(THIS ARTICLE IS COURTESY OF NPR AND THE BROOKINGS INSTITUTE)
(THIS ARTICLE IS COURTESY OF NPR AND THE BROOKINGS INSTITUTE)
(THIS ARTICLE IS COURTESY OF REUTERS NEWS AGENCY)
WASHINGTON/CARACAS, Venezuela (Reuters) – The Trump administration imposed sanctions on 13 senior Venezuelan officials as the country’s opposition launched a two-day strike on Wednesday, heaping pressure on unpopular President Nicolas Maduro to scrap plans for a controversial new congress.
With clashes breaking out in some areas, a 30-year-old man was killed during a protest in the mountainous state of Merida, authorities said.
Venezuela’s long-time ideological foe the United States opted to sanction the country’s army and police chiefs, the national director of elections, and a vice president of the state oil company for alleged corruption and rights abuses.
But U.S. President Donald Trump spared Venezuela for now from broader sanctions against its vital oil industry, although such actions were still under consideration.
U.S. officials said the individual sanctions aimed to show Maduro that Washington would make good on a threat of “strong and swift economic actions” if he goes ahead with a vote on Sunday that critics have said would cement dictatorship in the OPEC country.
The leftist leader was also feeling the heat at home, where neighbors gathered from dawn across Venezuela to block roads with rubbish, stones and tape, while many stores remained shut.
“It’s the only way to show we are not with Maduro. They are few, but they have the weapons and the money,” said decorator Cletsi Xavier, 45, helping block the entrance to a freeway in upscale east Caracas with rope and iron metal sheets.
Overall, however, fewer people appeared to be heeding the shutdown than the millions who participated in a 24-hour strike last week when five people died in clashes.
State enterprises, including oil company Petróleos de Venezuela S.A. (PDVSA) stayed open and some working-class neighborhoods were still buzzing with activity.
But hooded youth were clashing with soldiers firing tear gas in various places including Caracas, where opposition lawmakers reported several injuries.
In western Merida state, Rafael Vergara was shot dead when National Guard soldiers and armed civilians confronted protesters, local opposition lawmaker Lawrence Castro told Reuters.
Maduro has vowed to push ahead with Sunday’s vote for a Constituent Assembly, which will have power to rewrite the constitution and override the current opposition-led legislature.
The successor of late leader Hugo Chavez says the new superbody is the only way to bring peace back to Venezuela after four months of violent anti-government protests that have led to over 100 deaths.
The opposition has said that Sunday’s vote, which it is boycotting, is a sham designed to give Maduro dictatorial powers.
One of the U.S. officials warned the sanctions were just an initial round and the administration was readying tougher measures. The most serious option is financial sanctions that would halt dollar payments for the country’s oil and starve the government of hard currency, or a total ban on oil imports to the United States, a top cash-paying client.
But the decision to hold back for now on hitting Venezuela’s oil sector reflected a continuing internal debate that has weighed the risks of inflicting further suffering on Venezuelans, raising U.S. domestic gasoline prices, and causing problems for PDVSA’s U.S. refining subsidiary Citgo.
Even some of Maduro’s opponents have cautioned that he could rally his supporters under a nationalist banner if the United States goes too far on sanctions, as Venezuelans suffer a brutal economic crisis with food and medicine shortages.
Slideshow (17 Images)
Venezuela’s Information Ministry did not immediately respond to a request for comment on the sanctions. In the past, Maduro’s administration has denied charges from Washington, calling them a pretext to try to topple socialism in Latin America and win control of Venezuela’s oil sector.
Among those sanctioned on Wednesday were: national elections director Tibisay Lucena, PDVSA finance vice president Simon Zerpa and former PDVSA executive Erik Malpica, as well as prominent former ministers Iris Varela and Elias Jaua.
Elections boss Lucena is scorned by opposition activists, who have said that she has delayed regional elections and blocked a recall referendum against Maduro at the behest of an autocratic government. The opposition has also long accused PDVSA of being a nest of corruption.
The U.S. officials, who spoke to Reuters on condition of anonymity, said the individuals targeted for sanctions were accused of supporting Maduro’s crackdown, harming democratic institutions or victimizing Venezuelans through corruption, and that additional “bad actors” could be sanctioned later.
