For a better understanding of this post, please read part 1
In Part 1, the black dollar direct effect on the population was elaborated. The dollar negro also has another role, indirect, in causing the insecurity. This part 2 explains the main reason justifying the recent decision of the Venezuelan government of closing the border with Colombia.
Regulated Goods and Smuggling:
Most of the basic goods and necessities are price-regulated, and selling a regulated good at an unregulated price is subject to sanctions, often severe ones. Examples of regulated products are flour, sugar, gasoline, toilet paper and medicines. If these goods are imported, the CENCOEX (6.3 Bsf/$) rate is used.
The local production is not sufficient, the government is often $-stingy to permit the importation of goods to be regulated or the importation of raw materials necessary for local production (like malt for beer). This naturally causes the shortages and the tremendous lines (colas) of people trying to get the regulated goods, in front of supermarkets and pharmacies. The transportation of these goods and necessities is sometimes a cause of the problem, as the trucks could be attacked and stolen. Some people would just hijack a bakery to steal the food, in very desperate cases.
Aside from those points, another issue seem to be the main cause of the shortages: smuggling. It is said that perhaps 40% of regulated goods are illegally smuggled outside the country (mainly to Colombia). Some of the goods are reintroduced to Venezuela as an imported product, other are just sold in Colombia and the COP are converted to $ and then to Bsf in the black market (basically from 6.3 Bsf to more than 100 times that rate).
One of the smuggling schemes is the following.
The good is bought (or stolen) at basically nothing (since it is regulated in Venezuela) and is sold to some guy in Colombia, in COP (Colombian pesos, convertible to $). The guy in Colombia resells the good to Venezuela which will regulate it: the government is forced to pay in $. The smuggler and the guy in Colombia (surely related) will receive huge profits converting these $ or COP to Bsf the black market. In some cases, the money made will be used to extend his (criminal) network. So you're stuck in a growing spiral.
Smuggling is very often facilitated or orchestrated by corrupted police and army officials and ex-officials. They particularly traffic gasoline. One gasoline truck storing 30000 Liters can make 3000 Bsf in Venezuela, or around 4.2$ (black market rate in September 2015). It's around 1$/L for gasoline in Colombia. Just imagine the profit that the smuggler is making by selling his gasoline at 0.2$/L. I will let you do the math.
Corrupted officials ex-officials:
Aside from their role in the smuggling explained above, they are the ones who own guns and/or can procure them very easily, selling them to gangs and individuals who will cause terror and insecurity. I have heard that at least one crime over two involve a corrupted current or ex official.
Regulated Goods and Smuggling:
Most of the basic goods and necessities are price-regulated, and selling a regulated good at an unregulated price is subject to sanctions, often severe ones. Examples of regulated products are flour, sugar, gasoline, toilet paper and medicines. If these goods are imported, the CENCOEX (6.3 Bsf/$) rate is used.
The local production is not sufficient, the government is often $-stingy to permit the importation of goods to be regulated or the importation of raw materials necessary for local production (like malt for beer). This naturally causes the shortages and the tremendous lines (colas) of people trying to get the regulated goods, in front of supermarkets and pharmacies. The transportation of these goods and necessities is sometimes a cause of the problem, as the trucks could be attacked and stolen. Some people would just hijack a bakery to steal the food, in very desperate cases.
Aside from those points, another issue seem to be the main cause of the shortages: smuggling. It is said that perhaps 40% of regulated goods are illegally smuggled outside the country (mainly to Colombia). Some of the goods are reintroduced to Venezuela as an imported product, other are just sold in Colombia and the COP are converted to $ and then to Bsf in the black market (basically from 6.3 Bsf to more than 100 times that rate).
One of the smuggling schemes is the following.
The good is bought (or stolen) at basically nothing (since it is regulated in Venezuela) and is sold to some guy in Colombia, in COP (Colombian pesos, convertible to $). The guy in Colombia resells the good to Venezuela which will regulate it: the government is forced to pay in $. The smuggler and the guy in Colombia (surely related) will receive huge profits converting these $ or COP to Bsf the black market. In some cases, the money made will be used to extend his (criminal) network. So you're stuck in a growing spiral.
Smuggling is very often facilitated or orchestrated by corrupted police and army officials and ex-officials. They particularly traffic gasoline. One gasoline truck storing 30000 Liters can make 3000 Bsf in Venezuela, or around 4.2$ (black market rate in September 2015). It's around 1$/L for gasoline in Colombia. Just imagine the profit that the smuggler is making by selling his gasoline at 0.2$/L. I will let you do the math.
Corrupted officials ex-officials:
Aside from their role in the smuggling explained above, they are the ones who own guns and/or can procure them very easily, selling them to gangs and individuals who will cause terror and insecurity. I have heard that at least one crime over two involve a corrupted current or ex official.
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