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Program 9926
June 29, 1999


Alan Vierqutz

Senator Isaias Rodriguez

Luis Paul, head of the oil industry trade association

Antonio Herrera, Venezuelan-American Chamber of Commerce

Alfredo Ramos, head of the parliamentary delegation of the leftist Causa R Party

Senator Pablo Medina

Jose Antonio Gil Yepes

Alfredo Ruiz, Coordinator, Network in Support of Peace and Justice

Pedro Tabata, Deputy Chief, Congressional delegation of Democratic Action

This text has been professionally transcribed. However, for timely distribution, it has not been edited or proofread against the tape.

ALAN VIERQUTZ: For every dollar that the barrel of oil goes up Venezuela as a nation receives a billion dollars in additional income.

KRISTIN MC HUGH: This week on Common Ground, the changing landscape in Venezuela.

JOSE GIL: We’re using a significant amount of resources and a disciplined organization, vertical organization, that can move very fast to try to solve the most important single problem that Venezuelan society has, which is poverty. I approve of the President’s decision in bringing in the military to give a hand with this.

MC HUGH: Common Ground is a program on world affairs and the people who shape events. It’s produced by the Stanley Foundation. I’m Kristin McHugh.

When populist Venezuelan President Hugo Chavez took office in February he inherited a massive economic crisis, particularly in the oil industry. He quickly moved to reduce costs at the state-owned oil company and later tried to freeze oil workers’ wages. Such policies are winning surprising praise from wealthy business people. But Chavez’s economic austerity measures are running into criticism from his core supporters—workers and the poor. Common Ground’s Special Correspondent Reese Erlich filed this report from Caracas.

[sound of city traffic]

VENEZUELAN DRIVER: [via a translator] Gas in Venezuela is really cheap. In other countries, including Brazil, it’s a lot more expensive.

REESE ERLICH: You can say that again. Petroleos de Venezuela charges only 50¢ for a gallon of regular gas. That’s just one of the perks that makes Venezuelans love their state-owned oil monopoly, known here as PAVSA. Company profits also provide 37% of the government’s budget. Alan Viergutz, president of an oil construction company, says petroleum is key to Venezuela’s entire economy.

VIERQUTZ: For every dollar that the barrel of oil goes up Venezuela as a nation receives a billion dollars in additional income.

ERLICH: The international price of oil bottomed out at $7.35 a barrel for Venezuela’s crude oil earlier in the year. Then the price nearly doubled to $14.00 per barrel, says Viergutz.

VIERQUTZ: That represents about $7 billion in additional income if the average is maintained throughout the year. Which that is still to be seen. So there is considerably a lot of money at stake here for the Venezuelan government.

ERLICH: When President Hugo Chavez took office in February he inherited massive government debt, 30% inflation and 16% unemployment. The state oil company faced the possibility of losing billions of dollars if it continued to produce too much oil. So Chavez cut production to actually match its OPEC quota, something previous governments hadn’t done. Senator Isaias Rodriguez, a national leader of Chavez’s political party, says it was the right choice.

SENATOR ISAIAS RODRIGUEZ: [via a translator]. Our policy is a little different from previous governments. Their plan was to increase production and try to maintain the prices for our oil. Our plan, together with that of OPEC and other non-OPEC-affiliated countries, is to reduce oil production. We think this will increase prices for oil. This has proven correct because oil prices have gone up.

ERLICH: PAVSA also canceled a multi-billion dollar expansion plan. Chavez plans to sell off other state companies, lay off government workers and encourage foreign investment, all in an effort to reduce the federal deficit and kick-start the economy. Such policies were a pleasant surprise to Venezuela’s business leaders, who strongly opposed Chavez during last year’s election. Chavez had campaigned on a leftist/populist platform promising to end poverty and make the rich pay. Luis Paul, head of the oil industry trade association, says Chavez’s actual policies have been quite different.

LUIS PAUL: He has been very orthodox in the way that he’s handling the economy. And he’s very prudent and he’s been going by the book. So, up to now, he, all the measures that he has taken have been of trying to solve the difficulties of a very large fiscal deficit.

ERLICH: Antonio Herrera of the Venezuelan-American Chamber of Commerce, says practical considerations are taking precedence over Chavez’s populist ideology.

ANTONIO HERRERA: Who really cares what he thought at one point or another as long as he uses common sense in actually governing.

ERLICH: And that’s the great irony of President Chavez’s presidency so far. Chavez’s rhetoric remains anti-imperialist, but analysts say his economic policies are far more moderate, even conservative.

