Dollars roll in as Maduro abandons ‘socialismo’
Perched on the mountain range that divides the sprawling city of Caracas from the Caribbean Sea, Venezuela’s Hotel Humboldt is clear from nearly all corners of the capital.
The 65 year-old, 14-floor structure can only be reached by cable car from below. It has 69 rooms, six dining areas, a casino, a nightclub, a swimming pool and a spa.
“It will be the first seven-star hotel in Venezuela,” President Nicolas Maduro proclaimed when the 1956 symbol of oil wealth was being lavishly renovated.
Now, the hotel is open again as a harbinger of an impending economic recovery and tourism boom in a country that has suffered the worst economic crisis in modern Latin American history.
Keen observers equate the recent changes – which have helped bring food and everyday items back to empty supermarket shelves – to the market reforms in China.
But the president’s touting of the $300 (£212) per night hotel in a country where most live in poverty represents something else to others – an abandonment of a political project promising a socialist utopia.
The regime has finally accepted the dollar as legitimate currency, turning the page on the dark days of mid-2019, when inflation hit 10 million per cent and Venezuelans wove baskets out of useless bolívar notes. It has also opened up the state oil industry to foreign private investment and loosened import restrictions, meaning supermarket shelves are relatively full
The country’s stock market is hitting record highs and economists predict the first recovery in GDP this year after seven years of collapse.
Some economists have suggested the country may follow the path of China, which in the 1970s implemented a series of pro-market changes while maintaining strict authoritarian rule. “Russia would be another logical comparison,” Henkel Garcia of Caracas-based consultancy firm Econanalitica said.
“There was a transition to more economic freedom. The businessman was no longer demonised and state agents stopped taking inventory at private stores.”
The trend towards economic liberalisation – which has been mirrored in Communist Cuba this year – took a giant leap in 2019 when a massive power outage plunged most of the country into the dark for seven days. With no electricity to power credit card machines, and shortages of local bank notes, many Venezuelans started using US dollars.
Eventually, even formal establishments like supermarkets and pharmacy chains started accepting dollars. Maduro even expressed support for their widespread use.
Some claim he has abandoned the socialist revolution founded by his predecessor Hugo Chavez. In a growing rift with the president, the country’s Communist party, which traditionally forms part of the government coalition, has accused Maduro of shifting his political strategy “in favour of big capital”.
In the most recent escalation, the party accused him of “promoting political criminalisation, which could turn into personal aggression”.
Maduro has responded by calling the communists “the sleepy Left”.
Relief among the private sector has not yet trickled down to all Venezuelans. Most salaries are still paid in worthless bolívars. The minimum wage equates to just over $2 per month. A study published in 2020 found that 96 per cent of Venezuelans live in poverty, officially rendering it the poorest country in Latin America and the Caribbean.
“We don’t eat like we used to,” Fermina Nuñez, a mother of two living in one of Caracas’s shanty towns, said. “If we buy chicken, we won’t be able to buy rice or flour.” She is one of 10,000 Venezuelans who still turns to soup kitchens to keep her family alive.
Meanwhile, those needing medical treatment still face dire prospects. Dialysis and radiation machines remain in disrepair, waiting for parts to be repaired. Those with conditions requiring daily medication often stop their treatment when the expensive drugs go missing in pharmacies.
“I’ve been told to take these pills, but they have to be bought in Colombia, and I can’t afford it and I don’t have anybody to bring it here,” Noris Viscaira, who has early-stage breast cancer, said.
She has instead turned to herbal medicine, creating a paste with tree leaves believed to have antiinflammatory properties.
“Today we have a surge in luxury import stores, but a country that is extremely poor, showing a stunning amount of inequality,” Mr Garcia said.
At 2,000 feet above sea level, the Hotel Humboldt provides an escape from one of the world’s most dangerous cities. A lobby with a vaulted, wooden ceiling greets guests while classical music plays in the background.
In their free time, visitors can bet at slot machines or play card games in the hotel’s casino. Although Chavez banned casinos in 2011, leaving owners and workers bankrupt and unemployed, Maduro reversed the decision last March. Casinos are legal again.
“We are open to everybody, we don’t have politics or religious requirements,” Carlos Salas, the hotel’s new general manager said. “It’s a pleasure that Venezuelans and the international community come here.”
But the average Venezuelan on a minimum wage would need to save their salary for over 12 years to afford one night’s stay. That would have likely horrified Chavez, who famously nationalised more than 1,000 companies, including symbols of wealth such as banks, supermarkets and large franchises. He also decreased the fare for a ride in the cable cars that lead to the Humboldt, so more ordinary Venezuelans could afford a trip up the mountain.
Maduro, on the other hand, has emphasised the hotel’s luxury. “Here we are in the restaurant as it was in 1956, at the peak of the mountain, preparing for the future,” he said in a video ahead of the hotel’s inauguration, eating dinner at one of the hotel’s restaurants beside an outdoor fireplace.