Venezuelan opposition leader Juan Guaido declared himself interim president on Wednesday, winning over the backing of the Washington and many Latin American nations and prompting socialist Nicolas Maduro to break relations with the United States.
Speaking to supporters outside the Miraflores presidential palace in Caracas, socialist leader Maduro said he would give U.S. diplomatic personnel 72 hours to leave Venezuela, which is suffering from a hyperinflationary economic collapse.
U.S. President Donald Trump formally recognized Guaido shortly after his announcement and praised his plan to hold elections. That was swiftly followed by similar statements from Canada and a slew of right-leaning Latin American governments, including Venezuela's neighbors Brazil and Colombia.
The U.S. State Department said in a statement that it would not remove American diplomats because it did not recognize the Maduro regime as the government of Venezuela: "The United States does not consider former president Nicolas Maduro to have the legal authority to break diplomatic relations with the United States or to declare our diplomats persona non grata."
At a rally that brought hundreds of thousands of Venezuelans into the east of Caracas, Guaido said Maduro had usurped power and promised to create a transitional government that would help the country escape its hyperinflationary economic collapse.
"I swear to assume all the powers of the presidency to secure an end to the usurpation," 35-year old Guaido, the head of the opposition-run congress, told an exuberant crowd.
Guaido's declaration takes Venezuela into uncharted territory, with the possibility of the opposition now running a parallel government recognized abroad as legitimate but without control over state functions.
In a televised broadcast from the presidential palace, Maduro accused the opposition of seeking to stage a coup with the support of the United States, which he said was seeking to govern Venezuela from Washington.
"We've had enough interventionism, here we have dignity, damn it! Here is a people willing to defend this land," said Maduro, flanked by top Socialist Party leaders, although the defense minister and members of the military high command were absent. The office of Defense Minister Vladimir Padrino did not answer a phone call seeking comment.
The Kremlin's support for Venezuela
Venezuela, graced with the world's largest oil reserves, was once the economic envy of South America. The oil-rich nation faces a collapsing economy sparked by government corruption, social unrest and a global commodity bust.
And despite the nation's economic crisis, Maduro welcomed the deployment of two Russian Tu-160 strategic bombers. The Russian aircraft, capable of carrying nuclear weapons, landed in Caracas last month in a move designed to show Moscow's support of Venezuela's socialist regime.
The Pentagon swiftly criticized the Russian deployment of warplanes to Venezuela.
"The Venezuelan government should be focusing on providing humanitarian assistance and aid to lessen the suffering of its people and not on Russian warplanes," Pentagon spokesman U.S. Army Col. Rob Manning said last month.
Similarly, Secretary of State Mike Pompeo condemned the Russian military flight on Twitter writing: "The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer."
Meanwhile, the Kremlin rejected U.S. criticism saying Pompeo was wrong and undiplomatic to condemn the deployment to Caracas.
"We consider it completely inappropriate," Kremlin spokesman Dmitry Peskov said following the deployment.
Manning then reminded that the U.S. military deployed the hospital ship USNS Comfort to South America earlier this year to provide humanitarian aid to refugees fleeing the desperate conditions.
Since its deployment this summer, the Comfort, a vessel transformed from a hulking oil tanker into a 1,000-bed hospital ship, has treated more than 20,000 people along its stops in various Central and South American nations.
"Contrast this with Russia, whose approach to the man-made disaster in Venezuela is to send bomber aircraft instead of humanitarian assistance," Manning said knocking Moscow's deployment.
Trump vows diplomatic pressure
Maduro started a second term on Jan. 10 following a widely-boycotted election last year that many foreign governments described as a sham. Venezuela's constitution says if the presidency is determined to be vacant, new elections should be called in 30 days and that the head of congress should assume the presidency in the meantime.
However, the pro-government Supreme Court has ruled that all actions taken by congress are null and void and Maduro's government has previously accused Guaido of staging a coup and threatened him with jail.
Guaido's political mentor, Leopoldo Lopez, was arrested in 2014, one of dozens of opposition activists and leaders the government jailed for seeking to overthrow Maduro through violent street demonstrations in 2014 and 2017.
"I will continue to use the full weight of United States economic and diplomatic power to press for the restoration of Venezuelan democracy," Trump said in his statement.
The Trump administration could impose sanctions on Venezuelan oil as soon as this week, according to sources. The South American country has the largest crude reserves in the world and is a major supplier to U.S. refiners, though output is hovering near 70-year lows and reaction in the oil markets was muted on Wednesday.
Maduro has presided over Venezuela's spiral into its worst-ever economic crisis, with hyperinflation forecast to reach 10 million percent this year. Some 3 million Venezuelans have fled abroad over the past five years to escape widespread shortages of food and medicine.
On bond markets, Venezuela's benchmark 2027 bond was trading above 31 cents on the dollar for the first time since May 2018, up from 22.25 cents just two weeks ago.
—CNBC's Amanda Macias and Reuters contributed to this report