The Wall Street Journal has published an article in which it claims that U.S. prosecutors are investigating a number of Venezuelan high-ranking officials, including Diosdado Cabello, for turning Venezuelan into “a global hub” for drug trafficking and money laundering. According to the article, the Drug Enforcement Administration and federal prosecutors are “far along” in their investigation, which they have conducted with the help of informants and defectors from the Venezuelan government.

Diosdado Cabello is singled out as being “a main target” of the investigation. A justice department official told the newspaper:

There is extensive evidence to justify that he is one of the heads, if not the head, of the cartel.

The article claims that the investigation began in recent years with “an explosion in drug trafficking” through Venezuela, which the article claims is a result of Colombian drug traffickers shifting their operations to the neighbouring country. According to the article, the traffickers found in Venezuela “a government and military eager to permit and ultimately control cocaine smuggling through the country.”

According to the article, the worsening economic and social crisis over the last two years has made it easier for law enforcement agencies to recruit informants. One of them, former Minister of Finance and governor of Aragua state Rafael Isea, has apparently told investigators that the current governor of Aragua, Tarek El Aissami, accepted bribes from a well-known drug trafficker.

The ties between Venezuelan law enforcement and government officials and drug traffickers appear to be deeply rooted. The article quotes a former National Guard officer who fled the country last year as saying:

The involvement of top officials in the National Guard and in the government of Venezuela in drug trafficking is very clear (…) Everyone feels pressured. Sooner or later everyone surrenders to drug trafficking.

The article also cites correspondence between drug kingpin Walid Makled – no imprisoned – and an aid in which Makled boasts of his ties to the Venezuelan government. In the correspondence, Makled wrote:

All my business associates are generals… I’m telling you we dispatched 300,000 kilos of coke. I couldn’t have done it without the top of the government.

The same sources who spoke to the Wall Street Journal say that any indictments that might arise from the investigation might remain secret until arrests can be made, “something that would be difficult if not impossible unless the suspects travel abroad”. 

Lines a Part of Life

An article published in El Nacional today that cites a survey from Datanalisis claiming that Venezuelans continue to feel the effects of the scarcity crisis.

Perhaps the most concrete effect of the scarcity (besides not being able to find food) is the fact that people are forced to shop around much more. Luis Vicente Leon, the president of Datanalisis, said:

Venezuelans have doubled the amount of times per week they go out shopping.

A survey conducted earlier this year by the same firm found that people must go shopping 2-4 times per week in order to find even the most basic necessities. The same survey found that people line up for an average of 2-5 hours per shopping trip. What products are found come at a high price, as Datanalisis also pointed out that Venezuelans spend 48% of their earnings on food.

While the government claims that scarcity is part of an economic war waged by foreign and domestic enemies to destabilize the country, economists have nearly universally condemned that theory as nothing but conjecture. Savy Levy, an economist and professor at the Universidad Central de Venezuela, said:

The scarcity [in Venezuela] has always been a result of lack of production. It’s not that the products are being hidden: it’s that they’re not being produced in the same quantities as before. The origin of this problem is the currency exchange system, which generates perverse incentives for the allocation of foreign currency. [The foreign currency] isn’t distributed in a transparent manner to allow for industry to import and produce.

Palestinian Foreign Minister Expected Today in Caracas

Palestinian Foreign Minister Riad al Malki is set to arrive this afternoon in Caracas, where he will be met by Delcy Rodriguez, his homologue.

Yesterday, the Spanish Minister of Foreign Affairs, Jose Manuel Garcia-Margallo, met with al Malki in Rome, and later said during a press conference that al Malki could help to ease tensions between Spain and Venezuela.

PSUV Deputy: Oppositions Seeks to “Exterminate Us”

PSUV National Assembly Deputy Hugbel Roa gave an interview on VTV’s El Desayuno in which he weighed in on the opposition’s drive for the National Assembly this fall. Roa summarized their intentions in the following way:

Those are parties [of the opposition bloc] that have no plan for this country. Their plan for this country can’t be, “We have to get rid of the chavistas any way possible”. The only thing they agree on, the only plan they have set out is to exterminate us. Other than that, they have nothing planned. They haven’t made clear how they’ll build an inclusive society.

640k Vote in MUD Primaries

Jesus Torrealba, the head of the Mesa de la Unidad Democratica, said that 640,000 people voted in yesterday’s primary elections. He qualified the number as an important increase over the last MUD primaries, which only saw 316,000 people show up to the polls.

Torrealba also had harsh words for the nation’s electoral body, the Consejo Nacional Electoral. He said that the primaries were successful, “not thanks to the CNE, rather, in spite of the CNE”. Specifically, Torrealba took issue to the fact that the CNE invited a UNASUR delegation to observe the voting process, apparently without consulting with them first. Torrealba said:

It was an ambush so that we’d react by opposing to [the delegation]. Instead, what we said was, ‘Well, welcome, but the means by which you came was an act of provocation.”

Questions/Comments? E-mail me: invenezuelablog@gmail.com

2 thoughts on “05.18.15: “Perverse Incentives”

  1. Pingback: 05.19.15: The Hero | In Venezuela

  2. Pingback: 05.20.15: Absolute Loyalty | In Venezuela

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