October 25, 2014
Maduro scrambles to contain economic fallout
Venezuelan leader announces series of measures, including nightly closure of Colombian border
CARACAS — In a bid to contain a crisis that many believe is spiralling out of control, the administration of Venezuelan President Nicolás Maduro announced a series of new measures during the weekend, including the nightly closing of the border with neighbouring Colombia.
The measure — aimed at trying to reduce smuggling between the two countries — is supposed to come into force today and is one more move by the Maduro administration in its “economic war” against the speculators who have been benefiting from Venezuela’s economic model, the government said on Saturday.
Many Venezuelans have learned how to “work the system” and have benefited from the government’s currency controls and heavy subsidies on a wide range of products that go from food to oil.
The shortage of basic goods and soaring inflation central to criticism voiced by citizens at the government’s economic policies since Maduro took power last year.
Discontent even fuelled three months of protests at the beginning of the year and the unrest is now threatening to contaminate Chavista ranks.
After recent criticism of Maduro’s policies by several officials, yesterday, one of Chavismo’s main intellectual leaders, Unasur Secretary-General Alí Rodríguez followed suit.
The current minister of Electric Energy called for Venezuela to clearer “define its economic policy,” saying officials “can no longer hide” that the state “can’t handle all the economic activities” it has taken on. He even raised the possibility of privatizing state steel company Sidor.
Maduro, however, seemed to be on a different wavelength. On Saturday, just as the state news agency announced the scheduled closing of the border with Colombia, he called for employees to “take over companies” that have failed to service Venezuelans and promised the state would supply them with the funds to make them function.
The border issue
A top military officer said on Saturday that Venezuela will close the border with its neighbour at night to prevent the smuggling of heavily subsidized fuel and food. The government will now stop traffic crossing the border between 10pm and 5am starting today, and limit movement of cargo vehicles in border municipalities to prevent lucrative cross-border illegal trade.
“With these measures we are increasing the mechanisms to minimize contraband,” General Vladimir Padrino said on state television.
Venezuela’s heavy subsidies on consumer goods mean smugglers can buy up all sorts of products ranging from gasoline and diesel to cooking oil and corn flour, then drive the goods across the border to Colombia, where they can be resold for a quick profit.
Padrino said the government as of July had impounded 21,000 tons of food that smugglers had attemped to take across the border, more than the total amount impounded in 2013. The government has also impounded 40 million litres of gasoline over the same period this year.
Filling the tank of a small vehicle costs about 38 cents in Venezuela, one quarter the price of a medium-sized bottle of water.
But critics said the gaping price disparities between the cost of goods in Venezuela and that of neighbouring countries means such measures are unlikely to have a long-term impact on the problem.
The government has accused businessmen and the opposition of waging an “economic war” against the Socialist government, blaming them for the shortage of basic goods, the flourishing of a parallel currency market and soaring prices.
“We are men of dialogue but we won’t tolerate that they keep sabotaging us,” Maduro said on Saturday as he promised workers that they would have state support to “take over the businesses that the bourgeoisie abandons.”
“Workers need to recover the productive units with law in their hands (...) and they need to put them to work again,” the president said during the opening ceremony of the National Congress of Socialist Workers in Vargas.
The government has also accused businesses of working currency controls in their favour, by making use of importers’ special authorizations to buy dollars at the official rate while later reselling products at ridiculously high prices.
Oil Minister Rafael Ramírez has repeatedly said of late that the government will seek to “unify” currency rates.
But his Electric Energy minister, historic Chavista figure Alí Rodríguez, took a very different line in an interview with El Universal published yesterday.
“What are we going to do with a whole group of activities that the state has become involved in and which are frankly wrong and we can’t hide?” he asked himself.
“I am not saying we have to privatize state steel plant Sidor, but will we continue passing on more activities to the state when its efficiency is very limited?” he added.
Rodríguez’s remarks, which are bound to anger Maduro, come as the ruling-party struggles to contain internal dissent.
The party’s differences regarding the country’s economic future became evident after former ministers Jorge Giordani and Héctor Navarro questioned Maduro’s policies in open letters to the government and were, as a result, cut loose from the government.
Alí Rodríguez is about to step down as Unasur’s secretary-general, a job that will be assumed by former Colombian president Ernesto Samper.
He has previoulsy served as Oil and Mines minister and Foreign Relations minister during Chávez’s consecutive terms in office.
Herald with Télam, AP