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Maduro orders US out of Venezuela as Trump backs opposition leader

Venezuela is in chaos as Nicolas Maduro and Juan Guaido both claim to be president.

Venezuela is in crisis as President, Nicolás Maduro, is claiming victory in a highly contested election. US President, Donald Trump, recognizes his opponent, Juan Guaidó, as the South American nation’s new leader. Maduro is severing diplomatic relations with the US in retaliation.

Why are there two presidents in Venezuela?

The turmoil in Venezuela started when Maduro became president in 2013. After he took over, the oil-rich nation suffered as prices dropped sharply. The country’s currency, the bolivar, has become worthless as a result of hyperinflation.

Venezuelans are devastated by food shortages and three million people have left the nation since 2014. Maduro packed the country’s Supreme Court with his cronies and created a new body of government to rewrite Venezuela’s constitution.

Protests against these actions grew and Guaidó ran for president in opposition to Maduro’s regime. An election was recently held and Maduro declared himself the winner. However, the US declared the election fraudulent and recognizes Guaidó as the new president.

‘In its role as the only legitimate branch of government duly elected by the Venezuelan people, the National Assembly invoked the country’s constitution to declare Nicolas Maduro illegitimate, and the office of the presidency therefore vacant,’ said Trump in a statement.

As a result, Maduro has accused Trump of instigating a coup against him and cut off ties with the US. He also gave US diplomats three days to leave Venezuela and refuses to leave office.

‘No one here is surrendering,' said Maduro.

Guaidó vowed to keep fighting alongside protesters until Maduro is ousted.

'We will stay in the streets until we have freedom for Venezuela. We will fight back until we have democracy,’ said Guaidó.

How does Venezuela’s economy affect regime change?

As a result of the economic and humanitarian crisis, Venezuela’s economy has plummeted. The country’s gross domestic product(GDP) has declined by 5%, making it the worst performing economy in the world. In addition to Maduro’s usurpation of power, the country’s dependence on cash loans from Russia and China can’t be sustained and is a key argument from opposition for regime change.

‘This has been our main argument supportive for regime change. You cannot ignore the increasing shift on cash-flow management after having exhausted any alternative sources of financing,’ says Siobhan Morden, head of Latin America fixed income for Nomura Securities in New York.

What will happen next in Venezuela?

Despite the actions of the US, ultimately the Venezuelan citizens will decide the fate of the nation. Pro-Maduro supporters like Javier Terán voiced his support for him.

‘I am here to support continuity and the presidency of Maduro. The people elected him. Our people have been attacked internally and externally since[former president Hugo] Chávez was in power,’ We have no other choice but to protest. They have taken everything away from us, even fear’, said Gonzalez.

Guaidó backer, Edwin Gonzáles, said he is supporting the resistance against Maduro.

‘We have no other choice but to protest. They have taken everything away from us, even fear,’ said González.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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