Things That Matter

Giant Costco Products Are Popping Up On Shelves Across Venezuela And Many Are Left Wondering How

The relationship between the United States and Venezuela is perhaps the most confrontational it has ever been, as the Trump and Maduro administration often trade jabs on social media and through diplomatic channels. The United States is set on decimating the economy of the country by way of economic and trade sanctions, while the government led by Nicolás Maduro has definitely not made things easier for its citizens.

Measures of austerity and the fact that many foreign companies are fleeing the country has led to daily financial struggle and lack of even the most basic products for Venezuelans, many of whom have decided to flee to the United States, Australia and Europe if they belong to the elite, or to neighbouring Colombia as migrants if they have to survive as refugees. However, if Latin Americans set themselves apart for anything, it  is the creative ways in which we survive and find opportunities that few would spot.

An increasing influx of US products are flooding Venezuelan shelves.

Credit: Manaure Quintero / Reuters

But how is this possible if trade between the countries is practically at a standstill? Well, people have taken matters on their own hands. Venezuelan businessmen have established a distribution network of basic products such as non perishing food and toiletries bought in bulk at discount stores in Florida such as Costco. These products are then sent to Venezuela on a door to door delivery service. Once in Venezuela they are put on the shelves of bodega style shops called bodegones.

Reuters reports on how this informal economy works: “The products move in bulk via shipping companies with bases in south Florida who have this year enjoyed a 100% exemption of import duties and waiver of some paperwork at the Venezuelan end, the sources added.”

Because the formal commercial relationships between Venezuela and the US are stalled, this type of activity is possible and provides what Reuters calls an unlikely valve that relieves some pressure for Maduro’s government, which has led to an unprecedented lack of basic products such as toilet paper. 

Some of the shops are even named after the original United States stores.

Credit: Manaure Quintero / Reuters

This shop located in Puerto Cabello, Venezuela, is named after Walmart, and we are sure that the headquarters in the United States are either unaware or don’t really care. Costco is not the only shop in which buyers in the United States acquire goods to send to Venezuela (for a fee, of course). There are services through which Venezuelas can mail goods to United States addresses from shops like Target. This is a type of informal economy that has boomed due to the scarcity of local products.

However, let’s keep in mind that the social gap is huge, perhaps insurmountable at this point, and that these products are sold at hefty prices that few can afford. As Reuters reports: “Though the goods in the corner-shops are out of reach for most bolivar-earning Venezuelans, a well-heeled elite with dollars makes for a viable business in indulgence products.”

Hector Mambe, owner of this Mini Walmart, told Reuters: “Everything our customers want from the United Sates, we’ve managed to offer here!”

The response of US companies? Deaf silence. As Reuters informs us: “Costco declined to comment, while Walmart did not respond to a request. Venezuela’s Information Ministry, tax authority and state port agency also did not respond to requests for comment.” Business seems to be booming right?

And many of these shops are dollar-only.

Credit: Manaure Quintero / Reuters

As the Bolivar depreciated, Maduro lifted the ban on dollar transactions. Just like happened in socialist Cuba before with tourist-only shops, there are establishments in Venezuela that only trade in US dollars, which is counter intuitive to the anti-imperialist rhetoric of the post-Chavez Venezuela. Other Global South economies have relied in the US dollar in the past, such as Cambodia, where the booming tourist industry trades almost exclusively in the foreign currency. 

And this practice is out in the open, it has ceased to be secretive, and people are criticizing it.

Timothy Aeppel, a journalist for Reuters, stresses the irony of not being to buy medicine in the country, but cake mix is now available if you have the cash. One of the many contradictions of the Maduro regime. Even though the government still has some support from fellow socialist nations in South America and elsewhere, even the most fierce defenders of the Venezuela Chavista sometimes find it hard to justify the economic decisions that have led the South American nation to a generalized state of anxiety and desperation.

While others think that this only serves the elites.

Yes, there are more products available now due to this strange availability of US brands, but is this another way of just perpetuating the class differentials between those who support Maduro and those who oppose him?