Punitive measures include freezing U.S. assets, banning travel to the United States and prohibiting Americans from doing business with them.
“What the United States is doing is bringing to light corruption in the Venezuelan government,” opposition lawmaker Franklin Duarte told Reuters. “This is the second list and we expect another one on Friday.”
Sanctions were imposed on the chief judge and seven other members of Venezuela’s pro-Maduro Supreme Court in May in response to their decision to annul the opposition-led Congress earlier this year.
That followed similar U.S. sanctions in February against Venezuela’s influential Vice President Tareck El Aissami for alleged links to drug trafficking.
Assets in the United States and elsewhere tied to El Aissami and an alleged associate and frozen by U.S. order now total hundreds of millions of dollars, far more than was expected, one of the U.S. officials told Reuters.
Additional reporting by Diego Ore, Andrew Cawthorne, Andreina Aponte, Anggy Polanco, and Fabian Cambero in Caracas, Francisco Aguilar in Barinas, Maria Ramirez in Puerto Ordaz, Mircely Guanipa in Punto Fijo, Isaac Urrutia in Maracaibo, Patricia Zengerle in Washington; Writing by Alexandra Ulmer and Matt Spetalnick; Editing by Andrew Cawthorne, Tom Brown, Toni Reinhold
(THIS ARTICLE IS COURTESY OF THE SAUDI NEWS AGENCY ASHARQ AL-AWSAT)
Protests against socialist President Nicolas Maduro continued in Venezuela on Friday as the opposition urged demonstrators to rally again on Saturday at the offices of the state media regulator.
Riot police in Venezuela fired tear gas and water cannon to stop anti-government protesters from marching on a key military installation Friday during the latest violence in nearly two months of unrest.
The opposition is trying to sway the support of the armed forces, a key pillar of the government of Maduro, who is resisting opposition calls for early elections.
Retired military personnel joined demonstrators who tried to march to the Los Proceres complex, which houses the defense ministry and lies close to a major military base in Caracas.
Friday’s protest was aimed at “demanding that the armed forces lower their weapons and not be complicit in the dictatorship,” said Freddy Guevara, an opposition leader who is vice president of parliament, the only branch of government the opposition controls.
He called on the military to reject a “constituent assembly” to be elected in July and tasked with drafting a new constitution, saying Maduro’s plans “will liquidate Venezuelan democracy forever.”
Masked protesters threw Molotov cocktails at riot police in scenes familiar after nearly two months of unrest.
A 33-year-old man who was injured Thursday night during a protest in the western city of Cabudare died on Friday, bringing the death toll from eight weeks of unrest to 58.
Several people were also injured in the capital on Friday, including opposition lawmaker Carlos Paparoni, who was struck in the leg with a blunt object.
Attorney General Luisa Ortega blamed military police for hundreds of injuries and at least one death.
Protesters brand the socialist president a dictator, blaming him for economic turmoil and food shortages.
Maduro is resisting their calls for early elections, saying the opposition and the United States are plotting a coup against him.
Despite the opposition’s calls for the military to abandon Maduro, the high command has retained its public support for him so far.
A crowd of Maduro’s supporters in red shirts started a counter-demonstration on Friday near the presidential palace in central Caracas.
The president has launched steps to reform the constitution in response to the crisis. His opponents say that is a bid to dodge elections and cling to power.
The National Electoral Council said those who wanted to stand for election to the constituent assembly to rewrite the constitution should sign up next Thursday and Friday.
Meanwhile, the state telecom regulator Conatel has come under scrutiny for its coverage of the protests.
In the mountains above Caracas, two government officials often stand watch over the antennas of TV news network Globovision, poised to take it off air if regulators object to coverage of anti-government protests, according to two station employees.
They said the 24-hour Venezuelan news station receives regular warnings from Conatel against showing live footage of clashes between anti-government protesters and security forces, or broadcasting terms such as “dictatorship” and “repression.”
“It’s a daily threat,” said one of the employees, citing information from station managers and asking not to be identified for fear of reprisals.
“Conatel is making decisions about coverage.”
In contrast to past waves of unrest in Venezuela, particularly during Hugo Chavez’s 1999-2013 rule, the nation’s three main private television stations have provided minimal live coverage of the latest anti-government demonstrations.
