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Venezuela & Chávez

From prisoner to president

Corruption-weary Venezuelans elect a former coup plotter

By Linda Robinson
World Report 12/21/98

CARACAS, VENEZUELA–Few economies have ever been as phenomenally mismanaged as Venezuela's. This South American country has the largest oil reserves outside the Middle East, yet three quarters of its people live in poverty. The economy is shrinking, many foreign investors have fled, and plunging oil prices have now pushed the nation to the brink of bankruptcy. Last week Venezuelans punished those they blame for this state of affairs, two political parties that have governed for 40 years. "People feel robbed," said Alibeth Acosta as she lined up to vote. While she is a college graduate, her $226 monthly salary doesn't begin to cover the bare cost of living, which the government estimates at $382 per month.

Turning their backs on traditional politicians, the voters chose as their new president a former lieutenant colonel who led a coup attempt six years ago, the fiery 44-year-old populist Hugo Chávez Frías. "You are the future owners of Venezuela," he shouted to jubilant supporters who poured into the streets on election night wearing the red Army berets that are his movement's trademark. "People voted for a profound transformation, and they will have one," Chávez told reporters after his victory.

Just what kind of transformation Chávez will bring, however, is not clear. His stump speeches were full of inflammatory rhetoric and contradictory declarations, but he has backed off threats to renege on Venezuela's foreign debt and restrict outside investment. Adversaries portray him as a radical leftist or a dictator in the making, but last week Chávez promised: "I'm going to show the world that I'm not a tyrant, much less a devil." He now says Venezuela will pay its debts, though it will seek to reschedule them so that they will not eat up one third of the budget in the next few years.

Oil. Washington is watching anxiously, because Venezuela is the No. 1 supplier of oil to the United States. Business leaders in both countries are particularly concerned by Chávez's vow on election night to redirect resources from the state-owned oil company to social programs. "You don't play with the crown jewel," says Antonio Herrera-Vaillant, vice president of the Venezuelan-American Chamber of Commerce.

With oil prices at a 12-year low, Chávez opposes the current policy of investing, with foreign help, to double Venezuela's oil production. Opponents call him shortsighted, arguing that the state oil company should try to increase its market share and that prices eventually will rise. But neither Chávez nor the Venezuelan people have much patience left. Having won nearly 60 percent of the vote, he has a clear mandate from a nation desperate for change.

Chávez's popularity has grown steadily since he tried to overthrow a discredited government. After he led a tank assault on the presidential palace in 1992, people from across the political spectrum came to visit him in jail. His early supporters included businessmen Carlos Enrique Tinoco, who has been trying to calm fears in Washington and on Wall Street, and Luís Miquilena, a Communist who was jailed under Venezuela's 1950s dictatorship. Miquilena, the éminence grise of the Chávez movement, has been painted as a revolutionary, but he praises Tony Blair's "third way" and argues modestly for agricultural tariffs. "Our adversaries fear their crimes will be uncovered, so they satanize us," he says.

Pardoned in 1994, Chávez formed a nationalist movement and styled himself as a modern version of Simón Bolívar, the hero who liberated South America from Spanish rule. Many Venezuelans buy the parallel, seeing his recourse to violence as justified. "Whether it was good or bad to spill blood, it was a spark that woke people up," says María Angulo, a mother of four. "Chávez is going to remake Congress, which is where the filthy mess is."

Graft. Many Venezuelans explain their country's dire straits with a single word: corruption. Transparency International, a worldwide monitoring group, ranks the country among the worst offenders. Exaggerating only slightly, political consultant Eric Eckvall says "all scandals" in Venezuela involve "$50 million and up." Two former presidents–and their mistresses–have been charged with embezzlement, and a former director of the customs service estimates that 80 percent of duties go uncollected because of bribes. Thus, it is little wonder that retired military officers and socialists alike rallied behind Chávez's vow to "fry the heads" of political party bosses who divide the spoils.

But oil money has had an equally insidious effect: People have gotten used to government generosity and forgotten how to work. Productivity has fallen 30 percent since 1977. While the rest of Latin America has slashed state spending, the Venezuelan government employs 1 out of every 20 citizens. Even middle-ranking officials have expense accounts and chauffeurs to take their children to school. The epitome of unrealistic policies is the price of gasoline, fixed at 53 cents a gallon. Yet, when the government attempted to increase gas and transport prices in 1989, riots broke out.

Chávez will have a hard time asking Venezuelans for more sacrifice after promising to raise the minimum wage. But the government is already facing a $5 billion budget deficit. Unemployment is 15 percent, and an estimated 50 percent of workers hold off-the-books jobs as street vendors, car washers, and the like. The upshot is that Chávez is "in a tough spot. He needs good advisers to squeeze out some money without killing the golden goose–oil," says George Landau, U.S. ambassador to Venezuela in the 1980s and later president of the Americas Society. "He's their last hope. We have to try to help him avoid disaster."

Reproduced from:

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