The Human Cost of Venezuela’s Capital Control Nightmare

By: José Niño - @JoseAlNino - Feb 17, 2016, 6:30 pm
. (Monedas de Venezuela)
Only Venezuelans with foreign bank accounts in dollars or skilled professionals can get by abroad. (Monedas de Venezuela)

While their country is experiencing the worst economic crisis in its history, many Venezuelan professionals have had to look outside their borders for better opportunities.

Recent records show that 1.5 million Venezuelans have left the country since 1999. This number has only kept growing as Venezuela’s economy spirals out of control.

Many Venezuelans aspire to leave the country since the highly politicized Central Bank has completely devalued the national currency, the bolivar, with its inflationary policies.

But those seeking economic exile must also face capital and currency controls in order to leave in the first place. First implemented by Hugo Chávez in 2003, these measures were used to stem the capital flight caused by the 2002 oil workers’ strike.

These capital controls started out as measures that targeted the rich in order to supposedly reign in their greed and their ability to move vast sums of capital abroad.

History, however, has shown that regulations that start out solely targeting the rich eventually turn into all-encompassing controls that affect all social classes.

In Venezuela, currency controls have recently evolved into travel allowances that limit the amount of foreign currency that citizens can use on their foreign travels.

These limits have varied from year to to year but, as of 2015, Venezuelans can only take US$2000 with them on trips abroad. Additionally, travelers heading to the United States will also have reduced cash quotas of $700 at their disposal.

Naturally, this represents a major obstacle for many Venezuelans whose trust in the dollar is much higher than the devalued bolivar. In effect, these measures serve as a “barrier of exit” for many Venezuelans.

Only skilled professionals or those with foreign bank deposits in dollars can get by abroad. Professionals must still brave months of job searches with the looming threat of their paltry dollar allowance running out during this time frame.

Venezuela’s poor, on the other hand, unfortunately do not enjoy these advantages and are effectively trapped inside the country. Unsurprisingly, 90 percent of Venezuelans who have fled after the Bolivarian Revolution are university educated professionals, with a significant minority belonging to a higher income segment.

So although the government implemented currency controls in order to prevent capital flight, there was a more sinister motive behind the measure: the control of the Venezuelan populace, especially its ability to move in and out of the country.

The recent flight of Venezuelan professionals is essentially a brain drain; some of the country’s most talented individuals must search for greener pastures abroad due to the unfavorable economic and political circumstances in their country of origin.

This case is all too familiar in Latin American history. In recent decades, Colombians, Cubans, Guatemalans, and Salvadorans have had to leave their countries en masse due to unfavorable economical, political, or social circumstances.

Contrary to popular belief, “brain drains” may actually yield net benefits to the the exiles’ countries of origin. Michael A. Clemens, a Senior Fellow at the Center for Global Development (CGD), notes that migrants have the ability to “transfer money, skills, and even democratic ideas” to their native countries.

However, these potential benefits may never come into fruition if governments decide to impose limits on migration.

In a globalized era in which travel is becoming increasingly affordable, citizens have more power than ever to forge their destiny wherever they see fit.

Ideally, nation states in a globalized world should be competing with each other in order to attract the most talented workers across the globe. In the 21st century, no citizen should be treated as a serf who is bound and shackled to his homeland.

[adrotate group=”7″]Sadly, governments that impose primitive mechanisms of control such as Venezuela’s have different ideas.

The true culprit of Venezuela’s economic tragedy is the lack of respect for economic freedom during the past 50 years. For Venezuela to overcome this dark chapter in its history, it must abandon both the socialism of the present and the soft-socialism of its not too distant past.

Only a system of capitalism based on the rule of law and the respect for individual and economic liberties can correct the policy flaws of the past 50 years.

José Niño José Niño

José Niño is based in Dallas, Texas. A citizen of the world, he has lived in Venezuela, Chile, and the United States and is a former member of Students For Liberty’s Executive Board. Follow @JoseAlNino.

Clinton E-mail Reveals Alleged Hezbollah Terrorist Base in Cuba

By: PanAm Post Staff - Feb 17, 2016, 4:41 pm

EspañolThe controversy surrounding former Secretary of State and current Democratic presidential candidate Hillary Clinton's e-mails is ongoing. The messages, it is now claimed, prove that Hezbollah, an Islamic militant group based in Lebanon, tried to set up a base in Cuba in order to carry out terrorist attacks throughout Latin America. The US State Department recently released an e-mail received by Clinton in 2011 that quoted the Israeli intelligence agency Mossad. It claimed that the Shiite extremist group Hezbollah was seeking to establish operations in Cuba in order to plan "terrorist attacks in Latin America." The author of the e-mail, Sidney Blumenthal, is a journalist and author who is close to the Clinton family. He stated that he received the information from "extremely sensitive sources." Blumenthal argued that even though Hezbollah's targets were "particularly Israel's diplomatic and business interests" in the region, the Shiite militants had been "instructed to also begin casing facilities associated with the United States and the United Kingdom, including diplomatic missions, major banks, and businesses." According to the e-mail, the leader of Hezbollah himself, Hassan Nasrallah, led negotiations with Cuba's intelligence agency, promising that his organization would keep a "very low profile inside of Cuba. Nasrallah also promised to take measures to avoid any trail of evidence that could lead back to Cuba in the event of a Hezbollah attack in Latin America." The source indicated that Hezbollah's "operational and support cells in Paraguay, Brazil and Venezuela are best prepared to carry out active operations" if they could "receive effective support from the base in Cuba." Source: Diario de Cuba.

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