Venezuelan Politics Are In Turmoil As Maduro’s Military Blocked The Opposition From Entering Parliament

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Venezuelan Politics Are In Turmoil As Maduro’s Military Blocked The Opposition From Entering Parliament

Paul Rivera Gallegos / Getty

It is sometimes hard to keep up with the roller coaster that are current Venezuelan politics. Since opposition leader Juan Guaido self-proclaimed as Interim President in his capacity as head of the National Assembly, international actors have recognized him as the leader of the South American nation while on the ground political power keeps resting on the socialist government led by Nicolas Maduro. Now a new development has maintained the status quo when it seemed that Guaido would get a boost in his political influence and power and present a bigger challenge to the Maduro regime that some, including most US politicians, call a “dictatorship”. Guaido was set to be re-elected as head of Congress but he was blocked from entering the building by security forces. 

Maduro’s government snatched the National Assembly from opposition leader Juan Guaido and las cosas se pusieron color de hormiga.

The Venezuelan government has now used its security forces to stop Guaido from being re-elected as Head of Congress. As Reuters reports from Caracas: “Troops with riot shields blocked opposition leader Juan Guaido from entering parliament for what was expected to be his re-election as head of Congress, at one point pulling him off the compound’s iron railings after he tried to push past security forces”. Because Guaido could not be elected, Maduro’s party, the Socialist party, handed the post to Luis Parra, who has recently faced corruption allegations. 

However, an alternative vote was held at the headquarters of a newspaper that is favorable to the opposition, and Guaido was re-elected.

National Assembly President Juan Guaido swears himself in as President of the National Assembly with opposition lawmaker votes at the newspaper El Nacional’s headquarters in Caracas, Venezuela, Sunday, Jan. 5, 2020. (AP Photo/Andrea Hernandez Briceño)

So now there are two de facto Heads of Congress in a country that is deeply divided in political issues and is facing economic challenges that seem insurmountable. The opposition’s tally shows that 100 out of 167 legislators voted for Guaido. 

World powers are divided over Venezuela and that is a worrying sign, the United Nations is growing increasingly worried.

As if the tension over Iran wasn’t enough to get many thinking that the world is on the verge of a major military clash, Venezuela is another hotspot of geopolitical tension. While the European Union, the United States and most Latin American countries have condemned Maduro’s forceful cling to power, Chine, Russia and Cuba remain supportive of his regime. Venezuela has rich oil reserves and sits at a key location in the Southern Hemisphere.

Things could get ugly very quickly. US Secretary of State Mike Pompeo congratulated Guaido on winning a second term as Head of Congress: “Venezuela’s political parties came together in a resounding display of unity to support Juan Guaido’s re-election. No regime thugs, no jail cells, and no bribery or intimidation can subvert the will of the Venezuelan people.”

But regardless, things in Caracas remain tense and opposition legislators are being stopped at checkpoints around Congress. As reported by Sputnik News, the United Nations is worried at the recent developments and has said through its spokesperson: “The Secretary-General is following with concern the events surrounding the election of the president of the National Assembly, which make urgently needed dialogue even more difficult to achieve. The Secretary-General calls on all actors to take immediate steps to lower tensions and to work towards a peaceful and sustainable solution to the political crisis”. 

The United States has condemned the move and congressmen have used harsh words.

The United States has long had an antagonistic relationship with the socialist regime in Venezuela first led by Hugo Chavez and then by Nicolas Maduro. The most recent development in the convoluted political landscape in Venezuela has been received with harsh words by US congressmen.

For example, congressman Albio Sires (D-NJ), Chairman of the Subcommittee on the Western Hemisphere, Civilian Security and Trade, released the following statement: “Having dismantled every other democratic institution in Venezuela, yesterday the Maduro dictatorship tried to seize the country’s last vestige of democracy, the National Assembly. Maduro’s months-long effort to bribe legislators to vote against Juan Guaidó failed, so he used force as a last resort to block assembly members from entering the chamber and re-electing Juan Guaidó as their leader.”

