Wednesday 23 June 2021

Drug Trafficking and Money Laundering Fuel Venezuela’s Dollarization

Much of the dollars now circulating in Venezuela allegedly come from money laundering and drug trafficking.

ndrea Rondon: “When the state is the trafficker, the dollar injections are much wider because it doesn’t have the natural obstacles” (Andina)

A study carried out by Ecoanalítica and published by Bloomberg revealed that more than half of the retail transactions in American currency in a country where salaries are set in bolivars and the minimum wage is less than five dollars a month.

The dollarization, which has rebounded in the country, is due to the recent relaxation of price controls. However, prices are so high that those who depend on wages in bolivars cannot afford anything.

- Advertisement -

Although there is the talk of a kind of “normalization” of the economy in the South American country, what is happening is a “mercantilism of the 21st Century,” according to Andrea Rondon, a university professor and member of CEDICE Libertad’s academic committee.

The expert explained that the economy would not improve unless the laws and controls change. On the contrary, what we have is a “relaxation” that was forced because the state was “strangled” with sanctions.

“In these last two months there is a kind of feeling of improvement because you see inns, premises that are opening and that create the appearance of investment; and I say appearance because they are not necessarily so. Many are probably linked to money laundering,” he explained.

Rondon pointed out that the state injects a lot of those dollars that are circulating today in Venezuela.

- Advertisement -

“We must remember that one of the biggest problems of drug trafficking is to mobilize cash and launder it, but when it is the state that is trafficking, the injections are much more extensive because it does not have the natural obstacles. That is why it is also assumed that the largest injection of dollars comes from there,” he said.

The specialist explained that for Nicolas Maduro’s regime, the dollars no longer come from oil rent but from illicit transactions: money that arrives in cash and is laundered with “investments” in legal businesses.

For more than two decades, chavismo imposed laws, economic and penal sanctions on those who freely accessed the dollar. Besides, the exchange control killed more than 10,200 companies and devalued the Bolivar to its peak. However, Maduro, who had said that the dollar was a currency “without backing,” is now thanking God for the dollarization of the country.

After drowning in international sanctions, chavismo was forced to give in and allow Venezuelans to trade dollars. It is already common in the South American country to charge in U.S. currency for private medical consultations, insurance, tourist services, electrical appliances, real estate, restaurant bills, private education, and even commercial activities such as shopping in the market and transportation.

Professionals such as dentists, lawyers, surgeons, etc., offer their services in exchange for payment in dollars with no question because it is logical to assume the source of the money.

An economic bubble

Despite the talk of a supposed “normalization,” the truth is that Caracas is immersed in an “economic bubble.” According to Andrea Rondon, this is a “feeling of improvement” that is removed from reality.

- Advertisement -

“In Caracas, the lack of water and electricity, for example, continues. But there is a supposed feeling of improvement because that is where the establishments, the Russian, Chinese, and Iranian companies that are also injecting dollars into Venezuela, are visible. Caracas is the city that shows this economic bubble,” he added.

“The economy is not improving because the same policies persist. The only difference is that they have had to relax the controls because they themselves have been suffocated. The laws and controls are in force, and as long as they remain in effect, we cannot say that there is an improvement,” he said.

Venezuela has become a kind of “modern Cuba.”

Rondon explained that it is tough to provide unbiased information about what is happening in Venezuela because there are no official data available.

“There is massive economic intervention and no official information. It is impossible to surgically separate what part of the money belongs to the state, what comes from drug trafficking, what comes from private enterprise, etc.,” he added.

“Any explanation is short; the market must be transparent and give you as much information as possible. But the intervening state is the one giving the information. That makes everything uncertain, and there is no transparency,” he said.

For Rondon, Venezuela’s economy today resembles that of Cuba and what is happening in China.

“It is a kind of modern Cuba; for example, they do not have to restrict people’s freedom to leave the country. Instead, they set excessive prices and taxes making it hard to buy passports or airline tickets. We have the same shortcomings as Cuba, but it has been modernized. On the other hand, capital is injected, and that is very similar to China. It is not the capitalism of a liberal regime, but a mercantilism of the 21st century. There is no rule of law, and the state intervenes in economic freedoms,” he concluded.

Article originally appeared on Today Venezuela and is republished here with permission.

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Q24N
Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

Related Articles

Ortega government accuses imprisoned opponents of receiving money from the United States to overthrow him

TODAY NICARAGUA – The Nicaraguan government assures that the imprisoned political...

Nicaragua government assures that detainees violated one of the Ten Commandments

TODAY NICARAGUA – The vice president of Nicaragua and First Lady,...

MOST READ

Today’s Vehicle Restriction June 19: only “ODDS” can circulate

Today, Saturday, June 19, only vehicles with "ODD" ending plates CAN circulate The measure is countrywide and applied between 5:00 am and 9:00 pm, save...

Today’s Vehicle Restriction June 22: plates ending in 3 & 4 CANNOT circulate

Today, Tuesday, June 22, plates ending in 3 & 4 CANNOT circulate. The measure is countrywide and applied between 5:00 am and 9:00 pm, save...

The Best Sports To Play On A Beach

Costa Rica has some of the best beaches in the world. The coastline is blessed with golden sand, beautiful palm trees, and perfect blue...

Since 2018 MECO has received contracts from the State for more than ¢139 billion

QCOSTARICA - Almost ¢140 billion colones (US$227 million dollars) is the amount the MECO construction company was able to snare for public works contracts...

Tico tried to enter via San Jose airport with ¢93 million in cash

QCOSTARICA - A Costa Rican tried to enter the country through the Juan Santamaría International - San Jose Airport - with US$153,244 (the equivalent...

Nathalie Álvarez Mesén’s feature debut, Clara Sola, ready for the Cannes Directors’ Fortnight

Q ENTERTAINMENT (CINEUROPA) Nathalie Álvarez Mesén’s debut feature, Clara Sola, is ready to take part in this year’s Directors’ Fortnight at the Cannes Film...

How to Continue Learning German If You Live in Berlin

Berlin is the place to be: the best parks, cinemas, concerts, and cultural life attract many students every year. COVID-19 has changed the situation...

Tourism sector depends on political will for recovery

QCOSTARICA - The future of tourism operators in Costa Rica depends on the political will to approve a package of bills that favors the...

First five months of the year reflect recovery of Costa Rican exports

QCOSTARICA - The value of Costa Rica exports increased by 23% in the first five months of the year, being the highest growth in...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Article originally appeared on Today Venezuela and is republished here with permission.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.