The Trial (And Errors) of Hugo Chavez

By Steve Ellner

August 27, 2007

In April 2006, after a failed attempt to demolish the structurally unsafe bridge on the highway connecting Caracas with the Port of La Guaira, the Chávez opposition expressed outrage at government incompetence. Manuel Rosales, the opposition candidate in the December 2006 presidential elections, accused President Hugo Chávez of "allowing the Caracas-La Guaira bridge to collapse" and "having inaugurated scores of public works projects without completing them."

However, on June 21, 2007, President Chávez inaugurated a new bridge that is 180 feet high and half a mile long--longer than the original one. The construction was on schedule and in time for the kickoff of the America Soccer Cup. In a jab at the opposition, the main state-controlled TV channel declared, "You can't cover up the accomplishment with a finger." In another plus for Chávez, nine modern, well-designed stadiums were constructed or remodeled for the games, which Venezuela hosted for the first time in the Cup's 90-year history.

Although the government won this round, the issues raised by the opposition resist easy answers. Oil prices are at record highs. And the nationalist Chávez has driven a hard bargain with the oil companies. They now pay 33 percent in royalties for the massive deposits of the Orinoco River region, up from 1 percent paid during the neoliberal years of the '90s. Chávez not only counts on increased oil income to finance his experimental programs, but vigorous enforcement of the income tax system.

But Venezuelans are debating whether Chávez is putting this windfall revenue to good use or squandering it through disorganization, corruption and misplaced priorities.

The debate over government performance is significant because much of the country's oil wealth is being invested in novel social programs to help the poor. Indeed, Chávez calls the model he aspires to create "21st century socialism," which stresses solidarity and democracy from below and prioritizes social over economic goals.

In some ways, the current debate over government programs replays a conflict Venezuela faced during the oil boom of the '70s. Neoliberals have bashed the '70s and particularly the first government of Carlos Andrés Pérez for using the increased revenue to expand the role of the state in the economy without producing concrete results. Stanford political science professor Terry Karl refers to the experience of the '70s as the "Paradox of Plenty." Rather than foment development, she says the spike in oil revenue led to greater handouts, aggravating both dependence on the state and a climate of paternalism. Ironically, Pérez, who nationalized the oil and iron industries during those years, returned to power in 1989 to impose neoliberal formulas that were a fiasco and resulted in his ouster.

In the case of Chávez, both sides have overstated their case in regard to government spending. The Chávez government has made mistakes in administering social programs that cost huge sums and involved many people. Nevertheless, the programs that are working have begun to transform the lives of Venezuela's poor, who were previously all but ignored by politicians.

Some of the opposition attribute alleged government ineptness to the lower-class makeup of the Chavista movement and the modest participation of educated middle-class professionals. In what could be interpreted as a slur on poor people who are viewed as dependent on handouts, Rosales referred to Chavistas as "parasites," a remark that one of his allies, Leopoldo Puchi, considered inappropriate. Chávez, however, has inadvertently strengthened this charge by making disparaging remarks about government "bureaucrats," and appointing ministers who lack professional experience.

State-nurtured cooperatives

More than any other program under Chávez, the balance sheet for the government's new worker cooperatives is mixed.

In 2004, the government created the Ministry of the Popular Economy to organize training programs and facilitate loans to encourage those enrolled to form cooperatives. By 2005, Chávez traveled through the country to authorize loans for cooperatives in televised "Regional Cabinet Meetings," where beneficiaries discussed their plans and answered questions. A large majority of the cooperatives consist of not many more than five members (the minimum number required by law) and engage in maintenance work for local governments and state companies such as the oil industry. Most of these cooperatives are made up of members of an extended family, a setup that generally functions well due to mutual trust among associates. Government spokesmen have hailed some cooperatives, such as those of fishermen, for challenging the control of monopoly companies.

One of the few large cooperatives is the Fabricio Ojeda, which consists of the 150 workers (all but one of whom are women) at the Venezuela Advances textile plant and 75 shoe-factory workers. The co-op's health and educational facilities serve the residents of the surrounding lower-class community in the western part of Caracas.

Alida Bastida, one of the textile workers elected supervisor, gave a tour and proudly pointed to the eight sewing machines recently purchased by her cooperative, as opposed to other machinery donated by the state oil company. Asked about worker absenteeism, she says, "If the worker has a legitimate health problem, they can get time off and receive the same salary as everyone else. But at the end of the year our cooperative's 'surplus' [profits] are divided up and distributed to each worker on the basis of the number of days worked." Bastida says that last year the surplus that workers received almost equaled their annual salary.

But the failure of many state financed cooperatives--due to improvisation or misuse of government funds--has resulted in the loss of tens, if not hundreds of millions of dollars. On the other hand, those cooperatives that have withstood the test of time may contribute to the transformation of society, particularly because so many of their members come from the non-privileged sectors of the population.

The cooperatives are heavily dependent on the state. Government incentives include generous credit, lenient terms of payment and exemption from all taxes. One sign of independence is when the cooperative pays off its original loan and purchases its own equipment. At a conference sponsored by the University of Carabobo, one co-op member said: "It gave us great satisfaction to have paid off our loan in seven months. Now it is they [the state bank] who are behind us, urging us to apply for new credit."

