U.S. sanctions to pile misery on Venezuela
Associated Press
CARACAS, Venezuela — A small army of red-shirted workers mop the linoleum floors as their supervisors, sitting under a giant portrait of Hugo Chavez, look on. By the meltdown standards of Venezuela's economy, the shelves around the workers at the staterun Bicentenario supermarket in eastern Caracas are brimming with staples like rice and pasta.
What's missing are the shoppers: They've been scared off by prices that double every few weeks while wages in the crisiswracked nation remain stagnant.
“I don't even look at my paycheck anymore because it just gets me depressed,” said Norma Pena, a bank teller who earns a little more than Venezuela’s minimum wage of around just $15 a month. She left the store with a single bag of black beans.
While President Nicolas Maduro celebrates having calmed Venezuela’s streets after months of deadly protests, the country’s imploding economy poses an ever more severe threat. And the misery is likely to get even worse because of financial sanctions imposed by the Trump administration in efforts to isolate Mr. Maduro for taking the country down an increasingly authoritarian path.
Even before the sanctions were announced, most Venezuelans were struggling like never before. Since 2014, the year after Mr. Maduro took office, the economy has shrunk 35 percent — more than the U.S. did during the Great Depression.
A bevy of foreign airlines have pulled out of the country this year, oil production is at the lowest level in more than two decades and the government had to add three zeros to its bills as the value of its currency — the “strong bolivar” — plummeted.
But while daylong bread lines have eased, the newest scourge is the way galloping inflation has reached even the basic staples, whose prices were long controlled by rigid price and currency restrictions.
In recent months authorities have started allowing companies to import everything from canned food to new cars and letting them pass the dollar prices on to consumers at the black market exchange rate, where the greenback is worth 1,685 times more bolivars than it was at the strongest of three official exchange rates. In the past, merchants risked having goods seized, or their businesses shut down, if bolivar prices reflected the world market prices.
The result of the de-facto dollarization has been a devil's bargain: Shelves are fuller than Venezuela has seen for months, but with prices that are out of reach for the vast majority of poor Venezuelans. Inflation, which has been running in the triple digits for more than two years, hit a record two months ago and has risen to 650 percent over the past 12 months, according to an estimate by New York-based Torino Capital.
Venezuelans have made a grim joke of the process. The government once boasted of guaranteeing a “precio justo” — or “just price” — for goods. Buyers report there is now more on offer but only at a “precio susto” — a “scary price.”
That's not to say shortages have gone away. The Bicentenario supermarket hasn’t seen any fish or meat in about a year, partly because the freezer section’s cooling system broke and no spare parts can be found. Most shelves contain a single variety of any given product, much of it imported from China. Private supermarkets aren’t much better stocked.
Ms. Pena says she scrapes by selling items — telephones, clothes, once even a washing machine — left behind by better-off clients who have abandoned Venezuela. If she and her husband didn’t already own their home, they wouldn't have enough to feed their two daughters, she said. Even so, she’s lost 13 pounds as a result of what’s come to be known as the “Maduro diet.” In the past year, 74 percent of the population has lost weight because of food scarcity, according to a recent study by three of Caracas’ largest universities.