Handouts offer little relief in Venezuela’s food crisis

Posted on November 16, 2016

Tamara Viana feels the socialist revolution deserves a chance, despite Venezuela’s worsening crisis of food shortages, political repression and crippling price rises.

Inside a school in one of Latin America’s largest shanty towns, near a mural of late Venezuelan leader Hugo Chávez, Ms Viana tries to comfort the faithful. “Rest assured the government is doing everything it can to deliver us food supplies,” she tells an audience of loyal chavistas.

While a Vatican-mediated dialogue between the embattled government and the opposition seeks a way out of the deadlock amid growing scepticism, President Nicolás Maduro is ramping up a bid for hearts and minds.

Ms Viana is in charge of registering her revolutionary neighbours into a government initiative called the Local Committees for Supply and Production, or CLAPs, that deliver subsidised basic goods to the poor. 

Polls show most Venezuelans believe the country is mismanaged as they confront daily shortages of food and medicine, rising crime and triple-digit inflation. Meanwhile, Mr Maduro has enraged opponents by blocking a constitutional referendum that could have ended his rule. 

Launched earlier this year, the CLAPs have meant some relief for Venezuelans who have to spend days outside stores queueing to buy whatever remains of basic supermarket items.

“People in the queues curse Maduro, say the opposition should take over and erase all traces of Chávez’s legacy,” says Ms Viana. “As things are more organised people are calmer. They now know they will get something every certain amount of days.” 

Despite the chaos on the streets, Mr Maduro maintains a lock on economic life which allows him to cling to power. The state controls the bulk of foreign earnings through oil sales, its main lifeline, along with all hard currency imports via a complex import licensing scheme.

“The CLAP bags are just enough for a few days, but at least I know that every two weeks or so I will receive my bag and won’t be wasting entire days rummaging for stuff,” says Josefina Leonett, one of the scheme’s beneficiaries who says she has lost 13kg in the past year due to hunger. “The CLAPs are like a decompressor of tension.”

© Bloomberg

Furthermore, border states run by loyal governors have quietly relaxed foreign exchange controls to private importers, opening a backdoor to goods, albeit at unaffordable prices.

According to pollster Datanálisis, in Caracas the level of scarcities has dropped nine points since April to 73 per cent. Powdered milk has reappeared on supermarket shelves, even if at prices beyond the reach of all but the moneyed classes. 

“When I first walked in and saw powdered milk I almost cried with emotion,” said Liliana Gorosabel, an accountant and mother of two in a supermarket in a middle- class quarter of Caracas. That milk was priced at 5,000 bolívars this month, or roughly a fifth of a minimum wage, versus 9,000 bolívars for a CLAP bag filled with 14kg of basic goods.

With rocketing prices and demand for goods rising as Christmas approaches, such measures can only go so far. Venezuela imports almost everything it needs, paid for with shrinking oil revenues. But in the first nine months of the year those are a third of what they were in the same period in 2013, the year Mr Maduro took office.

Additionally, in defiance of official pegs, the bolívar has tanked on the parallel market to almost 2,000 per US dollar. “This system of importing goods under the table is unsustainable [and] it is also highly discriminatory,” warns Asdrúbal Oliveros, an economist with consultancy Ecoanalítica.

Shrugging off criticisms from Provea, a human rights watchdog, which called the scheme a “food apartheid” that mainly feeds socialist loyalists, Mr Maduro has now announced he will broaden the scheme. The measures may just be enough to allow the government to maintain control while it talks with its enemies.

Following a second round of negotiations brokered by the Vatican and the Union of South American Nations, government and opposition negotiators say they have agreed on a road map to resolve differences within a “constitutional framework”.

But as the government seems unwilling to consider early elections and pressure to release jailed dissidents grows, the talks risk further angering many in the opposition. The question is how much power each side has. The state controls the courts, the military, and the CLAPs. The opposition has foreign backing and has gained more popular support.

It also has the legislature which, despite being undermined by judges, is not entirely toothless when it comes to foreign borrowing. China, which has lent $65bn to Venezuela, has been meeting the opposition and sources say, Beijing insists the government needs legislative approval to borrow.

“Russia and China have a clear stake in the talks given their substantial investment in the country,” reads the latest risk analysis report by Caracas Chronicles, a website run by government critics. “Trump’s election could lead the US to disengage from the Venezuelan crisis, increasing Chinese and Russian influence.”

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