Facts recalling Venezuela’s border problems with Colombia:
? Venezuela has a long tradition of welcoming Colombian migrants; be they economic migrants, political refugees, or any other kind. There are approximately 5.6 million Colombian immigrants in Venezuela, of a total population of 30 million. The truth is that Venezuela has cooperated in a consistent and inexhaustible fashion with Colombia and its people, something which is evidenced in the hundreds of treaties of cooperation and in the fraternal welcome of the millions of Colombian citizens that immigrated to the country in the context of the conflict that the country has suffered for over 50 years.
? Venezuela has achieved international recognition for its efforts in welcoming Colombian refugees. Venezuela has welcomed millions of Colombians with the greatest solidarity and protection, as is well documented by the Office of the High Commissioner for Refugees of the United Nations and the World Bank, among others.
? The country has suffered the consequences not only of the internal conflict underway in Colombia, but also the Colombian state’s lack of control over violent paramilitary groups and criminal activity in and around the joint border. Of these issues, one of the most prescient is the smuggling of contraband items out of Venezuela, taking advantage of the price controls in place on essential items in Venezuela- making such cross-border operations extremely lucrative, at the expense of the Venezuelan people who have to deal with the shortages caused as a result of these operations. The items that are subject to being smuggled as contraband include, but are not limited to, immeasurable quantities of foodstuffs, medicines, machinery and equipment and, of course, petrol among all sorts of provision and attacks on the Venezuelan national currency, the Bolivar.
? The government of Venezuela calls for its counterpart to assume its own socio-economic responsibilities with its citizens, and tackle the crimes committed within its own territory, so that they do not have to be resolved outside its borders. Venezuela asks Colombia for absolute engagement with its responsibility in putting an end to the criminal acts perpetrated by persons, paramilitary groups or organised crime who operate outside the law, as a result of the indifference of the Colombian State to confront these groups, who commit crimes against human rights, and create the obligation to entirely fix the harm caused by the losses and injuries, in part derived from the lack of attention to its duties as a State.
Timeline of recent events in the border between Venezuela and Colombia:
19th of August 2015: President Nicolas Maduro of Venezuela announced the temporary closure of the border between Colombia and Venezuela in Tachira state (south west of Venezuela) for a period of 72 hours, launching a so-called ‘People’s Liberation Operation (OLP)’ in the area in order to detain the perpetrators of an ambush against members of the Bolivarian National Armed Forces that same day, resulting in the injury of two military personnel.
21st of August 2015: The Venezuelan leader extended the border closure and decreed a state of emergency in 6 border municipalities in the state of Táchira (Bolivar, Pedro Maria Urena, Junin, Capacho Nuevo, Capacho Viejo and Rafael Urdaneta).
26th of August: A meeting of the foreign ministers of Venezuela and Colombia (Delcy Rodriguez and Maria Angela Holguin, respectively) was held in which an agreement wasn’t reached in respect to the closure or the possible re-opening of the border. A meeting was pencilled in of the two countries’ ombudsmen to establish ‘the protocol for deportations from Colombia to Venezuela’.
27th of August: The President of Colombia, Juan Manuel Santos, called its Ambassador in Venezuela Ricardo Lozana in for consultations. This measure was reciprocated by the Venezuelan government which called its Ambassador in Colombia, Ivan Dario Rincon, in for consultations that very day.
28th of August: President Maduro extended the border closure to another 4 municipalities in Tachira (Lobatera, Garcia de Hevia, Ayacucho, Panamericano) and 3 days later decreed a state of emergency in those same municipalities. The Venezuelan president embarked on a tour that saw him visiting Vietnam, China and Qatar.
31st of August: The Organisation of American States (OAS) held a meeting but did not reach a consensus on organising a conference of the foreign ministers of the countries which make up the organisation (34) to tackle the border issues.
7th of September: The Venezuelan president decrees a state of emergency in 3 municipalities in the state of Zulia, north west Venezuela (Guajira, Mara and Almirante Padilla), at the same time ordering the closure of the border crossing in Paraguachon, in Zulia.
8th of September: The governor of Tachira, Jose Vielma Mora, reported that the Operation for the Liberation of the People (OLP) that had been underway in the region, with 7 paramilitaries belonging to the Los Urabeños being killed, while 8 others had been detained.