They rarely show more than a few minutes of real-time images of protests.
However, the private networks, including Globovision, do give broadly equal weight to opposition and government leaders and supporters in broadcasts – contrary to assertions by critics that they muzzle the opposition.
“If people abroad sampled Venezuela’s TV media directly, as opposed to judging it by what is said about it by the international media and some big NGOs, they’d be shocked to find the opposition constantly denouncing the government and even making very thinly veiled appeals to the military to oust Maduro,” said Joe Emersberger, a Canadian blogger who tracks Venezuelan media and writes for state-funded Telesur network.
“Focusing on ‘live’ coverage is just a way to avoid acknowledging they (protests) are being extensively covered.”
Regulators do openly describe vigilance of coverage, with Conatel director Andres Mendez recently telling state TV the regulator was constantly evaluating Globovision and some of its anchors. “We sometimes have pleasant conversations with (Globovision’s) president,” he said.
Ruling Socialist Party officials scoff at the idea of any censorship, insisting the government is the victim of a US-supported campaign by private local and international media to depict it as a repressive regime and thus justify a coup.
They recall that private media openly backed a bungled 2002 coup against Chavez, and accuse media of exaggerating the protests to weaken Maduro’s government.
Unable to follow the protests live on TV, many Venezuelans have turned to other sources of information, especially online.
“I find out what’s going on from my phone and social media,” said Claudia Mejias, who watches Colombian network Caracol via cable at the hair salon where she works and then shares information with friends via Whatsapp and Facebook.
Though social media platforms have to some extent supplanted TV news, they frequently transmit inaccurate information.
And only 53 percent of Venezuelans have internet access, according to one local research firm.
(THIS ARTICLE IS COURTESY OF THE SAUDI NEWS AGENCY ASHARQ AL-AWSAT)
The state prosecutor has rejected embattled Venezuelan President Nicolas Maduro’s plan to establish a congress as the country spiraled further into chaos when a mob set a man on fire.
Chief State Prosecutor Luisa Ortega stunned the crisis-hit country in March when she lambasted the Supreme Court for annulling the powers of the opposition-led National Assembly.
Since then, she has been a wild card within the publicly homogenous Venezuelan government, whose foes accuse it of seeking to dodge elections by creating a parallel assembly with powers to rewrite the constitution.
Socialist Party official Elias Jaua, in charge of the “constituent assembly” project, confirmed on Monday that Ortega had written him to express her discontent in a letter that was previously leaked on social media.
“It is my imperative to explain the reasons for which I have decided not to participate in this activity,” Ortega’s two-page missive reads.
“Instead of bringing stability or generating a climate of peace, I think this will accelerate the crisis,” she said, mentioning it would heighten uncertainty and alter the “unbeatable” constitution launched under late leader Hugo Chavez.
Jaua acknowledged receipt of Ortega’s letter, but quickly said she was merely expressing a “political opinion,” without any power to change the situation.
“We consider that the only organ the Bolivarian Republic of Venezuela’s constitution empowers to interpret the constitution is the Supreme Court’s constitutional chamber,” he said at a news conference, in reference to the pro-government top court.
Venezuelans are scrutinizing Maduro’s government and the armed forces for any cracks as protesters take to the streets daily to demand early elections, humanitarian aid to alleviate food and medicine shortages, and freedom for jailed activists.
While anti-government protests have brought hundreds of thousands to the streets, Venezuelans are increasingly concerned about spates of nighttime looting and barricades popping up in many neighborhoods.
Masked youths man roadblocks, turning back traffic or asking motorists for a monetary “collaboration” to be allowed through.
The worst nighttime unrest has largely been concentrated outside the capital, however, with the jungle and savannah state of Bolivar hard-hit overnight.
Some 51 buses were burned after a group attacked a transport company in the city of Puerto Ordaz, the prosecutor’s office said on Monday. Barricades and clashes with the National Guard were also rippling through the city on Monday, according to a Reuters witness.
One of the most violent scenes was when a crowd set a man on fire.
“I spotted a man running in front of me as a group of protesters, most of them hooded and with makeshift shields, were chasing him,” said Reuters photographer Marco Bello in an area east of Caracas.
