May
17
2013
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In Case You Missed It…Articles Roundup Week of 5/13/13

This week: Shortages prevent Venezuelans from buying basic foodstuffs, from milk to flour to cooking oil. Foreign direct investment plummets The widespread shortages caused by Maduro’s socialist policies have now choked off the supply of a new household item: toilet paper; To address rampant crime, Maduro sends Venezuela’s military into high-violence areas. Analysts worry that Venezuela, entirely dependent on oil revenues, may turn into a failed state when oil prices inevitably drop. Desperate for a scapegoat on which to blame Venezuela’s economic woes, Maduro accuses Venezuela’s largest food company, Polar, of hoarding.  Polar’s CEO convincingly rebuts these allegations and offers advice on how the government might work with the private sector to combat shortages. A conciliatory Maduro begins to show signs of extending an olive branch to the private sector.

 

Eclac reports 15% drop in foreign investment in Venezuela in 2012, El Universal

Foreign investment in Venezuela fell 15% in 2012, said the Economic Commission for Latin America and the Caribbean (Eclac) of the United Nations in its report “Foreign Direct Investment in Latin America,” released on Tuesday. The regional agency report highlighted that in 2012, Venezuela received USD 3.21 billion versus 3.77 billion a year earlier. In this way, Ecuador joined Venezuela, Nicaragua, Mexico, Bahamas, Granada, Saint Kitts and Saint Lucia as the only countries in the region where foreign investment has dropped. Thanks to the positive performance of other countries, on average, Latin America and the Caribbean in 2012 hit a new record amount of direct foreign investment of  USD 173.36 billion (6.7% higher than in 2011), despite the external context of declining capital flows, Eclac reported in a press release.

How food shortages are dividing Venezuela, BBC News

Some 30 people are queuing outside a state-run supermarket in the 23 de Enero neighbourhood in Caracas. A woman walks out with a bag in her hands. “There is milk!” she says enthusiastically, much to the delight of the other customers. Milk is one of the products that are not easily available in Venezuela. Others include toilet paper, sugar, cooking oil and the cornflour used to make arepas, Venezuela’s national dish. According to data from Venezuela’s Central Bank, the scarcity index rose to 21% last month, the highest since the bank started tracking the measure in 2009. This means that out of 100 goods, 21 are not available.

Roiled over rolls: No toilet paper has Venezuelans fuming, USA Today

Gil, a 43-year-old Venezuelan housewife, spent two days looking for toilet paper in this city of 150,000 in the central state of Aragua. She found paper towels and napkins but no toilet paper. Gil, a 43-year-old Venezuelan housewife, spent two days looking for toilet paper in this city of 150,000 in the central state of Aragua. She found paper towels and napkins but no toilet paper.”Call me a counterrevolutionary but there are certain things that are essential and toilet paper is one of them,” she says, staring at the bare shelves where toilet tissue used to be stocked at the Morichal supermarket, one of the city’s largest. “What do they expect us to use? Banana leaves?”

 

Venezuela’s military enters high-crime slums, Miami Herald

Stern-looking soldiers clutching assault rifles wave down the beat-up Chevy Caprice entering this sprawling slum on the outskirts of Caracas. Flashlights in his face, the driver steps out and places his hands on the roof while the soldiers frisk him for drugs and weapons. He’s clean, and a hand gesture from the commanding officer sends him off into the maze of ramshackle homes that is Petare, one of the most dangerous parts of Venezuela’s notoriously crime-infested capital.

The People of Venezuela Are in Dire Need of Toilet Paper, New York

The AP brings us news that Venezuela is having a serious humanitarian crisis, one with which anyone who’s ever made a frantic late-night run to the corner bodega can sympathize. Namely, the entire country is running out of toilet paper. Venezuela’s socialist government has promised to import 50 million rolls of toilet paper (or maybe 25 million double-rolls?) and 760,000 pounds of food to make sure all citizens can eat and poop in comfort once more. “The revolution will bring the country the equivalent of 50 million rolls of toilet paper,” the country’s commerce minister said. “We are going to

Venezuela remains mired in a political and economic crisis that shows no signs of letting up. But while street protests, soaring inflation, scarcity, and skyrocketing crime are massive headaches, the government can count on still-high oil prices to soothe the pain a bit. The question that begs asking is: How will Venezuela maintain stability if oil prices drop?

