Venezuelan president’s backers laud war on ‘capitalist parasites,’ but others see difficulties


Shoppers stand with their goods inside the retail super store Traki which has slashed prices in Caracas, Nov. 15. In recent days President Nicolas Maduro ordered the military to take over appliance stores, which he's told to slash prices, leading bargain hunters to form block-long lines across the country. (Alejandro Cegarra/AP)
November 20, 2013

Christmas came early here in Venezuela, thanks to President Nicolás Maduro, who has slashed the prices of big-screen televisions and appliances by 60 percent or more for his overjoyed followers.

On Wednesday, a day after being granted extraordinary powers to enact broad measures without congressional approval, the leftist government began moving quickly to combat skyrocketing inflation and shortages of basic goods. But in deepening a socialist experiment begun by his late predecessor, Hugo Chávez, Maduro is taking Venezuela on a new, uncertain course that economists and political analysts say could make matters far worse.

Among his plans is to limit profit margins across broad sectors of the economy, a course that some analysts say is more radical than Chávez-era policies.

And yet the short-term fix by a man who has become something of a socialist Robin Hood — forcing stores to sell at bargain-basement prices — couldn’t have come at a better time.

Discontent is palpable over shortages of essentials such as toilet paper and a 54 percent annual inflation rate that is among the world’s highest. That had, until now, weakened the government’s position as it prepared for Dec. 8 municipal elections seen as a plebiscite on Maduro’s turbulent seven months in office. Indeed, an October poll by the Datanalisis firm showed that only 27 percent of those surveyed thought the situation in Venezuela was good.

Earlier this month, in the face of a dysfunctional economy, Maduro launched what he described as “an economic offensive” against shopkeepers he called “capitalist parasites.”

“I say to all our people — you’ve seen the first actions, just the first actions, against speculative capital, against the parasitic bourgeoisie who rob all the people,” he said Tuesday after he was given decree powers. “The prices have fallen and will stay there to protect the people.”

Arresting store owners accused of currency speculation and forcing businesses to sell cheap has struck a chord with people such as Maria Eugenia Vivero, a 39-year-old cook. Earlier this week, she eagerly lined up outside Pablo Electronica, a large store in a gritty part of Caracas, to buy a television.

“I came to buy because before the prices were too high and I couldn’t afford it,” Vivero said. “The measure is excellent. They’d taken too long to do it.”

But what has thrilled the poor masses who have long supported Chávez’s and Maduro’s leftist-
populist movement has rattled businessmen and the opposition in this country of 30 million.

“This is bad, but people are afraid to talk,” said Edgar Andara, who owns a small business. “This is going to generate more shortages, more unemployment, more problems and more crime.”

Government intervention

Maduro has had a rocky time since Chávez, whom he considered a father figure, died of cancer in March. The former bus driver, who cut his teeth as a union activist and has close links to Cuba’s communist government, barely squeaked to victory in an April election to choose a successor.

And as president, he has been mocked for mangling the Spanish language, falling off a bicycle on television and recounting how he has slept in the mausoleum where Chávez is buried.

With the country buffeted by economic travails and one of the world’s highest homicide rates, Maduro has taken to the airwaves frequently to accuse a hapless opposition of sabotaging the electrical power generation system and plotting assassination attempts against him. With the currency’s value plummeting, his government banned Web sites that report the black market exchange rate for dollars.

“Maduro is very dogmatic and, in addition, politically insecure,” said Javier Corrales, who co-wrote a book that largely deals with Venezuela’s economy. “And his dogmatism and insecurity has veered him to the left and led to this hard-line approach, this crackdown.”

The president — well aware that this remains a deeply consumerist country, despite the revolutionary rhetoric — opted to shower Venezuelans with money, still possible thanks to the country’s huge oil reserves.

He gave workers their Christmas bonus nearly a month early and created a new agency, the Vice Ministry of Supreme Social Happiness, to coordinate programs offering handouts to supporters. Then, this month, Maduro astonished people here by doing what Chávez had never done: He flung open the doors to the country’s retail sector. Maduro, in essence, told his countrymen that everything must go, cheap.

It first came at the expense of the Daka electronic chain, the Venezuelan version of Best Buy.

But the government then intervened in many businesses in between: shoe stores, clothing outlets, tire dealers, auto-body repair businesses, even toy stores. Some anguished shopkeepers cried as they watched their inventories snatched off the shelves at a fraction of their cost. Meanwhile, the government will maintain currency controls that force importers to purchase ever-expensive dollars on the black market — a huge cost that’s passed on to the consumers who buy those imports.

Few public officials captured the government’s fervor better than army Gen. Hebert García Plaza, who speaking live on television in the middle of one store laid out the strategy: “We have to guarantee that all Venezuelans have a plasma television, have the latest refrigerator.”

‘Desperate measures’

Carlos Barrera, 41, is among those who have taken advantage of the government’s schemes.

Standing in line as he waited to get into an electronics store, he echoed the government’s allegations that stores were buying dollars at the official exchange rate and then hiking prices of goods 1,000 percent.

“To me, the measure is good,” Barrera said of the government’s strategy. “Hopefully, they’ll keep the measure going.”

Some observers had doubts that the government tactics would do much for the beleaguered economy. Corrales predicted more capital flight and a currency that will fall further in value. “You’re going to essentially stop private-sector activity,” he said.

Indeed, what the government says it is planning — holding down profit margins below 30 percent, regulating distributors and ensuring better oversight of dollar sales — appeared more like the kind of half-baked efforts to outlaw inflation that have taken place in semi-authoritarian countries, such as Zimbabwe.

“These are desperate measures that will end up finishing off the working foundations of the economy,” said Humberto García, an economist at the Central University of Venezuela. “We’re talking about bad measures for the economy, carried out with regulations, controls and restrictions. They destroy the rational mechanics of the economy.”

Forero reported from Bogota, Colombia.

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