June 23, 2009

The Exporter

Quico says: "Así estarán las vainas que when we manage to get the National Guard to show up at our factory, we celebrate," The Exporter says, savoring how counter-intuitive his sentence sounds.


"Well, sure. They make you jump through so many hoops before they'll even send an inspection team over to certify your shipment, it's a bit of a victory just having them there."

Bewildered? So was I.

Welcome to the world of The Exporter: a topsy-turvy universe where businesses positively relish the chance to get shaken down by some fat Guardia Nacional bloke who's holding their business plan hostage.

"Check it out, by the time the National Guard deigns to send an inspection team over, that means we've already gotten the Cadivi permits, the certificate saying that the internal market is already fully supplied, and we've finished the crazy little Treasure Hunt through the Caracas offices of the ministerios to get all the various permits: health ministry, tax office, labor ministry, the works. The export certificate has to have nine official stamps on it by the time you're finished and - credit where credit is due - that's actually the new, streamlined procedure because until a couple of years ago you needed seventeen!"

"Even nine, though, is a mighty struggle, especially because it turns out the last stamp has to be signed by the same MILCO official who signed the first one. Not the same agency, mind you, the same official. So if the guy is out sick, or on vacation, or just didn't feel like coming in that day...you're out of luck. The guy knows he can hold up your entire shipment so...as you'd expect, wheels have to be greased. Biggest racket in the world, that one..."

"So yeah, by the time that nightmare's over and you finally have all the papers you need to get the Guardia to come over to the plant, you're de fiesta."

Yowza. "Y ¿entonces?" I ask.

"Well then these guys come into the plant and they go through your shipment box by box, crate by crate, pallet by pallet, actually physically inspecting each one before putting a big plastic sheet over the pallets and an official Guardia Nacional seal on them."

I'm a bit puzzled by this.

"To make sure you're not over-invoicing, I guess?" I add tentatively.

"Well, in part," The Exporter says, "but mostly to make sure there aren't any drugs hidden away in the shipment. And that part, of course, you can understand. The Guardia doesn't want any competition, y'know? If any cocaine is moving through the country, they want a cut..."

"Anyway," The Exporter, who's in full swing now, goes on "you'd think now that your package is fully permisologized, inspected, signed and sealed, that's the end of it, right? No, mi amor. Not a bit of it, because then you have to put it on a truck and ship it off to a port where, the second it gets there, it gets stopped by...wait for it...La Guardia Nacional. That's right, a second set of Guardias take off the old Guardia seal, undo all the plastic and inspect it all over again, box by box, crate by crate, pallet by pallet. And when they're done they put a new plastic on it, and another seal on it, which, actually, looks just like the first."

"It's a nuthouse, Quico," he says, laughing, "and the really insane part is that, on average, a shipment takes 4 to 6 weeks to move out of the ports in La Guaira or Puerto Cabello. But the Guardia seals expire in three days! So every three days you have to suck up to them to get them to come back, take old seals off and put new seals on...and, of course, every three days you gotta pay someone off to do that!"

I'm staggered already, but it gets worse.

"But lets say somehow you manage to jump through all the hoops and you put your stuff on a ship, send it abroad and sell it...guess what? At the start of the entire process, you had to tell Cadivi you were going to export this stuff, so you're forced, as a matter of law, to take no less than 90% of the dollars you get paid and give them to the Central Bank, at which point they'll turn around and give you the princely sum of two bolivars and fifteen cents for each dollar worth of exports!"

"That's what?" I say, "maybe a third of what a dollar is worth, in purchasing power terms?"

"Right," The Exporter replies, "But since they've been inspecting you inside and out for weeks, they know exactly how much you exported and there's just no getting around it. If you don't hand over the dollars to BCV, you'll never get another export permit again."

"The way it works, basically, is that you have to go through that whole sprawling, steaming mass of hassles just for the privilege of having Chávez confiscate two out of every three dollars you earn. Or, to put it more delicately, tax your export revenues - your gross export revenues - at something like a 60% or 70% rate. Because that's the implied tax when they force you to hand over a dollar worth Bs.6 or 7 and they pay you just Bs.2.15 for it."

"Que bolas," I say.

"Nice, huh?" He's smiling this big masochist smile of his. "Es que not even PDVSA buys bolivars at the official rate anymore - or did we forget all about Rosemont already? It's basically occassional confused gringo tourists and us - those are the only pendejos left who'll fork over one full dollar for Bs.2.15."

It takes some time to digest The Exporter's story.

When you take it all in, it's no wonder that Venezuelan non-oil exports have collapsed to historic lows this year. The real wonder is that anything at all continues to be exported in these circumstances. Basically, the only firms that export are firms that have absolutely no other choice because there's no market for their products at home, or because they need to keep a presence in foreign markets if they're to have any hope of becoming competitive again some day in the future.

On this blog, we used to have some debate, now and again, on what an appropriate, progressive development policy for Venezuela might look like. But seen against the light of the utterly insane reality The Exporter describes, seriously, those kind of debates look so incredibly misplaced it's embarrassing.

Needless to say, these kinds of stories are the ones that first-world researchers miss by a mile. Somewhere, in an ivy-covered computer lab, a twenty-six year-old trade economist is running a regression and concluding that Venezuela suffers from a terrible case of Dutch Disease, a technical term that helps explain why oil-exporting countries export little else .

But it's not just Dutch Disease. It's not the over-valuation of the currency that is the main factor holding our non-oil exports back. It's the fact that the entire apparatus of the State is mobilized to stop you from exporting.

A change in perspective is in order. Any export regime that isn't certifiably bonkers would be a massive improvement over what we have now.