Venezuela's military to the fore as President Maduro struggles

Venezuelan soldiers stand guard while people queue for cooking oil and margarine at a supermarket in Caracas on July 12, 2016.
Venezuelan soldiers stand guard while people queue for cooking oil and margarine at a supermarket in Caracas on July 12, 2016.PHOTO: REUTERS

CARACAS (AFP) - Venezuela's military has been put on the frontline of a worsening national economic crisis by taking charge of food distribution and key ports amid dire shortages and mounting unrest.

President Nicolas Maduro, who is trying to cling to power and avert total collapse of his oil-dependent country, announced on Tuesday (July 12) that the armed forces have taken control of the country's five main seaports.

On Monday, he greatly boosted the authority of his defence minister - armed forces chief Vladimir Padrino - by making him responsible for distributing food, medicine and basic goods, all of which are running out.

The nation's woes have accumulated with multinational firms shutting up shop and, on Tuesday, the US bank Citibank confirming it has closed the government's overseas payments account.

A Citibank insider told AFP on condition of anonymity the decision was due to the "reputational risk" to the bank of continuing to do business with the failing South American country.

Mr Maduro likened Citibank's move to a "financial blockade". His government had used the account to make payments to other accounts in the United States and elsewhere in the world.

Now it will have to find another bank to deal with, so as not to get closed out of the international financial system altogether.

Citibank's move is the latest in a string of closures or scaling back of operations of foreign companies operating in Venezuela, such as Coca-Cola, US food giant The Kraft Heinz company, Clorox and airlines Lufthansa, Aeromexico and American Airlines.

The Maduro government made good on Monday on a threat to take over the facilities of companies that shut down.

A plant run by US consumer products giant Kimberly-Clark has been turned over to its workers.

The company said that it simply could not get hold of hard currency to buy raw materials in Venezuela.

In face of the mounting adversity, Mr Maduro has been characteristically defiant in the same vein as his late mentor and predecessor, populist president Hugo Chavez.

"Nobody stops Venezuela," he said on Monday. "With Citibank or without it, we are moving forward. With Kimberly or without, we are moving."

But the country's economic problems are crushing.

An estimated 80 percent of food items, medicines and other basics - even soap - are in short supply. Inflation hit 180 per cent last year and the IMF has forecast it at 720 per cent this year.

The country imports just about everything it consumes. But the dollars needed to buy all that stuff are also in short supply: both because of the drop in oil prices and because of currency controls the government exercises.

"Companies are leaving because they cannot get hard currency. They have nothing with which to import raw materials, and stop producing," said economist Pedro Palma of consulting firm Ecoanalytic.

"The response is to take over plants. But what are the workers going to use to produce?" he mused.

Critics say the problem stems from the leftist government's model of tight grips on the economy and currency controls in place since 2003.

Mr Maduro says he is being targeted by US interests and local business elites bent on stoking grassroots anger and removing him from power.

Under Mr Maduro's response, civilian ministers are now subordinate to the military. Mr Maduro has also named a new head of the National Guard.

He says the goal is to end corrupt practices, such as crooked officials turning food deliveries over to smugglers who resell the items at much higher prices to the few Venezuelans who can afford to pay.

"We are seeing a major movement of pushing civilians to the side in benefit of the military, which is what is holding up the Maduro government," economist Jesus Casique told AFP.

"This, the Citibank issue and the companies that are leaving all affect the country's image and discontent within Venezuela," Mr Casique added.

Mr Maduro says the military will make things right, arguing that the private sector controls 93 per cent of distribution of basic goods and is killing the economy with hoarding and scalping.

Out of a total of 30 government ministries, the military is now in control in 10.

This not going down well with critics of the Maduro government.

The Venezuelan Bishops Conference said the rise of the military is a "threat to tranquility and peace".