¡Viva El Presidente Chávez! Part I - Page 2

Even some Chavez fans are complaining, like Luis Emiro Gomez, 53, who lives in a shack of corrugated sheets patched with Chavez campaign posters. Gomez said he lacks credit, tools and sufficient water to increase his corn harvest. While he holds a government permit for his plot, he said many others who received land are well-off and have rented it to tenant farmers for profit.

''If the idea was for parcels to be for the peasants, why are they offering them to people who aren't needy?'' Gomez asked.

El Presidente has also brought other substantial sectors of the Venezuelan economy under his control in various ways, including appropriating and attempting to appropriate businesses:

Telecommunications giant CANTV;

Electricidad de Caracas;

Power company Seneca;

Three cement producers, which together produced nearly all of the cement sold in the country;

Four heavy oil fields in the Orinoco Basin, worked by a total of 13 companies;

Steelmaker Thermium Sidor;

Sixty-four Oil field service companies, 39 of them at Lake Maracaibo;

In February this year, El Presidente ordered the military to occupy rice processing companies owned by Alimentos Polar;

Rice and pasta production plants owned by Cargill, one of the seven largest grain companies in the world; and

Ports at Maracaibo and Puerto Cabello, both of them in states under opposition control.

When El Presidente nationalized the country's oil industry, he gave as his principal reason that it was contributing insufficiently to his vast social spending programs; nationalization was seen as critical to furtherance of the social goals on the basis of which he had been elected. Oil industry infrastructure investment has been cut by almost forty percent and most of the skilled employees are no longer there. Consequently, the infrastructure is deteriorating.

El Presidente imposed price controls on many domestically produced goods, such as rice, because he said that the prices were too high. The prices are now somewhat lower, but there is very little rice and much it has to be imported; critical shortages of corn, a principal ingredient of tacos and other Venezuelan food staples as well as of cattle feed, have also been experienced. The substantial shortage of hard currency, discussed below, makes importation very difficult. The same is true of most other basic needs of the Venezuelan people.

Prices for home appliances have skyrocketed, pharmacies are reporting shortages of drugs, and General Motors is planning to stop car production here next month, as measures by the Venezuelan government to conserve dollars ripple through the weakening economy.

"Today, there's no milk, no rice, no beans, no chicken, no meat, no butter and no cooking oil," Francisco Quintero said as he shopped at a government store that sells subsidized staples for the poor.
***
The government increased the price of sugar by 35 percent last week, however, and is facing pressure to raise prices for other subsidized goods as well. A Mercal manager in a poor working neighborhood in western Caracas said that this was only the first of the increases.

"We're expecting the government to raise prices for rice, milk, meat and chicken by 40 percent," said Marlon Barragan, who manages a Mercal in Catia. He said that the prices "will still be low." The only question is whether the goods will be available.

El Presidente has devalued the Venezuelan currency which, when I was first in Venezuela in 1997, traded at about three Bolivars to the dollar. In 2008, Venezuela introduced a new currency, the "Strong Bolivar" or Bolivar Fuerte; one thousand Bolivars were exchanged for one BF. The new "strong" currency now trades at an official rate of 2.15 BF to the dollar and at an unofficial (black market) rate of 6.7 BF to the dollar. Foreign travel (by those few outside the Government who can still afford it) has become much more expensive. The problem is being attacked by making it very difficult to obtain hard currency. Venezuelan banks, in order to avoid late payment charges — to the banks due to their own delays, rather than due to late payments by their customers — on credit cards which they issue, have essentially ceased to honor charges to those cards in foreign currencies.

Banks are reportedly running into delays of months, with several banks — Banesco and Banco Venezolano de Credito (BVC) most notably — having to threaten to stop allowing the use of their credit cards abroad to force Cadivi [Commission of Foreign Exchange Administration] to loosen the purse-strings. As of May 1st, Cadivi reportedly owed BVC more than $1.3 billion to cover just that bank's credit card use abroad.

The General Motors subsidiary mentioned above has car and truck manufacturing facilities in the industrial city of Valencia. It announced that it would have to close in late June of 2009, because it could no longer obtain needed supplies due to the unavailability of hard currency, which it had not been able to obtain since November of 2008. The closure will "affect 4,000 employees at the Valencia assembly plant and another 70,000 people indirectly. "Without production, it’s difficult to comply with obligations to the workers. . . ."  Production had been running about ninety thousand vehicles per year. When I visited Valencia during late 2000/early 2001, it was a relatively prosperous city, with several modern shopping malls and more under construction. The death of the GM plant there will very likely diminish Valencia's relative affluence.

Article Author: Dan Miller

Dan was graduated from Yale University in 1963 and from the University of Virginia School of Law in 1966. He practiced law in Washington, D.C., retiring in 1996 to sail with his wife in the Caribbean. They settled in a rural area in Panama in 2001. …

Visit Dan Miller's author page — Dan Miller's Blog