THE AMERICAS:

<a href=search.ft.com>Search Financial Times By Andy Webb-Vidal

At the Mercal food store in Caricuao, a poor district on the dust-blown outskirts of Caracas, the range of goods is limited. Shelves are half- empty. An army sergeant loiters at the end of the checkout, ready to bag your ration of beans, flour and sugar.

Unpromising as it may seem, the government store in the capital is the model to be replicated across Venezuela under a plan fathered by populist President Hugo Chávez and overseen by the military. The plan's goal: to feed Venezuela's growing number of poor and to counter shortages from the private sector.

"Prices are cheaper than elsewhere, and for those of us with low incomes, any difference is important," says Viviana Trillo, a Caricuao housewife. "I thank President Chávez for this."

Paradoxically, the food security programme is being prioritised just as the Chávez government is blocking dollar sales to businesses, including soft commodity importers and food processors, curtailing supplies.

Currency trading was suspended in January during the strike at Petróleos de Venezuela, the state oil company that is the government's main source of export revenue. Four months later, international reserves have recovered and oil exports have resumed.

But Cadivi, the foreign exchange control agency, has yet to disburse any dollars and business leaders are convinced that Mr Chávez intends to bring the business sector - which fiercely opposes his government - to its knees.

"This a specific retaliation against all those seen as not being in favour of the regime," says Rafael Alfonzo, president of Cavidea, the food industry chamber.

The non-functional currency controls are not only affecting domestic companies, many of which are closing and laying off employees. Multinationals with subsidiaries in Venezuela, such as Cargill, the US agricultural conglomerate, say they will be forced to shut down operations within the next few weeks unless hard currency is made available.

"A lot of US companies thought that this would be a temporary situation and they got money from their home offices to maintain market share," says Antonio Herrera, vice-president of the Venezuelan-American Chamber of Commerce.

"But now they are being told: 'no longer', so they are exhausting inventories," Mr Herrera says. "This is an economic atrocity against the Venezuelan people."

Venezuela's economy appears to be spiralling downwards. Central bank figures due this week are expected to show that the economy shrank 15-25 per cent in the first quarter after a9per cent contraction last year. Inflation is forecast to top 50 per cent this year.

The official unemployment rate has surged to 21 per cent - 5 percentage points higher than at the end of 2002 - and many of the jobless are elbowing into the precarious informal sector, itself dependent on imports and contraband.

Meanwhile, formal trade links are being severed because of the exchange controls. The US Export-Import Bank last month stopped offering credit to buyers in Venezuela, and the Andean Community could impose punitive tariffs on the country. Venezuela's ports are at a standstill.

Mr Chávez's strict enforcement of currency controls and the introduction of military-run food distribution is fuelling renewed fears among some opposition groups that he is bent on emulating a Cuban-style command economy. Dozens of Cuban officials are advising Venezuela's agriculture ministry, and the government is using Cuban trading companies to import food for the network of Mercal stores.

Officials insist that food imports are not being subsidised and that the price of foodstuffs at private sector outlets is inflated because of excessive profit margins and hoarding.

The government's food plan is hugely ambitious. Colonel Gerardo Liscano, head of Mercal, says Mr Chávez has ordered him to guarantee that 4m people are supplied with food by the end of the year, and 8m by the end of 2004 - a third of the population.

"The idea is to deliver food at prices that are in solidarity with the common people," says Col Liscano.

But opposition critics suspect that Mr Chávez, through Cadivi, is funneling dollars at a discount to government frontmen, who import basic foods and thus can shore up the political loyalty of the poor ahead of a possible referendum this year.

Either way, economists warn that unless the government begins releasing dollars soon, its nascent but inefficient distribution system will not be able to fill the yawning food supply gap that will result from a crippled private sector.

"The government cannot substitute all of the most efficient traditional producers," says Francisco Vivancos, economics professor at the Central University of Venezuela. "But the implicit logic is to cater for that section of the population that is politically most important to Chávez."

