Venezuela has seen nothing short of a full collapse of its economy over the past several years, as the wonderful benefits of both hyperinflation and socialism continue working together.
Now, the path forward for socialist leader Nicolas Maduro seems to have turned to dollarization.
Despite the fact that it is further widening an inequality gap in a country where its citizens barely have access to water, electricity, gasoline and food, Maduro’s embrace of dollar based businesses have also led to a swanky “dollar underground” in Caracas, complete with “a dozen new delivery services bringing to their doors everything from truffle-salmon poke bowls to electronic cigarettes and $50 gluten-free birthday cakes,” according to Bloomberg.
The dollarization over the country has created an alternate universe of luxury businesses even while the country’s economy has shrunk from 65% over the last 5 years. This year, it’s down 20% alone. The options are “endless” for those with dollars in a country where a majority of its citizens don’t have access to basic items, the report notes:
In southeastern Caracas, there’s Sam Adams Octoberfest at $2.45 a bottle, Spanish Manchego cheese La cueva del abuelo at $12 for 150 grams, a keto seeds bread for $20 and Omaha Steaks, including a one-pound pork tenderloin for $23.
But even those with dollars are seeing food prices rise in Venezuela, up 23% since March.
Business owner Graciela Beroes, who is the general manager of Lits ice cream company, said: “With just the slightest opening in the economy, we’ve seen innovative and creative ways to create during a crisis.”
Economist Omar Zambrano said: “The government no longer harasses the small private sector and has allowed dollarization to advance. It creates a comfort bubble that reduces the political pressure of having to maintain an economy that can supply the minimum, especially with U.S. sanctions.”
This has helped some businesses boom. One motorcycle delivery service, called Ubii Go, has expanded to 15,000 users in Caracas, growing 30% every month since March. A market in the Las Mercedes neighborhood was stocked with not only with basics, but with expensive “luxury” food items like plant based meats. They only take dollars.
Analyst Diego Moya-Ocampos says the dollarization has been “useful” to Maduro: “In a way, it’s an escape valve so the ruling class that’s increasingly surrounded can access luxury goods and services with a certain quality of life to prevent it from starting to think about a way out. It maintains civil and military loyalty.”