The Silent Metamorphosis of the Venezuelan Economy

By Marco Teruggi on February 16, 2020

The return of Juan Guaido made headlines that soon faded. His arrival brought no announcements but promises of upcoming actions without dates or format, the mobilizations that were to take place did not take place, and things returned to a similar situation on the surface of the political conflict.

The crisis of the opposition to mobilize its social base has several elements, such as the lack of credibility of its leaders, almost identical road maps with no results, and weariness with the logics of the conflict. It’s no longer credible and people do what the new scenario allows the well-to-do strata including living in the bubbles of life and consumption in dollars that have multiplied in Caracas.

This situation expanded and consolidated in 2019 with a breaking point during the March blackout, when dollars emerged due to the lack of electronic methods of payment and of local cash (bolivars) due to the shortage of working capital. Businesspeople began to charge and give back in dollars in an open and informally authorized manner.

The phenomenon multiplied from a motorcycle parts store in a popular western neighborhood to a shopping mall in the wealthy eastern Caracas. Prices marked in dollars or at the exchange rate in bolivars for that day.

The differences were built around the holding of foreign currency. The society can be categorized into three sectors that, as ideal types, can be synthesized into those who live and think in dollars with accounts generally abroad, those who work for the dollarized bands or receive, for example, remittances; and the third who are those left out. The latter are in the majority.

A sector of the opposition social base, historically from the middle and upper classes, found its new living space with new comforts; payment methods, such as Zelle, between accounts in the United States so as not to have to handle dollars in cash, supermarkets with imported products such as Nutella, Pringles and Kit Kat, and new stores of foreign clothing brands.

It is the capital being described by foreign correspondents; the celebration of the return to capitalism promoted by the Bloomberg website or narrated with critical expectation ( to talk about too much stability would be to give credit to the government) by The New York Times.

This is the sector that played a leading role in the opposition calls for protests in previous years. The combination of dollarized bubbles together with the prolonged crisis of results of the coup strategy that has generated immobility. Not even the photographs with Donald Trump influenced a will to protest in those who now see how, little by little, an old order of things where they have exclusive privileges without feeling threatened is returning.

Nicolas Maduro referred to the phenomenon commonly called dollarization as a “self-regulating economy of resistance,” which, in fact, was accompanied by measures to favor it. By tactics? By strategy? By necessity? There are different assessments about it in the context of a country under an economic and financial blockade.

The reality is different for the majority of the population who did not become dollarized or, in the case of the border areas, did not adopt the currency of the neighboring country. This is where the central core of Chavism is located, estimated at around 25 percent, which is explained by factors such as identity, loyalty, organization, analysis, non-resignation, and the nature of anti-Chavism and its threat.

Daily life on those streets is a daily struggle to get public transportation, cash, and the products that are least affected by inflation. The government’s social policy has its epicenter there, with subsidized food via Local Supply and Production Committees, sectorial bonds, the housing policy or the general benefit of almost free water, electricity and gasoline.

This economic metamorphosis has created a stabilization of a high social group with old and new members, full shelves, an inequality that the revolution had reduced, in a country crossed by widespread political disenchantments and trenches of political passions.

The opposition, in this context, is also going through a crisis of its party structures and a division between two blocks: one that remains aligned with the U.S. strategy, with Guaido as a figure, and one that has moved away from that bet.

This second sector has grown in volume of political actors. It opposes the economic blockade and is in dialogue with the government in the context of the legislative elections that will be held this year. From there, a new National Electoral Council and the call for elections will have to be born.

That election, still without a set date, will be the new political watershed. Chavism is betting on expanding the number of factors involved and winning the majority and it is the only force that has a national party organization, with a presence in the popular sectors through different forms of organization, and has the position of strength for being a government.

The United States has already said that it will not recognize these elections. That, in terms of the Venezuelan conflict, will surely mean a violent covert operation attempt to seek the overthrow or change the course of trends and correlation. In view of this, the government deployed this Saturday the military exercise called Bolivarian Shield 2020.

As these underground plots develop, the country is reordered between armored bubbles in dollars and daily battles in bolivars.

Source: Pagina 12, translation Resumen Latinoamericano, North America bureau