Venezuelan food firm tells Maduro government to boost output, Reuters

Venezuela’s top food producer, Empresas Polar, on Monday challenged the country’s socialist government to boost output of basic staples and ease nagging product shortages, rejecting accusations it is hoarding products to destabilize the economy. Food supplies have become increasingly unsteady since late last year. Shoppers struggle to find corn, wheat flour and basic medicines – a constant complaint that could become a political liability for President Nicolas Maduro. The president over the weekend said Polar, which makes products from beer to detergent, was intentionally cutting output to leave supermarket shelves bare and weaken his government through “economic war.” Polar President Lorenzo Mendoza, in a combative press conference, said the product shortages have been partly spurred by inefficiency of state-run companies nationalized during the 14-year-rule of late socialist leader Hugo Chavez.

Caracas Offers Peace to Private Sector, Wall Street Journal

New President Nicolás Maduro, trying to shore up Venezuela’s economy amid growing shortages of everything from corn flour to toilet paper, has extended an olive branch to the country’s private sector, in particular the country’s largest food maker. It is a surprising turnaround given the antics of his predecessor, the late populist Hugo Chávez, who regularly threatened to nationalize the food maker, Empresas Polar SA, and accused it of hoarding products in order to sabotage his self-styled revolution.

 
Apr
27
2012
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In Case You Missed It… Articles Roundup Week of 4/27/12

This week: Venezuela’s stocks rise a staggering 99 percent on the speculation that Chávez’s health is rapidly deteriorating; Venezuelans go 11 days without a public statement or appearance by their president; Chávez, meanwhile, continues to shuttle back and forth from Cuba for treatment; he runs the government via twitter during his absences; a New York Times opinion writer reports that the Chávez executive branch had “the last word” on every judicial decision rendered by Venezuela’s Supreme Court; that, along with continuing allegation of bribery by drug lords, keeps the issue of Venezuela’s public-sector corruption in the news. Meanwhile, the World Bank director warns that Venezuela will suffer economically if and when oil prices fall; finally, inflation continues to soar and Venezuelans face shortages of even the most basic goods.

Chavez’s mysterious ailment fuels a run on Venezuelan stocks, The Washington Post

What is the hottest global market so far in 2012? How about socialist Venezuela — where stocks rose 99 percent between Jan. 1 and this week.

Chavez: he’s back! (again), The Financial Times

And… he’s back – again. But after a deafeningly silent 11-day absence in Havana, this time Hugo Chávez returned on Thursday from his radiotherapy to greater speculation than ever that his cancer is more serious than he has so far let on.

Venezuela’s Chavez returns home, CNN

Venezuelan President Hugo Chavez returned home early Thursday after receiving cancer treatments in Cuba. Before landing, Chavez released a statement about coming back to his homeland.

Venezuelan politics in 140 characters or less, Foreign Policy

“Hello Venezuela! I inform you that I approved 1.95 billion bolívars for state and local governments, coming from extraordinary income! Onward!” The above is a rough translation of a tweet written by Venezuelan president Hugo Chávez on April 17.

Hugo Chávez & The Supremes, The New York Times

It happened every week. On Friday mornings, Venezuela’s top prosecutor, the justice minister, the solicitor general, assorted Supreme Court justices, police chiefs and top officials would meet in the vice president’s office to review politically sensitive court cases and decide how they should be handled.

