Speaking before the Constituent Assembly this evening, Maduro announced a number of changes to the country’s economy, including adjustments to the currency exchange system. The announcement constitutes the most dramatic modifications that the Venezuelan economy has undergone in years.
Maduro qualified the announcements by advocating for a fundamental shift in the way that the Venezuelan economy operates at the highest levels. Maduro described this “new economic model” in the following way:
This is an economic model that is sovereign, [that shows] solidarity, that develops in all of its expressions [sic] all of the country’s productive forces.
Maduro also suggested that the new economic model in itself would not be enough to bring about the fundamental changes that Venezuela needs to undergo in order to recover:
[This new economic model] needs a new state, a new economic model that is a vital weight on a powerful industrial economy and one of services [that is] sovereign, national, in the hands of the state and of the working class [sic]….
The president’s speech took a bizarre turn when he boasted of not having “an ego or vanity”, and cited the herculean task with which he has been burdened. Maduro explained:
[I have] faced the most serious economic circumstances [that Venezuela has seen] over the last 100 years. It’s my burden and I don’t complain. I don’t want to talk like a victim or sound vainglorious. I don’t have an ego or vanity.
Maduro Loosens Up Currency Exchange System
Arguing that “the time has come” for radical changes to the Venezuelan economy, Maduro announced that Venezuelans would soon be able to exchange currency at special establishments that will be set up across the country at an unspecified time in the future. Maduro said:
May these currency exchange [establishments] complement the access to foreign currency in the market.
Under the current system, access to foreign currency is strictly controlled through a government agency called CENCOEX. Any individual wishing to purchase foreign currency must navigate a nightmarish bureaucratic maze in the hopes of getting a severely limited amount of available foreign currency. The byzantine nature of the current exchange system, along with the general lack of foreign currency supply, drives the vast majority of Venezuelans to the black market, where the exchange rate is unregulated.
Maduro did not announce any details about the new currency exchange system. It is not clear when or where the currency exchange establishments will open, or how the exchange rate at the establishments will be calculated.
Minimum Monthly Salary Shoots Up 40%
During the same address, Maduro also announced an overall increase to the minimum monthly salary of 40%, effective retroactively to September 1. The increase is the fourth this year.
A Venezuelan worker earning the minimum monthly salary will now take home a total of Bs. 325,544 at the end of the month. This sum includes earned wages (Bs. 136,534.4) plus food subsidies. The new minimum monthly salary amounts to approximately $16.12 at the current black market rate (Bs. 20,192.95).
The fact that frequent, substantial increases to the minimum monthly wages can be extremely harmful to an economy, since they can force employers out of business and/or encourage layoffs. Injecting more money into circulation via these types of increases can also fuel hyperinflation.
Sensing the inevitable criticism of the measure, Maduro said:
Some people criticize me, [saying that] I should control [rising] prices. Aren’t we defending your salary? Your cestaticket [food subsidy]? Your pension?
The salary increase is likely to evaporate in a matter of days as the country’s inflation continues to rise unstopped. In the month of August alone, inflation rose by 33.7%. The inflation rate has risen 366.1% so far in 2017.
New Price Control System Will Target 50 Basic Products
Maduro also announced a new system of price regulation that would target 50 basic products in an attempt to maintain them at affordable prices for Venezuelans. The new price regulations will go into effect tomorrow. Maduro made the announcement by saying:
This new system of price controls has been agreed on by all of the production and distribution sectors and with the consumers, [and it will be] supervised in the streets.
While details on the new price regulation system are scarce, Maduro did reveal that some of the products that would be targeted include milk, mayonnaise, butter, flour, pasta, chicken, fish, cheese, soap and cooking oil.
Opposition Legislators Continue European Tour in England
The Prime Minister of the United Kingdom, Theresa May, met with National Assembly president Julio Borges in London today, where the two spoke on the ongoing crisis in Venezuela and the Maduro regime’s continued drive towards authoritarianism. The meeting took place as part of a European tour that has seen Borges and other high-ranking opposition legislators meet with French President Emmanuel Macron and German Chancellor Angela Merkel.
