The arrival of a Liberian-flagged freighter with Ukrainian, Arab and Filipino sailors spells one thing for Elena -- dollars. And greenbacks are king in Venezuela, the 32-year-old prostitute says.
Within hours of hearing of the ship’s imminent arrival, she has packed her bags and is heading to the crumbling city of Puerto Cabello. It is a 450-kilometer (280-mile) journey from her home in the Western state of Zulia that Elena finds herself doing more often now as Venezuela’s economy contracts, the bolivar slumps and prices soar.
Prostitutes more than double their earnings by moonlighting as currency traders in Puerto Cabello. They are the foreign exchange counter for sailors in a country where buying and selling dollars in the streets is a crime -- and prostitution isn’t. Greenbacks in the black market are worth 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes.
“The dollar is king these days, but having them comes at a price,” Elena, who uses an alias to protect her identity, said late last month in a room she rents in a Puerto Cabello brothel. “Yes, we got dollars to afford the things our families need, but we have to sell our bodies for it.”
The benefits of the trade are stacked around Elena’s room in the Blue House brothel -- bags of rice, flour, sugar and cooking oil -- products that other Venezuelans have to line up for hours to buy at regulated prices in shops, if they can find them at all.
The bolivar has fallen to 71 to the dollar from 23 on the black market since President Nicolas Maduro succeeded his mentor Hugo Chavez in April 2013. The government tightened currency handouts to stem the outflow of foreign reserves, which are near a decade low. The official exchange rate, reserved for imports of food and medicine, is 6.3 bolivars per dollar.
The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, said Steve Hanke, professor of applied economics at Johns Hopkins University in Baltimore. Those with access to dollars such as prostitutes, tour agents, airport taxi drivers and expatriates are able to shield themselves from inflation by trading their greenbacks at ever higher rates. Those who can’t are seeing their living standards decline.
In a country where prostitution is legal, it is the black market in dollars that Maduro has called “perverse,” saying it was designed by the bourgeoisie to destroy his Socialist government.
Officials have tried jailing traders, shutting down brokerages and setting up four parallel exchange systems to stem the rise of the unofficial rate in the 11 years since Chavez began controlling the bolivar’s price.
Prostitution has become the only boom industry in Venezuela’s biggest port. The Blue House brothel is clean and well-kept, with a patio and kitchen where women get three meals a day. Outside, the squares and cobbled streets of the colonial center stand in ruins, with the smell of sewage pervading the piles of garbage.
“Before I was working to support my kid and my mom; now I support my entire family,” said Paola, a prostitute who like Elena comes from Zulia and declines to give her real name. “Dollars are the only way to get by. The bolivar wages of my uncles and cousins barely mean anything now.”
Prostitutes in Puerto Cabello charge sailors a fixed rate of $60 per hour. They also help foreigners arrange rooms, telephone cards and taxis, charging them in dollars and then paying the landlords and drivers in bolivars.
A typical stint with a dollar-paying foreigner would earn a prostitute about 6,800 bolivars in fees and currency exchange arbitrage in the black market. The same service paid in bolivars, which Elena and her friends would grudgingly accept as a last resort, would earn them 3,000 bolivars.
“We can make more in two hours here than working in a shop in a month,” said a prostitute who calls herself Giselle, as she sipped a 12-year-old whiskey in Club 440 striptease joint.
The shortage of dollars has led to a scarcity in the shops of everything from bottled water to toilet paper and pushed prices up 59 percent in the year through March, the last month for which figures are available.
The jump in prices, mounting shortages and a crime wave have fueled three months of anti-government protests that have cost the lives of at least 42 people.
The price paid by investors to protect Venezuelan debt against default rose 3 basis points in the past month to 987, the highest in the world after Argentina, according to data compiled by Bloomberg. The price of the credit default swaps implies a 49 percent chance that Venezuela will stop paying bondholders in the next five years.
The economy contracted 0.5 percent in the first quarter from a year ago, according to a median estimate of seven economists surveyed by Bloomberg. Economists at Goldman Sachs Group Inc. forecast last month that the Venezuelan economy would shrink 1.3 percent this year. Gross domestic product expanded 1 percent last year, the central bank has said.
“We are going to defeat the parallel dollar,” Economy Vice President Rafael Ramirez said March 20 as he announced a new currency market. The system, known as Sicad II, allows companies and individuals to buy dollars in restricted quantities for about 50 bolivars each, an 88 percent devaluation from the official exchange rate.
The bolivar has slumped 17 percent in the black market since Sicad II started, according to rate-tracking website dolartoday.com.
A Finance Ministry spokeswoman, who can’t be named because of internal policy, didn’t reply to phone calls and an e-mail seeking comment on the black market rate. A spokesman for Maduro’s office, who also asked not be named because of internal policy, declined to comment on the President’s plan to stem the rise of the black market rate, inflation and shortages.
Drinks vendor Luis Alberto Paredes lives with his sister and their 85-year-old mother in the shell of a colonial house covered by corrugated iron in Puerto Cabello’s old business district. His walls and roof are adorned with flags and posters of Maduro, Chavez and the Venezuelan Communist Party and his mobile kiosk is covered with photos of pro-government mayor Rafael Lacava.
Yet, the 52-year-old is losing trust in Chavez’s successor. “Maduro has been a total failure,” he said while sipping coffee at home. “People are getting fed up. I think it will explode sooner rather than later.”
Paredes, who lives on a minimum wage of about 4,200 bolivars a month (about $60 at the black market rate), says he has to buy coffee beans for his stand from street hawkers for nine times the regulated price, because the supermarkets are always out of stocks.
One in four basic products were unavailable in shops in January, the last time the central bank published scarcity figures.
The percentage of households living below the poverty line rose six percentage points to 27.3 percent in the second half of last year, the first increase since 2010, according to the National Statistics Institute. Maduro said June 3 the figures from the government agency are unofficial.
For women like Giselle, Elena and Paola, prostitution for dollars has become a lifeline keeping them from poverty.
“We haven’t studied, we have no education. What would we do now if we stopped?” said Giselle. “Work for a minimum wage that doesn’t even pay for food? If we wouldn’t be here working the scene, we would be living on the streets.”
(An earlier version of this story corrected the spelling of Hugo Chavez’s first name.)