Echoing Chávez, Venezuela's Maduro given decree powers
While Maduro says the emergency decree powers are necessary to stamp out corruption and fix the country's foundering economy, the move is seen by critics as trampling democracy.
After months pressing Congress, Nicolás Maduro was granted emergency decree powers yesterday, immediately sparking celebrations at the Miraflores Presidential palace, and unease among Chavismo detractors.
"They [the bourgeoisie] underestimated me; they said Maduro was an amateur," the president called out to hundreds of red-clad supporters. "[But] what you've seen is little compared to what we're going to do."
Crowds cheered and a Venezuelan folk band played tunes dedicated to former President Hugo Chávez, the founder of President Maduro's political movement. The passage of the Enabling Law, which allows Mr. Maduro to rule by decree for the next year, is being trumpeted as a triumph for the embattled president after opposition lawmakers tried to spike the bill.
While Maduro says the powers are necessary in his efforts to stamp out corruption and fix the country's foundering economy, the move is seen by his critics as a means to consolidate power ahead of Dec. 8 municipal elections. The powers enable Maduro to fast track legislation regarding graft and the economy, however vague clauses within the statute and the experience of past decree laws under Mr. Chávez have stirred fears among the presidents critics that democracy will be trampled.
"The law allows Maduro to present himself as powerful, ruling with all the forces of government behind him," says Margarita López Maya, a historian at the Central University of Venezuela.
“[The measure] could help the president stay 'afloat,' but the fear is that all his efforts are being directed toward the short term as the country slides deeper and deeper into crisis," Ms. Maya says. Maduro’s popularity has slumped in recent months. His polling numbers have dipped to lows of around 40 percent approval, compared to around 50 percent back in April when he was elected to office.
Maduro not the first
Maduro’s move toward increased power isn’t unique in Venezuela. Chávez was granted emergency powers four times during his 14-year rule and passed over 200 laws by decree, including a controversial land reform measure and the nationalization of parts of the oil industry. In addition, the late president counted on a two-thirds majority in Congress until 2010, when Venezuela's political opposition experienced its first major breakthrough.
Fearing a power grab, Maduro's congressional opponents had said they would remain steadfast and reject the bill’s passage. However, the law gained preliminary approval last week in a vote of 99 to 60 after an opposition congresswoman – who was formerly a member of the ruling socialist party – was stripped of her congressional vote while a corruption investigation commenced against her.
“[Maduro will] continue the way Chávez ruled, even if he lacks the charisma or the votes," says Maya. "He can now present himself as the heir of Chávez.”
In his seven months as president, Maduro has been dogged by a sputtering economy and runaway inflation nearing some 55 percent, and beset by nagging shortages of consumer goods.
Recent polls show that Venezuelans have become increasingly gloomy about the country’s economic and political situation. Surveys by Datanalisis and IVAD indicate that around 70 percent of Venezuelans are pessimistic about the state of the country.
'Tenuous' hold on power?
The opposition has cast the upcoming municipal elections as a litmus test for the beleaguered Maduro government and its ability to manage the economy.
"The people will give Miraflores a clear ruling this Dec. 8,” said opposition Congresswoman María Corina Machado, while stumping in Barinas, Chávez’s home state. There, “where the process of destruction began, will also start the liberation of our fatherland,” Ms. Machado said.
"Leaders of the Chávez coalition realize Maduro's popularity declined in recent months and his hold on power is tenuous," says David Smilde, at the nongovernmental organization Washington Office on Latin America.
Insisting the country's economic woes are the result of his political adversaries and "hoarders and speculators," Maduro extended state control over large swaths of the economy in the days leading up to his gaining decree powers. He slashed prices on everything from electronics to home furnishings, tools, and toys weeks ahead of the holiday season.
As Maduro looked set to receive emergency powers, he promised to expand his "economic offensive," furthering price controls, regulations, and, among other measures, establishing profit margin limits for businesses.
