Ricardo Hausmann is professor of economic development and director of the Center for International Development at Harvard's Kennedy School. He is on Twitter (@ricardo_hausman).

Venezuela’s problems are self-inflicted and the country will only recover if it mends its ways. However, there is much that the rest of the world could do to help Venezuela out of its current crisis.

The country's problems are self-inflicted and the government must mend its ways. But there is much that the world could do to help Venezuela out of its current crisis.

How did we get here? Unfortunately the former president Hugo Chávez did not use the massive oil price boom between 2004 and 2013 to put money aside for a rainy day but instead, over-spent and quintupled the public foreign debt. This left the country in a vulnerable position because when the price of oil declined in 2014 the country was left with no savings and no access to financial markets because of over-indebtedness. He used the boom to expropriate large swaths of the economy, impose Draconian foreign currency and price controls and to subsidize imports. All this weakened the economy and made the country more dependent on imports, which Venezuelans can no longer afford. To return to prosperity the people of Venezuela need the freedom to sell items at the price the market will bear and to purchase whatever else is needed through foreign trade – an exchange that has been essentially outlawed by the government.



But the recovery will be much quicker and less painful with three forms of international assistance.



First is the issue of emergency supplies of food and medicine. The 80 percent plus reduction in imports engineered by the government has led to a deadly collapse in output and inventories – especially food and medicine – and the breakdown of production chains. While these chains are re-established, the country should accept the humanitarian assistance that countries, such as the United States and Brazil, and nongovernment organizations like Caritas have already offered aid. But the government has rejected these offers in a misguided attempt to deny the existence of a humanitarian crisis in the country that is costing many lives.



Second, to fund a path to recovery and sustainability, Venezuela will need to restructure its public external debt to lower its cost and lengthen its maturity and it will need significant amounts of international financial assistance to do so. An “exceptional access program,” like the one in Greece or Ukraine, led by the International Monetary Fund with support from other multilateral organizations like the World Bank and the Inter-American Development Bank, would provide the resources that would allow the economy to recover more quickly while funding cash transfer programs to protect the most vulnerable members of society.



Third, the country will need to reestablish intelligence cooperation with the United States and other security agencies to tackle the narco-trafficking and money-laundering groups that have taken control of important sections of the Venezuelan state, including its armed forces and the criminal justice system. While recreating a clean, fair and accountable state should be the principal goal, locating and returning the billions of dollars that have been looted by corrupt officials and their confederates would be a welcomed contribution to the recovery.



Join Opinion on Facebook and follow updates on twitter.com/roomfordebate.

