“Doing business in post-Hugo Chávez Venezuela is not for the faint of heart,” writes AP’s Fabiola Sanchez:
Thousands of companies suffer under currency controls that all but deny them the U.S. dollars they need to import vital items into this oil-rich country, from food to cars to spare parts — even gasoline. Venezuelan firms must sell their wares at state-controlled prices that don’t reflect the 22 percent inflation rate, the highest in Latin America. Even Venezuela’s socialist government admits the controls don’t work — but its attention is focused on the April 14 election to replace the late President Hugo Chávez .
It’s a largely improvised economic policy that, despite oil earnings, has turned people’s lives upside down and produced shortages of flour, coffee, butter and medicines. It’s also a mess that will immediately challenge whoever becomes the president of this 28 million-person country.
Neither Chávez successor Nicolas Maduro nor opposition candidate Gov. Henrique Capriles has proposals to resolve the crisis, said Alejandro Gutierrez, an economics professor at the University of the Andes.
“We are facing a transition situation, and they are going to wait until this situation is cleared up,” Gutierrez said.
Only Capriles has suggested a possible way of injecting more dollars into the economy: Ending subsidized oil exports to Cuba that began under Chávez .
The late leader had aided his allies by providing oil at preferential terms to more than a dozen countries in Latin America and the Caribbean. Cuba receives Venezuelan oil worth around $3.2 billion a year, estimates Jorge Pinon, a University of Texas energy analyst. Nicaragua gets about $1.2 billion worth of oil, according to economist Nestor Avendano.
“No one thinks that Capriles can radically reduce crime overnight or transform over half a century of the kind of ‘resources curse’ that has left Venezuelan civil society and its non-oil economy atrophied,” note Suffragio analysts:
But by reducing the worst corruption of the chavismo era, by allaying the basketcase business environment in Venezuela and by transforming Chávez’s misiones and other social welfare programs from a slapdash system of handouts into a more sustainable and lasting social safety net, a Capriles presidency could wind up solidifying the gains of Chávez’s revolution in a more enduring manner than Maduro ever could.
Contrary to suggestions that Chávez pursued a radically pro-poor agenda, The Economist (above) recently noted that Venezuela’s reductions in poverty were in line with general reductions in poverty across Latin America.