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Venezuela: Can oil trump agony?

17th July, 2007 - Posted by Alessandro I. - No Comments

By Lowell Blankfort

It is twilight and, as April and I sit back on their terrace sipping wine with John Pate and his wife, we enjoy a sense of tranquility hardly experienced in our almost three weeks in Venezuela.

Below us lies a verdant valley, framed by a wooded green mountain which mercifully blocks the down-at heels skyscrapers and ragged slum hillsides in downtown Caracas. In Venezuela this is heaven.

A few minutes earlier John had become excited as he drove us into his gated community. “Look,” he exclaimed pointing out the window. “See how these neighbors are able to take a leisurely stroll here without a bodyguard.”

***

John, 62, is an American lawyer, a graduate of Brown University and Boston University law school, and of Tufts University School of diplomacy, who heads a major law firm in Caracas. He has lived 34 years in Venezuela, the last eight of them in his charming hillside home with its tropical garden, decorated largely by Gertie, his professional-artist wife.

Yet, at a stage in life when most successful people are dreaming of retiring and enjoying the fruits of their labors, John and Gertie are seriously thinking of giving up their fabulous home, giving up the law firm, and fleeing their adopted country for the United States.

“Chávez is going after people like us,” he says, talking of the nation’s president, Hugo Chávez. “Many of this country’s successful people — and not just foreigners like us — have already left. Foreign companies, our clients, are pulling out their investments. And now Chávez’s new ‘socialism of the 21st century,’ is threatening us directly. Now he is saying that people with too much property should have to share it with others — i.e., the government would simply install strangers with us in our home,” like the communists did in Eastern Europe in the last century.”

***

Seven hours earlier we are in a taxi. Our driver is Tony Antonetti, Italian-born, who tells us he had come to Venezuela as a teenager 50 years ago. It is a long ride in typically stagnant Caracas traffic and Tony uses the time to give us a sort of political sightseeing trip.

“See that school on the right,” he says. “Chávez built that.” “See that old folks’ home. Chávez built that” “See that clinic. Chávez built that”

“Chávez is good for the poor people that nobody in power used to care about. He cares.”

***

Chávez, 52, who inherited the Latin-American country with the worst gap between rich and poor when he became Venezuela’s president in 1999, is regarded by many Venezuelans as their knight on the white horse, their new Robin Hood, the unchallenged, all-powerful keeper of the cash of the world’s fourth largest oil producer, who is capitalizing on soaring oil prices to elevate the lives of the nation’s long-neglected majority — impoverished people, the class into which he was born — with a new system he calls “21st century socialism.”

Other Venezuelans consider him an instigator of class warfare, a shrewd, ruthless and charismatic megalomaniac, an incipient dictator who is gradually whittling away the nation’s freedoms, an avowed Marxist-Leninist who is chasing away capitalist foreign investment and setting the stage for an economic catastrophe.

The United States considers Chávez’s virulent anti-American rhetoric and his successes in wooing friendships with several other Latin-American countries a threat to U.S. free-trade economic policies and political hegemony on an economically troubled continent already rife with anti-Americanism. And, perhaps most serious, it views him as a threat to U.S. oil supplies because Venezuela long has been — and still is — a major U.S. oil supplier.

***

Who is, really, this flat-faced, pudgy, former paratrooper whose mulatto features reflect Venezuela’s multi-ethnic history (indigenous, Spanish, African) and whose fame goes back to a failed coup he led in the early 1990s, for which Chávez did jail time? First elected president in late 1998 after his behind-bars stint, he was re-elected last December in a 63 percent landslide after surviving a coup in 2002 and a referendum in 2004. He defeated a state governor but the feeble opposition parties offered no candidate.

Just before Chávez first took office, Gabriel Garcia Marquez, the Nobel Peace Prize laureate, shared a flight with him from Cuba to Venezuela. Garcia Marquez was later quoted as having said, “I was overwhelmed by the feeling I had been traveling and chatting pleasantly with two opposing men. One to whom the caprices of fate had given him an opportunity to save his country. The other an illusionist who could pass through history as just another despot.”

***

Recently, the despotic side of Chávez seems to be emerging. Increasingly, his government has been making use of “the list,” the names of hundreds of thousands of Venezuelans who signed petitions in the early 2000′s that brought about the a failed anti-Chávez referendum. These people mostly are blacklisted for government jobs.

Last year, for further intimidation, Chávez’s rubber-stamp Congress added another crime — “showing disrespect for the president.” And it has imposed stiff fines on publications which violate this law, even for newspaper cartoons.

Chávez controls every major element of government. In January, Congress (for which the cowed opposition also ran no candidates) voted him the right to rule by decree until July 2008.

Then he is expected to demand — and get — replacing a constitutional clause setting term limits with one permitting him to become president for life.

Still, Venezuela is not a full-blown dictatorship. Critics will look in vain for concentration camps here.

A majority of newspapers are critical of the regime — although, critics say, government intimidation has muted their voices. The nation’s two largest labor unions outside of Chávez’s own recently rejected his demand that they dissolve and join his “unity” socialist union (although they pledged loyalty to him).

