Venezuela’s moribund economy shows a pulse amid US sanctions

CARACAS, Venezuela (AP) — Errol Irausquin is carving out a profitable niche with his burgeoning Fat Panda restaurant business in Venezuela’s capital, despite an economic collapse that has driven millions from their crumbling homeland.

Capitalizing on his success selling from a food truck, Irausquin brought his Asian-influenced menu to a new restaurant featuring spicy sandwiches that drip down customers’ arms in an upscale corner of Caracas. A second location is coming soon — the sign of a little froth amid Venezuela’s otherwise economic nightmare.

“Part of the population decided to stay here in the country,” Irausquin said. “People need things to do.”

He’s not alone. In seeming defiance of the doomsday predictions from Washington about the economy’s impending implosion, a number of trendy restaurants and shops packed with imported consumer goods, from Froot Loops to iPhones, have popped up in the last few months across Caracas.

Driving the resurgence is President Nicolas Maduro’s decision in May — little appreciated at the time — to loosen rigid currency controls in place for 16 years. That step allowed banks to buy and sell U.S. dollars at any exchange rate, making it far easier for entrepreneurs to operate in a currency accepted internationally. At the same time, socialist authorities are looking the other way as the greenback has replaced the worthless local currency, the bolivar, as an accepted form of payment for purchasing even a slice of pizza.

Some even posit that with the country increasingly isolated, well-connected businessmen, some of them facing sanctions themselves, are repatriating ill-gotten gains from government contracts and the illicit sale of gold and drugs to fund the construction of new office buildings and businesses.

The result is a rare adrenaline boost for what has been a moribund economy. For the first time in years, what’s still among the world’s highest inflation rates is slowing, supermarkets are filling up and capitalist instincts are being unleashed.

Economists caution that the surprise bounce is very limited and unlikely to last. Sweeping U.S. sanctions, which were tightened last week when the Trump administration threatened to target foreign companies found doing business with Venezuela’s government, are likely to exacerbate an economic fall years in the making.

Nonetheless, for Venezuela’s shrinking elites it’s a reprieve from years of scrounging across empty store shelves and driving past their favorite restaurants only to see they’d closed their doors.

A party-like street fair appeared one recent Sunday when a line of food trucks set up along a small park as the clouds cleared following a tropical downpour. Live music and glowing strings of lights drew a crowd, creating a feeling that life had returned to normal.

Luis Vicente Leon, president of Caracas-based polling firm Datanalisis, says the divide between Venezuela’s haves and have-nots is growing more stark as the crisis grinds on, with the primary fault line being access to U.S. dollars.

While the wealthy one-fifth have long thrived on savings in foreign banks and paychecks from international firms, an increasing number of Venezuelans depend on $4 billion sent annually in remittances from the over 4 million compatriots who’ve fled in recent years.

The return of a few comforts after years of scarcity underscores the limited effectiveness of sanctions in dislodging Maduro from power, said Leon. Protests led by Juan Guaido, who is recognized as Venezuela’s rightful leader by the U.S. and more than 50 countries, have been fading in the capital, although turnout in the interior, where economic conditions are as desperate as ever, remains high.

The vast majority of Venezuelans live in deepening poverty, without help from abroad. Roughly 80% depend on government-subsidized food and earn a monthly minimum wage in bolivars equal to $3.50, which shrinks each day under inflation that topped 1 million percent last year, according to the International Monetary Fund.