Caracas Chronicles

Photo: El Nacional, retrieved.

Venezuelans have been openly transacting in cash dollars since 2015. In 2017, words like “Zelle,” “remittance,” and “BofA” (Bank of America) first appeared; in 2018, they became common in the streets, as a consequence of the cash crisis; in 2019 and after the nationwide blackout, it’s so open that we’re in mid-November and we just saw Nicolás Maduro saying how this “dollarization” is an oxygen valve that slows down hyperinflation. 

That very same “criminal dollar” of old.

And it seems like very few remember that our legal currency is the bolivar. Many stores write down prices in bolivars, sure, but they’re also marked in dollars, and Venezuelans are programmed to calculate everything immediately: “This kilo of meat is 90,000 bolivars. That’s $3!” 

The same goes for drugstores and restaurants, both accept foreign currency even if you’re paying for things that are cheap. You know the informal valets who keep an eye on your car and help you find a parking spot? They’re not taking bolivars. A couple of months ago, when I tried to hand 2,000 bolivars to a valet, he said, “I can’t do a thing with this. I need greens, or you’re not taking your car.” Even tips must be in dollars. 

All of this is illegal. Where are the dollars coming from?

“Legal” Lettuce 

Henkel García, financial analyst and director of Econométrica (a local consultant company), says that there are several sources. First, he mentions the already dismantled CADIVI system: many Venezuelans have dollars from the CADIVI era (since a small amount of bolivars were enough to buy dollars in banks or trips) and those were turned into savings. “Many Venezuelans used those savings to survive the blackout, the breaking point after which a public, open trade in dollars began.” 

The collapse of the national banking system during the March blackout made those greenbacks come out from hiding, but other dollars come in from the border.

The collapse of the national banking system during the March blackout made those greenbacks come out from hiding, but other dollars come in from the border. 

People who go to Brazil or Colombia to buy goods, or who live right by the border, exchange their bolivars for dollars or Colombian pesos, the currency that states like Tachira, Merida, Trujillo and even Lara use the most, explains the analyst. The same goes for trade in Brazil, at Boa Vista, with dollars or reais that openly flow in Bolivar state, down south. 

Another source of dollars are travellers. People who leave the country and before returning they make a stop at an ATM to withdraw what they can, so they can buy food, clothes, school supplies or home appliances in Venezuela. The remittances sent by migrants also play a role, according to García: most of it comes into the country through digital means, but when migrants know of someone going back to the country, they usually ask for help: “Give my mom this money,” “here’s some money for my dad” or “can you do me a favor and take $200 for my sister?” 

The director of Econométrica clarifies that it’s not exclusively citizens feeding this odd dynamic. The State has done its part, too: “The Maduro administration has introduced euros into the financial system,” meaning loans or payment for oil and other minerals that the regime has obtained to dodge the American financial system and its sanctions. 

Smuggled Dollars 

Luis Izquiel, lawyer and citizen security expert, says that certain organized crime activities could be the source of a large portion of the cash we see on the streets today. Mainly, the gold contraband. 

Certain organized crime activities could be the source of a large portion of the cash we see on the streets today.

“It’s estimated that 66% of the gold from Bolivar state is moved far from the Venezuelan Central Bank, and sold illegally,” says Izquiel. “These transactions are carried out in cash and those banknotes circulate in our economy.” 

Naturally, drugs are another source. “Venezuela has become one of the main hubs for Colombian drugs that are then shipped on boats and planes to Central America, Mexico and finally the U.S.; there’s another route to Europe, mainly through Africa.” 

This role as a large South American platform for drug traffic works in dollars and euros. 

The third way the lawyer mentions is the gasoline contraband, since fuel is pretty much free in Venezuela. Izquiel says that sales of Venezuelan gas in Colombia or Brazil are done in foreign currency; most smugglers take the money they get from these transactions and turn them into dollars. 

Legally or illegally, foreign currency is here to stay. The fact that Nicolás accepts it is a sign. They come from migrants, contraband, people who work for transnational companies and private companies that offer bonuses to their employees as incentives, all of this in front of a State that, for the moment, is passively watching. So while the Venezuelan diaspora expands across America, America expands its influence in this “socialist” Venezuela. 

And what better way to do it than using the true icon of capitalism?