“I followed them, and some 100 meters down the street, the protesters caught the man and surrounded him. When I walked up and went through the circle of people to take pictures, someone had already poured gasoline over the man and set him on fire.”
Though Maduro accused the mob of attacking the man, whom he identified as 21-year old Orlando Figuera, because he was pro-government, Bello said they were calling him a thief.
“All I heard throughout was that he was being accused of trying to steal from a woman. I didn’t hear anyone accusing him of being a pro-government infiltrator,” Bello said.
During Venezuela’s economic and political crisis, lynchings have become common, killing about one person every three days according to monitoring group Venezuelan Observatory of Violence.
With flames on his back, the man ran through the crowd, hit a motorbike on the ground, and tore off his shirt. Some people chased him and threw rocks, while others tried to calm the aggressors and formed a protective circle as the fire abated.
The man survived, though with severe burns.
(THIS ARTICLE IS COURTESY OF THE REUTERS NEWS AGENCY)
Venezuela said it was sending 2,000 soldiers on Wednesday to a border state that is a hotspot of anti-government radicalism after a night of looting in which one 15-year-old died as political unrest rumbled on in the volatile nation.
Most shops and businesses in San Cristobal, capital of Tachira state on the Colombian border, were closed and guarded by soldiers on Wednesday, though looting continued in some poorer sectors, residents said.
People made off with items including coffee, diapers, and cooking oil in a country where a brutal economic crisis has made basic foods and medicine disappear from shelves.
Barricades of trash, car tires, and sand littered the streets, as daily life broke down in the city that was also a hotspot during the 2014 wave of unrest against leftist President Nicolas Maduro.
Hundreds of thousands of people have come onto the streets across Venezuela since early April to demand elections, freedom for jailed activists, foreign aid and autonomy for the opposition-led legislature.
Maduro’s government accuses them of seeking a violent coup and says many of the protesters are no more than “terrorists.” State oil company PDVSA also blamed roadblocks for pockets of gasoline shortages in the country on Wednesday.
In Tachira, teenager Jose Francisco Guerrero was shot dead during the spate of looting, his relatives said.
“My mom sent my brother yesterday to buy flour for dinner and a little while later, we received a call saying he’d been injured by a bullet,” said his sister Maria Contreras, waiting for his body to be brought to a San Cristobal morgue.
The state prosecutor’s office confirmed his death, which would push the death toll in unrest to at least 43, equal to that of the 2014 protests.
’21ST CENTURY JEWS’
With international pressure against Venezuela’s government mounting, the United Nations Security Council turned its attention to the country’s crisis for the first time on Wednesday.
“The intent of this briefing was to make sure everyone is aware of the situation … we’re not looking for Security Council action,” U.S. Ambassador to the United Nations Nikki Haley told reporters after the session.
“The international community needs to say, ‘Respect the human rights of your people or this is going to go in the direction we’ve seen so many others go’ … We have been down this road with Syria, with North Korea, with South Sudan, with Burundi, with Burma.”
Venezuela’s U.N. envoy Rafael Ramirez in turn accused the United States of seeking to topple the Maduro government.
“The U.S. meddling stimulates the action of violent groups in Venezuela,” he said, showing photos of vandalism and violence he said was caused by opposition supporters.
Venezuelans living abroad, many of whom fled the country’s economic chaos, have in recent weeks accosted visiting state officials and their family members.
Maduro on Tuesday likened that harassment to the treatment of Jews under the Nazis.
“We are the new Jews of the 21st century that Hitler pursued,” Maduro said during the cabinet meeting. “We don’t carry the yellow star of David … we carry red hearts that are filled with desire to fight for human dignity. And we are going to defeat them, these 21st century Nazis.”
The German Nazis and their collaborators persecuted and killed six million Jews in the Holocaust during the 1930s and 1940s.
Social media has for weeks buzzed with videos of Venezuelan emigrees in countries from Australia to the United States shouting insults at public officials and in some cases family members in public places.
Maduro’s critics say it is outrageous for officials to spend money on foreign travel when people are struggling to obtain food and children are dying for lack of basic medicines.
But some opposition sympathizers say such mob-like harassment is the wrong way to confront the government.
