Coca-Cola Forced To Stop Production In Venezuela

[Bacchus4.0]

http://news.sky.com/story/1699800/coca-cola-forced-to-stop-production-in-venezuela

Coca-Cola is halting production of its namesake soft drink in Venezuela for the foreseeable future due to a shortage of sugar.


The US company says it is being forced to take the action because it has run out of the raw material.

Venezuela's economy is teetering on the edge of collapse with widespread food shortages and inflation forecast to surpass 700%.

Last month, Venezuela's largest food and drinks company, Empresas Polar, stopped production of beer because it was unable to obtain enough imported barley.

[Ghost Dog]

1. Car parts, barley, sugar...

Why are these private corporations ceasing to produce or import materials, shutting down production, throwing workers out into penury? Because the government forces them to? How? None of these news/propaganda articles explain. Why?

Without some clear explanation, it looks like corporations 'striking' for political purposes..

[Bacchus4.0]

2. They can't get the dollars to import raw materials

Its pretty sad when a tropical latin American country doesn't have enough sugar.

Its the government that manages the exchange for dollars. Venezuela does not have a well developed industrial or agricultural base. They are nearly completely dependent on oil sales for revenue.

[Ghost Dog]

3. You say the likes of Toyota, Coca- Cola, and the country's

semi-monopoly beer brewer have no access to US dollars? Because of government currency-exchange controls, ie because of internal inflation provoked partly by oil prices (and the petrodollar system)? 'Reporting journalists' should make this clear, rather than describing as 'government forcing' what is a much more complicated situation (including long-needed reforms in domestic primary production sectors).

[Bacchus4.0]

4. They don't in Venezuela. That's why Ford and Coca Cola closed shop

The government controls the exchange of dollars. That's why airlines don't fly there. They can't convert earnings to dollars and a profit. Why operate in Venezuela at all if it's always at a loss

[Ghost Dog]

6. Oh, indeed, why, temporarily, operate at a loss?

That's still not government 'forcing', that's down to the economic situation, in the international context, the country finds itself in.

Perhaps Venezuala needs to implement more collectivisation and domestic production.

My main point is that English-language MSM discusses none of this, merely reproducing the 'government forcing' talking-point, as if orchestrated..

[Bacchus4.0]

13. Yes, they need to implement more domestic production but not collectivisation

That doesn't work. The businesses that were confiscated and now run by the state are not productive. The only thing Venezuela has now is oil and with the price way down, the country is lacking in basic human necessities.

[hack89]

14. How would the government be able to import things?

they don't have dollars either. The government running things doesn't make the currency problems go away - you need dollars to run a modern economy.

[COLGATE4]

5. It's not complicated.

The 'government' of Venezuela has made it virtually impossible for companies to obtain the dollars necessary so that they can import the raw materials needed for their production, while at the same time letting favorites of the system game it so they can prosper buy buying those same dollars at bargain basement prices and then resell them on the black market at enormous gain.

[Ghost Dog]

7. Ok, thanks. So the government runs a variable- rate exchange control

system on USD (to fight inflation and inegality, presumably) and the system is gamed by corruption. What about other currencies? Why would USD be required to import sugar from neighboring countries?

I wonder how many jobs we are talking about, overall. Perhaps, in the austere circumstances, these are not very vital industries, neither economically nor socially and Venezuala's economy could be more usefully focused on primary production and manufacturing in and for its domestic markets, given the social demographics of the country as a whole. (edited)

[COLGATE4]

8. They have several different rates. No other country is prepared to

sell to Venezuela except for dollars now. That's why airline tickets in VZ can only be paid for in dollars, cell phone service the same. In a country like Venezuela, any job is a treasure. Throwing thousands out of work because they 'are not very vital industries' is not conducive to internal harmony.
'

[Ghost Dog]

9. What happens if the exchange controls are eased

or lifted?

[COLGATE4]

10. They can't. They don't have enough dollars. In addition, the economic dislocation is so

severe that it would take a couple of years for things to even begin to return to normal. Venezuela's credit is so poor that China is their only source of funds, and the Chinese are now getting skittish. It's truly beyond the point of no return.

[Ghost Dog]

11. Yes. But rather than a return to 'normal', Venezuela's economy

needs to open new development paths, less-focused on the small so-called 'middle', in fact upper classes and less dependant on oil and international finance. However, as I see from today's Telegraph, another kind of transition is in the works. Here's the money quote:

(A) new regime could help the country back on its feet, with help from the IMF. “If we have a new government that could imply multilateral support to manage a transition process (and) we could have a relatively market-friendly restructuring like that seen in Ukraine.”

(Edit to add, from today's Guardian) Of course:

Maduro blames the country’s woes on an “economic war” against his government by rightwingers and foreign interests.

[COLGATE4]

12. The VZ government was moving in that direction when Chavez was

elected and promptly threw all the forward-looking initiatives in the trashcan. A new regime could do a lot but Maduro is not going to let that happen, announcing his intention to keep ruling by decree. He's perfectly prepared to spill blood in order to keep himself and his cronies in power. Democracy is at present dead in Venezuela. Who knows what will have to happen before it can be restored.

[hack89]

16. That would require an enormous infusion of foreign capital

transforming economies is expensive.

[hack89]

15. US dollars are the currency of the global economy

other countries don't want other currencies for their goods and services - they want dollars.