Figures on the reception of Colombian refugees and immigrants in Venezuela:
• 85% of Colombians who have fled their country as a result of internal conflict or a poor economic situation reside in Venezuela; with the remaining 15% in other countries.
• The Venezuelan government has built and assigned in the last years some 800,000 houses to those in need; 25% of those have been assigned to Colombians.
• Venezuela is the country with the greatest amount of refugees in Latin America and the Caribbean; as well as receiving the second greatest amount of refugees in the Western hemisphere and being among the top 24-25 in the world. (According to data published by different reports of the World Bank between 2010 and 2014, and by a 2014 report by the United Nations High Commissioner for Refugees [UNHCR])
• In 2014, Venezuela could count with more than 204,000 protected people in its territory, 95% of them from Colombia, according to the World Bank.
• The US welcomes the most refugees in the Western Hemisphere, with 263,000; however its total population is 300 million, 10 times greater than that of Venezuela’s population. Expressed as a percentage (ratio?) of people, Venezuela hosts more than 10 times more refugees than the US.
• The UNHCR counts with support centres for refugees and/or displaced people in the Venezuelan states of Apure, Táchira and Zulia, where special support is given to Colombian refugees.
• In 2011, a law was passed known as the Organic Law for Refugees and Asylum Seekers, which protects the right to seek refuge, while article 12 of the same law established the Venezuelan National Commission for Refugees.
• In May 2015, the UNHCR recognised our country as a state that complies with international treaties on Human Rights.
• In 2003, Venezuela signed a ‘Memorandum of understanding between Venezuela and Colombia on the treatment of displaced persons in Colombian territory who reach the Venezuelan border’, with the goal of attending to the victims of the Colombian War.
• The Vice President of the Bolivarian Republic of Venezuela, Jorge Arreaza, said on the 4th of September that following the closure of the Colombian-Venezuelan border, the Bolivarian Government has established a “humanitarian corridor” for 350 schoolchildren registered, both Venezuelan and Colombian, so they can cross the border into Colombia and continue their education in schools of that country.
• He also noted that the Bolivarian Government is guaranteeing the right to work for Colombians living in Colombia and working in companies located in the Venezuelan border municipalities. Therefore, Venezuelan authorities have asked employers for the details of all their employees on their payroll.
Smuggling and Contraband - General Figures:
• Nearly 40% of all that Venezuela produces or imports are lost on the Colombia/Venezuela border, as has been revealed by the President of the Bolivarian Republic of Venezuela, Nicolas Maduro.
• The closure of the border has led to a halt in the smuggling of contraband, from which the criminal mafia groups which operate in the area have stopped receiving a daily sum of 300 million dollars, or 9 billion dollars per month, according to the President of the Venezuelan National Assembly, Diosdado Cabello.
• According to information provided by the spokesperson for Marcha Patriotica, or Patriotic March, the main political and social left-wing movement in Colombia that was founded in 2012, Andres Gil, in the article entitled ‘Venezuela-Colombia. What if Maduro is right?’, published on the 30th of August in the media outlet Resumen Latinoamericano, the business of smuggling of contraband is controlled in Colombia by paramilitary groups.
• Gil reported that the main paramilitary groups operating in the border include the MAS (Death to Kidknappers), the AUC (United Defence of Colombia), the CONVIVIR (Cooperatives for Vigilance and Private Security), the BACRIM (Emerging Criminal Groups), the Black Eagles and the Rastrojos, among others.
• In 2013 the total amount of contraband was calculated to be valued at $5 billion or three times more than the amount of legal commercial exchange between Colombia and Venezuela, which stood at $1.817 billion.
• A third of Colombians consume or use subsidised Venezuelan products, that’s to say more than 16 million people, including the 40 municipalities in North Santander which includes around 2 million people plus 800,000 people in the Guajira department, made up of 15 municipalities.
• After the launch of the official Plan Against Contraband and the closure of the border, Cucuta was left with 30% fewer products.
Smuggling of Contraband Petrol:
• The contraband of petrol is one of the most lucrative businesses for the mafia groups that operate on the border. The business is based on the difference in prices, bearing in mind that the price of oil is subsidised by the Venezuelan state: Each gallon of petrol (3.78 litres) costs 0.28 Bolivars in Venezuela (equivalent to $0.08) and is sold at prices that range from 4,000 to 8,000 pesos in Colombia ($1.2 - $2.56). All of which means that a profit of anything from 1500% to 3200% is gained by the smugglers.
