The Mistery of Luxury Construction in Depressed Maracaibo | Caracas Chronicles

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Conspicuous in a run-down and decaying city, lies a modern and stylish white-clad office building, which towers over the affluent Las Mercedes sector of Maracaibo, Zulia State, at the westernmost corner of Venezuela. Completed around a year ago, this building is elegance personified with a spacious, two-story lobby befitting the headquarters of a sizable and respected company. The main peculiarity of the building resides in its modern, asymmetrical design and usage of imported tiling elements, incongruent in a country that has stagnated at all levels of the industry. 

Since its completion, this building has had no tenants, dependents or employees working within its walls. There are no furnishings or equipment of any kind, leaving a hollow, empty building with no prospects of future usage. It’s merely an example of many buildings in Maracaibo, that continue to be built even when the market seems to be completely deflated.

Maracaibo, one of the hardest-hit cities in the Venezuelan diaspora and refugee crisis, is quietly having a construction Renaissance.

Business-wise and Ironically Safe

The construction industry had initially met its death near the start of the hyperinflationary crisis in 2014. When faced with rising prices across the board and a complete collapse of production of essential construction components such as rebars and cement, companies had to severely cut costs and lay off employees in order to stay afloat. Its killing blow, however, occurred simultaneously with the rapid decline of the Venezuelan economy. A severe economic crisis eliminated any desire or means for investment into construction projects, plummeting the demand for an already struggling industry. Any ongoing construction was paused indefinitely and only the sturdiest of companies were able to survive, leaving only a shadow of a previously solid sector.

In late 2018, in the midst of an ever-deepening crisis, there seemed to be an outward appearance of healing. Restaurants were refurbished and reopened, expansive and luxurious houses were built, and the previously abandoned buildings found the necessary investors in order to finance their completion. However, much like the newly built modern office building, these positive trends were merely a pleasant façade. These projects were misattuned to the harsh reality of Venezuela today and can be seen as the expression of the new Venezuelan elite class known as enchufados.

Maracaibo, one of the hardest-hit cities in the Venezuelan diaspora and refugee crisis, is quietly having a construction Renaissance.

The widespread wealth and standing of the enchufados are well known by Venezuelans. Having personal or business connections within the regime have enabled them to exponentially expand their influence, as well as share in the systemic plundering of the country’s coffers. Nonetheless, recent tensions between the international community and the Bolivarian government have led to an existential crisis for the enchufados, and sanctions on people with ties to the Maduro government or who otherwise have unaccounted wealth from Venezuelan business dealings, have left them scrambling for any means to retain, exploit, and legitimize their wealth. With restrictions to their properties abroad, enchufados have looked inward for investment opportunities as well as methods to effectively launder their money. Even if the local authority isn’t actively searching for illicit capital, there still exists a need to legitimize it due to external pressures and safeguards for the shifting tides of government.

While mainstream culture has popularized the idea of nail-salons or laundromats as ways of laundering money, construction projects have often been overlooked as one of the most common methods for the activity, since they tend to reach exorbitant prices. There is the added benefit of Venezuela’s exploited labor class, who having very little alternative and recourse, can be paid informally in cash. In fact, the labor class itself isn’t the only one being paid this way, as recent restrictions have forced the wealthy to pay contracting companies in cash, as well. 

Plots of land and buildings are also optimal as investment opportunities, due to their inherent value. While they may be susceptible to swings in valuation, along with the dollar, they are considered as one of the most valuable assets to own. With the property market at an all-time low, purchasing and refurbishing abandoned projects can seem like a solid investment and a way to garner influence and legitimacy in a hypothetical post-Maduro Venezuela. This also represents a safeguard in the current political landscape, seeing how the current regime has an inherent complicity between all the actors in the play: anyone who steps out of line can immediately be accused of corruption and jailed, ensuring their full loyalty.

Turning Dirty Money Into Clean Bricks

So how exactly would this system work? Let’s say you’re an enchufado and you’ve earned your wealth thanks to your close yet well-hidden association with the Maduro government. You own a series of international bank accounts, yet you have to be wary, as any wealth coming out of Venezuela is closely audited. With such an ample supply of cash, your only recourse is to invest locally. There are a couple of abandoned projects that could be bought cheaply and then have their price inflated, or maybe it’s possible to open a restaurant or bodegón as an additional source of income, and maybe even as a hobby. 

The current regime has an inherent complicity between all the actors in the play: anyone who steps out of line can immediately be accused of corruption and jailed, ensuring their full loyalty.

Whatever your choice may be, the outcome is that you now own an inherently valuable asset instead of having money that would be unusable outside of Venezuela. Now, with your newly completed asset, you can wait and choose to sell it to those with legitimate means, or you can find a way to make it productive. This is why investments done with legitimate and illegitimate money are virtually indistinguishable.

This system seems to be emblematic of the Maduro regime as a whole. Having criminals being able to gain legitimacy through their ill-gotten wealth, portrays the sad reality facing many Venezuelans: the new normal involves a cohabitation with the new political elite who pillaged the country and now seek to erase the past. 

Yet one can also see the willful ignorance of this new ruling class, believing that this rough-shod economy would be able to sustain itself through sheer force of will. It relies on the possibility to gain and make investments with illicit funds, yet the regime’s purse strings are increasingly restrained; it relies on finding legitimate investors or customers in order to legitimize and maintain a mechanism for productivity, yet millions of Venezuelans flee in droves and the middle class is all but destroyed. 

The new office tower is like the industry that it currently represents, a vacant husk held up by its slowly deteriorating façade. It’s a representation of a time when Venezuela had some degree of productivity and raison d’être, but now it’s merely a prop, utilized by those in power to sustain their declining existence.

A city of empty monuments for an elite that rules over no one, clinging on a broken system that will also bring their downfall one day.

This post was originally posted on Caracas Chronicles – View Original Article

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About the Author

admin
Have lived and invested in Venezuela full time for the last eight years and visited for each of twelve years prior to that. Studied and closely followed developments in Venezuela since 1996.