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

CARACAS, Venezuela — In the capital, a store sells Prada handbags and a 110-inch television for $115,000. Not far away, a Ferrari dealership has opened, while a new restaurant allows well-to-do 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 into a microphone to get the customers excited as they sang a Coldplay song.

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

Venezuela’s economy imploded nearly a decade ago, sparking a huge outflow of immigrants in one of the worst crises in modern Latin American history. There are now signs that the country is settling into a disorienting new normal, with everyday products readily available, poverty beginning to ease, and surprising pockets of wealth emerging.

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

Conditions remain dire for much of the population, and while the hyperinflation that crippled the economy has eased, prices are still tripling annually, among the worst in the world.

But with the ease of government restrictions on the use of US 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 rich and poor, and one of the most unequal societies in the world, according encovia respected national survey carried out by the Institute of Economic and Social Research of the Andrés Bello Catholic University of Caracas.

Maduro has boasted that the economy grew 15 percent last year over the previous year and that tax collections and exports also increased, although some economists stress that the economy’s growth is deceptive because it followed years of big falls.

For the first time in seven years, poverty is falling: half the nation lives in poverty, up from 65 percent in 2021, according to the encovi survey.

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

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

Although parts of Caracas are packed with residents who can afford an ever-growing array of imported goods, one in three children in Venezuela suffered from malnutrition as of May 2022. according to the National Academy of Medicine.

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

And despite the Maduro administration’s new slogan: “Venezuela is fixed,” many survive on the equivalent of a few dollars a day, while public sector employees have taken to the streets to protest low wages.

“I have to do backflips,” said María Rodríguez, 34, a medical laboratory analyst in Cumaná, a small city 250 miles east of the capital, explaining that to pay for food and school fees for her daughter, depended on two jobs. , a side business that sells 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 per meal.)

Despite such difficulties, 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 recover, stop, walk and run,” he said in a recent speech, comparing Venezuela to a suddenly cured hospital patient.

The shifting US strategy toward Venezuela has partly benefited his administration.

In November, after the Maduro administration agreed to restart talks with the opposition, the Biden administration granted Chevron a six-month extendable license to drill for oil in Venezuela. The agreement stipulates that the proceeds will be used to pay the Venezuelan government’s debts to Chevron.

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

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

With presidential elections planned for next year and the shadow opposition government recently dissolved, Maduro seems increasingly confident in his political future.

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

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

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

Still, US officials dismiss Venezuela’s economic outlook as illusory.

“They were able to adapt to a lot of their problems after the sanctions were put in place through dollarization,” according to Mark A. Wells, deputy assistant secretary of state, “and so you start to see over time that they can achieve a status that basically helps the elites there, but the poor are still very, very poor.”

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

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

Widespread belief that Maduro won by fraud led the National Assembly to declare the presidency vacant and use a provision of 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 the legitimate ruler of Venezuela.

But as a figurehead for a shadow government that oversaw frozen international financial accounts, he had no power at home.

In December, the National Assembly ousted Guaidó and removed the interim government, a move some observers saw as a boost for Maduro. Several opposition figures have announced that they will participate in a primary scheduled for October, although many political analysts are skeptical that Maduro will allow a credible vote.

“What Maduro does have today is a disjointed and scattered opposition,” Guaidó said in an interview. “He also has the majority of people against him. He continues to be a dictator without popular support, an economy in shambles, through his own fault, with teachers, nurses, the elderly, and workers protesting 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 direction the country is headed.

Although she is from the upper middle class, she said she had yet to see how she spent her money.

She goes out to eat from time to time and has visited some of the new luxury stores in town, but without buying anything.

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

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

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

Nayrobis Rodríguez contributed reporting from Sucre, Venezuela, and julie turkwitz from Necocli, Colombia.