• The spokesperson for Marcha Patriotica, Andres Gil, pointed out in the aforementioned article that in the Venezuelan department of Tachira (whose border with Colombia was closed by the Venezuelan government), there are around 160,000 cars in circulation consuming more than a million gallons of petrol each day (3.78 millions of litres), more than in a single day in all of Caracas, the capital of Venezuela, in which there are around 1 million cars.
• The person responsible for the Colombian National Bureau for Taxes and Customs (DIAN in Spanish), Juan Ricardo Ortega, state in an interview with the Venezuelan newspaper Panorama in February 2015 that 15% of the petrol that is consumed in Colombia comes from the smuggling of oil from Venezuela.
• According to Eulogio del Pino, the current Minister of Popular Power for Energy and Petrol of Venezuela, in February of this year 100,000 barrels of petrol were smuggled daily over the border to Colombia. If we suppose that each barrel contains 159 litres of fuel, we are talking about 15.9 million litres of oil flowing out of Venezuela every day to Colombia.
• Small scale smuggling serves as a method for Colombians to soften the blow of the great poverty existent in North Santander, with high levels of unemployment and informal employment. Small scale smugglers (known as pimpineros) total more than 30,000 people, who have paid taxes to successive administrations in the Cucuta local government and are organised in the Sintragasolina trade union, meaning that in Colombia the practice of oil contraband smuggling is completely legalised.
• The Venezuela oil-trade expert, David Paravisini, has confirmed that the smuggling of oil towards Venezuela is not done on a retail basis, that is to say that a great volume of the oil smuggled is received by Colombian oil companies such as Vetra, Pacific Rubiales and Petromagdalena, who jointly with Ecopetrol (the Colombian state oil company) are engaged in refining, commercialising and even exporting this smuggled Venezuelan oil to third party countries (Peru and Guatemala, among others), claiming it as its own.
• The legalisation of contraband at such a massive scale happened in 2004, as a response to a fall in the production of Colombian oil. The then President of Colombia, Alvaro Uribe, ignoring agreements signed with President Chavez, passed decrees 2337, 2338, 2339 and 2340, which formalised the legalisation of all smuggled oil products originating from Venezuela.
• In 2004 also, so-called ‘centres for collection of fuel’ were established along the border with Venezuela, which gave authority to businessmen along the border to manage these collection centres in order to supply oil and diesel to the internal market, to be then exported via Ecopetrol.
• The New Colombia News Agency (ANNCOL) published on the 30th of August 2015 a report entitled ‘Oil and Energy: In-depth issues on the border closure’, in which it is stated that the contraband of Venezuelan oil at a big scale is achieved by transporting lorry-loads of oil from the states of Tachira and Zulia, in the west of Venezuela, towards Barrancabermeja, the main refinery in Colombia, where it is processes as Colombian oil. The article states that the ‘turning off the tap of Venezuelan oil could, in a few months’ time, make Ecopetrol falter’.
• The numbers indicate that the monthly sum of Venezuelan oil that is smuggled towards North Santander alone (on the Colombian side of the recently closed border with Tachira State) reaches 11 million gallons of oil each month.
• Other more conservative estimates point to 30 million litres, with the Department for Internal Markets of PDVSA (Venezuelan state oil company) reporting that since the closure of the border with Colombia is was saving 1 million litres of oil per day in what it was sending to Tachira State.
• 90% of the oil in circulation in the Colombian Department of North Santander comes from Venezuela. Of those 11 million gallons that are used every month in the Department, the Colombian state only provides 1 million.
• The average international price of oil currently stands at $1.57 per litre. If Venezuela were to export the oil that it is peddled solely in North Santander as a product of contraband, the Bolivarian Republic would gain $47 million dollars per month, or $565 million per year.
• La Opinion, a daily newspaper in Cucuta, reported that as a result of the plan against contraband, petrol in Cucuta became 35% more expensive.
• In Cucuta, a container of 22 litres of oil (known as a pimpina) is sold at a rate of between 28,000 and 30,000 pesos (14-15 US dollars), while this same quantity of fuel in Venezuela barely costs $3.30
• This contraband petrol is sold in Colombia by the well known Multi-Active Cooperative for Oil Sellers from the North, whose members set aside 10% of their profits from each pimpina sold to the departmental government.