Graphic on Venezuela’s economic woes: here
(Reporting by Anggy Polanco, additional reporting by Eyanir Chinea, Brian Ellsworth, Girish Gupta and Andrew Cawthorne in Caracas, Julia Symmes Cobb in Bogota and Michelle Nichols at the United Nations in New York; Writing by Girish Gupta and Alexandra Ulmer; Editing by Andrew Cawthorne and Andrew Hay)
(THIS ARTICLE IS COURTESY OF THE WASHINGTON POST)
An opposition activist clashes with riot police during a protest march in Caracas on April 26. (Ronaldo Schemidt/Agence France-Presse via Getty Images)
By Mariana Zuñiga and Nick Miroff April 26 at 7:57 PM
CARACAS, Venezuela — Faced with growing criticism from its neighbors over a slide toward authoritarian rule, Venezuela announced Wednesday it will quit the Organization of American States, the hemisphere’s oldest regional alliance.
The move comes after OAS member states voted Wednesday to convene an emergency meeting of their top diplomats to discuss the worsening humanitarian crisis and deadly political violence that has convulsed Venezuela all month. At least three people were killed in fresh protests Wednesday, including a 20-year-old student struck by a tear gas canister in Caracas.
Speaking on national television Wednesday evening, foreign minister Delcy Rodriguez said President Nicolás Maduro would give formal notice on Thursday of Venezuela’s plans to renounce its OAS membership. During the 24-month period it will take for the country to formally leave, Rodriguez said her government will no longer participate in OAS activities or meetings with other nations she said are trying to “undermine the stability and peace of our country” with the goal of promoting an “invasion.”
OAS general secretary Luis Almagro in recent months has become a fierce critic of Maduro’s, calling him a “dictator” guilty of widespread human rights violations. His concerns are backed by the Washington-based OAS’s largest member states: the United States, Mexico, Brazil, Argentina, Canada, Colombia and several others.
If Venezuela quits OAS, which was founded in 1948, it would join its leftist ally Cuba, whose communist government was expelled in 1962, as the only non-OAS nation in the hemisphere. But Venezuela’s opposition-controlled legislature may attempt to block it, and if Maduro is unseated in elections due to take place late next year, his successor could halt the process.
Opposition supporters attend a rally against Venezuelan President Nicolás Maduro in Caracas as police respond with tear gas. (Christian Veron/Reuters)
Chris Sabatini, a Latin America expert at Columbia University, said Venezuela’s withdrawal risks a major split in OAS if Nicaragua, Bolivia and other Maduro allies follow him in protest.
“At that point, the body that had once represented the hemisphere would be fractured,” Sabatini said, adding that none of the region’s other international organizations has the same institutional heft as the OAS, including the CELAC bloc of states that excludes the United States and Canada.
Venezuela has asked for an emergency CELAC meeting, that, if boycotted by many other Latin America nations, could leave that international body crippled as well, Sabatini noted, saying Venezuela’s decision is a “rejection of long-standing international rules and commitments” that leaves it increasingly isolated.
On Wednesday, thousands of anti-Maduro protesters again seized control of the main highway through Venezuela’s capital, but their march toward government buildings downtown was pushed back by police water cannons and stinging clouds of tear gas.
Although the standoff has played out the same way several times this month, opponents of Maduro insist they will continue to pressure his government through near-daily protests, sit-ins and other acts of civil disobedience.
One 20-year-old protester died after being struck with a gas canister in the city’s upscale Altamira district, authorities said.
As the government lashed out at foreign critics Wednesday, the blocked march underscored the degree to which the country’s political crisis has become a battle of attrition between Maduro and his re-energized opponents.
The country’s political crisis intensified after its supreme court curbed the powers of the opposition-controlled legislature, then reversed the rulings days later.
Caracas was crippled for another day as the government shut down subway and bus systems and choked off highway access to the capital in what appeared to be an attempt to limit the size of the protests.
Thousands marched against the government anyway, some ready with gas masks. By calling their supporters into the streets repeatedly, opposition leaders say they want to wear down security forces and push the government to meet their demands: new elections, the release of political prisoners, acceptance of international aid and a return to democratic rule.