***

But he ran into big trouble the end of May when, its license expiring, he shut down the nation’s oldest television channel, RCTV.

The only TV station to criticize the president, it had parlayed a diet of schmaltzy soap operas, quiz show, talk shows, music, sports and a comedy program that often poked fun at Chávez to become the nation’s most popular station.

A poll showed 80 percent of Venezuelans opposed the shutdown. Chávez’s popularity ratings tumbled — from 63 percent on Election Day to 36 percent, according to Hinterlaces, a respected polling company.

Moreover, the shutdown brought to the streets a new potential source of anti-Chávez power — university students. Shunning cooperation with traditional opposition politicians, for the better part of a week banner-carrying students chanting “freedom, freedom,” many in black masks, their mouths taped shut to represent loss of freedom of speech, marched peacefully through the streets of Caracas and other cities — withstanding police detention and attacks by baton-wielding cops trying to beat them back with nightsticks, tear gas and water cannons.

The big question is whether over time, when the students have forgotten the loss of their favorite soap opera, they will retain their political ardor on behalf of free speech — or be permitted to.

***

RCTV’s shutdown, and the public’s overwhelming opposition to it, evoked an angry Chávez reaction that indicated free speech in Venezuela, such as it is, may not last much longer.

“The current battle is for media power,” Chávez proclaimed during his 40 hours of television fulminations during the student demonstrations.

The government now controls seven TV channels, and has subdued all the others into self-censorship except for Globovision, a news channel that was the only one daring to report the student demonstrations.

This did not escape Chávez’s attention. He told his TV audience, threateningly.

“I want to warn Globovision to measure its steps, or the same medicine for RCTV will be administered if it continues to incite violence.”

He reminded listeners, “Hugo Chávez is a son of the Revolution.”

A Chávez alter ego specializing in media, academic Marcelino Bisbal vowed, “Venezuela will not have the information TV channels that differ from the point of view and opinion of power.”

***

Until now Chávez’s power has come through the ballot box.

“He doesn’t have to be a dictator,” one journalist explained to me. “Just look at the election results.”

But. increasingly, as dissatisfaction over soaring crime, high inflation, vanishing products in stores and eroding freedoms spread, it appears that he may have to retain power through the barrel of a gun.

That’s because, despite a still-vibrant but sagging economy and continued economic progress for the poor, more of the public seems disaffected.

***

But Chávez, a former Army lieutenant colonel, has readied himself for a fight. He has greatly increased the military budget and military perks, as well as encouraging youths from the slums, wide-eyed followers of leftist heroes like Fidel Castro and Che Guevara, to organize in militias that could bolster the military in a pinch.

“For all practical purposes this is a government of the armed forces,” Teodoro Petkoff, a former minister in a pre-Chávez government, a long ago communist who is an editor of Tal Cual (So what) said. “I didn’t divorce Stalin to marry Chávez.”

Chávez also has been diligent in encouraging the election of pro-Chávez local city councils who control police departments, assuring him of police support if push comes to shove.

***

One way Chávez woos police support, apparently, is to look the other way while cops commit crimes. Venezuela has long been Latin-America’s most dangerous country, and one hardly meets an urban Venezuelan who has not been a street-crime victim. I asked 23 Caracas residents if they’d ever been a crime victim, and 20 of them said yes.

In a poll, 89 percent of Venezuelans said their biggest fear was for their own personal safety.

A multi-year 57-nation UNESCO study reported Venezuela led them all in gun-related deaths.

The United Nations official who conducted the study called Venezuela “one of the most violent nations in the world.”

About half of the petty criminals are said to be police. Mostly wielding knives, they typically demand pedestrians open their wallets to them. His critics say Chávez is reluctant to crack down lest he need police backing in a counter-revolution. The police stand ready to do the regime’s bidding. When some of the more violent Chávez followers began seizing and destroying private farms this spring, the police stood by and did nothing. The regime then awarded the farms to the marauders, claiming the owners were not using the land to its fullest potential.

***

With oil accounting for 85 percent of the economy, until now there has not been a lot of emphasis on agriculture, which accounts for only 6 percent. Venezuela has to import, at considerable cost, a whopping 70 per cent of its food. Critics charge that Chávez has been squandering much of the country’s oil bonanza on ideological projects, and is not trying hard enough to diversify its economy should oil prices tumble.

On his socialist ideology, there are real questions as to whether Chávez has public support. A majority of the 63 percent which re-elected him in December are recipients of government benefits but this same majority, when asked if they would like a government like Cuba’s, resoundingly rejected the idea even though they appreciate having Cuban doctors at neighborhood clinics (whom Chávez obtained by giving Cuba cut-rate oil).

Chávez continues to make inroads on poverty. According to government figures, people living below the poverty line have dropped from 50 percent when Chávez first became president, and from a high of 62 percent in 2003 after a disastrous oil strike, to 44 percent at the start of 2006, last figures available.