Experience has shown how difficult it is to decree such experimental changes in people's lives from above. The government placed the number of cooperatives at 140,000 in 2006, but this year the Ministry of the Popular Economy announced that it counted only 74,000. Worse yet, a more recent census indicated only 48,000. Many cooperatives never got off the ground, and in other cases, cooperative members pocketed the money they received from loans or the down payments for contracts. One pro-Chávez congressman admitted, "Up until now, no one can say the cooperative program has been successful. In fact, there is little to show considering all the money that has been spent."

In response, the Ministry has tried to exercise greater control over the cooperatives, but in doing so may have gone to an opposite extreme. The cooperatives are now required every three months to solicit a Certificate of Fulfillment of Responsibilities issued by the Ministry's main office in Caracas. The paperwork, which includes a balance sheet signed by a certified accountant, is extremely time-consuming. The cooperative also needs to demonstrate solvency with regard to financial obligations to government agencies such as the social security system, the housing authority and the job-training institute.

Chávez and his followers generally attribute the problems facing cooperatives to their members' lack of social consciousness. As a corrective, they call for a cultural transformation along the lines of what Che Guevara called the "New Socialist Man." However, in its promotion of cooperatives and other social programs, the government faces a more practical problem that Chávez movement leaders haven't recognized. Mechanisms have been created to monitor cooperatives, but to date there no cooperative member has been penalized for failing to comply with their legal obligations. Although Minister of the Popular Economy Pedro Morejón announced late last year that he had taken 300 cases of cooperatives to court, it is unclear whether Chávez, who claims to be the president of the underprivileged, will be willing to jail, or seize the property of, poor people who have misspent public money.

On the plus side, many cooperative members have learned administrative skills while at the same time changing their attitude toward cooperation and solidarity. By law, co-op members must work in their communities, carrying out maintenance service in schools, distributing Christmas presents to children or other tasks. Furthermore, the experience of sharing the profits of the enterprise breaks with the tradition of wage labor and is bound to influence the cooperativist's way of thinking.

The "massification" of education at all levels

The education "Mission" programs, which also involve hundreds of thousands of underprivileged Venezuelans, have been more successful than the cooperatives. The Missions, which provide primary, high school and university education mostly to adults, use Cuban-prepared video cassettes in the classrooms and "facilitators" who answer questions posed by the students.

In October 2005, Chávez announced that the program "Robinson Mission" had achieved its objective of teaching reading and writing skills to 1.5 million Venezuelans, thereby eliminating illiteracy in the nation. Some of the participants in the program, however, have only learned to sign their names. The "Ribas Mission" works with nearly 1 million Venezuelans, about 200,000 of whom receive stipends of about $100 a month. The program reaches out to the most excluded members of society, such as the indigenous, the disabled, delinquents and prisoners.

Videocassettes have been used in school classrooms in other countries but never on such a massive scale. Héctor Navarro, who has headed the Ribas Mission in the state of Bolívar over the last three years, explains the experimental nature of the program: "We wanted our facilitators to have a university education, but the vast majority are merely high school graduates. They learn as they go along. Training consists of problem-solving sessions among the facilitators with feedback from the school coordinator who typically has some university education."

Many Mission university students fear schools and professional associations that object to the unconventional nature of the program will not recognize their degrees. To avoid discrimination, the government has reached agreements with the universities controlled by the Ministry of Education whereby they help supervise the missions and issue the diplomas in their own name. The nation's larger universities, however, have refused to cooperate.

Members of the opposition claim that by lowering the quality of education, the Mission program is depreciating the value of existing degrees. According to them, rather than awarding grade school, high school and college degrees, the Missions should issue special diplomas to their students so as not to undermine the established educational system.

The need to assimilate errors

This combination of advances and missed opportunities characterizes not only social programs but all types of government activity. Chávez's revolutionary rhetoric and actions have created great public expectations that in turn account for his resounding electoral successes. Yet his government faces a host of practical problems.

For instance, to its credit, the Chávez government has greatly expanded public transportation. Venezuela is one of the few countries in the world building out its rail system. In June, a trolleybus service was inaugurated in Mérida in the Andean mountains, making it the smallest city in Latin America to have such a system. Last year, subway systems began functioning in the cities of Valencia and Maracaibo, a new line was added to the metro in downtown Caracas, and two rail lines now connect that system with neighboring towns. The metro fare in Caracas is less than 25 cents and free for passengers over 60.

At the same time, oil-induced prosperity has exacerbated automobile traffic and its attendant problems. The first half of this year saw car sales increase by 52 percent over the same period last year; 65 percent of the purchases were imported vehicles. While Chávez has railed against SUVs, he has not placed a special tax on them or on cars in general. Indeed, the government has encouraged poor Venezuelans to purchase cars by exempting non-luxury from the value added tax.

But if Venezuela is to learn from the errors that are being committed on this untrodden path, discussion within the movement is essential. The private media is alive and well and continues to criticize the government, sometimes aggressively, notwithstanding the non-renewal of the TV channel "Radio Caracas." Opposition criticism is no substitute, however, for constructive criticism from those who support the "revolutionary" project.

But during the eight-and-a-half years in power, the pro-Chávez parties have failed to establish internal mechanisms of discussion. Chávez's recent creation of the United Socialist Party of Venezuela (PSUV), which he claims will be the most "democratic party in Venezuelan history," is designed to overcome this shortcoming by holding internal elections and calling an ideological congress. With such considerable resources at its disposal, the government cannot expect to avoid mistakes, which in any case are inevitable in this trial-and-error road to change. Rather its main challenge is to figure out a way to encourage constructive debate in order to parlay frustrating experiences into new, effective programs.