Dollars flood Venezuela as Maduro abandons 'socialismo' in favour of Chinese system

Perched on the mountain range that divides the sprawling city of Caracas from the Caribbean Sea, Venezuela’s Hotel Humboldt can be seen from nearly all corners of the capital.

The 65-year-old, 14-floor structure can only be reached by cable car from the city below. It currently boasts 69 rooms, six dining areas, a casino, a night club, and a swimming pool and spa.

“It will be the first seven star hotel in Venezuela,” President Nicolas Maduro once proudly proclaimed as the 1956 symbol of oil wealth was being lavishly renovated.

Now, the hotel is open again as a symbol of an impending economic recovery and tourism boom in a country that has suffered the worst economic crisis in modern Latin American history.

But the so-called Socialist president’s touting of the luxurious, $300 per night hotel in a country where most live in poverty represents something else to others - an abandonment of a political project promising a socialist utopia in favor of an 'anything goes', capitalist kleptocracy.

Since the dark days of mid-2019, when inflation hit 10 million per cent and Venezuela's weaved baskets out of useless Bolivar notes, the economy has shown signs of recovery.

The regime has finally accepted the dollar as legitimate currency, opened up the state oil industry to foreign private investment and loosened import restrictions for private businesses, meaning supermarket shelves are relatively full again.

The country’s stock market is hitting record highs and economists predict the first recovery in GDP this year after seven years of dramatic collapse.

But the relief among the private sector is far from being felt among ordinary Venezuelans. Most salaries are still paid in bolivars. The minimum wage equates to just over $2 per month. A study published in 2020 by a respected Caracas university found that 96 per cent of all Venezuelans live in poverty, officially rendering it the poorest country in Latin America and the Caribbean.

“We don’t eat like we used to,” Fermina Nuñez, a mother of two living in one of Caracas's shanty towns, told the Telegraph. “If we buy chicken, we won’t be able to buy rice or flower.” She is one of 10,000 Venezuelans who still turn to soup kitchens to keep her family alive.

Meanwhile, those needing medical treatment often face dire prospects. Dialysis and radiation machines sit in disrepair, waiting for parts to be repaired. Those with conditions requiring daily medication often stop their treatment when the expensive drugs go missing in pharmacies.

“I’ve been told to take these pills, but they have to be bought in Colombia, and I can’t afford it and I don’t have anybody to bring it here,” Noris Viscaira, who has early-stage breast cancer, said.

She has instead turned to herbal medicine, creating a paste with tree leaves believed to have anti-inflammatory properties.

“Today we have a surge in luxury import stores, but a country that is extremely poor, showing a stunning amount of inequality,” Henkel Garcia of Caracas based consultancy firm Econanalitica told the Telegraph.

Some economists have even suggested the country may follow the path of China, a country that in the 1970s implemented a series of pro-market economic reforms while maintaining strict authoritarian rule politically.

“Russia would be another logical comparison,” Mr Garcia said. “There was a transition to more economic freedom and political figures gained more and more economic power.

“The businessman was no longer demonised or harassed and state agents stopped taking inventory at private stores.”

The trend towards liberalising the Venezuelan economy - which has also been mirrored in Communist Cuba this year - took a giant leap in 2019 when a massive power outage plunged most of the country into the dark for seven days.

With no electricity to power credit card machines, and shortages of local banknotes due to hyperinflation, many Venezuelans started using US dollars and other foreign currencies for regular purchases.

Eventually, even formal establishments like supermarkets and pharmacy chains started accepting dollars. Only a few years before, state price regulators regularly monitored and temporarily closed stores that exceeded price controls or used anything other than the local currency.

The government proudly broadcasted these raids on national TV to show its commitment to protecting the purchasing power of average Venezuelans.

In 2019, nobody from the government showed up to the stores or even mentioned the trend. Maduro later went as far as expressing support for the widespread use of the US dollar.

But for some of the country’s few remaining Leftist diehards, Maduro has abandoned the socialist revolution founded by his predecessor Hugo Chavez. In a growing rift with the president, the country’s communist party, which traditionally forms part of the government coalition, has accused Maduro of shifting his political strategy “in favor of big capital.”

In the most recent escalation, the party accused Maduro of “promoting political criminalisation, which could turn into personal aggression.”

Maduro has responded by calling the communists “the sleepy Left”.

At 2,000 feet above sea level, the Hotel Humboldt sits far away from the political bickering below. Its most recent renovation seems designed to provide a relaxing escape from one of the world’s most dangerous cities. A lobby with a vaulted, wooden ceiling greets guests while subtle classical music plays in the background.

In their free time, visitors can bet at slot machines or play card games in the hotel’s casino, an original feature of the hotel’s designs, but one that dictator Jimenez shot down.

Later, in 2011, Hugo Chavez banned casinos in the country, leaving owners and workers bankrupt and unemployed. Many of the husks of the former bingo halls remain, dilapidated, their bright paint schemes faded long ago.

But in March of 2020, Maduro reversed Chavez’ decision. Casinos were legal again.

“For example, in the Hotel Humbdolt, which we have recovered and is beautiful, we will be opening an international casino,” he said at the time.

“We are open to everybody, we don’t have politics or religious requirements,” Carlos Salas, the hotel’s new general manager told the Telegraph. “It’s a pleasure that Venezuelans and the international community come here.”

But the average Venezuelan earning a minimum wage would need to save their salary for over 12 years to afford one night’s stay at the hotel.

That would have likely horrified Chavez, who famously nationalized over 1,000 companies, including symbols of wealth like banks, supermarkets, and large franchises. Chavez also ordered the fare for a ride in the cable cars that leads to the Humboldt lowered so more ordinary Venezuelans could afford a trip up the mountain.

Maduro, on the other hand, has emphasized the hotel’s luxury.

“Here we are in the restaurant as it was in 1956, at the peak of the mountain, preparing for the future,” Maduro said in a video ahead of the hotel’s inauguration, eating dinner at one of the hotel’s restaurants beside an outdoor fireplace.