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Abu Dhabi, UAEMonday 17 December 2018

Venezuelan cash crisis triggers looting and protests

The widely used 100-bolivar note was discontinued on Thursday but the new notes to replace them have not yet arrived.
Venezuelans hold up 100-bolivar notes during a protest in San Cristobal in Venezuela’s Tachira state on December 16, 2016. George Castellanos / AFP
Venezuelans hold up 100-bolivar notes during a protest in San Cristobal in Venezuela’s Tachira state on December 16, 2016. George Castellanos / AFP

Caracas // Desperate Venezuelans looted delivery lorries and clashed with police as a botched plan to introduce new banknotes left people without cash – the latest shortage in a spiralling economic crisis.

President Nicolas Maduro blamed opposition politicians for the unrest, claiming that there were pictures and videos of some opposition members of the National Assembly involved in “attempts of vandalism and some acts of violence”.

He warned that “parliamentary immunity does not reach that far”, but did not give any names.

Mr Maduro also accused unnamed opposition leaders of being among rioters who torched two state banks in the town of Guasdalito, near the border with Colombia, and said they would be “captured and put behind bars”.

Faced with world-high inflation that has made the Venezuelan currency increasingly worthless, the government is trying to introduce new bills in denominations up to 200 times higher than the old ones.

But the plan went off the rails when Mr Maduro ordered the 100-bolivar note removed from circulation before the new bills arrived.

Formerly the highest denomination bill, the 100-bolivar note was worth about three US cents (11 fils) and accounted for 77 per cent of the cash in circulation in Venezuela. It ceased to be legal tender on Thursday.

Initially, Venezuelans were to have 10 days after that to exchange their 100-bolivar notes at the central bank, but Mr Maduro subsequently slashed the grace period to five days.

Protests erupted around the country as the chaotic reform left people without money to buy food or Christmas presents.

In the second city of Maracaibo in the west, groups of protesters hurled stones at police. In the eastern city of Maturin, dozens of people blocked off a major avenue and looting broke out.

“I went by the market and it was being guarded by the military. A chicken truck was looted,” said Juan Carlos Leal, a farmer in Maturin.

In Puerto La Cruz, another eastern city, “people rioted because they wanted to take out money and they weren’t allowed to,” said Genesis, a local baker.

“The police fired in the air to calm the riot. Everyone dispersed and the police ordered all shops to be closed,” said Genesis, who asked not to be identified by her surname for fear of reprisals.

Protests were reported by Twitter users in several Venezuelan states.

Local media in the western city of Santa Barbara said four people were injured when the drivers of a security truck transporting money opened fire on people trying to break into it.

In the capital Caracas, thousands of Venezuelans from around the country queued to rid themselves of 100-bolivar notes at the only place still accepting them: the central bank.

Many were angry to learn they would only be allowed to deposit the old bills or obtain “special vouchers” for new ones.

“The world has turned upside down. Normally, there’s no food. Now there are no bills to buy it,” said Jesus Garcia, 21, a food vendor who had been in line since 4am.

Mr Maduro, who took office in 2013, has presided over an unravelling of Venezuela’s oil-rich economy as crude prices have plunged.

The import-dependent country is desperately short of food, medicine and basic household goods.

Venezuela’s inflation rate is set to hit 475 per cent this year, according to an IMF forecast.

Mr Maduro said the 100-bolivar note had to be scrapped because “mafias” were hoarding it abroad in what he called a US-backed plot to destabilise Venezuela. In response, he sealed the borders with Colombia and Brazil until Sunday, exacerbating the chaos.

Angry crowds massed in the town of San Antonio at a bridge crossing on the Colombian border, yelling “We want to cross!”

“We are suffering. We are hungry, we have no medicine, we have nothing. Nothing!” said one of the people in the crowd, Carmen Rodriguez.

“And now with this money problem, we can’t even buy food.”

The new banknotes were to have been launched on Thursday, starting with a 500-bolivar bill and eventually reaching denominations up to 20,000. But the bills, which are being printed abroad, are yet to arrive.

Venezuelans had grown used to carrying around huge stacks of 100-bolivar bills for even the smallest purchases. Now they are stuck trying to amass even bigger piles of 10-, 20- and 50-bolivar notes. Some companies have stopped dealing in cash altogether.

“By removing the 100-bolivar bills, they are jamming up the economy,” said economist Alberto Martinez.

“Cash registers have no money. The system is under stress.”

* Agence France-Presse