Smearing Chavez using half-truths and lies. Foreign Affairs can do better than that.

In the continual smear campaign against Venezuela’s government, specifically Hugo Chavez, by USA media, Foreign Affairs has reared its ignorant head recently in an article entitled, “An Empty Revolution: The Unfulfilled Promises of Hugo Chávez,” (Foreign Affairs, March/April 2008).

Mark Weisbrot has written a nice rebuttal to that article which shows the folly of the assertions in the article and shows that circumstances in general have improved for the majority of Venezuelans, especially the poor.  He writes: 

In the five years since the government of President Hugo Chavez Frias got control over the country’s national oil industry, real (inflation-adjusted) GDP has grown by more than 87 percent, with only a small part of this growth being in oil. The poverty rate has been cut in half, and unemployment by more than half. The economy has created jobs at a rate nearly three times that of the United States during its most recent economic expansion. Health care for the poor has been vastly expanded, with the number of primary care physicians in the public sector increasing from 1,628 in 1998 to 19,571 (by early 2007). About 40 percent of the population has gotten access to subsidized food. Access to education, especially higher education, has also been greatly expanded for poor families. Real (inflationadjusted) social spending per person has increased by more than 300 percent.

Please check out this good article to get a more balanced and fair look at the amazing things the Venezuelan government is doing for its country.


8 Responses to “Smearing Chavez using half-truths and lies. Foreign Affairs can do better than that.”

  1. 1 Non-Arab Arab April 1, 2008 at 2:41 am

    But did they get a fish or were they taught how to fish? Every time I turn around I see another one of Venezuela’s long-term wealth producing assets being run into the ground. They just sold the Borco fuel-oil blending terminal in the Bahamas to pay for a milk plant. Now a milk plant is a worthy cause, but it’s a one-off. If they would have used the profits from Borco to pay the mortgage on the plant, eventually they would have had long term control of two valuable assets and could have gone on to acquire more. I use it as a simple example of a serious problem of asset-stripping that’s going on in Venezuela. Good that education has improved and poverty declined for now. But have sustainable industries been built so that when oil production or the oil price declines to the point of being unable to pay all those public sector salaries there will still be jobs? Every sign I’m seeing is no. This isn’t a new story – populist comes to power, full of good intentions, but strips the economy bare (and is usually followed on by a right-winger who in the name of economic reform brings in equally extreme foreign investment that favors the rich at the expense of the poor). I mean, I can’t tell you how worried I am here that the oil curse is just playing out yet again. Oil production is in steady decline, the refineries are falling apart, foreign reserves have been raided and nearly depleted, the cash crunch is so severe that PDVSA has started demanding payment within 8 days instead of 30 days (which it’s accountants can’t even do!) and they’ve even tried to get customers to pay for large volumes of fuel oil months in advance.

    If that all seems like a bit of arcane oil industry stuff, you need to remember that for all intents and purposes, the only real income Venezuela has is oil. If the oil industry falls apart and the revenues dry up, they’ve got almost nothing left and all the health, education, and anti-poverty gains of the past few years disappear in an instant. Venezuela becomes Nigeria. Compare this to say Saudi Arabia (no, this is not unbridled praise for Saudi Arabia for whom there is plenty to criticize, but where they do something right it’s worth acknowledging) where they are investing the current oil windfall in sustainable industries that will carry them on earning income long after the oil is gone: petrochemicals, cheap local hydrocarbon-fed heavy industries and other areas that can start to produce employment utilizing the country’s natural economic advantages.

    To put it another way, the Gulf States after meeting their current needs are investing their money for a rainy day. Venezuela is simply spending it all. Some, maybe even a lot, of that spending is on near-term positive things like roads, clinics, etc. But if it’s not sustainable (i.e., the oil industry is being allowed to crumble and no major new industries are being developed to provide employment and income), it’s just another oil mirage as so many other countries have experienced.

  2. 2 theradicalmormon April 1, 2008 at 4:37 am

    I don’t have much time to reply right now, but just a quick note from the article above. The statistic is given that shows an 87% increase in Venezuela’s GDP since Chavez took control of the oil industry 5 years ago with only a small percentage of that coming from oil itself. It would appear that all of the economy’s eggs are not in the oil basket. I’ll have to take more time to answer you more fully later. Thank you for your thoughtful comment.

  3. 3 Non-Arab Arab April 1, 2008 at 9:56 am

    Wish I still had access to the IFS statistical yearbooks to break out the macro economy statistics, but I can assure you that whether directly or indirectly the fact that oil has gone from $10 in the 98-99 period to $100 today is by far the most responsible factor for the huge increase in Venezuelan GDP. The same can be said of Saudi or Algeria or Russia or any other major oil exporter, the question as I mentioned above is what those revenues are going into for future usage.

  4. 4 theradicalmormon April 2, 2008 at 2:13 am

    In researching just a little about your comment above, I believe that your fears and doubts are not unwaranted. It appears that oil revenues are indeed what is propping Venezuela’s economy up. I am on a busy rotation in my fellowship this month and won’t have much time to post, but if you want to check a blog of a person that I’ve found very knowledgeable and fair on Venezuelan politics and economics, check out this search on GDP at the oilwars site. In particular, read the second entry down on the 2007 GDP numbers.

  5. 5 Non-Arab Arab April 2, 2008 at 3:35 am

    Venezuela has a long history of going through oil busts and booms. You should read “The Prize” sometime, Daniel Yergin’s excellent history of the global oil industry (from its beginnings to about 1991), there is some very good discussion of Venezuela in it. Oil is a curse to countries as often as a blessing.

  6. 6 Non-Arab Arab April 5, 2008 at 2:47 pm

    FYI, Venzuela just announced that they are going to issue new dollar-denominated domestic debt from PDVSA. This is said to be to cover the current cash flow crunch. Not good when they have to take on debt at $100 crude.

  7. 7 theradicalmormon April 5, 2008 at 3:57 pm

    Looks like the whole world is sufferring in this interconnected economy.

  8. 8 Non-Arab Arab April 5, 2008 at 10:10 pm

    Actually no, that’s my point: the developed countries’ economies have caught a serious flu, developing Asia is ok so far but on the brink of catching a cold, while almost all of the commodity exporting nations are not only perfectly healthy, they are positively booming. Russia, Saudi, UAE, Algeria, etc. But there is a huge divide among the resource exporters in that the ones that are badly governed (and there is a spectrum here too) are not doing as well. Iran is a prime exhibit where hoards of cash has been badly managed and so not only is inflation a problem but serious employment problems are too. Nigeria and the Congo and such places remain complete basket cases. Somewhere between those two sets lies a worsening Venezuela. It’s not a simple case of the US economy = the rest of the world’s economy. Resource exporters are massively benefitting from huge commodity price increases (Gold hitting $1000/oz, $6 corn, $13 soybeans, $100 crude, etc.). Those commodity exporting countries that aren’t turning those commodity price explosions into real sustainable economic gains can’t blame the OECD’s economic slowdown, they should so far be totally immune to it. They have only their own economic management and leadership issues to look to.

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