So What's The Problem?
We’ll go Down The Rabbit Hole in a sec but first…Human Rights Watch reports that HRW is saying the Maduro government, the opposition, the UN, and the Biden administration need to act swiftly and transparently to ensure aid for Venezuelans.
Hum Ven, an independent platform monitoring the humanitarian emergency, estimates that 66% of Venezuelans need assistance and 65% have irreversibly lost or exhausted their means of livelihood. They also say that 93% of households have a family member that has left the country.
Under the agreement reached in November, Venezuelan assets frozen abroad would be placed in a humanitarian fund to be administered by the UN and monitored by a commission with members of the Maduro regime and the opposition. The Biden administration has told the UN it will shield the fund from creditors looking to seize assets to pay Venezuela’s debts.
So, what’s the problem? At this point everyone involved needs to stop pointing fingers and get whatever issues are causing the delay in getting the fund operational resolved. Then we’ll just have to see if the Maduro regime will actually let NGOs help the Venezuelan people.
Then we have Portugal Resident reporting that Venezuela Minister of Communication and Information, Freddy Nanez, announced that Venezuela has recovered $1.5 billion that was ordered released by a court in Lisbon, Portugal after being frozen in 2019.
The Venezuela opposition reacted to the Maduro regime’s announcement insisting that the Chavista government will not have access to these funds due to sanctions.
We’ve heard from both sides , the Maduro regime and the opposition, but nobody seems to be talking about the UN-managed humanitarian fund, agreed upon by both sides, with both sides finger-pointing and decrying delays in getting the fund operational. (Sound familiar?)
Seems like the logical move would be to transfer the $1.5 billion into the fund to benefit the Venezuelan people. Both sides insist they have the best interest of “the people” at heart. Now might be a good time to show it.
Now, let’s head Down The Rabbit Hole…
Chapter 5/ continued…
…So now you have less products available and consumers are forced to settle for inferior quality. Then the populace was put in the untenable position of not being able to afford many of these due to devaluation, inflation, and then hyperinflation. The average Venezuelan could only afford subsidized products and even those were in short supply. People waited in line for hours when word circulated that a delivery was scheduled. After hours in the hundred degree heat they would have to be content with a couple of packages of rice, flour, or pasta as it had to be rationed. That said, you better not be too far back in line or they would run out. After some rioting and looting the military had to oversee deliveries.
Today availability is better but almost nothing is affordable to the average Venezuelan on their minimum wage of under $5 A MONTH! Prices fluctuate but, on average, a month’s minimum wage will buy 3 and 1/2 kilos of flour, that’s it! Quite a fall from the $200 a month minimum wage when Chavez took power (which we thought was low at the time but…). As with so many things Chavismo- related, the minimum wage debacle deserves a detailed conversation so let’s just say that the price controls did noting but hurt the Venezuelan people. So what about currency controls?
Well, it’s broken record time again and I’m apologizing in advance for the tedious nature of the content. These Chavistas make simple things complicated but what you’re about to see is ridiculous. Hang in there. It will blow your mind. Oh, and imagine trying to manage your finances through all this…
In 2003 when Chavez instituted currency controls it was primarily to prevent dollars from leaving the country. It was intended to be a temporary measure but as of the time of this writing, in 2019, controls are still in effect. Remember, in the US income tax was intended to be temporary. The bolivar (local currency) had long been accepted only in Venezuela and a few border areas due to it’s unstable nature so having and retaining dollars was necessary to conduct business by both the government and individuals.
All business was to be conducted in bolivares and the government would control all conversions of bolivares to dollars. There wasn’t much of a black market in the early days of Chavismo as the rate (notice I said “RATE”) the government used was about the same as the black market (parallel market) rate. The main benefit was the government’s ability to ration the allocation of dollars to the many multinational corporations doing business in Venezuela.
The airlines are a good example. There were 23 international airlines servicing Venezuela, back in the day. That would drop to seven in 2019. With all those tickets being converted into bolivares and deposited in Venezuelan banks it was a sizeable amount of money the government could sit on and gradually allow the airlines to repatriate it. It was annoying to the airlines but they were willing to put up with delays in the conversion process because they were making a good profit.
Without getting into the specifics at each stage of the Chavez/Maduro years lets just look at the overall structure of the currency controls. As of 2019, there had been six different configurations of currency controls in general and four different auction mechanisms. Think about that for a second. If you are considering doing business in a country or visiting a country, in most of the world, you have a pretty good idea of what the rules are regarding currency conversion. In Venezuela they overhauled their currency conversion policy, on average, every three years or so under Chavismo. Generally the changes involved some new way for the government or well-connected Chavistas to profit from the system. Here’s one example that will blow you away (at least if you’re not Venezuelan as they’re used to this Chavista corruption madness).
In June, 2014 this was the scenario :
Official exchange rate – 6.3 bolivares / dollar
Black market rate – 71 bolivares / dollar
©Copyright 2021 TalesFromTeodoro.com all right reserved.