Venezuela's New Economic Tool Could Advance Negotiations

The new foreign exchange mechanism implemented by the Venezuelan government March 24 probably will relieve some of the demand for foreign currency, but it is only a short-term solution. The new mechanism, referred to by its Spanish acronym Sicad II, is one of three such currency exchanges used by the government to distribute foreign exchange. Sicad II could provide additional opportunities for elements of the political opposition to negotiate with the government for preferential foreign exchange allocation. Low-key negotiations between the government and the national business sector are already underway. If parts of the opposition become involved in meaningful negotiations over political matters, including an end to the protests, they may further divide the overall movement and cost the protests crucial political support.