Venezuela’s judiciary: Whistle-blown, The Economist

An impeached judge says the courts are subservient and corrupt. When Hugo Chávez became Venezuela’s president, in 1999, he promised an overhaul of the country’s notoriously venal judiciary. But according to charges made by a recently dismissed supreme-court justice, the flaws Mr Chávez vowed to rectify are nothing compared with what has transpired under his rule.

The Colombian-Venezuelan border: Pick your poison, The Economist

Drug gangs now dominate where guerrillas once reigned. In the last days of Álvaro Uribe’s presidency in 2010, Colombia accused neighbouring Venezuela of letting the FARC and ELN, the two main leftist guerrilla groups, maintain camps along its border. In response Hugo Chávez, Venezuela’s president, recalled his ambassador and skipped the inauguration of Mr Uribe’s successor, Juan Manuel Santos.

Accused drug dealer says paid off fugitive Venezuela judge, The Chicago Tribune

An accused Venezuelan drug lord wanted by the United States said on Wednesday he made monthly payments to a former judge who recently embarrassed President Hugo Chavez with accusations of widespread manipulation in the OPEC nation’s justice system.

World Bank director: Venezuela is not prepared for a fall in oil prices, El Universal

A World Bank director warned Tuesday that not all Latin American countries are equally prepared for an eventual fall in the price of commodities, because some of them, including Venezuela, acted “like the grasshopper of the Aesop fable” and “spent their time singing in the summer.”

With Venezuelan Food Shortages, Some Blame Price Controls, The New York Times

By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries. “Whatever I can get,” said Katherine Huga, 23, a mother of two, describing her shopping list. She gave a shrug of resignation.

 
Apr
23
2012
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With Venezuelan Food Shortages, Some Blame Price Controls

The New York Times
By William Neuman
April 20, 2012

jp caracas articleLarge With Venezuelan Food Shortages, Some Blame Price Controls

By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries.

“Whatever I can get,” said Katherine Huga, 23, a mother of two, describing her shopping list. She gave a shrug of resignation. “You buy what they have.”

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.

Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil.

The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf.

Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.”

At the heart of the debate is President Hugo Chávez‘s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find.

“Venezuela is too rich a country to have this,” Nery Reyes, 55, a restaurant worker, said outside a government-subsidized store in the working-class Santa Rosalía neighborhood.

“I’m wasting my day here standing in line to buy one chicken and some rice.”

Venezuela was long one of the most prosperous countries in the region, with sophisticated manufacturing, vibrant agriculture and strong businesses, making it hard for many residents to accept such widespread scarcities. But amid the prosperity, the gap between rich and poor was extreme, a problem that Mr. Chávez and his ministers say they are trying to eliminate.

They blame unfettered capitalism for the country’s economic ills and argue that controls are needed to keep prices in check in a country where inflation rose to 27.6 percent last year, one of the highest rates in the world. They say companies cause shortages on purpose, holding products off the market to push up prices. This month, the government required price cuts on fruit juice, toothpaste, disposable diapers and more than a dozen other products.

“We are not asking them to lose money, just that they make money in a rational way, that they don’t rob the people,” Mr. Chávez said recently.

But many economists call it a classic case of a government causing a problem rather than solving it. Prices are set so low, they say, that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest.

In January, according to a scarcity index compiled by the Central Bank of Venezuela, the difficulty of finding basic goods on store shelves was at its worst level since 2008. While that measure has eased considerably, many products can still be hard to come by.

Datanálisis, a polling firm that regularly tracks scarcities, said that powdered milk, a staple here, could not be found in 42 percent of the stores its researchers visited in early March.

Liquid milk can be even harder to find.

Other products in short supply last month, according to Datanálisis, included beef, chicken, vegetable oil and sugar. The polling firm also says that the problem is most extreme in the government-subsidized stores that were created to provide affordable food to the poor.

But with inflation so crippling, many shoppers at those stores said the inconvenience was worth it.

“It’s an enormous help,” said Ana Lozano, 62, a retiree who takes in ironing to supplement her pension, who was waiting outside the Santa Rosalía grocery. “That’s why there’s such a long line.”

