The story the private media perpetuates about Venezuela is a country in deep economic chaos, where people line up endlessly waiting for goods they will likely never find, like toilet paper or milk.
While opposition leaders often blame a lack of foreign exchange, price controls, and a fiscal deficit as the primary causes for the shortages, the Venezuelan government has claimed that economic sabotage by the private sector, speculation and smuggling of goods to Colombia are more to blame.
Smuggling has become a profitable business in recent years: many basic goods, sold in Venezuela at government regulated minimum prices, are smuggled into Colombia, including food, and gasoline. According to government estimates, up to 40 percent of basic goods and 100,000 barrels of gasoline per day are smuggled, for a total loss of US$3.6 billion per year.
The strategy of re-sellers, or bachaqueros, consists in buying key products at government-regulated supermarkets and later selling them on the black market for an outrageous profit. They work in groups, often linked to the mafia, to rig the market and bribe distributors to create false shortages. They are also known to pay people to wait in line at state supermarkets in order to access the carefully regulated merchandise, causing lines to be much longer than necessary.
On the one hand, the price controls systems, implemented by the Venezuelan government, keeps prices low on a range of basic goods in order to ensure the poorest sectors can afford them in the face of inflation. On the other hand, it has also fuelled the contraband market in Colombia. In August 2014, Venezuela behan working closely with its neighbor in an effort to criminal activity on the border.
Besides the financial incentives, the government also claims that the practice of contraband, speculation or the deliberate hoarding of basic goods could be politcally motivated: with chronic shortages and inflation to building discontent and aimed at bringing down the Venezuelan government – a goal that the opposition has not yet managed to achieve via elections.
Putting a cap on profits and prices is a policy which has become a new source of disagreement between private businesses and the Venezuelan government, seeing some business intensifying their economic warfare and destabilization efforts. Gathered in the country’s business chamber of commerce, Fedecamaras – which was a prominent and direct actor in the coup attempt in 2002 against Hugo Chavez - even brought to court the Law for Control of Fair Costs, Prices and Profits in a bid to challenge it.
In an oil-producing country like Venezuela, which has to import most of its goods from abroad, the (very few) companies that control distribution have immense power. That’s why increasing production has been part of the government's strategy, yet it has faced many obstacles, as imports remain much cheaper than domestically produced goods – a situation economists refer to as the “Dutch disease,” affecting oil-producing nations, or more accurately “neo-colonial disease.”
The deliberate creation of shortages in the country has been regularly evidenced by the seizure of basic goods stored or buried underground in various places, especially along the border.
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Back in 2006, Luis Tascon, a prominent Venezuelan lawmaker told Green Left Weekly, “The paramilitaries control the business [of smuggling], principally in Cucuta — with the support of the Armed Forces of Colombia [FAC], and the assistance of the Venezuelan opposition. Proof of this is the presence of paramilitaries in Caracas, brought here in the context of the internal political struggle in Venezuela to provoke violence.”
Moreover, Venezuelan enforcement agencies has been routinely affected by assaults committed by smuggling gangs. In response, the government launched an operation called “Liberation and Protection of the People” (OLP) on July 13, leading to the arrest of over 100 people linked with Colombian paramilitarism. The operation has included mass arrests of alleged gang members, as well as the confiscation of illegal drugs, firearms, hoarded goods, and other contraband products.