U.S. Control of Venezuelan Oil Revenues Eases Cash Shortages but Leaves Economy Afloat, Not Rebuilt

A recent arrangement routes Venezuelan crude delivered to the United States through sales managed by U.S. authorities, with dollar proceeds parked in accounts under American oversight and remitted to Caracas under conditional rules. That mechanism increases the availability of foreign currency inside Venezuela but imposes constraints on timing, use, and access, turning new dollars into a narrowly circumscribed cash flow rather than a broad-based stimulus. Domestic markets have already shifted toward widespread use of dollars for daily purchases and pricing, while the bolívar functions mainly as an electronic medium with little role as a store of value. Because Venezuelan banks cannot fully operate in dollars — offering neither dollar-denominated savings nor widespread credit in greenbacks — the current dollar presence does not reconstruct financial intermediation or credit channels needed for investment. Meanwhile, wages and pensions remain indexed to the bolívar and are adjusted to limit fiscal strain, creating a sharp mismatch between income and prices that undermines purchasing power. High operating risk and service gaps — electricity, water, transport and production infrastructure — keep real costs elevated and deter domestic investment despite the presence of dollar transactions. The result is a fragile equilibrium: more cash circulates, yet the capacity to translate that liquidity into renewed output and employment is lacking. Large-scale emigration and persistent humanitarian pressures sustain dependence on remittances as a key livelihood source rather than on expanding domestic economies. Restoring durable recovery will require legal and institutional changes that reduce political risk, re-establish property and contractual certainty, and enable financial institutions to intermediate foreign currency into long-term credit and savings. Without those reforms, conditional dollar flows act as a temporary relief measure, smoothing some payments but leaving the deeper layers of economic dysfunction intact. The current pattern therefore risks prolonging stagnation: short-term improvers in cash balances will not substitute for policies that rebuild productive capacity and public services. In this context, policymakers face a trade-off between using controlled dollar transfers to avert immediate collapse and pursuing a comprehensive program to restore rights, incentives, and infrastructure that underpin sustainable growth.