Their ability to summon huge crowds also sends a message to Venezuela’s armed forces, said political analyst Margarita López Maya, because Maduro grows increasingly dependent on their loyalty as he weakens. Opposition leaders are appealing directly to Venezuelan soldiers, asking them to defy Maduro’s orders and force the government to give ground.
“By putting thousands and thousands of people in the streets almost every day, they’re trying to keep the cost of supporting Maduro very high for the armed forces,” said López Maya. “And the government is in a slide that looks irreversible.”
The unrest has left at least 29 dead this month, according to Venezuelan officials, including protesters, police, government supporters, alleged looters and several others who appeared to be bystanders.
The antigovernment surge was triggered by a perfunctory attempt by pro-Maduro judges last month to incapacitate Venezuela’s legislative branch, which the opposition has controlled since it won a landslide victory in the 2015 elections.
The court mostly reversed the decision, but anger swelled again a few days later when the government barred opposition leader Henrique Capriles from running for office.
Venezuela’s downward spiral has left food and medicine in short supply but anger at the government in abundance. Maduro charges that his enemies are trying to sabotage the oil-rich country’s economic recovery and are paving the way for a foreign invasion.
“They want to fill our country with hate, to push our country into violence,” Maduro said Wednesday. He said he plans to announce “a historic measure” in the coming days but did not elaborate.
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Venezuelans erected barricades with garbage and even bathtubs on Monday and snarled traffic with mass “sit-ins” along major thoroughfares to press their demand for early elections as anti-government protests entered a fourth week.
Ten people have been killed during clashes this month between security forces armed with rubber bullets and tear gas and protesters sometimes throwing rocks and Molotov cocktails.
At least 10 people have also died during night-time looting.
President Nicolas Maduro’s socialist government accuses foes of seeking a violent coup with U.S. connivance, while the opposition says he is a dictator repressing peaceful protest.
The opposition’s main demands are for elections, the release of jailed activists and autonomy for the opposition-led congress. But protests are also fueled by the crippling economic crisis in the oil-rich nation of 30 million people.
“I have an empty stomach because I can’t find food,” said Jeannette Canozo, a 66-year-old homemaker, who said police used rubber bullets against protesters blocking a Caracas avenue with trash and bathtubs in the early morning.
Demonstrators wore the yellow, blue and red colors of Venezuela’s flag and held signs denouncing shortages, inflation and violent crime as they chanted: “This government has fallen!”
In the capital, they streamed from several points onto a major highway, where hundreds of people sat, carrying bags of supplies, playing card games, and shielding themselves from the sun with hats and umbrellas.
In western Tachira, at another of the “sit-ins” planned for all of Venezuela’s 23 states, some played the board-game Ludo in the street, while others played soccer or enjoyed street theater.
At protests in southern Bolivar state, a university professor gave a lecture on politics while some people sat down to play Scrabble and others cooked soup over small fires in the streets.
The demonstrations were largely peaceful by mid-afternoon, although there were some scattered reports of security forces dispersing people with tear gas.
“In the morning they appear peaceful, in the afternoon they turn into terrorists and at night bandits and killers,” senior Socialist Party official Diosdado Cabello said. “Let me tell them straight: we’re not going, Nicolas (Maduro) is not going.”
WORST UNREST IN THREE YEARS
This month’s unrest is Venezuela’s worst since 2014 when 43 people died in months of mayhem sparked by protests against Maduro, the 54-year-old successor to late leftist leader Hugo Chavez.
The latest protests began when the pro-government Supreme Court assumed the powers of the opposition-controlled congress. The court quickly reversed course, but its widely condemned move still galvanized the opposition.
The government’s disqualification from public office of two-time presidential candidate Henrique Capriles, who would be an opposition favorite to replace Maduro, gave further impetus to the demonstrations.
“I’m staying here until 6 p.m. We’re simply warming up because the day will come that we are all coming to the street until this government goes,” said Gladys Avariano, a 62-year-old lawyer, under an umbrella at the Caracas “sit-in.”
More than 1,400 people have been arrested this month over the protests, with 636 still detained as of Monday, according to local rights group Penal Forum.
Facing exhortations from around the world to allow Venezuelans to vote, Maduro has called for local state elections – delayed from last year – to be held soon.
But there is no sign the government will allow the next presidential election, slated for late 2018, to be brought forward as the opposition demands.
