‘I do not have any hope,’ life on the edge in Venezuela
Anna Isaac
Updated
Venezuela is suffering from high inflation, food shortages and soaring crime rates. Many people have been killed during demonstrations throughout the year - AFP
"My neighbour saw me eating something that it was clear I’d pulled out of a bin; I was so ashamed,” says Samuel Dana. “Then he asked which bin it was that I had taken it from.”
In desperation, Dana and his wife, who live in one of Caracas’ many poor areas, stopped buying food for themselves in a bid to save enough money to get antibiotics for their two-year-old son.
On the black market, the price for the medicine they needed had reached several months worth of Dana’s salary. With nearly no savings left, he and his wife were desperate to try and make up the money.
They didn’t manage it. Their child died from an untreated ear infection.
It is a crisis at every level of society. Congressman Juan Mejia says: “I can’t vaccinate my daughter against basic things like measles. If I tried to buy one then I wouldn’t be able to feed her.” The vaccine would cost $120, he tells me.
Many Venezuelans are earning below $10 a month. The regime has not paid members of Congress a salary since July 2016, making it especially difficult for politicians from rural areas to attend meetings, with no way to fund their travel to the capital Caracas. Mejia’s family have to manage on his wife’s salary and family support.
Economic devastation has not only stripped public hospitals of basic medical supplies, it has made many simple activities challenging. Even if his baby was sick in the night, Mejia might not take her to the hospital, because crime is now so rampant in some areas that the risk of kidnap is very high.
Dubbed the 'March of all Marches' - one of the many rallies this year in Caracas in AprilCredit: CHRISTIAN VERON/Reuters
Protein is hard to come by. Parents unable to get hold of baby food have resorted to boiling and mashing rice (also expensive) into a paste as a source of protein. A dozen eggs might – in the rare case where they were available – fetch a dollar if not more. That’s 100,000 bolivares, based on what a bolivar is worth on the border with Columbia, known as the Cucuta measure. “People are suffering in lots of places, like Myanmar, but we didn’t need to suffer like this. We should be a wealthy country. We have the biggest oil reserves in the world,” says Mejia.
So how did it come to this? According to Dany Bahar, a fellow at the Brookings Institute, it was the fault of Hugo Chavez, the country’s former president, for failing to fix the roof of the economy while the sun was shining.
“Chavez created the mess and [President Nicolas] Maduro inherited it,” Bahar says.
Chavez – known for his charisma and whose once huge popularity lead to the founding of the Chavista movement, spent big while the oil price was high, and accumulated vast public debts.
Maduro has done much to worsen the situation Bahar says, initially actually adding to the vast debt left by Chavez. Maduro has continued the aggressive nationalisation programme, placing businesses at the mercy of rife corruption and poor management.
There has been a near halving of oil production in Venezuela as a result, from close to 3.3m barrels of oil a day, to around 1.8m.
Venezuela's President Maduro talks to the media during a news conference at Miraflores Palace in Caracas
Poor economic management has also left the country exposed to other economic forces.
When valuable resources, such as oil, are discovered, it can led to an economic syndrome termed “Dutch disease” (named after the turpor the Netherlands fell into after the discover of North Sea natural gas in the Eighties). The country becomes wealthier and the currency rockets in value making it cheaper to buy imported non-oil goods rather than make them domestically.
This kills off other forms of production, and makes the economy dependent on a particular industry, exposing it to huge risk, if for instance – as happened in Venezuela – the oil price plummets. This caused a severe weakening of the currency, the bolivares, and a shortage of incoming dollars. It ultimately led to hyperinflation.
If Chavez had held back on public spending, he could have followed the Norwegian example of tackling Dutch disease by creating a protective sovereign wealth fund.
For Harvard Professor Ricardo Haussman, Maduro’s cruellest economic act was not to adjust the denomination of the bolivar bills as inflation exploded.
“In early December 2016, the largest denomination bill was 100Bs. You needed 46 of those bills to buy one dollar. [The Government] prohibited the use of those 100B, causing a huge currency shortage and forcing Venezuelans to carry mountains of bills.”
Haussman notes that now, the bills in circulation add up to less than two dollars per capita, causing long queues at banks, as people are limited to withdrawing less than 10 cents a day. The shortage of bills is “artificial but amazingly painful” he adds.
The wider political and economic cruelty of the Maduro regime is plain to see. In just one Caracas district ten people known to Mejia were killed in anti-government protests earlier this year.
Opposition activists clash with riot police during a protest against the government of President Nicolas Maduro in Caracas on May 20, 2017
Mateo Forli, a businessman in the capital says that companies are managing to stay in business by getting loans from public banks.
“With 24pc interest [and such high inflation] you can actually do very well out of taking on a loan,” he explains. It effectively means, Forli says, that companies are publicly subsidised – an entirely unsustainable situation. “It’s immoral really when you think of savers, but it creates some jobs.”
Forli is not proud of it, but as a middle-class small business owner, he is both wealthy enough to live well and not high enough up the social order to be a major concern to the regime. “Life here can be quite cheap if you have the money,” he says.
Viola Aguado, the owner of a small cake company that caters for the wealthiest people in Caracas, says she can’t “hire staff with families, or who I don’t know personally,” because desperation leads them to steal the food they prepare.
Forli says that when officials call “you feel as though you could be kidnapped”. He adds: “You are not talking to an institution, you are talking to a thug.” The regime’s favourite punishment is to freeze a firm’s prices, sending them under as inflation renders their sales worthless.
In recent weeks, the Maduro regime has intimated that defaulting on its sovereign debt could lead to the government collaborating with opposition parties. But such talk is roundly dismissed.
“The average Venezuelan does not know what default means,” Aguado says angrily. “It doesn’t mean anything to them. It will not change the situation.
“I do not have any hope. People are not putting up Christmas decorations like they used to. They are too sad.”
