Wilmer García López, 41, a father of three, spends his days in bed in his new apartment in the center of the Venezuelan capital, Caracas. In September, he returned after a twenty-month stay in the United States with a wallet full of dollars. It was a great opportunity to get into Venezuela’s new dollar economy, but he put his $16,000 into a house for his family.
‘Yes, I’m sorry,’ he says sitting on a bench in the wealthy Chacao district. He points to the shop windows around the square. Pet shop Safarizoo, supermarket Gama, hot dog restaurant Perro Amor, everywhere he sees compatriots who were smarter than him. ‘There is enormous potential, wow! The secret to success is one’s own business.’ But he spent all his American money and, except for that house, is as poor as the gymnastics elderly in the square, on a state pension of $2 a month.
In Venezuela, “21st century socialism,” as then-left president Hugo Chávez called his project, has given way to “wild capitalism,” sociologist Mauricio Phélan, of the Central University of Venezuela, said over the phone. Like García, he returned from abroad last year. What he found, he says, was a more unequal country than the Venezuela he left five years ago. ‘Thanks to the dollar there are many new products in the shops. But only those who have access to dollars can buy them.’
That dollar lived a clandestine existence in the South American country for fifteen years. Only the state was allowed to trade in dollars, Chávez decided by decree in 2003. As a result, the American currency circulated on the black market at usurious rates and at the same time, as a state dollar, lent itself very well to corruption. President Nicolás Maduro, the man who has ruled with a heavy hand since Chávez’s death in 2013, adjusted the policy in late 2018. Currency trading was no longer punishable, someone with dollars in their pocket no longer suspected.
Shiny Towers
In 2022, as the dust settles from the pandemic, the impact of the liberated dollar becomes apparent. Caracas is still stretched out between green mountains, with its gleaming towers to the east, concrete blocks in the center and drab slums on the edges. And Chávez is still standing meters high on walls, just like freedom fighter Simón Bolívar, after whom Chávez named his Bolivarian Republic. But at the same time, the economical botox injections are visible everywhere.
Billboards tout the latest fintech apps. The bolivar, from which Maduro deleted six zeros last year, has largely become a digital currency, the dollar is dominant as cash. Hundreds bodegons, import stores, offer a wide range of imported products, from Heineken chips and cans to toys and household appliances. Yummy food deliverers shoot through traffic, their app displays the prices in dollars.
The internationally isolated Venezuela, groaning under US trade embargoes, is gasping for financial oxygen. This week Maduro therefore broke with the policy of his predecessor. Chávez expropriated thousands of companies and “gave them back to the people.” Maduro is now returning (part of) those state-owned companies to capital. ‘You can become an investor in Cantv and Movilnet (telecom companies, red.), in gas and oil companies, in steel companies,” he said on national television on Monday. Foreign investors are also welcome, he said. “We need money.”
It is the next step on a path that Maduro had already taken. “The dollar,” he said last year, “is a valve,” a necessary evil that offers some relief to the pinched economy. And so the citizens serve as a pump on the valve, the dollars they secretly kept in a shoebox or mattress in recent years, let the country breathe a little again.
Even now, only a few entrust their dollars to the scarce dollar deposit accounts at Venezuelan banks. It is not possible to withdraw fresh dollars. But the nationwide supply of well-thumbed dollar bills is growing with fresh influx thanks to Venezuelan migrants taking cash with them on family visits. The criminal dollars that previously also entered Venezuela via drug and commodities trade, can now be spent freely in the shop and on the market.
Nowhere is the change more visible than in the popular center. On Plaza Bolívar – where the opposition marches could never reach in the protest years 2014 to 2019 – right next to Simón Bolívar’s birthplace, a colonial building has been turned into donut shop Casa Dona. The shiny pasta is displayed in the display case for $1.50 each. For 2 dollars you can buy a bottle of Arizona iced tea, imported directly from the US.
Pragmatic pact
Around the corner from Casa Dona, Ileana de Jorge (31) rents a workspace on the ninth floor of a gray flat. She is also a returned migrant, but unlike García, she is like a fish in water in the new Venezuela. A pink children’s dress hangs from a clothes rack: ’20 dollars, 15 for friends.’ Rolls of fabric are piled up in a shelving unit. ‘Bought in Spain, cheaper and of better quality than what you can get here.’ She sent the materials by ship. One of her four part-time employees cuts patterns from a piece of cloth on a large table.
