Hugo Chávez's Venezuela

Oblivious to the coming storm

In his first decade Hugo Chávez has presided over social programmes, inflation, crime and rising intolerance. Venezuelans will pay the price in years to come

SQUEEZED between the millionaires’ row around the Country Club and the leafy gentility of La Florida, a middle-class neighbourhood, Chapellín is a blemish many of its neighbours would like to see bulldozed. Ten years ago, when Hugo Chávez took office as president of Venezuela, the residents of this Caracas slum would crowd around the gates of the nearby headquarters of Radio Nacional each Sunday. They were there to see but, more important, to petition their leader as he arrived for his weekly radio show.

Mr Chávez celebrates a decade in office this month with a referendum aimed at allowing him to prolong his rule for 20 or 30 more years. The streets of Chapellín are a good place to assess the impact of his self-styled Bolivarian socialist revolution.

“With the arrival of the Revolution,” proclaims an information-ministry press release, “the quality of life of most Venezuelans [has] improved.” That is not the view of Enrique González, a car mechanic. Recently the streets have been cleaner and rubbish collection better, he concedes. But crime, the cost of living and the problem of housing have all worsened substantially since Mr Chávez came to power, he says. The fortnightly shopping for his family “used to cost 100 bolívares [and] now costs 300 ($140),” according to Mr González. “I can’t afford to buy what my kids need.” Inflation in 2008 was 31%—the highest in Latin America. Food prices in Caracas rose by almost 50%. The minimum wage is just 800 bolívares a month, although many workers with formal jobs get a bonus of around 250 bolívares for food.

The government’s hostility to private property has triggered a shortage of rented housing. Even in rundown Chapellín, a two-bedroom house can cost around 600 bolívares a month. Last year the government began to repair 150 houses affected by damp. But a day of heavy rain flooded most of them and ruined what had been achieved.

Crime has been the main worry of Venezuelan voters ever since the kidnap and murder of three teenage brothers in 2006 dramatised the problem. With almost 15,000 murders in 2008—an increase of two-and-a-half times since Mr Chávez took office—Venezuela has become one of the world’s most violent countries.

“Just down the street here, a week ago, a man was shot dead by car thieves,” said Jorge Luis Alcalá, a security guard at a baker’s shop in Chapellín. “They didn’t even give him a chance to get out of the car.” The police do not patrol the area. “They only come when there’s a complaint,” according to Mr Alcalá.

The barrio is plagued by drug dealers. Your correspondent was offered cocaine—on the main street, in broad daylight—within ten minutes of arriving. “We can’t say the police aren’t involved,” said Yasmín Graterol, a community activist. “The police are certainly involved.”

Nevertheless, Ms Graterol defends Mr Chávez’s record. She points out that Chapellín now has three soup kitchens to help the poorest, primary health-care posts and a mercalito (a government shop with subsidised food). Not far away is an Integrated Diagnostics Centre (CDI), one of the free second-tier clinics set up by the government to offer more sophisticated medical treatment.

José Silva, a 70-year-old taxi driver, is full of praise for the CDI. He hurt his shoulder not long ago, trying to knock ripe mangoes from a tree. “As a pensioner, I get seen immediately,” he says. “The Cuban doctor soon fixed my shoulder.” Many like Mr Silva are grateful that the president has brought pensions into line with the minimum wage. And although he has to queue for hours at the bank once a month to draw it, he has few complaints.

Mobilising the state

The most reliable opinion polls suggest that Mr Chávez will win the referendum on February 15th, albeit by a small margin. Despite the complaints, just over 50% of respondents in polls approve of him personally. The referendum amounts to a plebiscite on his rule. The tortuous, 75-word question (which does not mention the abolition of presidential term limits) will probably make little difference to the outcome. “People don’t care about the articles [to be modified],” says Ms Graterol. “What they have here”—she touches her head—“and here”—the heart—“is Hugo Chávez. They know their leader’s future is at stake.”

So does Mr Chávez. He has turned almost the whole of the state bureaucracy, including the armed forces and the state oil company, into an election machine. The government-dominated electoral authority has said nothing. Pro-government rallies teem with public-sector workers in red shirts and baseball caps bearing the logos of government departments. “Everyone’s here voluntarily,” insists Clevis Bozo, who works in the internal audit office of Petróleos de Venezuela (PDVSA), the oil company. “It’s the will of the people.”

