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Dollars and elections, the double bubble in Venezuela | International

A merchant sells a perfume in dollars to a client, in the center of Caracas, this Saturday.

The supermarket shelves are full of boxes of imported cereals, homemade jams that cost an arm and a leg, and flours and yeasts. made in USA. Crab legs poke out of the freezer at $ 140 (about 124 euros) per kilo. The cashier, at the time of payment, has a question that he repeats to all customers: in bolivars or in dollars?

The Venezuelan economy contracted 80% for eight years, making the country the poorest in Latin America. Analysts believe that it has reached the bottom and during this 2021 it experiences a rebound effect. It is estimated that this year its GDP will grow, for the first time since Nicolás Maduro was in power, between 2% and 5%. The emergence of the dollar as a recurring currency, the lifting of price controls and duty-free imports have caused a timid recovery that has eased the day-to-day life of some Venezuelans.

This economic bubble manifests itself in the rich and middle-class neighborhoods of Caracas and is replicated in the state capitals of the rest of the country. “I can get 30 or 40 dollars in a night,” explains Johana, the driver of a car application similar to Uber who, very brave, walks the streets of the capital at dawn. Two years ago, before the pandemic, the avenues were deserted, due to the economy and crime. Now the noise of music from nightclubs and apartments where there are private parties seeps into the night. “That’s what I was earning before in a whole month.”

In the midst of this peculiar economic phenomenon, Venezuela today is holding regional and municipal elections that the Government and the opposition agreed upon at the Mexican negotiating table, where a political solution to the country’s serious crisis is being sought. The opponents are at a disadvantage, as they do not have the funding from the State to which the official candidates have access. Those who have come forward consider that in this way, with the EU’s observation, democracy can be rebuilt and a presidential election or a recall of Maduro can be proposed in the coming years. On the other hand, a part of the opponents of the Chavista regime believes that this path legitimizes Maduro in office, considering him a valid interlocutor and a common electoral actor. That, they allege, lengthens their mandate. That sector has called not to vote.

Analysts don’t give opposing candidates many options. Abstention is expected to be very high. The Venezuelan has lost faith in the vote. Politics is no longer discussed in cafes, the subject seems exhausted. The conversation revolves around a startup and how to earn dollars. All this benefits the Chavistas, whose social mass, estimated to be between 20 and 22% of the population, will go out to vote with complete security. A participation of more than 50% would benefit opponents, although it seems highly unlikely that this will happen. “The secret polls are catastrophic for the opposition,” explains a politician familiar with the negotiations with the Chavistas. “Maybe I will win in a region or two (out of 24), tops.”

It occurs in a Venezuela that, superficially at least, looks different. The dollar, demonized by the government for years as a tool for controlling the Yankee empire, has become the national currency. Chavismo opens its hand to businessmen and authorizes businesses such as casinos, which were banned by Hugo Chávez. The Humboldt Hotel, an architectural marvel built in the 1950s on top of Cerro Avila in Caracas, has reopened its doors at $ 350 a room. Grocery stores and alcohol warehouses have the same products, traced, as if the containers arrived loaded and were distributed evenly in the businesses. The prohibition for the elections began on Friday shortly after noon, but the restaurants open spaces in the back for customers to choose between the three kinds of imported beer that the place manages.

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Pensioners and workers march to demand better payments on November 10 in Caracas.
RAYNER PEÑA R (EFE)

“There are two realities in Venezuela,” explains Asdrúbal Oliveros, an economist. “A small but significant part that has achieved with the dollar a catalyst to boost the economy. There is consumption and exchange of goods. That activates the trade. And another, majority, which is excluded, the benefits of this system do not reach them. They are public employees with salaries in bolivars, pensioners … they live in significant poverty ”.

Those who have risen to this wave are traders, freelancers, those who receive foreign currency from abroad. Also those who launder money with illicit oil or drug trafficking businesses. Some businessmen linked to the socialist revolution who now take advantage of the liberalization of the market. Large office buildings are built in the financial part of the city that are hardly a short-term business. Most of the foreign companies have left the country in these years and those that have weathered the debacle have reduced their workspaces to a minimum. Of course, investment funds appear that buy blocks or factories at auction with the hope that in a few years the situation will normalize and the price of real estate will skyrocket, according to Francisco Mendoza, director of the real estate consultancy CBRE. In the center there are apartments of 70 meters for 40,000 and 50,000 dollars.

The slight exit from hyperinflation occurs in a market in which the price system and distribution are destroyed. That affects the value of things. Eating in a restaurant in an expensive area of ​​Caracas costs between 10 and 20 times more than two years ago. Ice creams are worth five dollars, an average taxi ride of three or four kilometers, you can go up to 20. Change is really a problem. There are only 20 and 50 bills, a few of 10. Americans working in the country come with briefcases loaded with one and five bills, knowing that they are a rare commodity. Well-meaning government officials tour the stores to have the labeling done in the local currency, but it is too late. In Venezuela the dollar reigns.

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