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Tuesday, December 12, 2023

Ferraris and Hungry Children: Venezuela’s Socialist Vision in Shambles

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CARACAS, Venezuela — In the capital, a store sells Prada purses and a 110-inch television for $115,000. Not far away, a Ferrari dealership has opened, while a new restaurant allows well-off diners to enjoy a meal seated atop a giant crane overlooking the city.

“When was the last time you did something for the first time?” the restaurant’s host boomed over a microphone to excited customers as they sang along to a Coldplay song.

This is not Dubai or Tokyo, but Caracas, the capital of Venezuela, where a socialist revolution once promised equality and an end to the bourgeoisie.

Venezuela’s economy imploded nearly a decade ago, prompting a huge outflow of migrants in one of worst crises in modern Latin American history. Now there are signs the country is settling into a new, disorienting normality, with everyday products easily available, poverty starting to lessen — and surprising pockets of wealth arising.

That has left the socialist government of the authoritarian President Nicolás Maduro presiding over an improving economy as the opposition is struggling to unite and as the United States has scaled back oil sanctions that helped decimate the country’s finances.

Conditions remain dire for a huge portion of the population, and while the hyperinflation that crippled the economy has moderated, prices still triple annually, among the worst rates in the world.

But with the government’s ease of restrictions on the use of U.S. dollars to address Venezuela’s economic collapse, business activity is returning to what was once the region’s wealthiest nation.

As a result, Venezuela is increasingly a country of haves and have-nots, and one of the world’s most unequal societies, according to Encovi, a respected national poll by the Institute of Economic and Social Research of the Andrés Bello Catholic University in Caracas.

Mr. Maduro has boasted that the economy grew by 15 percent last year over the previous year and that tax collections and exports also rose — though some economists stress that the economy’s growth is misleading because it followed years of huge declines.

For the first time in seven years, poverty is decreasing: Half of the nation lives in poverty, down from 65 percent in 2021, according to the Encovi poll.

But the survey also found that the wealthiest Venezuelans were 70 times richer than the poorest, putting the country on par with some countries in Africa that have the highest rates of inequality in the world.

And access to U.S. dollars is often limited to people with ties to the government or those involved in illicit businesses. A study last year by Transparency International, an anti-corruption watchdog, found that illegal businesses such as food, diesel, human and gas smuggling represented more than 20 percent of the Venezuelan economy.

Though parts of Caracas bustle with residents who can afford a growing array of imported goods, one in three children across Venezuela was suffering from malnutrition as of May 2022, according to the National Academy of Medicine.

Up to seven million Venezuelans have simply given up and abandoned their homeland since 2015, according to the United Nations.

And despite the Maduro administration’s new slogan — “Venezuela is fixed” — many scrape by on the equivalent of only a few dollars a day, while public-sector employees have taken to the streets to protest low salaries.

“I have to do back flips,” said María Rodríguez, 34, a medical lab analyst in Cumaná, a small city 250 miles east of the capital, explaining that, to pay for food and her daughter’s school tuition, she relied on two jobs, a side business selling beauty products and money from her relatives.

Yrelys Jiménez, a preschool teacher in San Diego de los Altos, a half-hour drive south of Caracas, joked that her $10 monthly salary meant “food for today and hunger for tomorrow.” (The restaurant that allows diners to eat 150 feet above the ground charges $140 a meal.)

Despite such hardship, Mr. Maduro, whose administration did not respond to requests for comment, has focused on promoting the country’s rising economic indicators.

“It seems that the sick person recovers, stops, walks and runs,” he said in a recent speech, comparing Venezuela with a suddenly cured hospital patient.

The United States’ shifting strategy toward Venezuela has in part benefited his administration.

In November, after the Maduro administration agreed to restart talks with the opposition, the Biden administration issued Chevron an extendable six-month license to pump oil in Venezuela. The deal stipulates that the profits be used to pay off debts owed to Chevron by the Venezuelan government.

And while the United States still bans purchases from the state oil company, the country has increased black-market oil sales to China through Iran, energy experts said.

Mr. Maduro is also emerging from isolation in Latin America as a regional shift to the left has led to a thaw in relations. Colombia and Brazil, both led by recently elected leftist leaders, have restored diplomatic relations. Colombia’s new president, Gustavo Petro, has been particularly warm to Mr. Maduro, meeting with him repeatedly and agreeing to a deal to import Venezuelan gas.

With presidential elections planned next year and the opposition’s parallel government having recently disbanded, Mr. Maduro seems increasingly confident about his political future.

Last year’s inflation rate of 234 percent ranks Venezuela second in the world, behind Sudan, but it pales in comparison to the hyperinflation seen in 2019, when the rate ballooned to 300,000 percent, according to the World Bank.

With production and prices up, Venezuela has also started to see an increase in revenues from oil, its key export. The country’s production of nearly 700,000 barrels a day is higher than last year’s, though it was twice as high in 2018 and four times as high in 2013, said Francisco J. Monaldi, a Latin America energy policy fellow at Rice University.

The Venezuelan government’s loosening of restrictions on dollars has made it easier for some people to use money sent from abroad. In many cases, no cash is actually exchanged. Venezuelans with means increasingly use digital apps like Zelle to use dollars in accounts outside the country to pay for goods and services.

Still, U.S. officials call Venezuela’s economic picture somewhat illusory.

“They were able to adjust to a lot of their problems after sanctions were implemented through dollarization,” according to Mark A. Wells, a deputy assistant secretary of state, “and so it starts to look over time that they are able to reach a status that basically helps the elites there, but the poor are still very, very poor.’’

“So, it’s not that everything is more stable and better there,” Mr. Wells added.

Mr. Maduro took office nearly 10 years ago and was last elected in 2018 in a vote that was widely considered a sham and was disavowed by much of the international community.

The widespread belief that Mr. Maduro won fraudulently led the National Assembly to deem the presidency vacant and use a provision in the Constitution to name a new leader, Juan Guaidó, a former student leader. He was recognized by dozens of countries, including the United States, as Venezuela’s legitimate ruler.

But as the figurehead of a parallel government that had oversight over frozen international financial accounts, he had no power within the country.

In December, the National Assembly ousted Mr. Guaidó and scrapped the interim government, a move some observers considered a boost to Mr. Maduro. A number of opposition figures have announced that they will run in a primary scheduled for October, even though many political analysts are skeptical that Mr. Maduro will allow a credible vote.

“What Maduro does have today is an opposition that is disjointed and dispersed,” Mr. Guaidó said in an interview. “He also has a majority of the people against him. He continues being a dictator without popular support, a destroyed economy, which was his own fault, with professors, nurses, older people and workers protesting right now as we speak.”

Even people like Eugenia Monsalves, who owns a medical supply company in Caracas and sends her two daughters to private schools, is frustrated with the country’s direction.

Though she is upper middle class, she said she still had to watch how she spends her money.

She goes out to eat occasionally and has visited some of the city’s new luxury stores, but without buying anything.

“The vast majority of Venezuelans live in a complicated situation, very complicated,” she said.

Ms. Monsalves believes the Maduro administration needs to go, but she worries that the best candidates were forced into exile or disqualified. The opposition, she said, has not coalesced around what it most needs: a leader who can energize the electorate.

“That’s what I most want, like many other Venezuelans,” she said. “But the truth is that without a clear vision from the opposition, a clear platform from a single candidate, I think it’s going to be hard.”

Nayrobis Rodríguez contributed reporting from Sucre, Venezuela, and Julie Turkewitz from Necoclí, Colombia.

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