Dakazo

Dakazo refers to a set of actions taken by the Venezuelan government forcing consumer electronic retail stores, with Daka being the most prominent, to sell products at much lower prices on 8 November 2013, weeks before municipal elections.^[1] The forced Daka price changes helped Venezuela's ruling party, PSUV, win in some of the municipal elections,^[2] though the massive sale of goods caused further shortages in the months following the initiative.^[1]

Etymology

The word Dakazo is the name of the retail store, Daka, plus the -azo suffix, which denotes a violent knock. Its translation could therefore be "the Daka smash". (see Spanish nouns: Other suffixes.)

Background

In 2013, Venezuela was facing multiple economic difficulties including shortages, high inflation and a depreciating currency.^[3][4] Currency controls implemented by the Venezuelan government made it difficult for importers forcing them to adopt a black market currency exchange rate with higher prices and created corruption among sellers and government officials.^[4][5]

Government occupation of Daka

Approval rating of President Nicolas Maduro increased nearly 10% from September to November 2013.
Sources: Datanálisis

Weeks before municipal elections and a month before Christmas, President Nicolas Maduro, who faced a possible presidential referendum if his party did not win in the elections and had lost popularity among Venezuelans in the preceding months, forced Daka to sell its products at severely lowered prices on 8 November 2013.^[3][4][5] In a speech, President Maduro criticized capitalism and claimed that Daka had raised prices on goods over 1000%.^[5] Troops were ordered to take control of the five Daka retail stores in Venezuela and enforce lowered prices, though at some stores, pro-government groups called colectivos arrived before authorities and forced Daka employees to sell goods at lower prices as well.^[1][5][6] Multiple managers of Daka, JVG and Krash were arrested by SEBIN and were prosecuted on charges of unjustified price increases after importing products with dollars obtained at the official exchange rate of 6.3 bolivars.^[1][7] At the main store in Caracas, troops filed hundreds of people in lines where they waited for hours to purchase items one person at a time.^[5]

The announcement of lowered prices sparked looting in multiple cities across Venezuela.^[8] Of the multiple cities where looting occurred, dozens of people were seen running from a Daka store in Valencia with flat-screen TVs and boxes.^[1][5][7] In the Carabobo municipality of Caracas, doors were ripped off of the Daka store and its windows were broken.^[9] Looters were also seen breaking into warehouses to take goods.^[8]

Outcome

Days after the Dakazo, President Maduro stated that the action taken by the government would result in a -15% inflation rate for the month of November and a 50% inflation rate in December, though critics disagreed candidly with President Maduro's statements.^[4] One month later in late December 2013, the Venezuelan government released data showing that inflation had in fact increased 4.8% in November and the inflation rate for December was 56.2%, proving according to Reuters that President Maduro's plan did not work.^[2] However, the measures taken by President Maduro helped his party, PSUV, win the majority of municipal elections.^[2]

Effect on business and shortages

An empty Samsung store in Venezuela with multiple notices on its windows months after the Dakazo.

Multiple economists warned that the actions taken by the government during the Dakazo would end up "cannibalizing" the economy, causing even more shortages since importing additional goods into Venezuela following the massive sale of products would be difficult for vendors due to currency controls and the black market exchange rate.^[3][4][5] By December 2013, shelves were empty in Daka stores, though Hebert Garcia Plaza, then High Authority for the Defence of Economy, stated that the stock of goods would return to normalcy soon.^[1] However, one year later in November 2014, some Daka stores still remained empty following the Dakazo.^[1] At a Daka store in the Bello Monte municipality of Caracas, only plates, a small oven, a pot, a blender and toaster remained one year after the Dakazo, with the manager stating that Daka would receive its first restock on 15 November 2014, over a year after the forced sale of goods.^[1] Multiple business leaders denounced the actions of the Venezuelan government demanding respect for private property and to work with business instead of taking actions against them.^[10]

See also

• Economic policy of the Nicolás Maduro government
• Economy of Venezuela

References