Buying frenzy as shops ordered to cut prices

| Nov. 17, 2013 | Caracas, Venezuela

Published by Sunday Times //pdf1//

Miriam Wells and Girish Gupta

She may hate her government but Carmen Cecilia loves cheap shoes. The 35-year-old office worker was one of thousands of people queuing for bargains in Venezuela last week after President Nicolas Maduro ordered prices to be slashed.

"I'm waiting because I want some high heels, it's definitely worth it. Of course I don't support the government but I've got to make the most of this," Cecilia said.

The shopping frenzy began last weekend after the socialist government sent the army into a leading electronics chain, demanding that it sell its products at "fair prices" or face prosecution.

Maduro, 50, was elected by a slim majority in April following the death of President Hugo Chavez, He claimed retailers were robbing his people by charging vastly inflated prices.

Crowds rushed to stores to get their hands on goods marked down by up to 60%. Faced with the threat of government intervention, many retailers had cut their prices voluntarily.

Looters broke into stores at dozens of shopping centres. Elsewhere, though, the mood was of happy camaraderie. "We want to buy! We want to buy!" chanted shoppers queuing outside one electrical store, cheering those who emerged with cut-price goods.

More than 100 shop managers and businessmen were arrested, many accused of usury, a crime defined as a seller gaining a "notoriously disproportionate advantage" over their customer.

"They are barbaric, these capitalist parasites!" said Maduro in one of his many lengthy daily speeches. He will be fighting municipal elections next month. "We have more than 100 of the bourgeoisie behind bars at the moment." Earlier last week he had declared: "Let there be nothing left on the shelves."

Strict currency controls have left the oil-rich country facing severe shortages of basic products and annual inflation of 54%, one of the world's highest rates. Everyday goods such as lavatory paper, milk, rice and cooking oil disappear at times from supermarket shelves.

Demand for dollars is so high that on the black market, where many importers say they are forced to turn, the currency sells for nearly 10 times the official rate.

"Every shop owner here is terrified," said Fatima, the manager of a clothing franchise in Sambil, Caracas, one of Latin America's largest shopping centres.

"This country is getting worse and worse — the government just doesn't understand how an economy works."

On Thursday the national assembly voted to grant Maduro, a former bus driver and union leader, decree powers that he said would be used immediately to impose limits on prices and profits "to protect our people from speculators, thieves and bourgeois parasites".

The government also blocked access to at least 50 websites giving information on the black market dollar rate.

Maduro's policy echoes that of President Robert Mugabe of Zimbabwe who in 2007 ordered all prices in shops to be cut in half — with predictably disastrous consequences. Henrique Capriles, Maduro's opponent in April's presidential election, said the priceslashing was a desperate attempt to avoid losing municipalities in next month's poll. "Every time Maduro opens his mouth, investments shift to other countries," he said.

Maduro's economic policies are even more radical than Chavez's, according to Luis Vincent Leon, a political analyst, who expects more "crowdpleasing" measures in the coming weeks.

"Chavez had popularity and charisma that allowed him to control the situation," he said. "Maduro does not and is turning to radicalism instead."