The MasterBlog: Island's Treasure, the Dollar, Lures Venezuelans - New York Times
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Thursday, March 13, 2008

Island's Treasure, the Dollar, Lures Venezuelans - New York Times

The New York Times


March 13, 2008
Willemstad Journal

Island's Treasure, the Dollar, Lures Venezuelans

WILLEMSTAD, Curaçao — Stroll down Columbusstraat. Enter the smoke-filled lobby of the San Marco Hotel and Casino. Proceed up a flight of stairs to the front desk. Dial Room 106. Bring a credit card issued in Venezuela.

In a quest to get their hands on American dollars, Venezuelans are flocking to this island in the Netherlands Antilles to take part in this elaborate back-room scheme and 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 the Supreme and Real, a bar opposite the San Marco Hotel, 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 bolívar, fell sharply against the dollar as fears intensified over Mr. Chávez's economic policies, including the nationalization of oil and telephone companies.

Faced with the highest inflation rate in Latin America, about 23 percent, and the dwindling value of the bolívar, Venezuela became an economic oddity in an age of ascendant currencies as varied as the Brazilian real and the 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 St. Michiel Bay Inn, reminiscing about past oil booms, when flush Venezuelans filled 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 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 bolívars, at the official exchange rate of 2.15 to the dollar. But at the prevailing black market rate of 4.50 to the dollar, the amount more than doubles to 22,500 bolívars.

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

The middlemen say they doctor receipts, with a wink and a nod from local banks that process the transactions. These intermediaries say the receipts, often for electronic items, offer the travelers alibis in case they are audited in Venezuela by bureaucrats ideologically loyal to Mr. Chávez. If problems arise, the middlemen say, a small so-called commission to some of the bureaucrats can smooth things over.

Some Venezuelans hold the dollars as a hedge against economic uncertainty, while others exchange them back in Venezuela for bolívars at the black-market rate, for a profit. The merchants get hefty commissions for swiping credit cards.

And in an illustration of where some of Venezuela's oil wealth is going, some middlemen have accumulated fortunes. "I made $300,000 in December alone," said Roberto, 31, a middleman who would not give his full name out of concern of being identified as a profiteer.

Rosann 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 for dollars twice in less than a year.

Once the flights arrive, the middlemen's employees swarm the airport lobby trying to steer the Venezuelans to their bosses. As competition increases, commissions on these deals have dropped recently to around 15 percent, travelers say.

Officials in Caracas have been trying to end the practice after Venezuelan credit card purchases abroad surged 312 percent in 2007 to $5.1 billion. They made it illegal to publish the black market currency rate and renamed the currency the bolívar fuerte, or strong bolívar.

They have audited thousands of travelers while requiring others to stay abroad seven days to tap their quota of credit card dollars. But the new rules have simply bred more creative ways to bypass them.

Some middlemen simply foot the bill for modest two-day trips, then keep the exchange profits for themselves, effectively duping Venezuelans out of their quotas while plying them with liquor at beaches here, usually occupied by Dutch tourists focusing on their paperbacks.

Little soul-searching about exploiting Venezuela's idiosyncrasies seems to have emerged in Curaçao, which has long been finding ways to grow prosperous off its neighbor to the south.

So many shops in downtown 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."

Sandra La Fuente P. contributed reporting.



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