Reports of looting surfaced throughout the country last week as prices were slashed to "fair" levels at retail outlets, according to the government. The National Guard was sent in to control the hordes of bargain hunters that rushed to the stores to scoop up the deals.
Gabriel del Rey, an athletic trainer, was one of the hundreds who flocked to central Caracas last night to welcome the law's passage. He says that Maduro's crackdown is necessary to keep spiraling prices in check. "The parasitic bourgeois has been looting the country's riches from the people. Now [the prices] are finally affordable again," Mr. del Rey says. "The party is over."
Still, many worry about the long-term effects of the policies Maduro is pledging to pass.
"While it could give them [Maduro's socialist party] a bump in the polls, it's a very risky strategy," says Mr. Smilde.
Referencing a Spanish proverb, Smilde adds, "Bread today, hunger tomorrow."
Maduro's First Socialist "Decree" - $250 Samsung Trinkets For Every Venezuelan
Submitted by Tyler Durden on 11/20/2013 17:10 -0500
Days after being granted omnipotent "decree" powers, and a week after the Venezuelan president wielded his mighty Marxist sword and jailed 100s of "bourgeois, barbaric, capitalist parasites"; Maduro has unveiled his latest "keep the masses happy" trick...
- *VENEZUELA TO SPEND $100M ON SAMSUNG IMPORTS: RAMIREZ
- *VENEZUELA TO IMPORT 400,000 SAMSUNG PRODUCTS, RAMIREZ SAYS
Why didn't AAPL get the nod? As Maduro explained yesterday, 15-30% margins are "enough"... Of course, the US is disappointed in the decision to grant Maduro "decree power" - perhaps as they didn't think of it sooner (though they do have the Obamaphone?).
Via Bloomberg (from Venezuelan State TV):
- Venezuela to pay $100m in cash for Samsung product imports, Ramirez says
- Samsung products to arrive before Christmas, Ramirez says
- Govt, Samsung create joint venture, looking for factory sites, Ramirez says
Venezuela seizes more stores ahead of local elections
Thousands of people have lined up in front of electronics stores and hardware stores that have been ordered by President Nicola Maduro to empty their inventories at cut-rate prices.
La VICTORIA, Venezuela — Forcing stores to sell their merchandise for a price that the owners say will put them out of business may sound like a bad idea, but President Nicola Maduro is not angling to improve the economy, Venezuelans say.
"This is going to help him and his party in the short term,'' says Alfredo Ramos , a political science professor at the University of the Andes in Merida. "His actions are motivating his backers to go out and vote, and disheartening his opponents. However, his actions could very well hurt him in the medium term."
Thousands of people have lined up in front of electronics stores and hardware stores that have been ordered by Maduro to empty their inventories at cut-rate prices.
Maria Davila felt like a winner after emerging from the Traki department store with clothes for herself and her husband, as well as toys for their four children.
Davila spent 14 hours in line to make her purchases after the store reduced prices by up to 70% on merchandise to comply with Maduro's crusade against the country's "parasitical bourgeoisie."
"It was well worth the wait," Davila, 42, says of her ordeal. "I saved so much money. I feel like I won the lottery."
Taking a page out of the late Hugo Chavez's populist playbook, Maduro is attacking the country's producers and businesses to boost his United Socialist Party of Venezuela for local elections Dec. 8.
His orders may be followed by more. On Tuesday night, Venezuelan lawmakers gave Maduro the power to enact law without legislative approval. Maduro said he will use the authority to create a new state body to oversee Venezuela's currency controls that have led to widespread inflation and shortage of basic goods. He also said he will order that corporations slash their profit margins by up to 30%.
His party is hoping the moves will revive its chances in the upcoming elections for about 370 mayors and city council members. The opposition has cast the vote as a referendum on Maduro and his policies, which have thus far been unable to prevent record inflation and a shortage in goods like food, cooking oil and even toilet paper.
Before Maduro's seizure of the Daka electronics chain 10 days ago and selling its inventory at a deep discount, the opposition had been poised to do well, capitalizing on the country's soaring inflation and widespread food shortages.
