Below is the Part 1 of an extensive interview by Fire This Time (FTT) with the Venezuelan Ambassador to Canada, His Excellency Wilmer Omar Barrientos Fernández. The next part of this interview will be printed in the next issue of Fire This Time (Volume 10, Issue 10 - October):
Fire This Time:A recent article in the news magazine USA Today claimed that Venezuela is "worst economic and humanitarian crisis in its history." This article is only one of many from mainstream media that spread certain views of the United States government. For example they show time and time again how thousands of Venezuelan people are going to Colombia daily to buy basic goods. What is your response to this?
Amb. Barrientos: In reality, in Venezuela there is an economic crisis caused mainly by the fall in oil prices and also by the by the improper use of fracking which has flooded the oil product market; but there is also a plot by the hegemonic powers associated with the Venezuelan oligarchy that has strongly influenced the shortages of products and medicines through a despicable method that the government has called economic war. Add to this the attack on the currency, and that is, I believe, a terrible imbalance in the economic apparatus. I think that the directors of this attack have prematurely announced this humanitarian crisis, for which they themselves are working towards, in order to create a great discontent among the people.
President Maduro has publicly accepted, as has our Foreign Minister, that we have an economic crisis which is the same as that facing other oil producing countries. The foreign currency revenue from oil sales in January 2016 was $77 million, while in the same month six years ago it stood at $3.317 trillion, representing a fall of greater than 4200%. However, we are taking this on as a great opportunity to diversify the economy, and to wean off of the oil rentier model.
What has been happening in Venezuela has not been a coincidence. It is clear that other expeditious ways of unconstitutional actions are exhausted at both an international and a national level, and yet they have not resulted in the desired objectives; economic warfare and financial aggression in the absence of political outcomes as been severely affecting the business and financial sectors of the country; attempts to reactivate the “guarimbas” [violent, opposition led riots] are not reaching the necessary maturity in a society that does not want more violence, and rejects any action that threatens national peace.
We cannot forget the agents that have caused this crisis; for this crisis has not come from one day to another. I will explain some of the mechanisms that have been used for this purpose.
1. War against the currency
The original cause and the trigger of the economic destabilization is the manipulation of the exchange rate of the Venezuelan currency on the parallel market. This has two effects that generate a vicious cycle in the economy:
• It increases the National Index of Consumer Prices (INPC), deteriorating the real wages of the working class in the country through the loss of purchasing power, it reconfigures the structure of household expenditures and decreases the demand for non-essential goods, resulting in reduced production and increases in unemployment.
• It distorts the exchange market, increasing the gap between the preferential rate and the parallel rate, which generates benefits for the private sector based on currency speculation alone, and they no longer import the necessary goods, thereby increasing shortages.
A small but important business sector also manipulates the flow of dollars in the parallel market and alongside “Dollar Today” this business sector spearheads the promotion of speculation and usury.
2. Planned Shortages, Smuggling Hoarding
• There has been a relative decline in imports in kilograms with respect to an increase in imports for dollars.
• There is a hoarding of essential, mainly non-perishable, goods; goods for which the production and distribution is handled by monopolies or oligopolies that coordinate transactions.
• There is extractive smuggling.
• Consumer expectations have changed since the rise to the presidency of the Commander Hugo Chavez, now there is an expanded demand for goods and people have greater purchasing power than before.
FTT:What has Venezuela done in order to defend the Venezuelan people in this situation and to ensure that there is no humanitarian crisis?
Ambassador Barrientos:Constitutional validity has been granted by the Supreme Court to the emergency economic decree as well as to the implementation of the plan towards “16 production engines” We invite everyone to learn more about the potential and scope of the “production engines” by visiting our website (www.misionvenezuela.org).
The President has taken extraordinary measures to end the economic crisis in several dimensions, such as measures taken to fight against the attack on the currency through mechanisms such as "Dollar Today.” Measures have also been taken against the attack on the system of distribution of goods and services.
We have also demonstrated that there is system of international boycott that has only one goal, and that is to bring Venezuela to its knees. This is a form of war without face, a war of putting pressure the people. It is a battle that emerges from the economy, from global geopolitics, it is the oil war.
