A thriving border business

SAN ANTONIO, Venezuela — "Carlos," a taxi driver in this border town, smuggles gasoline into Colombia several times a week.

He is waved through Venezuelan immigration, crosses the Simon Bolivar Bridge and, 50 yards past Colombian customs, turns down a dirt track where he swings into a dusty lot lined with rickety wooden shacks that shelter hundreds of plastic containers.

Minutes later, the 13 gallons of gas he bought for $1.90 in Venezuela have been siphoned off and Carlos is paid $40 — a staggering 2,100 percent profit for half an hour’s work.

“I do this almost every day,” said Carlos, who did want to give his real name because of the illegal nature of the activity. “It really helps to supplement my income.”

Venezuela has world's cheapest gasoline, which its government is believed to be subsidizing to the tune of $8 billion a year. A gallon of 95-octane gas sells for 18 cents per gallon, while 91-octane costs just 12 cents per gallon. In contrast, in Colombia, where the price is set by the free market and which has less oil, gasoline sells for around $4.15 per gallon. Throw into the mix a black market exchange rate (another thriving business in this border area) that reduces prices by a further two-thirds, and it’s easy to see how contraband gas has become such a lucrative business here.

The most obvious solution would be to raise the price of gasoline in Venezuela. President Hugo Chavez pondered a rise earlier this year but the measure is considered tantamount to political suicide in Venezuela, which has experienced bloody riots in the past after price hikes.

The border region’s economy is becoming increasingly dependent on the illicit trade. “This used to be a coffee growing region but now lots of producers make a living from smuggling gasoline,” said German Duarte, president of Transport Workers Union in Tachira, Venezuela. “It's difficult to find people to work on the coffee farms.”

A 2007 study by the Ministry of Transport estimated that as many as 70 percent of cars crossing the border between San Antonio and Cucuta are smuggling gas. The thousands of gallons smuggled across each day provide no monetary benefit to the Venezuelan state, said Rafael Ramirez, president of Petroleos de Venezuela, Venezuela’s state-owned oil company.

Rather, it is often local officials who benefit financially from their active involvement in the business. At gas stations around town, National Guardsmen can be seen manning the pumps while cars pass with relative freedom across the border. Carlos said small-time smugglers such as himself did not have to pay the National Guard but that larger containments did.

Meanwhile, criminal gangs that are believed to include elements of paramilitary organizations and guerrilla groups such as the FARC and the ELN, have gotten in on the act, Duarte said.

“It's common knowledge that the National Guard, the CICPC (special crimes police), and the DISIP (Venezuela’s intelligence agency) receive money from what appear to be illegal groups from the border region who are smuggling gasoline,” he said.

The National Guard commander in San Antonio turned down several interview requests.

These gangs are believed to have fleets of "Viking" cars — '70s and '80s models with extra large gas tanks and a back seat altered to accommodate a plastic bag (the bag reminds people of the packaging for a popular ice cream brand known as "Vikingo"). These masquerade as taxis but in fact spend all day shuttling gas back and forth across the border.

The contraband business causes other problems in addition to the loss of millions of dollars. In San Antonio and its vicinities, columns of cars stretch around the corner at gas stations as smugglers wait to fill up, meaning that those who require gas for legitimate reasons must wait in line — or are even pushed to the back of the queue. “When the pump attendants see our buses they say the gasoline has run out,” Duarte said. “Bus drivers have to wait up to three hours a day because the attendants will only give gas to public transport if public transport gives them money. The authorities know this goes on.”

But Jose Rozo, president of the Venezuelan Chamber of Commerce for Tachira, says he has seen a concerted effort by the Venezuelan authorities to tackle the issue in recent months.

Colombia has been receiving between 50,000 and 120,000 barrels of cheap fuel per month from Venezuela, though Chavez threatened Sunday to stop sending the fuel, a move analysts said would likely exacerbate the problem. Venezuela claims to have tightened controls and increased searches on the border. But the measures appear to have done little to stem the flow.

Rozo blames the Colombians, whose criminal gangs have spilled over the border, for corrupting Venezuela’s National Guard.

The Colombian government, meanwhile, has semi-legalized contraband gas in the Norte de Santander department, a move that has encouraged smuggling, said Rozo. In Cucuta, makeshift gas stations line the city's curbsides, openly selling contraband gas. A taxi driver in Cucuta said contraband gas sold for $1.72 per gallon.

“We are witnesses, and I can verify it, that at least on this side there is something that is being done by the Venezuelan authorities to combat these criminal groups,” he said. “But on their side there is indifference and tolerance on the part of the Colombian authorities."