A survey by polling firm Datanalisis for Sept. 23-Oct. 2 showed that 54% of those polled rated Maduro's job performance as negative, compared with 41% who rated his job performance as positive.
"The opposition is going to do very well in the largest cities and state capitals,'' says Tarek Yorde, a Caracas-based political consultant. "I think they are going to win up to 25 of the country's 33 largest cities."
The PSUV and its allies will do better in smaller municipalities, he said. The overall popular vote is too close to call, he said, making it difficult for either side to claim an all-out victory.
Maduro's response to this has been to veer further to the left, broadening his attack on stores that began with appliance merchandisers.
Over the weekend Maduro ordered similar measures against hardware stores, automotive part dealers and tire chains, charging that the owners were charging excessive prices and contributing to an economic war against his government.
"What the president is doing is making sure that we're going to have massive shortages once our inventories are exhausted,'' says Luis Quintero, who owns a hardware store in Caracas. "Come January we're going to have very little to sell because of what the president has done. He needed a scapegoat for his economic policies, and he hit on us."
Lines of 300 to 400 people gathered outside outlets of Epa – the Venezuelan equivalent of Home Depot – after Maduro ordered the company to reduce prices by 30% or face seizure.
National Guardsmen – sporting "Guardians of the People" armbands – stood watch as people hoped to buy paint for the traditional holiday makeovers of their homes.
Similar lines snaked out of some shoe, toy and clothing stores as merchants slashed prices to comply with Maduro's decree that profit margins shouldn't be above 30%. Maduro has claimed that some stores were marking up prices more than 1,000%.
"Don't leave anything on the shelves," Maduro said when he announced his campaign against price gouging. Some of his followers took his words to heart. The Venezuelan Observatory of Social Conflicts said that there were 39 incidents of looting or attempted looting in the first days of the president's campaign.
The head of the country's federation of chambers of commerce warned in a newspaper interview that the government was making a mistake by attacking speculation rather than addressing the failure of its economic policies.
"Speculation is the consequence of system, not the cause,'' said Jorge Ruig in an interview with El Universal. "In this case, it's like breaking the thermometer instead of curing the disease."
Soaring prices and shortages are the result of the government's foreign exchange policies, analysts have said. Venezuela strictly controls access to dollars, and currently has three exchange rates.
The official exchange rate of 6.3 bolivars to the dollar is administered by the Cadivi forex agency, which offers dollars for essential imports. Businessmen and others can also access dollars through a government auction system called Sicad, where the dollar is sold at about 12 bolivars to the dollar.
And then there is the black market rate, which is now above 60 bolivars to the dollar. Many merchants claim they have no choice but to buy dollars on the black market as the government has slashed the dollars its offering due to a fall in international reserves.
Companies say that prices reflect what dollar rate they used to fund their imports. Venezuela imports about 70% of the goods it consumes.
"The government created this mess with exchange controls," says Jorge Rodriguez, a manager at a small convenience store in the central city of La Victoria. "Now, they are trying to shift the blame before the elections, especially given food shortages."
Venezuela, which has the world's largest oil reserves, is in the midst of an economic crunch caused by the country's price and currency controls, which have created shortages of basic necessities such as milk, meat, cooking oil, sugar, corn meal and toilet paper. Inflation is at 54%, the highest in the hemisphere.
"They are destroying the Venezuelan economy,'' opposition leader Henrique Capriles Radonski said during a weekend campaign swing through the eastern state of Sucre. "People are waiting in line outside stores because they know that inventories are drying up."
Still, Maduro's actions have succeeded in diverting some attention from the country's food shortages, and soaring prices. It remains to be seen if members of his United Socialist Party of Venezuela will be able to capitalize on his war against speculation.
Quintero fears that the president and his party may emerge stronger in the short term thanks to the current campaign against businessmen.
"Venezuelans don't think too much about the future,'' he says. "We live in the present. We're destroying the economy with moves like this but very few think that way. In the future, people may have some regrets but right now they're acting like Christmas has come early."