The Blue House brothel in Puerto Cabello is clean and well-kept, with a patio and kitchen where women get three meals a day. Outside, the smell of sewage pervades the city’s squares and cobblestoned streets, littered with piles of garbage. In Venezuela’s biggest port, prostitution, which is legal, is a boom industry because the residents at the Blue House—and other sex workers—have become dealers in currency exchange. The prostitutes are paid in dollars by visiting foreign sailors.
Venezuela’s contracting economy has led to a free fall of the bolivar—the local currency—and steep inflation. Prostitutes more than double their earnings by moonlighting as currency traders. “We got dollars to afford the things our families need, but we have to sell our bodies for it,” says Elena, who uses an alias to protect her identity. She crosses the legal line, however, when she sells the dollars she earns from sailors to local businessmen, who stop by the brothel to get hard currency they need for trips abroad. With the extra bolivars, Elena can afford to go to black market street vendors for cooking oil, flour, nail varnish, and other products that are out of stock in shops.
The illegal currency trade in greenbacks can fetch 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes. When President Nicolás Maduro took office in April 2013—succeeding the late Hugo Chávez—the bolivar was 23 to the U.S. dollar. Today it has collapsed to 71 to the dollar. The government has tightened the supply of dollars to commercial banks to preserve reserves in the treasury. The official exchange rate, reserved for imports of food and medicine, is 6.3 bolivars per dollar.
The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, says Steve Hanke, a professor of applied economics at Johns Hopkins University. Those with access to dollars, such as prostitutes, taxi drivers, and other Venezuelans who interact with foreigners, can shield themselves from inflation by trading their dollars at ever higher rates. Those without are seeing their living standards decline. “We can make more in two hours here than working in a shop in a month,” says a prostitute at the Blue House who calls herself Giselle.
Prostitutes in the port city charge sailors a fixed rate of $60 per hour for sex, or about 4,200 bolivars—equal to the minimum monthly wage in Venezuela. The women also help book rooms and taxis for foreigners, charging them in dollars, then paying the landlords and drivers in bolivars. Providing those services to dollar-paying foreigners can earn a prostitute the equivalent of about 6,800 bolivars on the black market; the same service paid in bolivars would bring in less than half that amount.
Maduro has called the black market in dollars “perverse,” saying it was designed by the bourgeoisie to destroy his socialist government. Government officials have tried jailing traders, shutting down brokerages, and setting up alternate exchange systems to stem the rise of the unofficial rate. “We are going to defeat the parallel dollar,” Economy Vice President and Oil Minister Rafael Ramírez said in March as he announced a new currency market, the Sicad II. It allows companies and individuals to buy dollars in limited quantities for 50 bolivars each, an 88 percent devaluation from the official exchange rate.
Under Maduro, Venezuelan inflation hit an annualized 61 percent, the highest in the world, in May. According to a Venezuelan central bank scarcity index, one in four basic products, on average, aren’t in stock on store shelves. The percentage of households living below the poverty line rose 6 percentage points, to 27.3 percent, in the second half of 2013, the first increase since 2010, according to the National Statistics Institute. Rising prices, mounting shortages, and more crime have fueled months of protests that have cost the lives of at least 42 people.
Drinks vendor Luis Alberto Paredes lives with his sister and their 85-year-old mother in Puerto Cabello’s old business district. His walls and roof are adorned with flags and posters of Maduro, Chávez, and the Venezuelan Communist Party, and his mobile kiosk is covered with photos of pro-government Mayor Rafael Lacava. Paredes, who earns a minimum wage of about 4,200 bolivars a month, says he has to buy coffee beans for his stand from street hawkers for four times the regulated price, because the supermarkets are always out of stock.
“Maduro has been a total failure,” he says. “People are getting fed up. I think it will explode sooner rather than later.”
For women such as Giselle and Elena, prostitution for dollars has become a lifeline keeping them from poverty. “What would we do now if we stopped?” says Giselle. “Work for a minimum wage that doesn’t even pay for food? If we wouldn’t be here working the scene, we would be living on the streets.”