The opposition thinks Mr Bozo and his colleagues would be better employed trying to fix the mess in the oil industry. One reason for what OPEC estimates is a drop in oil output of around 1m barrels per day over the past decade is the politicisation of PDVSA. Venezuela’s oil currently fetches below $40 a barrel, down from an average of about $90 last year. Oil accounted for over 90% of Venezuela’s exports last year, up from 64% in 1998.

Even so, Venezuela’s economic prospects “are relatively comfortable in comparison with other countries in the region, and even the United States,” insists Alí Rodríguez, the finance minister. The government claims to have squirrelled away enough to maintain social spending and pay public-sector wages. Since these savings are in unaudited funds, it is hard to judge how long the government can withstand a low oil price without big policy changes. But in a sign that public finances are now under stress, last month it pocketed $12 billion of the Central Bank’s $42 billion of reserves.

Many independent analysts, as well as those linked to the opposition, fear economic doom. Five of the country’s most prominent economists gave warning that the transfer of reserves to the government’s coffers “drastically reduces backing for the bolívar and multiplies the anticipated inflationary impact” of the fall in oil revenues. They predict a squeeze on imports, with a cut of around a third in the foreign currency dispensed by the government’s exchange-control watchdog. They expect stagflation, with the economy contracting by 2-2.5% this year and prices rising by more than 40%. The government will be unable to finance its social programmes and will have to devalue, they say.

On the streets, few Venezuelans seem to be aware of these troubles. But the signs are there. PDVSA is months behind with payments to its suppliers, and some drilling rigs have stopped operating as a result. There are reports that the company is poised to make several thousand of its staff redundant.

In December 2007 Mr Chávez suffered his most serious electoral defeat, when a first attempt to change the constitution to abolish term limits was defeated in a referendum. Since then the government has resorted to large-scale food imports to tackle chronic shortages, which the opposition blames on price controls.

This time the opposition campaign has been weak. It seems exhausted after state and municipal elections last November in which it made important gains. Some opposition supporters assume apathetically that the result will be rigged. “Stand for four or five hours in a queue, so the country can stay the same?” says Mr González, the mechanic. “I don’t think so.”

Harassing the opposition

Mr Chávez has often said that “the revolution is peaceful, but armed.” Violence and intimidation of opponents by the security forces and by armed civilian groups (some openly linked to the government) have increased. Students campaigning against the constitutional change have faced harassment and arrest.

Opposition politicians elected as mayors and state governors last November have found it hard to exercise power. In Caracas the new mayor, Antonio Ledezma, has suffered an occupation of the city hall and other buildings by armed chavistas. The government has refused to intervene, saying that the occupations are a response to Mr Ledezma’s refusal to renew the contracts of thousands of workers hired by his chavista predecessor. Elsewhere, incoming opposition administrations have also found equipment and offices purloined.

The most disturbing incident was the sacking of Caracas’s main synagogue on January 30th by more than a dozen armed men. They vandalised religious objects, painted anti-Jewish and pro-Palestinian slogans on walls, and stole computer hard drives containing a database of the Jewish community. Officials condemned the attack and blamed the opposition. But it says that the government has been fostering a climate of hostility against Jews. Mr Chávez cut diplomatic ties with Israel in response to its attack on Gaza last month.

Days earlier a group of armed chavista radicals had attacked the Ateneo de Caracas, one of the capital’s most important cultural centres. Complaining that it was being used for “ultra-rightist” activities, they hurled tear-gas grenades and fired shots. They held scores of people at gunpoint for hours, stole their mobile phones and vandalised the premises. The assault was lead by Lina Ron, a prominent member of Mr Chávez’s referendum campaign. None of the assailants has been arrested or questioned. As if to dispel any doubt that the invasion of the Ateneo had the government’s support, the next day the finance ministry ordered the eviction of the cultural centre from the state-owned buildings it has occupied since the 1980s.

Ironically, the Ateneo provided Mr Chávez with a platform when he entered politics after leading an unsuccessful military coup against a democratic government in the 1990s. The incident highlights his regime’s increasingly authoritarian bent. “The first thing totalitarian regimes do is to attack institutions where different schools of thought and ideologies come together,” said Carmen Ramia, the Ateneo’s director. Hitherto, to describe Mr Chávez as “totalitarian” has been inaccurate. Will that remain the case?