, ,

Venezuela’s Black Market

black market
In the last few years, the economic wellbeing of Venezuelans has become highly dependent on their ability to obtain dollars. In a crumbling economy, people’s socioeconomic standing depends not on the job they have or their level of education, but their ability to trade currency.

In no other place is this so evident as in the country’s ports. In the crumbling city of Puerto Cabello, women from all over the country anxiously await freighters carrying sailors who bring dollars into the country. Elena, a 32-year-old prostitute from the western state of Zulia, has taken the 280 miles journey from her hometown to the port city of Puerto Cabello after hearing about the arrival of a Liberian-flagged freighter manned with Ukrainian, Arab and Filipino soldiers.

For prostitutes and many others in Venezuela, the practice of trading dollars in the black market has translated into the doubling of their earnings.

Since President Maduro took office in 2013, after the late Hugo Chavez, the value of the bolivar in the black market has dropped to from 23 to 71 against the dollar. Until recently, the official exchange rate was 6.3 bolivares to the dollar. And as far as basic foods, medicine and other necessities it remains pegged at this rate.

While this practice keeps basic consumer goods at reasonable price, their scarcity makes for a whole different outcome in practice. For over a year now, Venezuelans have had to stand in line for hours to have a access to limited quantities of basic products such as rice, flour or even toilet paper.

However, this is only the case for those who do not have access to foreign currency. For those able to get paid in dollars, such as prostitutes, travel agents and taxi drivers, the dollar shortage holds the key to their ability to overcome shortages and inflation. This gives them the choice of skipping the lines and buying these regulated products at a cost several times (sometimes 9 times) over the regulated price.

This has made Venezuela one of the most expensive countries in the world or expensive; it all depends where do one gets your money. If a citizen is able to tap into the highly demanded illegal and secretive black-market system, his or her odds at succeeding are much higher. Ironically, this has turned Venezuela into a two-tiered society composed of those who can get dollar and sell them in the black market and those who cannot and have to manage with what little comes their way.

– Sahar Abi Hassan

Sources: Bloomberg, NPR
Photo: Quartz