of President Nicolas Maduro on the anniversary of the 1958 uprising that overthrew the military dictatorship. Venezuela's National Assembly head, Juan Guaido, declared himself the country's "acting president" on Wednesday during a mass opposition rally against Maduro.YURI CORTEZ/AFP/Getty Images

The assault on Mr. Maduro’s rule came after large crowds gathered in Caracas waving flags and chanting “Get out Maduro!” in what was the largest demonstration since a wave of unrest that left more than 120 dead in 2017.

While the protests in the capital were mostly peaceful there were no signs that security forces heeded Mr. Guaido’s call to join the anti-Maduro movement and go light on demonstrators.

Hours after most demonstrators went home, violence broke out in Altamira, an upscale zone of Caracas and an opposition stronghold, when National Guardsmen descended on hundreds of youths, some of them with their faces covered, lingering around a plaza. Popping tear gas canisters sent hundreds running and hordes of protesters riding two and three on motorcycles fleeing in panic.

Blocks away, a small group knocked a pair of guardsman riding tandem off their motorcycle, pelting them with coconuts as they sped down a wide avenue. Some in the group struck the two guardsmen with their hands while others ran off with their gear and set their motorcycle on fire.

Elsewhere, four demonstrators were killed by gunfire in the western city of Barinas as security forces were dispersing a crowd. Three others were killed amid unrest in the border city of San Cristobal.

Amid the showdown, all eyes were on the military, the traditional arbiter of political disputes in Venezuela – and to whom Mr. Guaido has been targeting his message.

Mr. Maduro, who lacks the military pedigree of his mentor and predecessor, the late Hugo Chavez, has sought to shore up support from the armed forces by doling out key posts to top generals, including heading the PDVSA oil monopoly, which is the source of virtually all of Venezuela’s export earnings. He has also been playing commander in chief, appearing last week at a military command meeting wearing camouflage fatigues and receiving the blessing of the defence minister, General Vladimir Padrino Lopez, who said his troops were prepared to die for Mr. Maduro.

But beyond the public displays of loyalty from the top brass, a number of cracks have started to appear.

On Monday, Venezuelans awoke to news that a few dozen national guardsmen had taken captive a loyalist officer and seized a stockpile of assault rifles in a predawn raid. The government quickly quelled the uprising, but residents in a nearby slum took to the streets to show their support for the mutineers by burning cars and throwing stones at security forces, who fired back with tear gas.

Disturbances continued into Tuesday, with small pockets of unrest in a few working-class neighbourhoods where the government has traditionally enjoyed strong support.

Retired Major-General Cliver Alcala, a one-time aide to Mr. Chavez and now in exile, said the opposition’s new-found momentum has reverberated with the military’s lower ranks, many of whom are suffering the same hardships as regular Venezuelan families.

“I am absolutely certain that right now, especially younger troops are asking themselves whether Mr. Maduro is their commander in chief or a usurper,” Maj.-Gen. Alcala said.

Though intimidation has worked for the government in the past, it may not this time, said Dimitris Pantoulas, a Caracas-based political analyst. Discontent now appears to be more widespread and the ranks of security forces and government-allied groups have been thinned by the mass exodus of mostly young Venezuelans, he said.

“The government is resorting to its old tricks, but the people no longer believe them,” Mr. Pantoulas said.

With reports from Michelle Zilio