Given the country’s economic crisis, with millions short of food, pollsters say the ruling Socialist Party would fare badly in any vote at the moment.
Trying to keep the pressure on Maduro, the opposition is seeking new strategies, such as a silent protest held on Saturday and Monday’s “sit-ins”.
While some small demonstrations have been held in poorer and traditionally pro-government areas, most poor Venezuelans are more preoccupied with putting food on the table.
(Additional reporting by Andreina Aponte, Carlos Garcia Rawlins and Efrain Otero in Caracas, and Anggy Polanco and Carlos Eduardo Ramirez in San Cristobal; Writing by Girish Gupta and Andrew Cawthorne; Editing by Tom Brown and James Dalgleish)
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Published December 29, 2016
NEW DELHI – Fifty days ago, India yanked most of its currency from circulation without warning, jolting the economy and leaving most citizens scrambling for cash. As the deadline for exchanging the devalued 500- and 1,000-rupee notes for new ones hits Friday, many Indians are still stuck waiting in long bank lines.
Empty ATMs and ever-changing rules are preventing people from withdrawing money, and many small, cash-reliant businesses from cinemas to neighborhood grocery stores are suffering huge losses or going under.
Despite those problems, Prime Minister Narendra Modi says his Nov. 8 demonetization decree has succeeded in uncovering tax evasion and cracking down on graft. The Indian government is urging patience, insisting it’s playing a long game that will eventually modernize Indian society and benefit the poor.
So far, despite the widespread inconvenience and costs, most of the country’s 1.25 billion citizens appear to be taking Modi’s word for it.
Here are a few things to know about India’s massive cash overhaul:
HARDSHIP FOR THE POOR
Modi’s announcement that 500 and 1,000 rupee bills — making up 86 percent of India’s currency — were no longer legal tender has posed an enormous hardship for millions of people who use cash for everything from salaries to cellphone charges.
Almost immediately, serpentine lines appeared at banks and ATMs as people waited hours to deposit or exchange old currency notes for new bills. Since authorities only began printing the new bills after the policy was announced, demand vastly exceeds supply and cash machines often run dry. Daily commerce in essentials including food, medicine and transportation screeched almost to a halt.
Worst affected were the country’s hundreds of millions of farmers, produce vendors, small shop owners and daily-wage laborers who usually are paid in cash at the end of a day’s work. Many lost their jobs as small businesses shut down, compounding their poverty.
Pankaj Aggarwal, owner of a clothing shop in the Old Delhi neighborhood of Chandni Chowk says his sales crashed by 70 percent.
“You can imagine what our business is like now. It will be some time before our sales normalize,” he said.
Modi appears to have succeeded in promoting the cash overhaul as a “pro-poor” policy, tapping into deep anger among the have-nots toward wealthy elites.
“The first two months have been so bad for us, we don’t even have enough money to buy food,” said daily wage laborer Neeraj Mishra, 35. “Overall, I think Modi has done some good. People with a lot of money are the ones who have been troubled. I don’t have enough cash for it to bother me much.”
Political scientist Sreeram Chaulia, dean of the Jindal School of International Affairs in New Delhi, describes the strategy as “classic populism.”
“Some people are outraged, but are hesitant to come out and say it because they don’t want to be branded as anti-national or self-centered,” he said.
A BRUISED ECONOMY
The wide impact of the demonetization won’t be known until the government issues its next quarterly GDP figures in February, but the Reserve Bank of India already has shaved half a percent from this year’s GDP growth forecast, to 7.1 percent.
Since domestic commerce drives most economic activity, analysts have expressed alarm over the scale of economic and social disruption and are warning a contraction is likely in coming quarters.
“The countless unpredictable consequences that will continue to show in the coming weeks and months mean that it is, in effect, a huge gamble,” said Jan Zalewski, an Asia expert with the Britain-based risk assessment firm Verisk Maplecroft. “Inflicting such huge costs for what is an uncertain outcome is problematic.”
Real estate, tourism, transportation and gold and gems have been hit the hardest, along with informal sectors that rely mostly on cash.
Prices are forecast to rise since the cash crunch is pinching supplies of all sorts of goods.
The country’s banks, however, are seeing banner business. The central bank said old notes worth 13 trillion rupees ($191 billion) had been deposited as of Dec. 10, with many more expected by Friday’s deadline.
