Venezuela's strike - A divided country self-destructs
www.economist.com Jan 16th 2003 | CARACAS From The Economist print edition Getty
The opposition starts to blink, as President Chávez seeks victory at any price
ALEXANDER SOTILLO was a motorcycle messenger until he was made redundant a year ago. Now he shines shoes beside the metro station in Petare, a poor district at the eastern end of Caracas. At first glance the busy streets around him, crowded with vendors' stalls, look much as they would on a normal weekday. But this is the sixth week of the strike called by opponents of President Hugo Chávez, in a bid to force an early election. The government of Mr Chávez, a populist former army officer, claims that the strike is backed only by a privileged minority of Venezuelans, in business and the trade unions. It says that its effects are confined to the oil industry and the wealthier parts of the capital. But people in Petare dispute this. “On a normal day I can make about 60,000 bolivares [$36]. Yesterday I took 14,500,” Mr Sotillo says.
Despite the widespread hardship, there is no sign of a negotiated end to the strike. Two months of talks, chaired by César Gaviria, the secretary-general of the Organisation of American States (OAS), have proved futile. The opposition claims that Mr Chávez, who was twice elected, is ruling in an undemocratic manner, and that his “Bolivarian revolution” is taking Venezuela towards a kind of military socialism. In turn, the government sees its opponents as “terrorist” coup-plotters.
Outsiders have become increasingly concerned. Venezuela is the world's fifth-largest oil exporter; the oil price has risen by around $5 per barrel since the strike began. This week a group of “friends of Venezuela” was set up, including Brazil, Spain and the United States. Although this initiative stems from an effort by Mr Chávez to seek support from Brazil's new left-wing government and others, it has mutated into an American-backed effort to strengthen Mr Gaviria's hand.
The opposition is desperate to find a way for the private sector to return to work that does not look like capitulation, or like deserting the strikers at Petróleos de Venezuela (PDVSA), the state oil giant, who have acted as its shock troops. But it has found no way of doing this, and Mr Chávez is giving no ground. He has the support of the army and some 25% of Venezuelans. He claims to be restoring oil production with the help of strikebreakers (and foreign technicians, says the opposition). Officials claim that output has climbed to over 800,000 barrels per day. Half that, retort industry experts, who say that the PDVSA strike remains solid. Even if the strike is ended, it would take up to four months for output to return to its normal level of 3m b/d.
Mr Chávez seems to be winning his battle to abort a non-binding referendum on his rule, scheduled by the electoral authority for February 2nd after the opposition gathered the necessary signatures. The government claims, controversially, that this is unconstitutional; it says a referendum cannot be held before August. The Supreme Court (which was hand-picked by the president's allies) seems likely to agree.
What is beyond dispute is the mounting toll on daily life and Venezuela's economy. Shopkeepers in Petare say that takings are well below normal. Many workers are receiving only half-pay or less. While petrol has run out in opposition neighbourhoods, the government has managed to ensure that fuel is available in Petare, many of whose residents remain loyal to Mr Chávez. But maize flour and cylinders of cooking gas, two staples for the poor, have become scarce and expensive. Residents have started ambushing gas-delivery trucks, diverting them to Petare. “We sell them at the proper price and give the driver a little more for his trouble,” says Omar León, a community leader.
Mr Chávez has said he will send the army to seize the warehouses of food manufacturers, whom he accuses of “hoarding”. The companies, which support the strike, say their contingency plans to ensure supplies of basic goods have been disrupted by fuel shortages and government ineptitude and harassment. Both sides say they fear that looting could break out.
Even if the strike crumbles, Venezuela's economic prospects are grim. Since 1999, the economy has shrunk by almost 10%; some economists suggest that this year could see a further decline of at least as much. Facing a fiscal chasm, the government will have to slash spending, and resort to printing money. But until the oil industry returns to work, figures are just guesswork. What is not is the wave of bankruptcies that will shrink the private sector. So tens of thousands more workers will join Mr Sotillo in the informal economy, where one Venezuelan in two grinds out a precarious living. Others will swell the ranks of the 17% who are officially unemployed. Mr Chávez may win this battle. But Venezuela has already lost.
Hugo Chavez Background. Jan 16th 2003 From Economist.com
After his attempted coup in Venezuela failed in 1992, Hugo Chavez—a former army colonel and paratrooper—re-emerged as a presidential candidate six years later. He ran on a vague, populist platform and won by a landslide in December 1998 elections. He promptly put in place a new constitution, beneficial to himself. Aided once more by populism, he handily won another election in June 2000, called under the new constitution.
Despite grumbles from the opposition and army, rising poverty and a slumping economy (the bolivar was devalued in February 2002), Mr Chavez held onto power. But in December 2001, he faced a crisis as Venezuelans demonstrated angrily against a package of new decree laws, including one on land reform. A general strike in spring 2002, along with mounting military discontent, highlighted Mr Chavez's increasing isolation. After violence broke out, he was forced to resign on April 12th but was reinstated as president two days later. America was left to explain away its apparent covert support for the coup.
Tensions rose again in the winter of 2002-3, when a long-running general strike—an effort to oust Mr Chavez—shut down Venezuela's oil industry. Mr Chavez is clinging to power, but at a terrible cost to his country.