THE IMPOVERISHMENT OF VENEZUELA


Hugo Chavez came to power in late 1998 on a populist wave that sent tremors down the spines of the country's elite. Almost to a man every single upper class or upper middle class Venezuelan expressed loathing for Chavez and the change which he represented. But Venezuela's social and economic progress did not reflect what had happened in the rest of the world. To a large extent, the attitude towards the lower economic classes evinced by the upper and upper middle classes was eerily similar to the attitudes of their counter parts in Trinidad in 1959. The country was just waiting ... no, begging for somebody like Chavez to come along. He was, you might say, an accident waiting to happen. And when he finally burst onto the scene the poor flocked to his banner in numbers that no Presidential candidate had ever seen before.

But his promise of a better tomorrow has been squandered by his complete failure to understand that the world has moved away from the socialist rhetoric of yesteryear and his worshipping at the feet of one of the world's worst dictator's, Fidel Castro ... a man who has beggared his country by his stubborn adherence to socialist policies and principals which have all been disproved by bitter experience... has not helped matters any. Cuba is today one of the poorest countries in the Western hemisphere. But that's another story.

Instead of realising that he had a unique opportunity to become one of Latin America's greatest heroes by utilising Venezuela's vast oil resources for the benefit of his people, President Chavez chose instead to declare a virtual war on all who dared to oppose his ideology. It is perfectly true that Venezuelan society needed to change, and to change radically. It is also true that wrenching social change is never easy, and it is more than likely that those opposed to him would never have embraced him no matter what he did. But history has shown again and again that extremism, especially in politics, is never a good thing and that it will usually produce the exact opposite of what is really intended. Indeed, it is noteworthy that Lula in Brazil (a man who is probably just as left leaning as Chavez, and who came to power in a country that also needed serious social and economic reforms) has managed to achieve great social and economic change in Brazil to the great benefit of all Brazilians in more or less the same period. In other words, one has to question seriously whether Chavez ever understand the word "governance". Because today Venezuela is in a crisis to which there does not appear any answer that could bring a modicum of hope to thinking people.

Venezuela's official exchange rate is now around Bolivars 2,500 to the US dollar. The black market rate is at about 8000 Bolivars to the dollar! And the answer to that from President Chavez is that persons caught trading will be locked up! Yeah! Right! And this will engender confidence in the economy? In the currency? In the country? Exchange control is a tool that governments which have no confidence in their ability to control their economies institute. It is supposed to ensure fiscal as well as exchange rate stability. In real life, all exchange control does is create a further lack of confidence in the economy and a black market in which the real value (i.e. the market value) of the currency is traded to the detriment of the ordinary citizen.


Venezuela's annual inflation rate is well over 20 per cent. There are shortages of basic food items in the groceries in Caracas. The other day it was sugar and milk. The cost of everything has gone through the roof and ordinary Venezuelans are "catching their tails" to make ends meet. There has been no new investment of any significance in plant and machinery by manufacturers who are gradually closing down. Venezuela's import bill continues to climb. Unemployment has risen and life is harder now than it was, say, ten years ago.

There are Congressional elections due on September 26th. Opinion polls show that the Opposition forces are running just about even with the support for Chavez and his Unified Socialist Party. But new rules as to how many representatives each State can send to Caracas may make it difficult for the Opposition to win control.

On top of that there is the issue of corruption. The accusations and stories are so many that it is difficult not to believe that there is a lot of "fire" behind this particular "smoke". Indeed, a new wealth class has arisen in the last twelve years. The Chavistas are now the ones with the money.So much so that you can be forgiven if you go to Venezuela today in thinking that what the Venezuelans got twelve years ago was not change, but exchange!

Then, of course, there is crime. More people are being killed annually in Venezuela than in Iraq! Daylight robberies and kidnappings are virtually commonplace. No Venezuelan goes out into the street with a gold watch or any kind of jewelry again. And the conviction rate is worse than good old T&T's!

Underlying all this is the economy. How much longer can Chavez keep things ticking over? I don't know. But sooner or later reality is going to bite. what will happen then is anybody's guess. I wish that I could be more hopeful. The country is physically blessed and is beautiful. Venezuelans are by and large a warm and generous people. They deserve better.