ERLICH: Venezuela faces a conundrum: because vast oil deposits it’s a potentially rich country. At one time Venezuela was the wealthiest country in Latin America. But today 60% of its people live in poverty. The cost of living is high, as seen by the prices at this super-market checkout line.

[sounds of cash registers]

ERLICH: Bread and meat cost almost the same as they do in the US. But wages for many blue collar workers are less than one-tenth of those in the US.

[sounds of downtown traffic and people conversing]

ERLICH: On a downtown Caracas street corner Luis Manrique snaps his shoeshine cloth, eyeing a businessman’s wing tips with disdain.

[sounds of shoes being shined]

ERLICH: Manrique typifies the many poor Venezuelans who want President Hugo Chavez to put the shoe on the other foot.

LUIS MANRIQUE: [via a translator] My opinion of President Chavez is that he is a capable person and decisive in the things he wants for the country. It seems to me he’s honest, responsible and sincere. But until now he hasn’t done much. The number one problem is poverty. The government needs to provide new jobs. Second is unemployment. Third, corruption—social and political.

ERLICH: Chavez won election with overwhelming support from workers, peasant farmers and the poor by saying he would reduce poverty. But leftist critics say Chavez’s actual economic policies look more like those of Ronald Reagan than Fidel Castro. Alfredo Ramos heads the parliamentary delegation of the leftist Causa R Party.

ALFREDO RAMOS: [via a translator] I think President Chavez, like many candidates, took one position during the campaign and another after he got elected. In his campaign he said it’s not necessary to rely on the International Monetary Fund, that we have enough resources to resolve any problems we have here in Venezuela. During the campaign he talked about a debt moratorium to international lenders. But all that talk evaporated once he took office. The economic problems of Venezuela are structural. So we need an economic plan pretty quickly Right now he’s like a fireman, trying to put out fires but running out of water.

RODRIGUEZ: [via a translator] That’s not true.

ERLICH: Senator Isaias Rodriguez, a leader of Chavez’s political party.

RODRIGUEZ: [via a translator] We have an economic plan. Fundamentally, this Congress has passed the enabling law. It contains a plan to stabilize the monetary situation, the budget and inflation. It increased the price of oil. It includes a raise in the salaries for the private sector.

ERLICH: While Venezuelan business people like the new Chavez, they are worried. Oil construction company executive Viergutz says foreign investors are even more nervous. For the past decade PAVSA has pursued a policy of “apertura” or “opening. The apertura allows foreign investors to explore for oil, natural gas, and make other investments in what was once the exclusive domain of the Venezuelan government. Viergutz expects Chavez to respect existing contracts with foreign companies, but not necessarily to seek new oil exploration investments.

VIERQUTZ: We are gonna see new contracts being reviewed in detail and probably we’re gonna see a big slow-down in new contracts being signed. But everything that has already been agreed to, which I’d like to highlight is substantial, is not gonna be eliminated. So you already have like this big train of investment that is moving and you can’t stop that mass.

ERLICH: And it’s not clear foreigners would make new investments even if Chavez asked them. In early June Chavez visited New York hoping to get more foreign investment and to build support for a proposed Venezuelan government bond. But so far foreigners are taking a wait-and-see attitude says Antonio Herrera, the Venezuelan-American Chamber of Commerce executive.

HERRERA: I think they’re still a bit on hold. Venezuela has very serious economic problems that it needs to sort out. It needs to change its policies and not only to change them but to show that they’ve been changed for good.

ERLICH: But at least some of Chavez’s supporters don’t want Venezuela to rely on foreign investment for economic recovery. Senator Pablo Medina, leader of the leftist Fatherland for All Party, instead advocates a crackdown on corrupt businessmen who export capital rather than invest at home.

PABLO MEDINA: [via a translator] It’s a lie that foreign investments are the answer for economic recovery. Capital flight has caused the crisis, even while foreigners are investing. Venezuelan capital flight exceeds $550 million US dollars. That’s more than all the foreign investments in the country. We have to go after the corrupt politicians and bankers who are taking their money out of the country and ruining the economy.

ERLICH: Senator Medina says Venezuela, because of its vast oil wealth, can be much more self-reliant than other Third World countries. He strongly criticizes International Monetary Fund austerity measures that require a country to open its markets to foreigners. It’s a ruse, he says, for further foreign domination and doesn’t help the economy improve, either.

MEDINA: [via a translator] No country has developed following the dictates of the International Monetary Fund. None. That includes the US. The US doesn’t follow the formulas of the IMF. We need to get the economy going. We’re currently running at 30% of capacity. We need to have more construction. We need to have more public works projects.

