The Scrape: Life Among Venezuela's Have-Nots
Photo: Girish Gupta

The Scrape: Life Among Venezuela's Have-Nots

Girish Gupta
New Yorker | Mar. 6, 2014 | San Cristóbal, Venezuela

When I met Marisela Méndez in San Cristóbal, Venezuela, not far from the country’s border with Colombia, she showed me her palm. More than seven hours earlier, someone had scrawled “1,296” on it in black marker, to note her position in line at Garzón, a major supermarket. The line stretched for hundreds of metres against a fence on the outskirts of the city. “I heard they have flour and milk,” Méndez, who is forty-one years old, told me. “It’s been a while since I had those.” The mountains of the Venezuelan Andes were a little too far in the distance to shield her from the hot afternoon sun.

San Cristóbal is the capital of Venezuela’s Táchira state. A month ago, students here began protesting after the attempted rape of a female student at a local university’s botanical gardens. The students were unhappy about a recent increase in crime on campus, which they felt the local government hadn’t adequately combatted. Some of the demonstrators were detained by authorities, prompting their colleagues in both San Cristóbal and nearby cities to take to the streets themselves. Backed by opposition politicians, protests have since spread across the country, their participants speaking out against the supermarket lines, financial insecurity, and other ills that they say are symptomatic of a government, led by President Nicolás Maduro and the United Socialist Party of Venezuela, that has failed them. On Wednesday, the government held a parade to commemorate the anniversary of the death of President Hugo Chávez; meanwhile, the protests continued. They have involved tens of thousands of people and have left at least twenty people dead. In San Cristóbal, they continue at their most virulent. Streets are blocked by barricades of burning trash, debris, and barbed wire; teen-age protesters strut around with Molotov cocktails and slingshots, and have the support of many older residents. Méndez supports the protests but added, “In reality, I don’t know what they will achieve.”

Venezuela now has an annual inflation rate of more than fifty-six per cent and a record-high scarcity index—the percentage of goods unavailable—of twenty-eight per cent. This stems in large part from the government’s economic controls. In 2003, Chávez instituted currency controls after a major oil strike crippled the country’s economy. The controls pegged the exchange rate to the U.S. dollar and limited the amount of bolivars, the local currency, that Venezuelans were allowed to convert, with the goal of stabilizing the economy by curbing inflation and the rapid outflow of money. They failed to have the desired effect. Eleven years later, they have profoundly lessened businesses’ incentives to produce and import goods, and have divided the country between those with access to hard currency and those without.

Today, U.S. dollars can be sold on the black market for more than ten times as many bolivars as they are officially worth, according to Web sites that track the black-market rate, such as DolarToday. Those with access to dollars can live exceedingly well. Internationally priced goods such as plane tickets and hotels can cost up to fourteen times less than their “proper” market price when bought with black-market bolivars, which means a flight to New York from Caracas costs just over a hundred dollars and a night in a five-star Marriott around fifty dollars. Arbitrage scams are common. One of the most infamous is known as raspao, or the scrape. Venezuelans obtain their limited allocation of hard currency at the official rate on a credit card by demonstrating to the government that they need it to spend abroad. Outside the country, they convert it to cash that they bring back to sell on the black market, making huge profits.

Simultaneously, much more than flour and milk is lacking from shelves. In November, the military occupied a chain of electronics shops called Daka, similar to Best Buy, and forced them to charge “fair” prices that the government deemed appropriate. This approach eventually extended to other products; many shops simply pulled down their shutters rather than sell at a loss, while others remained open but with hardly any inventory. Exacerbating the situation, President Maduro, in January, decreed the Fair Price Law, which set the maximum profit margin for “each actor”—including manufacturers and retailers—at thirty per cent. Retailers say that they struggle to get hold of dollars at the official rate through the government’s byzantine mechanisms and must turn to the black market, which means charging prices the government deems unfair. The government has introduced various exchange policies to try to address the shortage of dollars, but none have managed to meet demand, as manifested in the country’s soaring black-market exchange rate.

People are hit hardest by shortages in San Cristóbal, because of its proximity to the border. Colombians come to the city to buy up price-controlled products with their hard currency, then smuggle them out and then re-sell them back home. This is especially true of gas. Venezuela’s gas prices are the lowest in the world—around six cents a gallon. On the Colombian side of the border, pimpineros, as gas smugglers are known, line the streets for miles with jerricans, often shaded by wooden shacks, to resell the gas at higher rates.

Currency controls in Venezuela predate Chávez. The exchange rate was fixed in 1934, four years after the bolivar came off the gold standard. Until Venezuela’s Black Friday, in 1983—when the currency was severely devalued and foreign exchange strictly limited—the bolivar was one of the region’s most stable currencies. Then economic problems arose; in the eighties, they were made worse by the economic policies of President Jaime Lusinchi, which played a large part in the discontent that helped bring Chávez to power, in 1999. Maduro, who took over the Presidency last year after Chávez died, attributed the problems to an “economic war” waged by the country’s opposition, with a helping hand from Washington. Maduro has blamed a “Nazi-fascist faction” for turning the protests violent.

Protests continue across the country. While they do not look to be losing momentum, there is little evidence, as Méndez told me, that they will lead to much if any change. As she continued to wait patiently in the supermarket line, she said, “We’re not fascists. Do you see any fascists here? We just want food to feed our kids.”