• A number of ex-PDVSA directors, Luis Giusti, Ronald Pantin and Humberto Calderon Berti (who were expelled from the Venezuelan state oil company as a result of the oil lock out in Venezuela between December 2002 and January 2003) have provided consultation services for the Colombian ex-President Alvaro Uribe and his government’s Minister of Finance, Roberto Junguito, on how to hand over smuggled Venezuelan oil to the Colombian state.
• Giusti, Pantin and Calderon set up companies in Colombia; with these being Pacific Rubiales, Alange Energy and Vectra, respectively. These three businesses have run the so-called Centres for Collection on the Border, where smuggled Venezuelan oil is stored. In line with legislation approved by President Uribe’s government, the smuggled oil becomes property of the Colombian state through these ‘Centres’, circumventing the need to pay customs tariffs or declaring its contents.
Smuggling of other goods:
Smuggling of other goods, especially food, can be lucrative too:
• 4.5% of the population lives in Tachira State, but according to Gil too, 8.5% of all foodstuffs are ‘consumed’ in the state. As such, it can be estimated that as much as half of all foodstuffs that arrive in that region are smuggled towards Colombia.
• For example, the profit to be gained from smuggling and selling products in Colombia that are subsidised by the Venezuelan state can be summed up with the following figures: 1 litre of milk in Venezuela costs 200 bolivars, yet in Colombia it is sold at around 14,000 bolivars, a potential profit of 7000%.
• The problem of contraband is so serious that in Venezuela it represents a monthly loss of $3.65 billion. This figure, as an example, is above the total gained from the export of coffee by sea in Colombia in 2014, which was above $2.4 billion.
Information on the mechanisms at stake in the attack on Venezuela’s currency:
• One of the most difficult areas for Venezuela’s government to tackle regarding the country’s border with Colombia is the manipulation of the national currency (the Bolivar) at various currency exchange houses in towns along the Colombian frontier, a practice that appears to take place with the full knowledge of the Colombian authorities, as well as with the help of the banks that enable the electronic transfers used to facilitate some of the transactions.
• Some 3,000 Colombian exchange houses along the border artificially manipulate or devalue the Bolivar, utilising two different mechanisms:
o In one scheme, bolivars are exchanged for bolivars; with a 40% mark-up on each 100 bolivars note sold. Customers with banknotes from the Venezuelan Central Bank, with the largest note denomination of 100 bolivars, can sell these bills at the currency exchange houses for 140 bolivars each (paid with smaller denomination notes or via an electronic bank transfer), and then return to Venezuela. The apparent ‘loss’ by the Exchange Houses is explained in the next paragraph. Collaborating banks in both countries (who are fully aware of these transactions) frequently form an integral part in this process.
o The next step is to bring back the 100 bolivars notes to Venezuela, carrying the more physically (in terms of weight and volume) convenient load of currency (no small bills), in order to purchase contraband goods of all descriptions in Venezuela for sale in Colombia. The sale of these subsidized Venezuelan goods can garner up to 3000% profit on the Colombian side of the border. The 40% premium paid by the Currency Exchange Houses is not an obstacle, as they need 100 Bolivar notes (being ‘worth’ more than say five 20 Bolivar notes) and this physical money is pumped into a huge criminal network of mafia activity, which at very least is engaged in smuggling and contraband, but might also be active in a murkier world of paramilitary violence and criminal activity.
o The second scheme at stake is the sale of Bolivars at an exchange rate for pesos at a heavy discount compared to the official exchange rate, as established by the Colombian Central Bank. While in the rest of Colombia a Bolivar can cost 225 pesos, along the border the rate is around 8 pesos per Bolivar.
o This sale at an absurdly low rate depreciates the Bolivar, making it cheaper to subsequently buy contraband goods in Venezuela with the heavily discounted, or rather deliberately depreciated Bolivars.
o This scheme is actually legal in Colombia, since the currency exchange houses in that country’s border favour a type of exchange against the Bolivar, which although manipulated to favour contraband, is based on Decree N° 8/2000 of the Central Bank of the Republic of Colombia.
o A further profit is obtained when buying dollars with pesos at the official exchange rate, a profitable operation even if it’s carried out with less pesos than would have been obtained in a more conventional of exchange Bolivars/pesos in another part of Colombia.