And these figures take into account only cash income and not Chávez-introduce benefits such as discount food at stores in low-income neighborhoods and better education and health services. In the last three years. He has twice increased the minimum wage.

But the country is running big budget deficits. Last year it was 23 percent of gross domestic product (total of everything produced) and early this year Venezuela had to borrow $7.5 billion from Russia to pay its suppliers.

***

With oil priced at $60-70 a barrel, compared with $12 when Chávez became president, the economy is still strong but growth is slipping, from world-high of 17 percent in 2004 to 7 percent so far this year through May, and oil production is slipping too.

The government claims it produces 3.3 million barrels a day, but international oil institutions like OPEC and the International Energy Agency says the real number is about 800,000 barrels lower.

One reason is the government’s difficulty in attracting talented oil managers — the result of the disruptive strike over wages in 2003 and government’s taking control of most remaining foreign-owned oil operations in May. One foreign observer told us that, in a visit to several oil installations, he saw hardly anyone over 30 or under 50. Venezuela produces mostly tricky-to-handle crude oil which requires extra knowledgeable expertise.

PDVSA (Petroleos de Venezuela), the government oil company, funds and oversees many other governmental functions, particularly in social services and public information.

While world retail gasoline prices are as much as $5.50 a gallon in Europe and $3.50 in the United States, PDVSA sells a gallon to Venezuelans for only 17 cents.

To inflation-plagued Venezuelans, that’s a rare bargain.

Inflation, highest in Latin America, is 20 percent at midyear, far above the 12 percent target because of heavy government spending. Basic foodstuffs like chicken, cheese and eggs are vanishing from markets because producers won’t sell their products at low government-set prices, particularly in discount food stores.

The value of the bolivar, the local currency, has shrunk to about half the official rate on a lively black market, partly fueled by well-heeled Venezuelans stashing away dollars in anticipation of fleeing the country.

Even a waiter, speaking in a low voice as he savored a tip, told us he had his bags packed. Still, as Chávez rails against the luxury-loving rich and the middle class shrinks, some Venezuelans are richer than ever. Banks, the traditional targets of the kind of anti-capitalist rhetoric which Chávez spews forth regularly, have never had it so good.

The merchants of big-ticket items — cars, digital television sets, other fancy appliances — have found a big new market as government oil money poured into the economy funnels down to consumers.

***

Chávez says his ultimate aim is to mold Venezuelans into “a new type of person with a new mentality,” dedicated to their fellows rather than themselves. To this end he has been encouraging ideologically-motivated “21st century socialist” worker cooperatives and Venezuela is now said to have the most in the world. An economics expert told us two-thirds of them were failing, despite government efforts to throw them lots of contracts.

We decided to drop in on a few to see for ourselves.

In the countryside, on a bus trip, we stumbled into one being built on a vast grassland about 80 miles north of Caracas. It is intended for 2,000 people, mostly homeless and drug addicts who are expected to do a variety of work, from raising pigs to sculpturing to working computers.

They will receive “everything they need” for free, we were told, but will not be paid in money. It opened about six months ago with 100 residents, of which about 70 remain. The rest have left.

At another cooperative, which makes army uniforms on the outskirts of Caracas, the middle-age woman at the sewing machine stopped work briefly to answer my questions.

Does she like working for a government-financed cooperative better than a private boss?

“You bet,” she replies, a glow in her voice. “I’m an owner now!” “And your salary?” I ask her — “how does it compare with the minimum wage?” She hesitates. “Well,” she finally says, “it’s below the minimum now, but when we get more orders I think I’ll be fine.”

Banco de la Mujer (the Woman’s Bank) in Caracas, financed by the government, is not at all like the thriving privately-owned banks cited earlier in this article.

Its main purpose is to provide loans to fund the new cooperatives, especially those involving women.. The bank’s top officers, including the president, all women, told us about some successful cooperatives who’ve been given a start with the bank’s money.

But what is your default rate? I asked, for in normal banking excess losses on loans can put the bank out of business. The officers looked at each other uncomfortably; no one knew or had any idea. Finally one piped up. “I don’t know the figures but they’re high,” she said. “A lot of the people we loan money to don’t have much business experience so they can’t pay us back. But the government then gives us more money and we create a lot of jobs.”

To me, co-ops trumpeting “socialism for the 21st century” didn’t seem much different to me than Mao Zedong’s 20th century communes I had witnessed in China or Stalin’s collective farms in Russia or Israel’s we’ll share-everything kibbutzes. They all flopped, killed by bureaucrats who didn’t care and workers who didn’t work because, selfish or not, they didn’t see anything in it for them.

But, then, Mao and Stalin and the Israelis weren’t swimming in vast reserves of $70 a barrel oil to grease the skids. The ultimate fate of Hugo Chávez’s ambitious, but hardly new, experiment?

In a country notorious for its violence, some foresee a long succession of bloody battles to determine Venezuela’s future. Others aren’t so sure. But one thing is certain — no Venezuelans will be watching it on RCTV.

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