Posted on Sun, Jul. 10, 2011
Chavez's 'reverse miracle' with Venezuela's economy
Andres Oppenheimer is a Latin America correspondent for the Miami Herald
Venezuelan President Hugo Chavez's critics took advantage of his absence
for cancer treatment in Cuba to blame him for all kinds of misdeeds, but
it's time to give him credit for having performed a true economic
miracle in his country.
I'm not kidding. What Chavez has done in Venezuela over the last 12
years is nothing short of an economic miracle: Despite benefiting from
the biggest oil boom in Venezuela's history, he has somehow managed to
turn the country into a shambles.
Venezuela has one of the highest inflation rates in Latin America, one
of the lowest economic growth rates in the region, daily electricity
blackouts, food shortages, and unprecedented crime rates. What's even
more amazing for one of the world's biggest oil producers, Electric
Energy Minister Ali Rodriguez announced June 15 that Venezuela had
started importing electricity from Colombia to restore power to various
parts of the country.
It's an amazing feat if you consider that oil prices have skyrocketed
from $9 a barrel when Chavez took office in 1999 to $100 a barrel now.
While Venezuela has enjoyed two-year-long oil booms in 1974 and 1979,
this has been by far the country's longest and biggest oil bonanza.
According to Venezuelan Central Bank figures, Venezuela's oil income has
reached $700 billion since Chavez took office. "Venezuela's oil income
over the past 12 years exceeds what it had received in the previous 25
years," says Jose Guerra, head of the economy department of the
state-run Central University of Venezuela.
And yet, this is what Chavez has to show for it:
While Latin America's economies grew by an average of nearly 6 percent
last year, Venezuela's economy has shrunk by 1.6 percent, after
shrinking by 3.3 percent the previous year, according to the United
Nations' Economic Commission for Latin America and the Caribbean
(ECLAC). The Venezuelan government is predicting 4 percent growth this
year, which – if it happens – would still be one of the region's lowest
While most Latin American countries have single-digit inflation rates,
Venezuela's rose from 12 percent a decade ago to 27 percent last year,
according to the ECLAC. The official rate now is about 25 percent.
While most Latin American countries are benefiting from record foreign
investments, Venezuela is suffering from capital flight. The country's
foreign debt has risen from $35 billion in 2001 to $58 billion in 2010,
ECLAC figures show.
The power outages that are affecting most of the country, with the
exception of the capital, are the first in recent memory. The government
at first blamed them on a drought, but economists say the power outages
are due to a near total lack of investment in electric facilities in
The latest food shortages include cooking oil, coffee, meat, and sugar.
Venezuela, once the world's fifth-largest world coffee exporter, is now
importing coffee from Nicaragua.
Venezuela's education, science, and technology levels are plummeting.
The number of patents registered in Venezuela – a key measure of
innovation – has fallen from nearly 800 in 1988 to fewer than 100 a
decade later, according to official figures.
Chavez's government cites ECLAC figures showing it has reduced poverty
from 45 percent of the population to 28 percent over 10 years. But, over
the same period, Argentina has reduced its poverty rate from 45 percent
to 11 percent, Chile from 20 percent to 11 percent, Brazil from 38
percent to 25 percent, and Peru and Colombia by similar rates, ECLAC
figures show. Most of these countries have reduced poverty while
attracting investments and creating industries that will generate
Venezuela has benefited from an economic windfall in recent years, but
it has squandered it in cash subsidies and grandiose international
propaganda projects that, once oil prices fall, will leave the country
bankrupt for generations.
Part of it is Chavez's chaotic economic management, part of it is
implementation of a narcissist-Leninist model aimed at destroying the
private sector and creating a country of government-dependent zombies,
and part of it is frankly unexplainable. Chavez is the author of a true
economic miracle – but in reverse!