The government appears keenly aware of the twin threats of shortages and inflation as it prepares for the October election in which Mr. Chávez is seeking a new six-year term. The price controls have been defended in government advertisements and accompanied by repeated threats from Mr. Chávez to nationalize any company that cannot keep its products on the market.

Vice President Elías Jaua has warned of a media campaign to frighten Venezuelans into hoarding, which would provoke artificial shortages. Government advertisements urge consumers not to succumb to panic buying, using a proverbial admonition: Bread for today is hunger for tomorrow.

Francisco Rodríguez, an economist with Bank of America Merrill Lynch who studies the Venezuelan economy, said the government might score some political points with the new round of price controls. But over time, he argued, they will spell trouble for the economy.

“In the medium to long term, this is going to be a disaster,” Mr. Rodriguez said.

The price controls also mean that products missing from store shelves usually show up on the black market at much higher prices, a source of outrage for many. For government supporters, that is proof of speculation. Others say it is the consequence of a misguided policy.

Emilio Ortiz, 52, a shop owner, said he could buy sugar and powdered milk from his distributors only once last year. He gets cooking oil once a month, but only about half of what he requests. He also said that profits were so low on controlled products that he must raise other prices to compensate.

One of his customers asked if the store had Harina Pan, which is considered the quintessential local brand of flour to use in making arepas, the signature corn cakes that are a staple of the Venezuelan diet.

“There isn’t any,” Mr. Ortiz said. It would be like an American store not having any Coca-Cola.

The customer asked if other stores nearby carried it.

“You can’t find it,” Mr. Ortiz said glumly.

If there is one product that Venezuela should be able to produce in abundance it is coffee, a major crop here for centuries. Until 2009, Venezuela was a coffee exporter, but it began importing large amounts of it three years ago to make up for a decline in production.

Farmers and coffee roasters say the problem is simple: retail price controls keep profits close to or below what it costs farmers to grow and harvest the coffee. As a result, many do not invest in new plantings or fertilizer, or they cut back on the amount of land used to grow coffee. Making matters worse, the recent harvest was poor in many areas.

A group representing small- to medium-size roasters said last month that there was no domestic coffee left on the wholesale market — the earliest time of year that industry leaders could remember such supplies running out. The group announced a deal with the government to buy imported beans to keep coffee on store shelves.

Similar problems have played out with other agricultural products under price controls, like lags in production and rising imports for beef, milk and corn.

Waiting in line to buy chicken and other staples, Jenny Montero, 30, recalled how she could not find cooking oil last fall and had to switch from the fried food she prefers to soups and stews.

“It was good for me,” she said drily, pushing her 14-month-old daughter in a stroller. “I lost several pounds.”

María Eugenia Díaz contributed reporting.

To read this post on The New York Times, please click here.

By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries.

“Whatever I can get,” said Katherine Huga, 23, a mother of two, describing her shopping list. She gave a shrug of resignation. “You buy what they have.”

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.

Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil.

The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf.

Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.”

At the heart of the debate is President Hugo Chávez‘s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find.

“Venezuela is too rich a country to have this,” Nery Reyes, 55, a restaurant worker, said outside a government-subsidized store in the working-class Santa Rosalía neighborhood.

“I’m wasting my day here standing in line to buy one chicken and some rice.”

Venezuela was long one of the most prosperous countries in the region, with sophisticated manufacturing, vibrant agriculture and strong businesses, making it hard for many residents to accept such widespread scarcities. But amid the prosperity, the gap between rich and poor was extreme, a problem that Mr. Chávez and his ministers say they are trying to eliminate.

They blame unfettered capitalism for the country’s economic ills and argue that controls are needed to keep prices in check in a country where inflation rose to 27.6 percent last year, one of the highest rates in the world. They say companies cause shortages on purpose, holding products off the market to push up prices. This month, the government required price cuts on fruit juice, toothpaste, disposable diapers and more than a dozen other products.