[sound of Venezuelan music]

ERLICH: Back at the street corner shoeshine stand Luis Manrique is still polishing the wing tips of the wealthy. He understands that Chavez needs more time to create jobs and reduce poverty. But he’s not willing to wait forever.

MANRIQUE: [via a translator] Here in Venezuela it’s difficult to solve all these problems in just a few days. Some of these problems have been going on for many years. But we need to see some drastic changes very soon.

[sound of Venezuelan music]

ERLICH: For Common Ground I’m Reese Erlich, in Caracas

MC HUGH: Printed transcripts and audiocassettes of this program are available. Listen at the end of the broadcast for details. Common Ground is a service of the Stanley Foundation, a nonprofit, nonpartisan organization that conducts a wide a range of programs designed to provoke thought and encourage dialogue on world affairs.

MC HUGH: Venezuelan President Hugo Chavez has stirred up plenty of controversy in his first five months in office. The populist President has promised to reduce poverty and revamp Venezuela’s corrupt political system. Opponents say he’s acting like a dictator. But so far he retains widespread popular support. As Common Ground Special Correspondent Reese Erlich reports from Caracas, Chavez faced his first big test when tens of thousands of squatters illegally occupied buildings throughout the country.

[sound of Venezuelan music]

ERLICH: Walking through a working class area in southwest Caracas, a visitor suddenly leaves the bustling street and enters a dark building, ignored by passers-by. Some 300 people invaded and occupied this abandoned street vendors’ market. They are typical of the 60% of Villahermosa Venezuelans who live below the poverty line. Andrea Villahermosa, a single mother of five, says she has no money for housing. She ekes out a living by getting day jobs washing and ironing clothes at rich people’s homes.

ANDREA VILLAHERMOSA: [via a translator] My income depends on how many people hire me. And then the women complain that it’s too expensive and won’t pay. I just ask for $12.00 for one day’s work. But they only pay $8.00, $5.00, or less. So in a typical week, working every day, I earn about $26.00

ERLICH: Villahermosa tries to survive on those wages despite Venezuela’s high cost of living. Food costs the same or even more than in the US. In addition, she says lack of childcare is a major problem.

VILLAHERMOSA: [via a translator] I have to keep my kids with me when I work. There are many single mothers like me. We need healthcare, housing, and jobs. The future lies with our children’s education. Many single mothers are stuck in a vicious circle. I must keep my children with me when I go to iron, so they can’t get an education. They’re with me when I’m looking for jobs on the street. I’m single, so they have no place else to go.

ERLICH: Villahermosa is quite aware of how Venezuelan society looks down on her and her fellow squatters.

VILLAHERMOSA: [via a translator] They say we aren’t good women, good wives, or good mothers. But look at how we take care of our kids and try to find work every day. We do the best we can. We just need some help. We are struggling for the sake of our children.

ERLICH: Many of the squatters here and working class Venezuelans in general voted for President Hugo Chavez. After Chavez’s election in December 1998 tens of thousands of people took over unoccupied farms, urban office and apartment buildings, and even a provincial airport. They demanded housing and land reform. The squatter invasions threatened to overwhelm the new president just as he took office in February. Squatter Evangelina Delgado Briceno had high hopes that Chavez would help the poor.

EVANGELINA DELGADO BRICENO: [via a translator] When people engage in a squatter’s invasion it’s because they have to. If people had housing they wouldn’t do this. I would do it again. Because I don’t have real housing. We came here because we didn’t have any place to live and the government authorities didn’t throw us out. For now, the government isn’t moving us.

ERLICH: When faced with similar squatter invasions previous presidents ordered out bulldozers and troops. But President Chavez, true to his populist views. Adopted different tactics. He negotiated with the squatters and let them stay. Such conciliatory tactics initially met with strong public opposition, says Jose Antonio Gil Yepes, President of the polling company, Datanalisis.

JOSE ANTONIO GIL YEPES: We have seen 86% rejection of the way invaders have been handled. The government has not been forceful enough to get them out where they invaded, and people are not approving of that. Anyone who owns any little thing—it doesn’t have to be a rich person—anyone who owns any little thing, thinks he, the government is there to protect his property and that that’s not what is being done today.

ERLICH: But Chavez surprised many people by resolving the crisis without violence. In some cases soldiers pulled up in front of occupied buildings and the squatters left without confrontation. In other cases Chavez provided squatters with surplus government land and construction materials to build their own houses. Jose Gil points out that almost all the squatters have left the urban buildings.

