CARACAS, VENEZUELA (THE WASHINGTON POST) – Last holiday season, devastated Venezuela saw shortages of everything from tinsel to toilet paper. This year, the socialist government has given a weary nation an unexpected holiday gift.
A dose of the free market.
President Nicolás Maduro is making tentative moves away from the socialist policies that once regulated the prices of basic goods, heavily taxed imports and restricted the use of the United States (US) dollar. As a result, the South American nation’s economic free fall is beginning to decelerate. The national inflation rate – still the world’s highest – has slowed from a blistering 1.5 million last year to a relatively breezy annualised rate of 15,000 per cent.
The changes might be temporary, and amount largely to an economic Band-Aid.
There are no signs, for instance, of a larger strategy to reverse the agricultural land grabs and company seizures that helped lay the groundwork for one of the worst economic implosions of modern times.
But as the new measures take hold, once-empty store shelves have overflowed this holiday season with beef, chicken, milk and bread – albeit at prices so high that a significant segment of the population is actually worse off. More moneyed Venezuelans, however, are flocking to dozens of newly opened specialty stores – including at least one fake Walmart – brimming with stacks of Cheerios, slabs of Italian meat, and crates of Kirkland Signature Olive Oils, much of it bought and shipped in containers to Venezuela from Costco and other bulk retailers in Miami.
Maduro remains deadlocked in a political standoff with opposition leader Juan Guaidó and his backers in Washington, who have ratcheted up pressure to force his ouster. But US sanctions against Venezuela do not appear to have crimped surging imports – mostly because they prevent Americans from doing business only with the government, not private Venezuelans.
The government had been unable to restart the economy any other way, so it’s doing what the people want by giving in to the free market, said President of Fedecamaras Ricardo Cusano, Venezuela’s chamber of commerce. The socialists are still in power, he said, but they have lost the ideological war.
Plagued by hyperinflation and economic collapse, depressed Venezuelans dubbed last December 25 the Christmas without lights – a day largely bereft of the traditional holiday bunting and toys for children.
But as the economy begins to show modest signs of life – particularly in the relative bubble of Caracas, the capital – there have been visible changes on the streets.
Meager holidays markets opened to peddle baubles to a slightly more optimistic populace. More holiday decorations popped up inside stores, along with, proprietors said, more parents buying toys and clothing for children. The capital is suffering its worst traffic jams in years as car owners with greater access to imported spare parts drag long out-of-commission vehicles back onto clogged roads.
The eased restrictions have made the holiday season merrier for a small minority of rich Venezuelans, many of whom live in mansions behind high walls in Eastern Caracas.
There were things you just couldn’t get – dishes you just couldn’t make, said Manager of Anonimo Pablo Gianni, a lavish new Caracas eatery that opened this month.
But now, it’s like legal contraband, he said. They’re letting everything in.
The changes taking shape here are the product of a combination of factors. For years, the government strictly limited the use of the US dollar, long portrayed as an instrument of Yanqui imperialism. But last year, the government freed the exchange rate and more broadly legalised dollar transactions. It also eliminated massive import taxes on a host of goods.
But those measures have begun to work through the economy only in recent months, as the government has taken the further step of abandoning attempts to control retail prices. Stocks of bread, chicken and beef that once sold for nearly nothing are now being sold at market rates, at least partly normalising farm production and sales through supply chains.
Just as importantly, there are simply far more dollars in the Venezuelan economy now.
About 4.5 million Venezuelans have fled starvation and poverty in recent years, creating a global diaspora that collectively sent USD3.5 billion in remittances this year – more than triple the amount two years ago, according to Ecoanalitica, a Caracas-based economic analysis firm.
In addition, economists say, the economy is awash in dollars from illegal mining, drug trafficking and other illicit activities.