"Ferrari" and hungry children: the collapse of the socialist vision

After years of extreme poverty, some Venezuelans live in luxury while others barely survive. The country, which is going through numerous difficulties, is increasingly becoming the country of the haves and the have-nots.

In one store in the capital, Prada handbags and 110-inch televisions are sold for $115. Not far from it, a representative office of "Ferrari" was opened, while a new restaurant allows well-to-do guests to enjoy a meal sitting on top of a huge crane with a view of the city.

"When was the last time you did something for the first time?" asks the host of the restaurant over the microphone to the excited guests as they sing the song of the band "Coldplay".

This is neither Dubai nor Tokyo, but Caracas, the capital of Venezuela, where the socialist revolution once promised equality and the end of the bourgeoisie.

Venezuela's economy collapsed nearly a decade ago, causing a massive outflow of migrants in one of the worst crises in modern Latin American history. Now, there are signs that the country is entering a new, bewildering normal, in which everyday products are more readily available, poverty is shrinking - and the number of rich is surprisingly growing.

As a result, the socialist government of authoritarian President Nicolas Maduro presides over an improving economy while the opposition struggles to unify and the United States eases oil sanctions that have been crippling state finances.

A huge part of the population still lives in difficult conditions, and although the hyperinflation that destroyed the economy has been mitigated, prices continue to triple annually, and the inflation rate is among the worst in the world.

However, after the government eased restrictions on the use of US dollars to address Venezuela's economic collapse, business activity is returning to what was once the region's richest country.

As a result, Venezuela is increasingly a country of those who have plenty and those who barely survive, and is one of the countries with the greatest social disparities, according to data from the Enkovi survey, conducted by the prestigious Institute for Economic and Social Research at the Catholic University " Andres Belo" in Caracas.

Maduro boasted that the economy grew by 15 percent last year compared to the previous year, and that tax revenues and exports also rose - although some economists stress that the economic growth is misleading because it followed years of huge declines.

For the first time in seven years, poverty is on the decline: half of the population lives in poverty, which is less than 65 percent in 2021, the Enkovi survey showed.

However, the research also found that the richest Venezuelans are 70 times richer than the poorest, which ranks this country among the countries in Africa that have the highest rate of inequality in the world.

Access to US dollars is often limited to people with ties to the government or those involved in illegal businesses. A study conducted last year by Transparency International found that illegal activities such as smuggling of food, diesel fuel, people and gas represent over 20 percent of the Venezuelan economy.

Although some parts of Caracas are teeming with residents who can afford more and more imported products, one in three children in Venezuela suffers from malnutrition, according to data from the National Academy of Medicine for the period from May 2022.

Around seven million Venezuelans have simply given up and left their homeland since 2015, according to United Nations data.

Despite the Maduro administration's new slogan - "Venezuela is fixed", many survive on just one dollar a day, while public sector employees took to the streets to protest low wages.

While certain parts of Caracas are teeming with residents who can afford luxury imports, one in three children in Venezuela suffers from malnutrition.

"I have to rethink everything," said Maria Rodríguez, an analyst at a medical laboratory in Cumani, a small town 250 miles east of the capital, explaining that to pay for food and school fees for her daughter, she has to work two jobs and while selling cosmetic products and borrowing money from relatives.

Irelis Jimenez, a preschool teacher in San Diego de los Altos, half an hour's drive from Caracas, joked that her $10 a month salary means "food for today and hunger for tomorrow." (A restaurant that allows guests to dine 45 meters above the ground charges $140 for meals).

Despite those difficulties, Maduro, whose administration did not respond to requests for comment, has focused on promoting indicators of the country's economic growth.

"The patient seems to be recovering, pausing, walking and running," he said in a recent speech, comparing Venezuela to a suddenly cured hospital patient.

The change in the United States' strategy toward Venezuela has partly benefited his administration.

In November, after the Maduro administration agreed to resume talks with the opposition, the Biden administration issued Chevron a six-month, renewable license to drill for oil in Venezuela. The deal stipulates that profits will be used to pay off debts owed to Chevron by the Venezuelan government.

And although the United States still prohibits purchases from the state oil company, this country has increased the sale of oil that goes to China on the black market via Iran, according to energy experts.

Maduro, too, is emerging from isolation in Latin America as a regional shift to the left has led to a thaw in relations. Colombia and Brazil, headed by left-wing leaders, have re-established diplomatic relations. The new president of Colombia, Gustavo Petro, is particularly fond of Maduro, he met with him on several occasions and concluded an agreement on the import of Venezuelan gas.

With presidential elections scheduled for next year and the opposition parallel government recently dissolved, Maduro is increasingly confident about his political future.

With last year's inflation rate of 234 percent, Venezuela was second in the world, after Sudan, but that pales in comparison to the hyperinflation of 2019, when the inflation rate exploded to 300 percent, World Bank data showed.

As prices and production rose, Venezuela also began to see a rise in oil revenues, its key export. The country's output of nearly 700.000 barrels a day is higher than last year, although it was double 2018 and four times 2013, said Francisco J. Monaldi, a Latin American energy policy fellow at Rice University.

Access to US dollars is often limited to people with ties to the government or those involved in illegal businesses. Research shows that illegal activities such as smuggling of food, diesel fuel, people and gas represent over 20 percent of the Venezuelan economy.

The Venezuelan government's decision to ease restrictions on the use of dollars has made it easier for some people to use the money they receive from abroad. In many cases, no foreign exchange actually takes place. Wealthy Venezuelans are increasingly using digital apps like "Zele" to use dollars in accounts outside the country to pay for products and services. Still, US officials call Venezuela's economic picture somewhat illusory.

"They've adapted to a lot of problems after the sanctions were put in place through dollarization," said Mark A. Wells, deputy assistant secretary of state, "so over time it's starting to seem like they're able to achieve a status that essentially helps the elites there." , but the poor are still very, very poor". "So it's not that everything is much more stable and better there," Wells added.

Maduro took office nearly a decade ago and was last elected in 2018 in an election widely seen as fraudulent and the results of which were rejected by most of the international community.

Widespread belief that Maduro won by fraud led the National Assembly to declare the presidency vacant and use a constitutional provision to appoint a new leader, Juan Guaidó, a former leader of the student movement. His appointment as a legitimate leader is recognized by dozens of countries, including the United States.

But as a parallel government figure who had oversight of frozen international financial accounts, he had no power in the country.

In December, the National Assembly ousted Guaidó and formed a transitional government, in a move many observers saw as a boost to Maduro. A number of opposition figures have announced they will run in elections scheduled for October, although many political analysts are skeptical that Maduro will allow a credible vote.

"Maduro today has an opposition that is divided and scattered," said Guaido in an interview. “He also has the majority of people against him. He continues to be a dictator without popular support, with a ruined economy of his own fault, with professors, medical technicians, elderly people and workers protesting as we speak".

Even people like Eugenia Monsalves, who owns a medical supply company in Caracas and has two daughters in private schools, resent the direction the country is headed. Although she belongs to the upper middle class, she says she has to be careful about how she spends her money.

She occasionally goes out to restaurants and has visited some of the most luxurious shops in town, but she hasn't bought anything.

"The vast majority of Venezuelans are in a complicated, very complicated situation," she said.

Monsalves believes that the Maduro administration should go, but she is concerned that the best candidates have been exiled or disqualified. The opposition, she says, has not gathered around what it needs most: a leader who can move the electorate.

"That's what I want the most, like many other Venezuelans," she said. "However, it is true that without a clear vision of the opposition, a clear platform of a single candidate, it will be difficult".

Translation: N. Bogetić