• Another profit in this labyrinth of exchange mechanisms is the exchange of the currencies obtained in the previous transactions (to and from pesos/dollars) on the black market in Venezuela.
• In both schemes, the key point is to obtain through Colombian exchange houses, an input of Bolivars or cheap goods in the nation’s economy.
• Juan Carlos Tanus, a senior member of the Association of Colombians in Venezuela which brings together Colombian immigrants in Venezuela, stated that as regards the attack on the Venezuelan currency (see above) those involved mostly belong to a ‘mafia of 6 or 7 families, who are connected to paramilitaries and who maintain their control thanks to the revenue gained by smuggling. They buy votes, governorships, mayoral seats, control all roadblocks, bribe the police, the army and the tax and customs authorities...’
• Tanus also added that ‘President Juan Manuel Santos knows full well about the problem, but also knows that if he truly attempted to tackle and control the issue of smuggling, his government would fall that very day. The Colombian government would have to intervene in the currency exchange houses (located near the border) or tell them that from that point on they would need to buy 1 Bolivar at the official rate of 170 pesos, but he’s not going to do this because he wouldn’t be able to give his people such cheap products as those that are smuggled out of Venezuela as contraband and he’d have to comply with 14 Treaties of Free Commerce between the two countries.’
• Tanus stated that ‘the economy in Colombia is pretty complex. The numbers show that it is a nation with an economy based on the banking and industrial sectors, but they never include the figures on how the 27 million Colombians who find themselves in poverty are living.’
Additional data on the internal situation in Colombia:
• According to the UNHCR, in 2015 Colombia counts with 6 million internally displaced citizens over the course of the years (12% of its population), making it the country with the second highest level of internal displacement, after Syria, with 7.6 million of internal displaced people and 3.3 million refugees.
• 63% of the million internal displaced people live below the poverty line and 33% live in conditions of extreme poverty, according to the Norwegian Refugee Council’s People internally displaced by conflict and violence –2015 Global Overview.
• That same report states that in 2014 there were ‘137,200 people in Colombia newly displaced in Colombia, fewer than in 2013 though the figure is expected to rise as the victims’ registry is updated’. The total amount of people registered as Internally Displaced Persons in Colombia currently stands at 403,700. Of those internally displaced people, 7100 people were forcibly evicted from their homes in 2014, while more than 50% live in informal urban settlements.
• The report also states that in 2014, displacements in the region rose by 12% from the end of 2013, with Colombia driving an ‘increase in numbers (of displaced persons) over the last decade’.
Figures on the socio-economic conditions in North Santander, Colombian region with which Venezuela closed its border:
• Half of the population of this region finds itself in poverty (including in extreme poverty), according to figures released by the National Administrative Department of Statistics (DANE), the Colombian organization for statistics. In 2014, 39.9% of the population was in poverty, while another 10.5% were in a situation of extreme poverty.
• Unemployment and informal employment levels in the region are the highest in all of Colombia. For the period between March and May 2015, the level of unemployment stood at 15.6%, whereas the national average was roughly half that, at 8.9%.
• Levels of informal labour for the same period stood at 69.9%, these being the highest rates on a national scale. Other figures, such as those of the National Planning Department (DNP), estimate that the levels of informality are closer to 78%.
• The GDP per capita of the department was around $4,597 in 2013, whilst the same figure for the whole of Colombia was almost double, with $8,065.
• Almost 20% of the population has been a victim of the armed conflict, according to the Register of Victims (RUV in Spanish), which runs the Programme for the Full Attention and Compensation of Victims. The number of people affected stands at more than 242,000. The number of displaced people amounts to 210,000, according to the RUV.
• The housing shortage is of over 50,000 houses, according to data from Ricardo Carvajal, the regional director of the Colombian Chamber of Construction (Camacol).
• Secondary school coverage stands at 38%, below the national rate, which stands at 42% and is significantly lower than the average for Latin America, at 72% and below Venezuela’s average of 78%.
• Levels of provision of running water stands at 82.6%, while the average in Latin America is around 97.1%.
• According to the Colombian government’s own National Administrative Department of Statistics (DANE), in Cucuta there are more than 4,500 children aged 5-17 who work without security, selling oil, water and ice creams on the street, as well some who work in quarries.