That should improve bank liquidity and in turn encourage more lending to boost economic growth.
MIXED MESSAGES, CHAOTIC RULES
The Finance Ministry and central bank have issued at least 60 different directives, some of them contradictory, about such issues as how much money can be withdrawn from bank accounts and which documents are needed for depositing old cash. The mixed messages have compounded the overall chaos and shaken investors’ confidence.
“There appears to be less trust in many institutions, including the Reserve Bank and other banks. That is one important behavioral change that has been ushered in,” said Mihir Sharma, senior fellow at the Observer Research Foundation, a New Delhi based think tank.
Financial experts are baffled about how to evaluate the move.
“One of the major problems with the demonetization move is that success is so difficult to measure,” Zalewski said. “In and of itself, it can’t end black money, stop terrorism funding and the counterfeiting of notes.”
NEW BILLS, OLD HABITS
The idea that swapping old currency notes for new ones would wipe out tax evasion has already been proven naive. Over the last seven weeks, Indian income tax authorities uncovered more than 32 billion rupees ($477 million) in undeclared wealth held in new notes, foreign currency, gold and other commodities.
The Finance Ministry found enormous stashes of new currency bills secreted away by corrupt bank managers. Axis Bank’s CEO Shikha Sharma said she was “embarrassed and upset” after it was found managers at the bank had used the stolen funds to fake accounts and launder customers’ untaxed savings for a premium.
A GLOBAL TREND?
A month after Modi scrapped the high-denomination notes, Venezuela’s president announced that the 100-bolivar notes that account for more than three-quarters of the country’s cash would be taken out of circulation.
Skyrocketing inflation had taken the value of the Venezuelan notes to 2 U.S. cents from 10 cents in the past year.
But while India’s cash overhaul has been relatively peaceful, Venezuela’s was not.
When no new bolivar notes appeared to replace the old ones, riots and looting erupted in towns across Venezuela, whose economy was already in shambles. Hundreds of grocery stores were damaged or destroyed. Ultimately, the government extended use of the old 100-bolivar notes until Jan. 2.
Venezuelan President Nicolas Maduro declared the abrupt cash overhaul an economic triumph, claiming people were racing to deposit the old notes into banks. He did not say how much was deposited.
In Pakistan, opposition lawmakers passed a resolution last week calling for the withdrawal of the country’s highest-denomination note from circulation. The government rejected that move, saying there was no need to discontinue the country’s 5,000-rupee note, worth about $48.
“The very notion of cancellation of such convenience in transactions is preposterous and unequivocally denied,” the Finance Ministry said in a statement.
Associated Press writers Fabiola Sanchez in Caracas and Munir Ahmed in Islamabad contributed to this report.
(THIS ARTICLE IS COURTESY OF REUTERS NEWS AGENCY)
Venezuela’s opposition-led National Assembly on Sunday vowed to put Nicolas Maduro on trial for violating democracy, days after authorities nixed a recall referendum against the unpopular socialist president.
The measure is unlikely to get traction given the leftist government and a compliant Supreme Court have systematically undermined the legislature, but it further heightens tensions in the crisis-hit OPEC nation.
“It is a political and legal trial against President Nicolas Maduro to see what responsibility he has in the constitutional rupture that has broken democracy, human rights, and the future of the country,” said opposition lawmaker Julio Borges during a special congressional session on Sunday.
The opposition coalition, seeking to end 17 years of socialism in the South American nation, says Thursday’s suspension of its drive for a plebiscite against Maduro shows Venezuela has abandoned democracy.
Ruling party officials have accused the opposition of fraud in their signature drive and say the coalition is seeking a coup to gain control of Venezuela’s vast crude reserves, the world’s largest.
Despite that oil wealth, Venezuela has plunged into an unprecedented economic crisis, with many people skipping meals due to shortages and soaring prices.
Many Venezuelans fear that preventing a the referendum increases chances of social unrest in the already volatile and violent country.
The opposition coalition has called for a major peaceful protest on Wednesday, dubbed “The takeover of Venezuela” to keep pushing for the plebiscite.
(Reporting by Deisy Buitrago; Writing by Alexandra Ulmer
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