US politicians still recognize Juan Guaido as the Interim President.

The statement continued its condemnation of Maduro’s effort to maintain the status quo: “Yesterday’s action changed nothing; it merely revealed the Maduro dictatorship’s desperation to cling to power at any cost. I will continue to work with my colleagues and the legitimate government of Venezuela, led by Interim President Juan Guaidó, to support the Venezuelan people in their continued effort to restore democracy. The need for free, fair, and fully democratic elections in Venezuela has never been more urgent.”

Mexico Is Increasing Minimum Wage By Record Levels But It’s Still Shockingly Too Low

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Mexico Is Increasing Minimum Wage By Record Levels But It’s Still Shockingly Too Low

@MexicoInsurance / Twitter

There’s been a lot of changes since Andrés Manuel López Obrador became president of Mexico, and not everyone would say the changes have been positive. Unfortunately, the situation in Mexico has gotten increasingly worse. There’s an increase in violence. The cartel seems to have continued their reign — and not just in the drug industry but in the farming one as well. However, there is some good news — sort of. 

Mexico’s president has announced they are increasing the minimum wage by 20 percent. 

This is the first time the government has made any changes to the minimum wage in 44 years. 

“We continue to gradually recover the value that the minimum salary has lost over time without creating instability, without creating inflation,” Lopez Obrador said, according to Reuters. “This is an important increase.”

While the increase is definitely welcomed, there are some issues. For starters, the wage hike means Mexicans will now be able to earn 123.22 pesos or $6.50 a day.

You read that correctly, not $6.50 an hour, but a day! That day rate feels incredibly low. The northern region of Mexico will see an increase of  5 percent to 185.56 pesos. Lawmakers were in talks to request a 29 percent increase. However, the concern is that while people need an increase in wages, the inflation rate has slowed down. 

Economists say that the increase could actually hurt Mexico’s economy in the long run because the wage increase doesn’t correlate with how their economy is doing. 

“In the past, real wage growth had been generally aligned with productivity,” economists at JPMorgan noted, according to Reuters. “The new wage policy has opened a significant wedge between the two, which eventually will likely create economic imbalances.”

But the president has urged since before his election that in order to see Mexico prosper and to keep violence down is to help the poor. 

“This is going to help the economy, of course, because it strengthens the internal market,” Lopez Obrador said, according to Time magazine. “If there’s more revenue, it helps reactivate the economy, there are more sales for merchants.”

Some also point out that if employers are forced to pay their workers at a higher rate than they’re expected to — while the economy isn’t at a good point, then they may have to fire some of their employees ultimately. 

No one is disputing that people in Mexico should be paid more, but the problem is, economically speaking, it will be a challenge for employers to increase their employees’ paychecks if the economy and inflation are not prospering. 

This is not the first time Lopez Obrador has increased the minimum wage. Last year he did so as well, but this time the increase is a lot more significant. 

Last year, President Donald Trump also raised concerns about Mexico’s low minimum wage standards, but not because he was looking out for the people of Mexico. He said the low wages would be an incentive for companies in the U.S. to move their laborforce to Mexico. Mexico’s minimum wage standard is low, but other Latin countries are pretty bad as well. 

According to the Tecma Group of Companies, “The minimum wage in Mexico is not only low when compared to its NAFTA trading partners, but is also low compared to workers’ wages in the other countries of Latin America. For instance, Mexico’s minimum wage is 44 percent of that of Brazil and is only 27 percent of what is paid to laborers in Argentina. In terms of a comparison with a country outside of the region, Mexico’s minimum wage represents only 16 percent of that of Spain.”

How this move will play out for Mexico remains to be seen. The increase goes into effect on Jan. 1, 2020. 

The shift in the economy, whether good or bad, will take some sort of shape after six months. If all goes well — in other words, if employers don’t fire their workers, and the economy grows — then perhaps the president by increase the minimum wage again. But we can’t imagine he would raise the minimum wage if the economy remains at this low point. 

READ: The Cartels In Mexico Are Taking Over The Avocado Industry By Any Means Necessary