JOSE GILL: He is bringing them all out of where they invaded. And that they’re putting them someplace else. The invaders some place else. And they are helping them to, through what is called “auto construction,” to build their homes, to start building their homes. That’s very innovative.

ERLICH: On this issue Chavez even won the grudging support of conservative business people, almost all of whom had opposed him during the presidential campaign. André Sosa, owner of a oil valve manufacturing company, says, opposition parties took advantage of the squatter’s movement to embarrass Chavez.

ANDRES SOSA: In the end it seems to me that the way President Chavez handled it was, seemed to have been very intelligent. It didn’t look so at the time. He seemed to have been sufficiently intelligent to see that there was a provocation made by his enemies, political enemies, so that if he went through repression, strong repression, then they could go back to the people and say, “Look at this government. He was saying he was not going to touch you people and look what he’s doing now.” So I think he handled the situation from a political point of view very well.

ERLICH: Chavez’s supporters argue that while some of the squatters were legitimate, others were opportunists seeking to embarrass Chavez. Senator Pablo Medina heads Fatherland for All, a leftist party that is part of Chavez’s governing coalition.

MEDINA: [via a translator] It’s curious that in the first 30 days President Chavez was in power we’ve seen a very strange kind of squatter invasion—invasions that were apparently spontaneous, but weren’t really spontaneous. I went to some of these invasions and saw a lot of Congressmen from Democratic Action, the opposition party, who had apparently planned some of these invasions. A total of 15,000 people participated in these invasions. The armed forces did a census of those squatters. Of these 15,000, 7,000 already had homes. They were professional squatters.

ERLICH: That’s poppycock, says Pedro Tabata. He’s the Deputy Chief of the Congressional delegation of Democratic Action, the main opposition party. He says party members supported the squatters, but blaming his party for the popular upsurge is like blaming it for the weather.

PEDRO TABATA: [via a translator] That’s in invention of President Chavez and those who support him. If there’s a hard winter without rain, they say it’s the fault of Democratic Action. If there’s no night, it’s Democratic Action’s fault. If there’s an earthquake, it’s our fault as well.

ERLICH: Tabata and other opposition leaders frequently refer to Chavez as a dictator because he ran through so many changes in the opening months of his government. Congress gave Chavez emergency powers to unilaterally implement economic reforms and Chavez succeeded in winning a national referendum to re-write the Constitution. Senator Tabata accuses the President of authoritarianism, nothing that Chavez led an unsuccessful coup d’ etat against the government in 1992, when he was an Army colonel.

TABATA: [via a translator] President Chavez shows an extraordinary mental confusion. One doesn’t know if he imitates Jesus Christ or Fidel Castro or Simon Bolivar. No one knows because one day he says one thing and then says another. Today he speaks in the name of one, and then of another. He’s got something scrambled in his head.

ERLICH: But Chavez’s supporters react angrily to such charges. After all, says Senator Medina, Chavez has abided by Venezuela’s laws and Constitution. Senator Medina points to Chavez’s non-violent handling of the squatters as an example.

MEDINA: [via a translator] There’s a national and international campaign to call Chavez a dictator. But does a dictator refuse to call out the Army against the people? He’s using dialogue instead.

ERLICH: And that gets to the heart of the debate in today’s Venezuela. Venezuela has suffered years of corrupt rule by politicians beholden to the rich. Is President Chavez bringing much needed radical change? Or a return to military-influenced strong man rule?

[sound of Venezuelan music]

ERLICH: In a plaza in a working class district of Caracas two young folk singers warm up a crowd for what is an unusual event in Venezuela: an anti-draft rally. The military has either ruled directly or had strong behind the scenes influence for all of Venezuela’s modern history. So mandatory military service is rarely challenged.

[sound of activist speaking over a loudspeaker]

ERLICH: This speaker is criticizing the Army and calling for a system of national service in which young men can do community work rather than military duty.

[sound of people applauding and cheering the speaker]

ERLICH: Alfredo Ruiz, Coordinator of the Network in Support of Peace and Justice, helped organize the rally. He says that while Chavez continues to support the draft, he hopes the new President will support alternative service as well. That’s because, at least so far, Chavez has made significant improvements in human rights.

ALFREDO RUIZ: [via a translator] His record so far is better than previous presidents. Previous presidents engaged in a lot of repression. So far we haven’t seen that from President Chavez. He is more respectful of human rights. We’ve seen some good first steps; for example, restoring constitutional rights for people living along the border with Columbia. During the government of Rafael Caldera, our previous President, civil rights were suspended there. The military and police engaged in horrible abuses—summary trials and torture. There are positive and negative things in Chavez’s human rights record. He has started some good programs but we need more time to evaluate. I would give him a seven on a scale of ten for human rights.

