CARACAS—The Spanish version of “Jingle Bells” is blasting through loudspeakers in the street, while large inflated Santas are hanging from trees and holiday lights are piercing the dark night.
The Yuletide season is in full swing in this affluent Caracas neighborhood called Las Mercedes. People here meander through the streets, searching for a Christmas tree and there are many places to choose from. The trees are for sale in specialized Christmas pop-up stores that have appeared in recent weeks on almost every corner.
This busy-ness is a stark contrast to last year's Christmas season, when even this upscale neighborhood, once famous for its dazzling night life, bore no resemblance to Christmastime at all. The area was dimly lit and most of the stores were closed, or left in ruins.
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So what is fueling these signs of economic renewal? The answer is simple: the U.S. dollar. It’s become routine now for greenbacks to be used for purchases, and some business owners now attach price tags in the American currency, once a banned and punishable practice.
"[President] Nicolás Maduro decided to abandon the price control and ease up on the import regulations.” says Henkel García, a financial analyst whose company Econométrica is located right in the middle of Las Mercedes. “Since then, the economy’s free fall has been stopped and the dollar circulation is for many a respite. Still, the economic situation continues to be bad.”
With dollars now circulating here in the Venezuelan capital, the stores are flooded with products imported from various countries. But the source of the goods depends on the neighborhood. In the more affluent east side of Caracas, the stores are mostly stocked with American goods. On the west side, however, the merchandise is made in Russia and Turkey. Those neighborhoods are dominated by partisans of the Maduro government, who are known as chávistas after the late Hugo Chávez, who built this country’s “revolutionary” regime.
“The government relaxed the so-called puerta a puerta [door to door] system of delivery,” says José Antonio Souza, owner of a restaurant in the Caracas neighborhood of Santa Fe. “I buy the imported goods through a middleman who obtains the stuff from a truck or ship, others use underground channels like the system of direct couriers.”
Right next to his establishment there is the so-called bodegon, a store that sell exclusively imported goods mostly in exchange for dollars and euros. In contrast to the stark images of empty supermarket shelves, here the shelves are full of fancy chocolate bars, various boxes of cereals, cosmetic products, and even some medicines and vitamins not seen in Caracas for a long time.
The absurdity of it all is that the imported goods are far cheaper than the ones produced here in Venezuela. Henkel García points to many factors like inflation, bureaucracy, theft, and inefficient systems of production and distribution that contribute to pricey domestic products.
“Another explanation is society’s behavior. People generally don’t trust Maduro’s economic policies and prefer to be part of the dollar economy to get access to imported goods that would cover their necessities,” says García. Maduro’s regime has simply proved unable to control the economic activity of ordinary Venezuelans.
The fact is that people here have developed many ways to survive in one of the longest economic crises of modern times. Often, they get their dollars in dangerous endeavors, both legal and illegal. Sometimes it’s drug trafficking, more often it’s selling the gas they smuggle from Venezuela to Colombia through the hidden paths known as trochas.
Contraband fuel is a lucrative business. The current price for a gallon of gas in Colombia is around $2.70 U.S., while in Venezuela gas stations charge $0.004 dollars per gallon, rendering the gasoline essentially free.
Another source of hard currency comes from selling the gold mined in the states of Amazonas and Bolívar located in the south of the country, close to the border with Brazil.
Venezuela used to be an oil-producing state, but now it is a state with oil that it’s not producing, says economist Luis Vicente León, director of the domestic polling company Datanálisis. “It has to find different ways to get the hard currency revenue outside of the oil production like selling gold, cacao, coffee or rum.”
Still, the biggest inflow of hard currency, he points out, comes from remesas, remittances, sent into the country by some five million Venezuelans in the diaspora. Those who have escaped the crisis in the last few years have settled mostly in Colombia, Peru, Brazil, and Spain.
Some experts believe that chávistas, led by Maduro, are devising plans to turn Venezuela into a Chinese model of governance. That is to say, a system in which the autocratic leadership exercises absolute political control but tolerates, in some sectors of the society, a free market economy.
“Maduro has been following the Chinese model for months,” says Caracas based political analyst and commentator Dimitris Pantoulas. “He focuses on the political control while providing more economic freedoms.” Pantoulas believes this government strategy is to defuse ongoing opposition-led street protests.
Chávistas used to sneer at the potential use of the U.S. dollar in Venezuela, calling it “Yanqui money.” They would declare in unison that the country could and would do without greenbacks.
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” President Maduro declared in the fall of 2017, addressing the Constituent Assembly packed with his allies.
Now Maduro, who publicly admires Mao Zedong and Fidel Castro, and embraces the moniker “tropical Stalin” (given to him by his adversaries not least because of a certain physical resemblance to the late Soviet dictator) has offered a stunning about-face.
“I don’t see it as a bad thing… this process that they call ‘dollarization,’” Maduro declared in an interview for a domestic television channel Televen just a week ago.
“It can help the recovery of the country, the spread of productive forces in the country, and the economy… Thank God it exists,” the leader went on, calling the dollar an “escape valve.”
This jaw-dropping statement is perceived by many as merely the official blessing for the process that has been already unfolding on the streets for some time. Ecoanalitica estimates that in the first two weeks of October of this year, almost 54 percent of transactions were carried out in dollars. The economist Luis Vicente León predicts that, starting early next year, this number could climb to 70 percent.
But Maduro’s “escape valve” is not for everyone. Far from it, experts warn. In the poor parts of the capital and elsewhere in the country, possession of dollars is rare. If this year’s Christmas will be one big feast for some Venezuelans, the poor living in the sprawling Caracas slums will be mostly left with an empty table and no gifts.
A traditional Christmas Eve these days might cost up to $200 U.S., and would include, among many other things, hallacas, a mixture of beef, pork, chicken, raisins, and olives that is wrapped in plantain leaves. And those Christmas trees? They cost on average another 100 bucks.
“Maduro’s neoliberal turn will unleash the market’s potential,” says Pantoulas, “but it will also result in higher inequality and more poverty, making people’s suffering much greater.”
The irony is manifest as a regime founded on promises to the poor now aims to survive by making life more comfortable for the well-to-do, including a Feliz Navidad.
