Venezuela’s Economy Suffers as Import Schemes Siphon Billions
CARACAS, Venezuela — The weed whackers were $12,300. Each.
Then there was the $1.8 million machinery to kill and gut chickens. When the police checked it, they found a worthless jumble of rusted scrap metal.
And there were the businessmen who collected $74 million to ship chemicals and other products from abroad — but sent almost nothing in return.
For years, Venezuela has had a hole in its pocket, a very big hole.
The government’s complex currency system has led to exorbitant schemes by importers, who wildly inflate the value of goods brought into the country to grab American dollars at rock-bottom exchange rates. Sometimes, they fake the shipments altogether and import nothing at all.
Then they just pocket the dollars that the government provides, or sell some of the money for a gargantuan profit on the soaring black market here for American currency.
“It’s scandalous,” said Víctor Álvarez, a leftist economist and government minister under Hugo Chávez, the former president who died in 2013. “It’s like the robbery that our people were subject to in the time of the conquest and the colonies, when the gold and silver were carted off by the ton.”
During the boom years of high oil prices, little was done to stop the billions that disappeared through corruption and fraud.
But today, with the country in a deep economic crisis marked by recession, crippling inflation and shortages of goods like milk, condoms and shampoo, the missing billions are particularly conspicuous.
Many store shelves lie bare, and people wait in line for hours to buy basics, a crisis made much worse by the years of hemorrhaging dollars through import fraud.
“Taking into consideration the behavior of oil prices, these are resources that we could use right now,” said Ricardo Sanguino, a governing party legislator appointed by President Nicolás Maduro to lead a commission to investigate the fraud.
Estimates of the import fraud vary, but a former president of Venezuela’s central bank, Edmée Betancourt, has said that up to $20 billion of the $59 billion that went to product imports in 2012 disappeared through fraudulent transactions.
The international community has failed to take action. This paralysis means we will see the country explode in riots and civil war. Meanwhile, the looting continues, and poverty increases. Today, over 50 % of the Venezuelan people live in poverty. A significant portion of those are in absolute misery, extreme poverty, or even worse, they languish in overcrowded jails.