ERLICH: But Ruiz and other human rights activists are concerned about Chavez’s tendency to rely on the military to carry out civilian functions. Chavez has appointed active duty and retired military men to key positions in government ministries. Soldiers distribute food in the poor barrios and provide labor for public works projects.

RUIZ: [via a translator] We are worried about the general militarization of Venezuela. Chavez sees the solution to all problems as a military one. During a workers’ strike he sent in the military to do their work. There’s a tendency to have the military do all the social programs. Similarly, many of the ministries have military men in the leadership. This worries us a lot because the military tends to see anyone who opposes them as the enemy. This is dangerous.

ERLICH: Interestingly enough, the country’s political and business elite echoed many of those same points in the early weeks of Chavez’s presidency. But, pollster Jose Gil says they muted those criticisms because the military is one of the few efficient organizations in Venezuelan society.

GIL: My assessment is that we’re using a significant amount of resources and a disciplined organization, vertical organization, that can move very fast to try to solve the most important single problem that Venezuelan society has, which is poverty. I approve of the President’s decision in bringing in the military to give a hand with this.

ERLICH: Gil says there is a danger of militarization if Chavez’s programs don’t work.

GIL: There are critics that would say that the number of military in public jobs is too risky because it could be a way to militarize society. I think that that militarization is a hypothesis that may come true only if Chavez tends to fail. If Chavez is successful in punishing corruption, in straightening up public administration therefore, and if he is successful in getting the entrepreneurs to invest in Venezuela to produce more jobs and get better pay in the pockets of workers, I think Chavez will not need to militarize any society.

ERLICH: These days fears of militarization have died down in Venezuela and everyone is starting to talk about an upcoming election.

[sounds of people having a vigorous conversation on a street corner]

ERLICH: At street-corners all over Venezuela people are discussing the July elections for a constitutional assembly. Chavez successfully backed a national referendum earlier this year that called for re-writing Venezuela’s constitution. Senator Isaias Rodriguez, a national leader in President Chavez’s political party, says Venezuela’s constitution is long overdue for radical change.

RODRIGUEZ: [via a translator]. The problems of our country didn’t just fall from the sky. They’re part of an undemocratic structure that’s existed for forty years. With these changes there will be a much better chance for jobs, investments, and to control government expenses. It will help improve healthcare, housing, jobs, and in other ways serve the interests of the people.

VIERQUTZ: This could turn out to be a complete free-for-all.

ERLICH: Alan Vierqutz, president of an oil construction and engineering company, says that President Chavez is throwing too many institutions up for question.

VIERQUTZ: Just think about in the middle of a great economic crisis, in a time when we have certain political instability, you could say, where we have a lot of crime out in the streets, to on top of that have this vacuum of leadership where we don’t know whether the President is going to continue, whether the Congress is going to continue—can be a source of pre-occupation to all Venezuela. And one of your presidents said “It’s the economy, stupid.” And oh well, maybe it’s the same thing here in Venezuela.

ERLICH: But Chavez supporter Senator Rodriguez says political reform can help lead to economic reform. He points out that ruling political parties effectively appoint judges, leading to widespread corruption.

RODRIGUEZ: [via a translator] There is no legal security in our country. Not for the rich or for the poor. There is no foreign investment because of lack of judicial transparency. If we clean up the judicial system we’ll get more foreign investments. With clean judges we’ll start to solve the problem of unemployment. It’s a critical problem.

ERLICH: Elections for the constitutional assembly will be held at the end of July and the re-written Constitution is expected to be voted up or down in a national referendum early next year.

[sounds of Venezuelan music]

ERLICH: Walking back to their abandoned vendors’ market the squatters here struggle to survive each day. They reflect the political sentiments of many ordinary Venezuelans. They voted for Chavez with the expectation of getting jobs and social services but so far they haven’t seen much improvement. Squatter Evangelina Delgado Briceno says they’re getting frustrated.

BRICENO: [via a translator] If I had the opportunity to talk personally with President Hugo Chavez I would tell him that we have no opportunity to find housing. If we have families of three, four, five people, we can’t afford to buy a house. Also, he should help us find work. Everyone has a lot of expectations. We need to improve housing, health, education and security. I think President Chavez speaks very well. But we need more than words.

[sounds of Venezuelan music]

ERLICH: For Common Ground I’m Reese Erlich in Caracas.

Our theme music was created by B.J. Leiderman. Common Ground was produced and funded by the Stanley Foundation.

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