De Jorge studied fashion in Spain since 2015 and had decided to build her future outside of Venezuela, far from a repressive regime that ruled a disadvantaged country. At the beginning of 2020, she was back for a while and was taken by surprise by the pandemic. And suddenly it turned out that her country could do more than she thought. ‘My chances are better here than in Europe at the moment.’ During December festive season, she sold $5,000 worth of children’s clothes.
While it lasts, she enjoys the new Caracas. ‘There are fewer people. There are no more lines in front of the shops. There are no more traffic jams,” she says. ‘The government gives us a little more economic freedom and we accept the balance of power. We don’t argue about politics anymore.’ Since Maduro came to power, nearly 6 million Venezuelans have left for foreign countries. Families fled from scarcity, activist youth from repression. Caracas is safer because even the thieves gave up, many Venezuelans say.
What remains is a pragmatic pact between a regime that clings more firmly to power than the ideals of the Bolivarian revolution and a population that needs a stocked fridge – and sometimes a donut – just as much more than political change. “Two years ago you had to queue for a carton of cornmeal. Now you can buy an American specialty beer for two dollars,” said Venezuelan economist Henkel García, director of economic consultancy Econométrica, over the phone.
“Maduro not only let go of state control of currency, he also stopped harassing entrepreneurs.” Dollarization was not the goal, the economist believes, but when the government offered that opening, the population appeared ‘very willing’ to jump in. The dollar proved such a success that, according to economists, most transactions now take place in foreign currencies. In 2020 that was less than 20 percent, President Maduro said, reliable official figures are lacking. The value of the dollar has fallen to a rate that many ordinary Venezuelans can afford. And the bolivar is slowly recovering: the currency used to devalue by thousands of percent, now by tens.
Behold the wild capitalism of sociologist Phélan. Because while most Venezuelans still receive their salary in bolivar, inflation is also taking place in the dollar economy. A forbidden dollar was worth a fortune, with the free dollar you buy less and less. Fashion designer De Jorge experienced it during her years in Spain: ‘First I sent my father $20 a month, then 50, then 100.’ Retired scientist Phélan receives a pension of 22 dollars. ‘You hardly buy anything with it. The monthly groceries already cost 300 dollars.’ Like many older compatriots, he relies financially on his children who live abroad.
the powerless
While De Jorge returned to Venezuela and hopped on the dollar train, Wilmer García guessed wrong and got stuck in the bolivar trough. He used to trade in ink, but nobody prints anymore. He hasn’t found a new job yet and even if he did work, what would you do with $20 a week? His wife is therefore the breadwinner, he says. She has a leadership position in the police force. Her colleagues sometimes give her a little extra when they’ve picked a criminal.
“There are two Venezuelas,” says García as he drives his battered 2008 Renault (the twilight of car production in Venezuela) through the Las Mercedes neighborhood. In this part of Caracas, wealth is sprouting up in the form of concrete mushrooms. Reflecting office buildings and construction sites alternate. He points to a shop window filled with Ferraris. ‘Here let the children of the chavists (the political leaders who under Chávez grew into the new rich, red.) roll their money.’ The only activity is the construction workers around the towers, empty spaces are still gaping behind the windows of the completed buildings.
Two Venezuela’s doesn’t really cover the charge. There are at least a handful of them: the poor who still (occasionally) receive food parcels, the old rich before Chávez, the new rich of the socialist regime, their rich children, and a burgeoning dollar middle class. Yet there is one simple dividing line between the returned migrant García and all the groups above him: ‘Poder adquisitivo’, he says, purchasing power. Literally translated: the power to buy. He belongs to the powerless.
Real change is still not forthcoming, says economist Henkel Garćia, despite a ‘stabilization’ of the economy. ‘There is less scarcity, but the income of an average household is very low.’ Moreover, the regime that opened the valve a bit can also close it again. Maduro recently announced a tax on foreign exchange transactions. García: ‘The bolivar has to become dominant again.’ Even in slightly better times, the whims of the government determine the lives of Venezuelans.
Sociologist Phélan has decided to say goodbye permanently. He only came back to make final arrangements before leaving. “I love my country, but in Spain my rights are respected.” Fashion designer De Jorge will stay longer, but at most until 2024. ‘Then the presidential elections are bound to cause problems.’ Returnee García would like to return to the US as soon as possible. One more time to save dollars and then open your own business. But he put all his buying power into that house. “I don’t have a dollar in my pocket yet.”