Venezuelans Still [Heart] the [Crummy] US Dollar

I am no fan of the US dollar and I think that anyone gullible enough to hold it deserves to suffer from endless Bernanke helicopter drops that nonetheless do little to prop up the sagging US economy and only worsen its long-term health. Unfortunately, one of the bozos who've been stuck with this rather useless currency is, well, me. I have been trying to get rid of my remaining greenbacks since late last year but the dollar decline has continued unabated--there have been no real opportunities to "buy on dips." With American monetary and fiscal policy looser than Spitzer's hos, how could it be otherwise? I've even created a top 10 list of what the dollar is still useful for, which isn't much.

If you're a dollar holder like me, you may be glad to know that there are folks who are even more depraved than us. The International Herald Tribune has a story about how bad things are down in Venezuela. It's so frickin' awful that inflation there is even worse and people are desperate for dollars. It appears the Bolivarian Revolution is putting hapless Venezuelans on the road to a Zimbabwe-style 100,000% inflation rate. To evade currency controls, they've all sorts of ways to get their hands on greenbacks. If anything can make you feel better than the dollar holding loser that you of course are, maybe this story will, at least for a while...

Stroll down Columbustraat. Enter the smoke-filled lobby of the San Marco Hotel Casino. Proceed up one flight of stairs to the front desk. Dial room 106. Bring a credit card issued in Venezuela. In a desperate quest to get their hands on American dollars [I am laffing so hard], Venezuelans are flocking to this island in the Netherlands Antilles to take part in this elaborate backroom scheme and dozens of others like it to get around currency controls imposed by the government of President Hugo Chávez.

"These Venezuelans come here to get their dollars, and we're happy to help them out," said Ronald Veenstra, 36, owner of a bar across from the San Marco Hotel, the Supreme Real, while mixing a mojito. "I've never poured more drinks for any one group in my entire life." For Venezuelans, the Curaçao option for obtaining dollars emerged last year when the value of Venezuela's currency, the bolivar, fell sharply against the dollar as fears intensified over Chávez's economic policies, including the nationalization of oil and telephone companies.

Faced with the highest inflation rate in Latin America, at 24 percent, and the dwindling value of the bolivar, Venezuela became an economic oddity in an age of ascendant currencies as varied as the Brazilian real and Peruvian sol: a place where the dollar is still sought after. That's where Curaçao comes in.

"Venezuela has always been a natural market for Curaçao," said Johannes Henriques, 63, a manager at the Saint Michiel Bay Inn, reminiscing about past oil booms when flush Venezuelans would fill Willemstad's boutiques and hotels. "Now the Venezuelans come to do their card thing, and it's an opportunity for them to get to know us again." The "card thing" is an intricate scheme involving local merchants, Socialist bureaucrats, Venezuelan travelers and middlemen.

Trying to slow capital flight, Venezuela limits its citizens to $5,000 in annual credit card purchases abroad. That is 10,750 bolivars, at the official exchange rate of 2.15 to the dollar. But at the prevailing black-market rate of 4.5 to the dollar, the amount more than doubles to 22,500 bolivars.

Seizing on that gap, some Venezuelans began coming to Curaçao's casinos last year and using their credit cards to buy chips. They then played a few hands and cashed in the chips for dollars, which circulate here along with guilders. But the casinos soon prohibited them from buying chips with their cards, because so few of the people were actually using the chips to gamble.

Middlemen then moved in, organizing trips for Venezuelans and charging a 20 percent commission for cash advances at the office of a merchant, like the travel agency in Room 106 of the San Marco Hotel. The middleman and merchant divide the $1,000 commission, leaving the Venezuelan with $4,000 in cash.

With a wink and a nod from local banks that process the transactions, the middlemen dummy up receipts, often for expensive electronic items, offering the travelers an alibi in case they are audited by back in Venezuela by bureaucrats loyal to Chávez.

The Venezuelans get dollars to hold as a hedge against economic uncertainty, while the merchants get a hefty commission for swiping a credit card. (Multinationals like Mastercard and Visa also collect commissions on each currency transaction.)

And in an illustration of where some of Venezuela's oil wealth is going, some middlemen on this palm-fringed island have accumulated fortunes since the scheme began. "I made $300,000 in December alone," said Roberto, 31, a middleman who asked to be identified only by his first name. He puts up some of the Venezuelans in his own home to save them money on hotels and food.

Rosan Jansen, a researcher at the Curaçao Tourist Board, said Venezuelan visitors roughly tripled in 2007 to 60,000 from a year earlier as airlines added flights from Caracas and smaller Venezuelan cities like Maracaibo, Valencia and Las Piedras. With flights booked months in advance, that number could rise to 100,000 this year.

"I'm doing this to have some savings when I'm older," said Yesenia Castro, 53, a Venezuelan office worker who came here in March in search of dollars for the second time in less than a year. "One never knows what life may bring."

Once the flights arrive, employees of the middlemen swarm the lobby of the airport trying to steer the Venezuelans to their bosses. With increasing competition, commissions on these deals have dropped in recent weeks to around 15 percent from 20 percent, travelers say.

Meanwhile, officials back in Caracas have been trying to put an end to the scheme after Venezuelan credit card purchases abroad surged 312 percent in 2007 to $5.1 billion. They made it illegal for newspapers to publish the black market currency rate and renamed the currency the bolivar fuerte, or strong bolivar.

They have conducted audits of thousands of travelers in recent months while requiring others to stay abroad seven days to access their quota of credit card dollars. But the new rules have simply bred ever more creative schemes to circumvent them. For instance, many travelers buy tickets for week-long stays but change their itineraries upon arrival.

Some middlemen simply foot the bill for modest one- or two-day trips, effectively duping Venezuelans out of their quotas while plying them with liquor at beaches here, where the hushed tones of Dutch tourists trying to focus on their paperbacks are drowned out by groups of partying Venezuelans.

Little soul-searching about exploiting Venezuela's vagaries seems to have emerged in Curaçao, which has been finding ways to grow prosperous off its neighbor to the south since the early 20th century when Royal Dutch Shell built a refinery here to process Venezuelan crude oil.

So many shops in central Willemstad have signs saying "We Welcome Venezuelan Cards" that it is a surprise to find one that does not. The explanation, when it comes, is simple. "We don't do it," said Manish Chandhani, 25, a salesman in Baba's, an electronics store. "My boss does not like to earn easy money."