Caracas Chronicles

Photo: Efecto Cocuyo, retrieved.

“I’m gonna close up shop now and what little stock I have I’m going to put in storage, so I can reopen in January,” says José Suárez, bracing for a darker future. Providers told him they won’t keep sending him dry merchandise because they couldn’t import enough.

Closing his liquor store/thrift shop earlier this month, he placed a sign at the front: “Collective leave.”

This sight is in today’s downtown Caracas and the Sabana Grande Boulevard, a classic Venezuelan hub if you’re looking for holiday gifts. Today, people walk by in crestfallen groups by forlorn stores, a Dickensian postcard of socialist heartbreak. “People leave the same way they came in,” a shopkeeper says. “There’s no movement, just bad business.”

Instead of songs and sales at great value, we have lines outside the stores “fiscalized” by the government, full of hopefuls trying to buy shoes with less than Bs.S. 2,000. People hug themselves on one of our coldest Decembers in recent memory, with all conversations dancing around the same thing: we wanted Christmas, and we got queues.

The Venezuelan economy is a risky environment, hostile to importers, with a government that intimidates and forces shop owners to sell products below their cost.

“I imported merchandise worth $10,000,” says Ismael Ramos, who runs a shoe store in downtown Caracas. “When I recovered the investment in bolivars, I couldn’t replenish the stocks. I buy with black market dollar, I’ve never been to a DICOM auction. It’s very hard to replenish inventories like I used to.”

Ramos’s showcases are half-empty. The vacant spaces are filled with decorative shoe boxes, to try and give the impression of a living store.

“The Chamber of Commerce of La Guaira estimates a decline of over 89% compared to 2017, due to recession and the lack of foreign currency,” says Consecomercio chairwoman, María Carolina Uzcátegui.

We wanted Christmas, and we got queues.

Meaning, not many business owners got into the official auctions, and the gap set by the black market dollar (which defines transactions in the actual Venezuelan market) and hyperinflation starve any market. According to estimates by the Economic Commission for Latin America and the Caribbean (Cepal) presented in their report on the region’s International Trade Outlook for 2017, Venezuelan imports dropped by 21.8% compared to 2016.

Juan Pablo Olalquiaga, chairman of the Venezuelan Federation of Industry, explains reality through numbers: according to a survey to the industrial sector, 71% of companies say their investments decreased; 26% said that they kept their levels and only 3% say theirs increased.

52% of respondents say they won’t make any more investments for the remainder of 2018, while 88% of business owners say the order backlog dropped; 72% say they can only guarantee work for the coming three months, a figure that plummets to less than a month for the small industry.

The imports regime

A week ago, when the ghost of shop crackdowns was expected to return, the government launched its Merry Christmas Plan.

Nine million pieces of clothing and shoes were spread across the national territory. Stores in downtown Caracas and Sabana Grande got single-model socks, underwear, trousers, sheets, sportswear, blouses and shoes.

Because, see, the regime didn’t raid stores as in previous years, they just brought cheaper merchandise that leaves no earnings, imposing another flavor of disloyal competition on the market.

“This is an agreement made with shopkeepers to guarantee their inventory,” says a state official pasting stickers on the doors of one of the few department stores still active in the country. “This store complies with the policies of access and services implemented by the bolivarian government,” the sticker reads.

The Venezuelan economy is a risky environment, hostile to importers, with a government that intimidates and forces shop owners to sell products below their cost.

For María Carolina Uzcátegui, the operation isn’t just that. “It’s like what happened in the Nazi era, when dissident homes and stores were marked so the state gained full economic control. There won’t be any changes without a radical policy change, and if hyperinflation continues to be out of control. There’s a 25% increase in monetary mass printing; the National Assembly estimated inflation for November at 140% and, by the end of the tax exercise this year, the annual rate could be 2,000,000%.”

If there are no import bump for the Christmas season, the most important of the year, then 2019, according to Uzcátegui, will start with severe shortages.

“The government would have to do the opposite of what they’ve been doing,” says Uzcátegui, meaning the shutdown of exchange and price controls, the encouragement of national production in the public and private areas, and a frank discussion with the business guilds to find agreements that set a new course for the country. None of that is likely to happen any time soon.

“Merry Christmas? what right you have to be merry? You’re poor enough!” wrote Dickens in 1843, and how his words sting today for store owners with no merchandise, and buyers with no money, in a country desperate for a hope it cannot afford.