El Universal reported today that while non-oil exports made up 29% of the country’s foreign currency income in 1998, that number now sits at a mere 3%. In 2013 Venezuela earned only $2.1 billion in non-oil exports, the weakest yearly performance in 30 years. The same article claims that while exports saw an “important increase” in the first eight months of 2014, they had fallen 36% by October due to a new series of government regulations implemented at the time.
Citing official figures from the Instituto Nacional de Estadisticas (INE), the newspaper blames a host of policy failures for the crippling decline in exports. Among them – citing a study conducted by Sergio Arancibia and Jose Francisco Reyes – is the fact that out of the 30 top non-oil exports produced in Venezuela, 18 of them require three different kinds of special permit, and must be submitted to “legal regimens” before they can be exported, a process that takes at least two and a half months. Other industries, the El Universal article says, simply don’t receive responses for the government for export permits.
El Universal claims that items that cannot be exported unless they have a special permit from the Ministry of Commerce include health, food, personal hygiene, paper, and cardboard products. Aside from the special permit, industries wishing to export these products must also have a “Certificate of Met Internal Demand”, which is intended to battle the scarcity crisis.
Ramon Goyo, the head of the Asociación Venezolana de Exportadores (AVEX) says that out of all the regulations, the most harmful to the country’s exports is the Regimen Legal de Arancel, which oversees the export of steel and aluminum products. Since steel and aluminum make up most of Venezuela’s non-oil exports, Goyo argues that this single piece of regulation is responsible for most of the country’s export underperformance.
Furthermore, the article states that once every single regulatory goal as been met and no further issues arise, it could take another 49 days before the product is placed aboard the export ship. Containers can be inspected by a host of bodies ranging from the National Guard to the Ministry of Health at either the factory or the port of exit, or at both places, further causing delays.
Earned Export Dollars Also Ruled by Regulations
El Universal also points out that once a company has successfully exported a product and earned foreign currency on its sale, the way it uses that currency must adhere to strict government regulations. The company is allowed to use 60% of the earned currency can be used to re-invest in raw materials for further production. The other 40% must be sold to the Banco Central de Venezuela, which is then supposed to exchange the foreign currency for Bolivares at the current SIMADI rate (currently around Bs.200/U.S. dollar). However, Goyo says that the government has not been exchanging the currency at that rate, and that the industry is simply sitting and waiting for the government to decide to start following its own rules.
Army Placed on Alert in Western Region over Looting
Army forces in the west of the country have been placed on alert over the disturbances and looting that took place in San Felix, Bolivar state on Friday. El Nacional is reporting today that army units in the region have been ordered to locate and question undocumented immigrants to determine “if they are paramilitaries”.
A 21 year-old man named Gustavo Pertiñez was killed during the looting, and 27 people were arrested on Friday in San Felix after looting broke out along a main avenue. The looting, which began in the early morning and appeared to have subsided by the mid-afternoon, started once more in the evening and continued into the night. A Mercal was looted in the 25 de Marzo area of the city, and the National Guard dispersed a crowd of people attempting to break into another supermarket in the La Victoria neighbourhood.
El Nacional reports that the National Bolivarian Armed Forces have issued a communique to four regional headquarters covering the western area of the country saying that the San Felix disturbance was a deliberate event planned and executed by “groups that generate violence”, and calls on the units in the region to take “all pertinent actions” to stop further disturbances.
The order follows a call from Maduro on Friday to take the Operacion Liberacion del Pueblo to Bolivar state so that it may “search these violent groups of mercenaries and paramilitaries”.
Former CADIVI Boss: “We Don’t Have Reserves” for the Crisis
The former head of the CADIVI (now CENCOEX, the body that alots foreign currency), Edgar Behrens, told La Verdad today that while the exchange body was founded on the principles of “efficiency, honesty and transparency”, they no longer exist in the organization.
Behrens appeared to take some responsibility for the economic crisis that is affecting Venezuela today, saying:
In times of fat cows [meaning, “when times were good”], we didn’t administer foreign currency correctly. Crises happen in cycles, and most countries take previsions. That’s why we created the Fondo de Estabilización Macroeconomica (FEM), but (now) it doesn’t have any foreign currency. We don’t have any reserves.
While CADIVI had up to $40 billion in reserve in 2006, Behrens says that “corruption” led to a relaxation of regulations that resulted in “many fraudulent imports in the years 2007-2008” made by shell companies that just wanted U.S. dollars for imports that never arrived in the country.
A PSUV-led National Assembly audit into the way CADIVI handed out foreign currency found that $20 billion disappeared through the body between 2011 and 2013.
Opposition Calls for Demonstrations on August 8
The Mesa de la Unidad Democratica has called for nationwide demonstrations on August 8 to protest “hunger, crime” and to promote freedom. A press release by the MUD on the demonstrations partially reads:
[On August 8] we will put forward proposals that the Unidad Democratica demands be implemented immediately to face, with common sense rather than bullets, the crises created by official corruption and ineptitude.
On the overall scarcity situation in the country – and apparently referencing the La Yaguara expropriation – the same release states:
We condemn the unbearable and unbelievable situation that the Venezuelan people put up with today thanks to the destruction of the economy perpetrated by the government. On top of the shortage of food and medicine we’ve been suffering through due to the destruction of the productive apparatus and the massive theft of dollars earned from oil, we now add a set of official measures which have the effect of aggravating the crisis they themselves created.
Tachira “Can’t Declare Health Emergency” Yet
Miriam Febres, the secretary general of the Tachira state government, has said that the state government is not in a position to declare a health emergency over the dire condition some of its hospitals find themselves in yet. Febres said:
We can’t declare an emergency, not because we want to hide these things, but because we can only declare an emergency after a process of inspections to all of the support network, and when there are no supplies or staff at all in every operating room in the hospitals.
Febres said that while she admitted that there does exist “some lack” of medical supplies, the government is trying its best to rectify the situation.
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