While the petro, Venezuela's oil-backed cryptocurrency announced in February, was billed as a tool to facilitate the economic recovery of the nation, a recent government decree indicates, instead, it may become an instrument to prevent Venezuelan citizens from emigrating. Vice President Delcy Rodriguez announced Friday that starting next month, Venezuelans will only be able to purchase passports using the petro.
The Maduro administration now claims the currency will be available for purchase on November 5, but since the cryptocurrency was first announced eight months ago, the country's economic problems have continued. During this time of economic crisis, record numbers of Venezuelans have left the country. In his speech last week opening the UN Human Rights Commission's latest session, commissioner Filippo Grandi claimed, "Some 5,000 people are now leaving Venezuela daily – the largest population movement in Latin America's recent history."
The numbers are particularly striking when the difficulty of obtaining a passport is considered. Some have reported having to wait in line for days, and that civil service members are demanding bribes, sometimes in excess of the equivalent of $1,000 USD.
According to the commissioner, there are currently more than 2.6 million Venezuelans outside the country, and "a non-political and humanitarian approach is essential to help States receiving them in growing numbers." Because of the scale of the exodus of and the difficulty of obtaining travel documents, some neighboring countries have agreed to accept migrants who don't have up-to-date papers. Some of those same countries originally moved to restrict migrants from Venezuela.
It's against that backdrop that the possibility of obtaining a Venezuelan passport just became even more difficult.
According to Bloomberg, Vice President Rodriguez stated in a press conference Friday that, starting next month, Venezuelan citizens who want passports will be required to purchase them using the nation's elusive virtual currency, the petro. Passports will cost two petro, the equivalent of 7,200 sovereign bolivars. In September, the minimum wage was 1,800 bolivars per month.
If the high cost isn't enough to discourage Venezuelans from trying to obtain a passport, the difficulty of actually purchasing petro might be.
The pre-sale of the petro was announced in February. However, six months later, a Reuters reporter was still unable to find any signs of the currency's existence and claimed officials had offered contradictory statements on the state of the petro's development.
"Maduro says petro sales have already raised $3.3 billion and that the coin is being used to pay for imports. But Hugbel Roa, a cabinet minister involved in the project, told Reuters on Friday that the technology behind the coin is still in development and that 'nobody has been able to make use of the petro ... nor have any resources been received.'"
The confusion surrounding the creation of the petro didn't end there. The currency, expected to be on the Ethereum blockchain, was switched to NEM in February. Government representatives even claimed to be working with the NEM Foundation on the project. NEM, however, contradicted those claims of partnership, even expressing some confusion as to why the foundation would need to be involved. "Really, it doesn't take much to learn how to use NEM's tech. It's intuitive and built for enterprise so we see all kinds of projects being built on it," a member of the foundation told Motherboard.
Last week, a new petro white paper emerged. Some criticized the new paper for being simply a cut-and-paste of the Dash white paper. Unlike the earlier paper, this one claimed the currency could be mined, contradicting the earlier white paper that asserted because the petro was backed by commodities, it was "pre-mined."
But it's hard to know what is the official paper. Websites pertaining to the petro are frequently down, and a white paper made available in January was declared fraudulent by government representatives, despite having been posted on an official government website.
In case the Maduro government's incompetence isn't enough to sink the petro, there are forces outside the country working against its success. President Trump issued an executive order banning US citizens from purchasing petros in March (one of a number of executive orders prohibiting Americans from transacting with the Venezuelan government). Last month a bipartisan group of lawmakers submitted a bill, called the Venezuela Humanitarian Relief, Reconstruction, and Rule of Law Act of 2018, that seeks to make life even harder for the petro. The bill not only reiterates the executive ban, but also prohibits US citizens from providing any technical support for the cryptocurrency. It also calls for a report on how cryptocurrencies "affect the effectiveness" of sanctions.
As an attempt to save Venezuela from the runaway inflation that has plagued the nation, the petro may have always been doomed to fail. Both international experts and members of the Venezuelan opposition have derided the project, calling it a "scam," a "gimmick," or simply "illegal." And the rollout of the currency has resembled an elaborate farce.
But the most recent development in the story of the petro is hardly amusing. Since those who try to leave Venezuela each day will soon be required to purchase passports with a form of money that doesn't exist (and, if the last year is any indication, may never exist), thousands or possibly millions will potentially be stranded in a failing country.