Venezuela Hopes Cracking Down on Smuggling and Raising Fuel Prices Will Help Struggling Economy

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Venezuela has announced an extension of the overnight closure of its border, in an attempt to stop widespread food and fuel smuggling.Measures to stop traffic crossing the border between 10 p.m. and 5 a.m., and limit the movement of cargo vehicles during the day, were introduced in August to combat the lucrative smuggling business.

Venezuela has the cheapest gas prices in the world, and many other goods are sold with large discounts in state stores, enabling thousands to live off of a thriving contraband trade along the Colombian border.

“We are going to pursue and punish smugglers with double severity,” President Nicolas Maduro said, announcing the three-month extension. “They are looting the republic.”

Subsidies on products, first introduced in late socialist leader Hugo Chavez’s 14-year presidency, are hugely popular among Venezuelans.

Hugo’s socialist regime did nothing to help the nation’s economy, and the fuel subsidies that Venezuelans have grown accustomed to costs the South American OPEC member about %12.5 million a year.

Maintaining the subsidies will hasten the country’s economic decline. The low gas prices in particular disincentivize the use of alternative fuels. The government’s incentivizing the products sold in state stores make it impossible for businesses to thrive.

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Venezuela may soon be hiking its highly subsidized gasoline prices, in an attempt to help offset the country’s reeling finances and generous welfare programs.

Venezuelans are currently struggling with an annual inflation over 60%, and shortages of various goods, such as corn flour and medicines.

Venezuela has the world’s largest oil reserves, and many Venezuelans see cheap fuel as a birthright. President Maduro, whose popularity is already below 40%, has faced a backlash at the mention of hiking gas prices.

“We deserve subsidized fuel,” said Antonio Lugo, a 63 year-old lawyer. “I think it’s incredible that in an oil-producing country they want to increase fuel prices on us.”