Despite all of the budgetary constraints caused by the economic crisis, we have established specific policies to protect the people. That is why we do not accept blackmailing by those who are trying to label this situation as a violation of human rights or a humanitarian crisis. To the contrary, we have enacted concrete measures to protect the people. I will explain below six of the concrete actions we that have been taken to achieve this objective:
1. A new system of food production, distribution and commercialization which:
• Has created a single corporation for food services and production in order to unify the logistics which were before divided into three corporations: CVAL, Mercal and Abastos Bicentenario. This single corporation will now run the direct distribution centres for the community markets.
• Stresses the importance of the original force of communal supplies, people power is responsible for the distribution of food through a new system of producers.
2. A new system for the guarantee of real costs and prices
• New prices based on actual costs and a maximum retail price. The Law of Fair Prices is applied to essential goods and services for the people. To this end, the President set up a general staff that will handle pricing and restructuring of the Food Mission.
3. A new gasoline price scheme
• The new price per liter of gasoline is one Bolivar (1BS) per liter (91 octane) and six bolivars (6BS) per liter (95 octane). These new prices came into effect last February 19 in the 600,000 gas stations operating in Venezuela. The resources generated by this increase in prices were allocated to system of Missions as established by the Organic Law of Missions, the Great Missions and Micro Missions. 30 percent of all of these new resources were allocated to the Transport Mission for the allocation of credit and renewal of the fleet.
• It is noteworthy that Venezuela has the cheapest gasoline in the world. In the US a liter of gasoline costs 78 cents, in Colombia and Venezuela it is 1.1 cent, just 0.01 cent on the dollar.
• That does not mean that Venezuela is increasing the prices of this item for the people, on the contrary, this subsidy has been maintained, every liter of fuel costs PDVSA 1.87 Bolivars, at the same time, the Venezuelan consumer pays just 0.09 Bolivars.
4. A new system for the creation, acquisition, investment and management of foreign exchange
• The new currency system is composed of five vital components: the National Plan of Currency created in 2014, the defense of oil revenue, new exports and new foreign exchange earnings, attracting investment and the injection of dollars into the Venezuelan economic system and the introduction of a dual-band exchange system.
• As of February 18, the protected exchange rate went from 6.30 to 10 Bolivars per dollar in priority areas for the nation.
• The exchange rate system is simplified into two bands: a protected exchange rate, which starting on February 18, replaced the Sicad and a floating complementary system, which replaced Simadi. The protected exchange rate is set at 10 Bolivars per dollar and will apply in four strategic areas: health, missions and large missions, food and production incentives.
5. Plan for strengthening employment protection, wages and pensions
• A plan for investment in public works to build new infrastructure and generate quality workplaces, this plan received 120 billion Bolivars in 2015. In 2016, the government approved 190 billion Bolivars.
• An increase in the minimum wage (for both workers and pensioners). A wage increase of 20 percent, and a further 2.5 percent increase based on bonus calculations, has recently come into effect. This is the 33rd yearly consecutive wage increase in 17 years of the Bolivarian Revolution.
• The introduction of a social missions card. This is a mechanism to secure the social programs and funding to families for food and health through Mercal, FarmaPatria and Pdval, as part of a new complementary system of protection, support and promotion of the capacities of Venezuelan families.
6. Tax revolution plan
• Installing a new electronic and digital billing to allow transparent tax collection and avoid tax evasion that has been successful in Ecuador.
• Internal taxation has contributed 90 percent of the revenue needed to sustain the country and uphold the State missions and great social missions.
• In 2015, tax revenue accounted for 90 percent of revenue to the nation. This allowed the state to maintain investment in education, public works, housing, wages, jobs and pensions, even amid falling oil revenues.
FTT: Can you also talk about the thousands of Venezuelans that go to Colombia for the purchase of essential items?
Ambassador Barrientos: I come from the area with an open border with Colombia. Historically, all borders are areas of much legal and illegal economic exchange. Yes, it is true that many Venezuelans have gone; many Colombians have gone to Venezuela as well. But why do you think Venezuela closed its border with Colombia and then reopened it after a year?
On August 11, 2015 the national Government announced the closure of a 2,200 km section of the border with Colombia in Tachira state for an indefinite period. The measure was adopted by the Venezuelan State in response to the injury of three Bolivarian Armed Forces by paramilitary groups. This closure also sought to halt the smuggling of fuel, food, and medicines, among other items, that attacks the economic stability of the Venezuelan region.
