Letter from Caracas: Troubled seas ahead

www.upi.com By Owain Johnson From the International Desk Published 2/25/2003 2:33 PM

CARACAS, Venezuela, Feb. 25 (UPI) -- President Hugo Chavez once famously noted that Venezuela and Cuba are sailing together in the Sea of Happiness. This might well be true. Certainly, all the signs are that Venezuelans might want to brush up their raft-making skills.

Chavez's leftist government and the opposition remain at odds despite intensive international mediation efforts. Meanwhile, 90 percent of Venezuelans told a recent poll they believe that the economic situation is "grave," and 43 percent said it will worsen still further.

Those 43 percent are the smart ones. The prospects for the oil-rich country, once nicknamed Saudi Venezuela, are so awful that some businesses are even looking to relocate to Colombia. Despite being in the midst of a brutal 39-year civil war, many business owners now believe Colombia is actually more stable and business-friendly than Chavez's Venezuela.

"I know there are some companies that are already on three-month standby notice to leave the country," said Danay Zoppi, the president of the Association of Chemical Producers. "Businesses have cut salaries by as much as 30 percent and many are working four-day weeks."

Venezuela used to be a magnet for economic migrants from Colombia and nearby Caribbean islands, but the giant lines outside the American, Spanish, Italian and Portuguese embassies show Venezuela now as a country of would-be emigrants.

(Admittedly, the long line has disappeared at least briefly at the Spanish embassy, which was bombed Tuesday by attackers who identified themselves as members of the Simon Bolivar Urban Militia Coordinator and the Bolivarian Liberation Force. Leaflets found at the scene of the embassy and the Colombian consulate, the other target, accused the two countries of intervening in Venezuelan affairs -- comments similar to those made by Chavez on Sunday. Government supporters blamed the attacks on opposition groups trying to poison world opinion against Chavez.)

Venezuelans with no foreign escape route in place are preparing for a very rocky ride over the next few months. The opposition's recent two-month general strike delivered the coup de grace to a sickly economy and left the country facing an economic meltdown that is likely to lead to serious shortages of many basic goods.

Venezuela is highly reliant on imports, but the strike closed ports and affected the oil production that pays for most of the imports. In response, the government has imposed strict currency controls and price restrictions on basic goods.

Producers are still supplying retailers from their pre-strike stocks, but once these are exhausted, the prospects are grim. Even in a best-case scenario, it will take several weeks for new imports to arrive. Importers face long waits to get clearance and dollars from the authorities before they can order goods that must then be brought from the United States, Asia or Europe.

"There will be a gap," warned Sergio Sesti, the general manager of importer S.F.C. "In the two months of the strike, companies used up all their stock, and if it takes 30 to 45 days to get approval to import, then it will be May before any shipments reach us."

At the moment the import situation is only affecting those high-end consumers, whose pets prefer to eat imported brands and who like the occasional dram of imported whisky.

But as Sesti notes, import problems mean many essentials could vanish from supermarket shelves within weeks, while shortages of raw materials could force large swathes of industry to shut down, throwing still more Venezuelans out of work.

In a country that already averages a murder every 10 minutes on weekends, these potential shortages are likely to prove a recipe for looting and violence.

The likely political consequences of any serious disturbances are the subject of intense speculation. Some believe an upsurge in street violence could force the military or the international community to intervene to restore order and oblige Chavez to call elections. Others believe, however, that any disturbances would strengthen Chavez's position by justifying the imposition of a state of emergency.

Critics say Chavez is already moving towards authoritarian rule. Last week, he personally approved the controversial arrest of opposition leader Carlos Fernandez, the head of a business association that had helped organize the general strike.

The president has also said that his government has allowed the opposition to set the political agenda for far too long. In recent speeches, Chavez has told supporters that 2003 will be the decisive year for his "Bolivarian revolution" in favor of the poor.

"We have stopped being on the defensive and now we are going on the attack," Chavez said in a recent speech. "Every Venezuelan should keep this powerful idea, this powerful belief in their heart: this will be the victorious attack of the Bolivarian offensive."

Venezuelans waiting for his "victorious attack" are flocking to embassies and stocking their cupboards. They know all too well that there are likely to be plenty of storms ahead before the country reaches the president's Sea of Happiness.