Venezuela Passes the Buck to Colombia

StrategyPage reports on the deteriorating situation down south:

The economic collapse in Venezuela and the inability of the government there to do anything about it has led to Venezuela blaming Colombia and closing a major border crossing in northeast Colombia. Ambassadors have been recalled and Venezuela is expelling thousands of Colombians who live on the Venezuelan side of the border. Over 7,000 Colombians have left since the expulsion order on the 21st. Venezuela also blames its record high murder rate (and most other crime) on Colombian gangs, even though most of this crime occurs far from the border where there are few Colombians and most of the perpetrators who are caught turn out to be Venezuelans.

The reality is different. There is lots of legal trade across the border, much of it involving food. Most of the trade is from Colombia to Venezuela. The primary legal items coming into Colombia from Venezuela are industrial products (steel, iron, chemical products and petroleum products). This trade has been declining because of the collapse of the Venezuelan economy and the shortage of foreign currency to pay for imports. The food is desperately needed, mainly because of the illegal export of subsidized food to Colombia. Closing the border will slow down (because the main roads can no longer be used) but not disappear. It is too lucrative for the smuggling gangs and corrupt Venezuelan officials who make it work.


The further any economic activity is driven underground, the less efficient trade becomes and costs and prices are forced ever higher.

This is something Venezuela is going to have to relearn the hard way, in an economy already teetering on the edge of hyperinflation.


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