Rich In Oil, Venezuela Is Now Poor In Most Everything Else
Simon Nobile, 72, runs the Capri pasta factory in the capital Caracas, which was founded by his Italian-born father in 1940. Capri's two plants crank out 11 million pounds of pasta per month.
They could produce nearly twice that much. However, Nobile says a government policy designed to help the poor forces him to sell half of his inventory for just five cents a pound.
"There is no incentive because price controls mean that you lose money. So the more you produce, the more money you lose," he says.
Another headache is securing the grain to make pasta, says Angie Mendible who works in Capri's import department. Venezuela does not produce wheat.
Even so, Mendible says that each time the company wants to buy a shipment from the U.S. or Canada, it must first apply for a government certificate stating that ... Venezuela does not produce wheat.
"It takes 35 days to get this certificate," Mendible says. "Then we have to apply for permission to buy U.S. dollars. That can take another 90 days.
Venezuela is facing a major economic crisis that continues to worsen. The country is hugely dependent on oil exports, and prices are now less than half of what they were last summer.
The good news is that subsidized gasoline in Venezuela costs less than two cents a gallon, the cheapest in the world.
The bad news is that almost every other part of the economy is in trouble. There are shortages of many basic goods and supermarket shelves are often empty. Imports have been slashed. There's no official inflation rate, but most estimates put it 50 percent a year or higher.
Economists say the country's economic woes date back to the 1999-2013 rule of Hugo Chavez, who took a dim view of capitalism and nationalized hundreds of companies.
Chavez imposed many government regulations and under his rule, private businesses faced a much tougher time. Between 1999 and 2007, the last year for which government figures were available, the number of Venezuelan manufacturers fell from 12,000 to 7,000.
Chavez' His successor, President Nicolas Maduro, claims the current food shortages are the result of hoarding and price speculation by the private sector and he has responded by imposing even more controls.
In defending these policies, Ramon Lobo, a ruling party congressman, says that before the Chavez revolution the private sector had grown too powerful and could make or break presidents.
But Ismael Perez, president of the Venezuelan Chamber of Industries, says government intervention has backfired because very few top officials have any business experience. He recalled a meeting to deal with a recent toilet paper shortage caused by distribution snafus.
Instead of addressing the bottlenecks, Perez said, a government minister proposed building toilet paper factories in each of Venezuela's 32 states.
Other analysts say Maduro has an authoritarian streak and wants to control all sectors of Venezuelan society.
But the resulting bureaucracy is ruining the economy, says Jorge Redmond, president of Chocolates El Rey, which produces and exports chocolate.
"When Chavez came to power there were four steps one needed to take in order to export a container of chocolate. Today it's 90 steps," he says. "And there's 19 different ministries involved in this series of permissions. It's a mess."
Redmond claims the government is out to punish the private sector because many business leaders, himself included, support Venezuela's political opposition.
"In other countries, the governments have a sort of an alliance with the private sector to create a process of development," he says. "That doesn't exist because there is a complete mistrust on the part of the government toward the private sector. We're just have to be watched."
Back at Capri, Nobile tells me that after a half century making pasta, he's never seen a tougher business climate. But at least Capri is still standing. There used to be 40 pasta companies in Venezuela. Now there are only five.
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