“We are not asking them to lose money, just that they make money in a rational way, that they don’t rob the people,” Mr. Chávez said recently.

But many economists call it a classic case of a government causing a problem rather than solving it. Prices are set so low, they say, that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest.

In January, according to a scarcity index compiled by the Central Bank of Venezuela, the difficulty of finding basic goods on store shelves was at its worst level since 2008. While that measure has eased considerably, many products can still be hard to come by.

Datanálisis, a polling firm that regularly tracks scarcities, said that powdered milk, a staple here, could not be found in 42 percent of the stores its researchers visited in early March.

Liquid milk can be even harder to find.

Other products in short supply last month, according to Datanálisis, included beef, chicken, vegetable oil and sugar. The polling firm also says that the problem is most extreme in the government-subsidized stores that were created to provide affordable food to the poor.

But with inflation so crippling, many shoppers at those stores said the inconvenience was worth it.

“It’s an enormous help,” said Ana Lozano, 62, a retiree who takes in ironing to supplement her pension, who was waiting outside the Santa Rosalía grocery. “That’s why there’s such a long line.”

The government appears keenly aware of the twin threats of shortages and inflation as it prepares for the October election in which Mr. Chávez is seeking a new six-year term. The price controls have been defended in government advertisements and accompanied by repeated threats from Mr. Chávez to nationalize any company that cannot keep its products on the market.

Vice President Elías Jaua has warned of a media campaign to frighten Venezuelans into hoarding, which would provoke artificial shortages. Government advertisements urge consumers not to succumb to panic buying, using a proverbial admonition: Bread for today is hunger for tomorrow.

Francisco Rodríguez, an economist with Bank of America Merrill Lynch who studies the Venezuelan economy, said the government might score some political points with the new round of price controls. But over time, he argued, they will spell trouble for the economy.

“In the medium to long term, this is going to be a disaster,” Mr. Rodriguez said.

The price controls also mean that products missing from store shelves usually show up on the black market at much higher prices, a source of outrage for many. For government supporters, that is proof of speculation. Others say it is the consequence of a misguided policy.

Emilio Ortiz, 52, a shop owner, said he could buy sugar and powdered milk from his distributors only once last year. He gets cooking oil once a month, but only about half of what he requests. He also said that profits were so low on controlled products that he must raise other prices to compensate.

One of his customers asked if the store had Harina Pan, which is considered the quintessential local brand of flour to use in making arepas, the signature corn cakes that are a staple of the Venezuelan diet.

“There isn’t any,” Mr. Ortiz said. It would be like an American store not having any Coca-Cola.

The customer asked if other stores nearby carried it.

“You can’t find it,” Mr. Ortiz said glumly.

If there is one product that Venezuela should be able to produce in abundance it is coffee, a major crop here for centuries. Until 2009, Venezuela was a coffee exporter, but it began importing large amounts of it three years ago to make up for a decline in production.

Farmers and coffee roasters say the problem is simple: retail price controls keep profits close to or below what it costs farmers to grow and harvest the coffee. As a result, many do not invest in new plantings or fertilizer, or they cut back on the amount of land used to grow coffee. Making matters worse, the recent harvest was poor in many areas.

A group representing small- to medium-size roasters said last month that there was no domestic coffee left on the wholesale market — the earliest time of year that industry leaders could remember such supplies running out. The group announced a deal with the government to buy imported beans to keep coffee on store shelves.

Similar problems have played out with other agricultural products under price controls, like lags in production and rising imports for beef, milk and corn.

Waiting in line to buy chicken and other staples, Jenny Montero, 30, recalled how she could not find cooking oil last fall and had to switch from the fried food she prefers to soups and stews.

“It was good for me,” she said drily, pushing her 14-month-old daughter in a stroller. “I lost several pounds.”

María Eugenia Díaz contributed reporting.

To read this article on The New York Times, please click here.