Through his Twitter account, Borges said after the meeting that the prime minister was “100%” on the side of the Venezuelan opposition, a sentiment that was echoed by the French and German leaders.
The prime minister’s office sent out the Tweet below following the meeting:
Borges was joined in the meeting by Antonieta de Lopez, the mother of imprisoned opposition leader Leopoldo Lopez, who is pictured to the right of the prime minister in the image above.
Borges also released the video below shortly before the meeting with the prime minister:
Julio Borges: Well, today we are pushing our agenda in the United Kingdom. We are going to meet with [Minister of State for Europe and the Americas] Sir Alan Duncan to talk to him about the problems in Venezuela and foreign affairs. Then, we will meet with with Prime Minister Theresa May.
The idea is [for us to tell them] about the reality in the country, and how it is that we are going to rebuild Venezuela as a prosperous country [that welcomes] investors and grows, one that opens its doors to the entire world, which wants to see Venezuela prosper. That is [the message that we are spreading] during this tour, and [that vision is what] we will achieve soon with the help of the international community and the Venezuelan people.
Maduro: Borges “Should be Tried for Treason”
Maduro launched into a raving tirade against Julio Borges during his speech at the Constituent Assembly today, calling him “a traitor” and demanding that he be tried for treason for speaking to European leaders about the Venezuelan crisis.
Speaking on Borge’s meeting with German Chancellor Angela Merkel yesterday, Maduro said:
Julio Borges smiles [in the pictures] as if he were Merke’s cousin. He’s ridiculous. He’s a traitor. He should be tried as a traitor against the fatherland for the damage that he is causing, for the damage that he is bringing about. Julio Borges should be tried according to the laws of the Republic and severely punished for treason. I’m calling him a traitor.
Maduro also said that he does “not care what Merkel or the Queen of England” have to say about the Venezuelan crisis, and suggested that there “will be justice” in Venezuela regardless of the reaction from the international community.
Borges’ European tour includes speaking to regional leaders about the political persecution that opposition leaders like himself face in Venezuela.
Odebrecht Denies Former AG’s Corruption Allegations
Brazilian giant Odebrecht formally denied allegations made by former attorney general Luisa Ortega Diaz last month that it had paid $100 million in bribes to PSUV second-in-command Diosdado Cabello as part of the corruption scandal engulfing the company.
Having escaped the country days earlier due to mounting pressure on her from the Maduro regime, Ortega Diaz told reporters in Brazil on August 23 that Cabello had personally received $100 million in dirty money from Odebrecht through a shell company in Spain called TSE Arietis, which she claimed is owned by some of Cabellos’ relatives.
Odebrecht issued a statement yesterday refuting Ortega Diaz’s allegations. Part of the statement reads:
Odebrecht affirms that the accusation regarding the payment of US$100 million to Diosdado Cabello has no standing (…) [Odebrecht] also never paid out that sum, directly or indirectly, through third parties or in their name, to the Spanish Company TSE Arietis…
The statement comes after the company claims to have conducted “an extensive search of old records” as well as interviews of former employees, neither of which turned up evidence that what Ortega Diaz claims actually took place.
Cabello bragged about the press release on his weekly television show last night, during which he said:
Things collapse on their own. The former attorney general went around the world saying that I had been paid $100 million by Odebrecht, but then Odebrecht came out that this was all a lie.
Cabello also said:
They [the opposition] spend their time attacking us. They call us all sorts of names and lie to us. They’re wrong because they do not know us. They say that we are corrupt–even me, personally. How many things have they said about me? And they’re wrong, because truth be told I do not love money. I’m not attracted to it at all.
I come from a small town, and when the time comes I hope to go back to that small town. I don’t love money at all, and since they do, they accuse of us everything.
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