Today, according to the figures of the Bolivarian government of Venezuela at least 5 million Colombians have migrated to our country. The majority of which are people fleeing difficult situations of internal conflict or humanitarian crisis, for which Venezuela have always given them solidarity and protection.
A BBC report has found that in the brother country of Colombia, the smuggling of Venezuelan gasoline is more lucrative than drug trafficking. Because gasoline is so cheap in Venezuela, its smuggling to Colombia has become a business with a yield of 10,000%, according to a report from the Directorate of Taxes and Customs of Colombia.
Other military authorities in Colombia, where gasoline is one of the most expensive in Latin America at $1.1 USD a liter, have said that because of this profitability, smuggling has been linked branches of the guerrillas and the Colombian paramilitaries.
In fact, according to the Center for Security and Drug Studies at the University of the Andes in Bogota, an increase in the effectiveness of drug seizures has caused some drug cartels to become gasoline cartels.
According to PDVSA numbers, 100,000 barrels of oil (5% of its total daily production) move from Venezuela to Colombia daily. Also according to the PDVSA, smuggling generates losses for Venezuela of as much as $1.400 billion USD per year.
We have briefly discussed the example of gasoline, but certainly this is only one item. This same situation happens with food and medicine, energy, vehicles and other necessities. Some examples of this are: a box of Glucophage, vital medicine for diabetics, costs less than ten Bolivars in Venezuela and about fifty or sixty Bolivars in Colombia; precooked corn flour, costs 7.5 Bolivars in Venezuela and more than 55 Bolivars in Colombia.
In this sense the smuggling of food, medicine, and fuel from Venezuela to Colombia brings shortages and promotes and black markets or parallel markets for staple products. These cited examples are consistent with the position and reality of our brother country. Chancellor of the Republic, Delcy Rodriguez, asked the government of Colombia to exercise control over the exchange rate of the Bolivar. Her Colombian counterpart has relied negatively to this, arguing that the price difference in products and fuels subsidized in Venezuela with respect Colombia, "make it very difficult to control the smuggling."
FTT: The President, Nicolas Maduro and the Venezuelan government described the situation in Venezuela today as an economic war. What are some of the measures that the Venezuelan government has taken in order to combat this economic war? What do you think is the level of organization of the masses against the sabotage of the counterrevolution?
Ambassador Barrientos: As previously mentioned, we have taken actions, one of which is the implementation of the “16 production engines.” I have referenced our website for specific information. On our website (www.misionvenezuela.org) there is interactive and comprehensive material on these 16 engines. However, in general terms, these motors have been activated in 36 sectors and for 50 priority items in the country.
For example, Plan 50 has been designed to help bring the economic emergency in the country to a position of stability and growth. This plan was designed around 50 specific goods, items for which there is now a concentrated effort to produce and sustain them with our own people, without relying on a dollar or anyone, in order to guarantee books and uniforms for our children and food and services for our people.
Other components of the economic engines work in prioritized sectors: 1. Food Industry, 2. Pharmaceutical, 3. Industrial, 4. New exports to generate foreign exchange, 5. Communal, social and socialist economy, 6. Hydrocarbons, 7. Petrochemical, 8. Mining, 9. Domestic and international tourism, 10. Construction, 11.Forestry, 12. Industrial Military, 13. Telecommunications and information technology, and 14. public and private banks.
FTT: And in respect to how well organized people can make a difference?
Amb. Barrientos: I'm sure it is a blunt fact, but I will give you an example. The Executive Branch has created and promoted the missions, which was the name given by the humanist President, Hugo Chavez, to a set of social programs. These missions have the aim of improving the living conditions of the people, and of ensuring multiple human rights to the population; human rights such as housing, food, health, education, culture, sport and security, among others.
The recent creation of the Local Committees of Supply and Production (CLAP) has constituted a new form of popular organization responsible, together with the Ministry of Food, for distributing products to every house to cover the basic necessities. This new creation has served 504,000 families across the country, and strengthened the joint work of popular power and the Government towards ensuring the feeding of the people. A total of 8.4 trillion Bolivars have been approved President Maduro to be given to governors across the country to boost the Popular Food Distribution System. All of the workers in this network do so voluntarily, consciously and responsibly.
Thanks to this effort more than 500,000 families have been assisted in 208 municipalities, 464 parishes and 2,034 communities, where volunteers have also surveyed the needs of the people and then worked hand-in-hand with the mayors and governors.
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