- Associated Press - Monday, January 21, 2013

CARACAS, Venezuela — Mireya Bustamante spent most of the day trying in vain to find flour to bake a birthday cake for her 4-year-old son.

Like most other Venezuelans, the single, 33-year-old office worker has struggled periodically with such food shortages for years and, like many others in the country, thinks they are getting worse. She blames price and currency controls imposed by the government, though authorities contend that unscrupulous business owners are at fault.

“An odyssey that never seems to end” was how Ms. Bustamante described the everyday challenge of finding basic foodstuffs.

“What good are the controls if it becomes so difficult to find basic products?” asked the mother of three. “It’s the government’s fault, not the owners of neighborhood grocery stores.”

Venezuelans have long had to shop around to find scarce foods. Consumers have had particular trouble lately finding staples such as chicken, cooking oil, sugar and coffee, as well as toilet paper and some medicines. The shortages pose a potential political vulnerability for the government while President Hugo Chavez lies bedridden in Cuba, unheard from more than a month after his fourth cancer operation.

Venezuelan soldiers check prices at a supermarket in Caracas that the Chavez government has accused of raising costs. In a country riven by political strife, the military has been a unifying force. (Associated Press)
Venezuelan soldiers check prices at a supermarket in Caracas that the Chavez ... more >

Such economic questions about his socialist model are adding to the political uncertainty sparked by Mr. Chavez’s illness and long absence.

Mr. Chavez’s government has sold cheap, subsidized staples at state-run markets for years to reinforce support among the poor. Officials say price controls, established in 2003, are essential to protect the poor by countering inflation, while government-established exchange rates for foreign currencies are needed to prevent capital flight. Those currencies, chiefly the U.S. dollar, are used to pay for Venezuelan oil.

Economy mismanaged

Many economists say the shortages stem from mismanagement of the economy through the price and currency controls. Official accusations of hoarding and price speculation aim to deflect blame for failed economic policy, government critics say.

“Since the presidential election in October, the government has seriously restricted the amount of dollars it is assigning to the private sector. This is leading to shortages,” said David Smilde, a University of Georgia sociologist and analyst for the U.S. think tank the Washington Office on Latin America.

Many analysts say heavy government spending on social programs and giveaways ahead of Mr. Chavez’s Oct. 7 re-election badly depleted the treasury.

The Chavez government has long been at loggerheads with private business leaders over state-set price controls, and government inspectors began raiding warehouses Jan. 7. The government said Monday that it had recovered 3,088 tons of food this month that is suspected to have been hoarded.

Over the weekend, National Guard troops entered one market in downtown Caracas and confiscated 20 tons of beef, 15 tons of corn and 4 tons of garlic that allegedly violated price controls.

Food imports have risen swiftly in the nation with the world’s largest oil reserves. Domestic production of some food products has declined while inflation has soared, reaching 20 percent last year, the highest in Latin America.

Starting in 2007, Mr. Chavez also stepped up nationalizations of industries and expropriations of private property.

Story Continues →