Traducción

En la tienda Mercal de Caricuao, una urbanización pobre de Caracas, la seleccion de bienes es limitada. Los estantes están medio vacios. Un sargento del ejército se pasea en la salida, listo para empacar su ración de caraotas, harina y azúcar.

Aunque el modelo parezca poco prometedor, esta tienda guberamental es un modelo a ser replicado en toda Venezuela bajo un plan concebido por el Presidente populista Hugo Chávez y supervisado por los militares. El objetivo del plan: alimentar al creciente número de pobres en Venezuela y contrarestar la escasez de alimentos del sector privado.

"Los precios son más económicos y para los que tenemos pocos ingresos, cualquier diferencia es importante," dice Viviana Trillo, un ama de casa de Caricuao. "Doy gracias al Presidente Chávez por ésto."

Paradójicamente, se le está dando prioridad al programa alimenticio a la vez que el gobierno de Chávez bloquea la venta de divisas al empresariado, incluyendo importadores de productos genéricos y procesadoras de alimentos, limitando de esta forma el abastecimiento.

El cambio de divisas fue suspendido en enero durante el paro de Petróleos de Venezuela...cuatro meses más tarde, se han recuperado las reservas internacionalesy se han reiniciado las exportaciones de crudo.

Pero Cadivi, la agencia de control cambiario, todavía no ha desembolsado dólares y ls empresarios están convencidos de que Chávez intenta someter al sector que lo opone.

"Esta es una retaliación específica contra todos aquellos que son percibidos contrarios al régimen," dice Rafael Alfonzo, presidente de Cavidea. Los controles de cambio no sólo afectan a las compañías nacionales, muchas de las cuales están cerrando y despidiendo empleados. Las multinacionales con subsidiarias en Venezuela, como Cargill, dicen que se verán forzadas a cerrar sus operaciones en las próximas semanas a menos que haya disponibilidad de dólares.

"Muchas de las compañías norteamericanas pensaron que la medida sería temporal y recibieron dinero de sus oficinas principales para mantener su presencia en el mercado," dice Antonio Herrera, vice-presidente del Venezuelan-American Chamber of Commerce.

"Pero ya están agotando sus inventarios," dice Herrera. "Esta es una atrocidad económica contra el pueblo venezolano."

La economía de Venezuela parece estar decayendo a pasos agigantados. Las cifras del Banco Central de esta semana aparentemente anunciarán una caida del 15-25 en el primer trimestre después de una contracción del 9 por ciento el año pasado. Se espera que la inflación llegue a un 50 por ciento.

La tasa de desempleo extraoficial subió a 21 por ciento y muchos desempleados están girando al sector infomal que también depende de las importaciones y del contrabando.

Mientras tanto, las relaciones comrciales formales están desapareciendo debido al control de cambios. El Export-Import Bank norteamericano paró el credito a los compradores en Venezuela y la Comunidad Andina podría imponer tarifas punitivas al país. Los puertos están paralizados.

La estricta aplicación del control de cambios ha reforzado la creencia de los grupos de oposición de que Chavez está decidido a emular una economía estilo cubano. Decenas de oficiales cubanos asesoran al Ministerio de Agricultura y el gobierno utiliza compañías de comercio cubanas para importar alimentos para Mercal.

Los oficiales insisten en que las importaciones no son subsidiadas y que los precios de los alimentos en el sector privado están inflados debido a los margenes de ganancia y el acaparamiento. El plan es ambicioso. El Coronel Gerardo Liscano, director de Mercal, dice que Chávez ha ordenado que se garantize que 4 millones de personas reciban alimentos para final de año y 8 millones para el 2004 - un tercio de la población.

Pero la oposición sospecha que Chávez, a través de Cadivi, canaliza dólares a precios preferenciales a enviados del gobierno, quienes importan alimentos básicos para ganar la lealtad política de los pobres ante un posible referendum.

"El gobierno no puede sustituir a los productores nacionales más eficientes," dice Francisco Vivancos, profesor de economía en la UCV. "Pero la lógica implícita es satisfacer al sector económico que es políticamente más importante para Chávez."