Venezuela’s National Assembly has granted President Nicolas Maduro a de facto dictatorship over Venezuela, at least for the next 12 months. A bill passed in the National Assembly will allow Mr. Maduro to govern without consulting Congress for up to 12 months. According to the President, the bill will allow him to launch a sweeping anti-corruption campaign to keep prices and inflation down.

Nicolas Maduro

Maduro hoping for the government to address the issues

Venezuela is sitting atop some of the world’s largest oil and natural gas reserves. Years of mismanagement under the government, however, has left the country relatively poor and suffering from numerous financial problems, including rampant inflation. Now, President Maduro is hoping that his special powers will allow the government to fully address the underlying issues. A long history of leaders refusing to give up special powers, however, is basis for legitimate concern.

Venezuela’s oil wealth no match for inflation

Venezuela is now facing a full-blown crisis, despite its massive oil wealth. The country’s inflation rates have topped off at about 54%, while the populace is suffering from blackouts and shortages of essentials, such as food. At the same time, people have been rushing to buy up foreign currencies as the value of Venezuela’s currency, the bolivar, plummets.

So far, President Maduro has already passed two major economic laws. One law will cap the profits that retailers can make selling goods, while the other will reorganize foreign currency purchases. If the laws are successful, food and good prices should decrease and the bolivar’s free fall should stop, or at least slow. The retail law will cap profit rates at 15 to 30%, while a central body will allocate dollars at the official 6.3 bolivar-to-dollar exchange rate.

Granting of unilateral powers opposed by many

The opposition, unsurprisingly, has opposed this move and argued that the President already has enough power. The United States government has also criticized the move. The State Department acknowledged that the move was constitutionally legal, however, stressed that a separation of powers is essential. So far, however, the State Department has declined to take a stronger stance, likely looking to avoid yet another diplomatic row on the world stage.

The Venezuelan government has already accused the U.S. government of interference and relations between the two countries remain frozen. Back in September, Maduro expelled three U.S. diplomats after accusing them of trying to sabotage Venezuela’s power grid. In 2010, now-deceased Venezuelan leader Hugo Chavez revoked the visa of the U.S. Ambassador after he did not approve of the nomination. The United States responded by revoking the visa of the Venezuelan ambassador.

Whether or not Maduro’s plan will work remains difficult to project. Without systemic reforms, however, Venezuela’s economy will slip further. While leaders in the West call for market driven reforms, Maduro appears intent to stay the course on the country’s “socialist” reforms. It’s fair to wonder, however, that in the event that Maduro’s plans fail to stabilize the economy, if the President will refuse to give up his powers.