Venezuela to businesses: Everything must go - or else. (+video)
Venezuelan soldiers, on President Maduro's orders, forcibly slashed prices at an electronics retailer over the weekend. Now, businesses large and small nervously await his next move.
Venezuelan businesses large and small were waiting nervously this week after the government took over a chain of electronics stores and declared "fair prices" would be enforced around the country.Skip to next paragraph
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A planned "economic offensive" against the capitalist saboteurs President Nicolás Maduro says are attacking Venezuela's economy and robbing its people took effect over the weekend with the military sent into stores to force the retailer Daka to sell its goods at heavily discounted prices.
Long queues formed and scuffles broke out as people waited to get their hands on a bargain, guarded by soldiers. Other electronics stores voluntarily slashed prices or shut down awaiting government inspection.
In the run-up to municipal elections in December, Hugo Chávez's handpicked successor is adopting extreme measures in the face of economic problems that have reached fever pitch six months into his presidency, say analysts.
As inflation and shortages of basic goods have spiraled, rhetoric about anti-Bolivarian conspiracies has escalated, culminating in President Maduro's declaration of war against "hoarders and speculators" last week and with the launch of the crackdown on retailers.
The problems that Maduro says he is trying to combat – price speculation, hoarding of goods by manufacturers and distributors, abuse of Venezuela's currency system, contraband flowing into neighboring Colombia – all exist, Venezuelan political analyst Luis Vicente Leon says. But he argues they are to be expected in a system in which access to dollars is strictly controlled, causing a dire effect on manufacture and imports, while the government sells certain goods at subsidized rates and prints money to try to combat inflation.
"The president says these things happen because a group of enemies is trying to destabilize the government, when in reality they are classic distortions caused by the government's economic policy," Mr. Leon says. "Not even Chavismo can control prices using laws, it has been shown throughout the history of economics to be impossible."
Managers from the electronics chain Daka were among 28 people arrested for artificially inflating prices, with a special prosecutors unit set up to go after retailers who were "stealing" from the people.
One woman waiting in line for cut-price products told reporters that a refrigerator that cost 76,000 Venezuelan bolivars two weeks ago had gone up to 200,000 bolivars when she returned recently – almost $32,000 according to the government's official rate of 6.3 bolivars to the dollar. But on the black market – which retailers say they are forced to use to get hold of dollars for imports, due to the very limited number given out by the government – the rate is now around 60 bolivars to the dollar, giving the refrigerator a value of around $3,350.
With the military watching over, Daka was forced to sell refrigerators at 19,000 bolivars (about $3,160 according to the official rate, $400 at the unofficial rate) and top of the range televisions for 2,300 bolivars ($365 or $46, depending on the rate).
The Daka takeover was the "tip of the iceberg," stated Maduro, and on Tuesday he announced price inspections of mobile phone and computer retailers and car dealerships, would take place immediately.
Am I next?
Adopting confrontational measures during times of crisis was a popular tactic of Mr. Chávez, who expropriated more than a thousand companies between 2002 and 2012 according to figures from the Venezuelan Industry Confederation. So far, Maduro has expropriated just a handful, but he has pledged to take over many more.
The fear of the crackdown on business is spreading far away from the capital. Alan Highton, a middle-aged Barbadian who emigrated to Venezuela 30 years ago, says he's ready for extreme measures should the government attempt to expropriate the small tourism business 20 hours from Caracas that he’s spent years building up.
"I'll die before I let them take this from me," says Mr. Highton, standing on the jetty of his stilted house in Venezuela's Lake Maracaibo.
Highton, a tour guide whose guesthouse stands in the perfect location for watching the Catatumbo lightning, a spectacular natural phenomenon of nightly electrical storms, fears he’ll be targeted.
It's estimated more lightning hits Lake Maracaibo than any other place on the planet, and the government announced last July it was planning a tourism mega-project in Highton's village – possibly even attempting to expropriate the phenomenon itself.
"They've said they want to rename it the Simon Bolivar Lightning," he says. "I'm trying to help the local community by bringing visitors here but I don't know if that will be enough to save me."
Invoking the name of the revolution was another common Chávez practice that Maduro has whole-heartedly embraced, but according to political analyst Leon, Maduro's tactics and economic policies are becoming even more radical than those of his predecessor.
"Chavez expropriated a lot of businesses but these actions by Maduro to intervene in the sales of goods and suppress the supply of foreign currency to the private sector are without a doubt more extreme," Leon says. The president lacks the charisma and popularity his predecessor was able to fall back on, meaning he is turning to "instant crowd-pleasers" to try to keep people happy, especially as he looks ahead to the elections next month.
Should Maduro's economic offensive reach Highton's doorstep, Highton will not back down. "If they come for me I will chain myself to my railings and go on hunger strike," he says.