Hugo Chavez, the president of Venezuela of 14 years (1999-2013), has died on March 5. In the conservative business press, he has been villified as a “narcisstic caudillo” (Economist 2013) and that as a result of his policies “most Venezuelans- rich, middle class or poor- understand that they are worse off today.” (O’Grady 2013) Among the people in Venezuela, he has been well-revered due to the enormous oil boom that allowed Chavez to finance a huge social-spending programs that lifted millions of Venezuelans out of poverty. But who is right? One would have to determine what Chavez had accomplished during his life time and during his presidency in order to answer this question.
Chavez was born into a working-class family of Amerindian, Afro-Venezuelan, and Spanish descent. He had a poor childhood, but made it to a high school. He joined the military academy in Caracas at age 17, where he observed the large-scale poverty of working-class Venezuelans. He developed an enormous sense of social justice, and studied the political thought of 19th-century revolutionary Simon Bolivar and 20th-century revolutionary Che Guevara (Wikipedia 2013c). That is how Chavez developed his idea of the Bolvarian Revolution, a socialist mass movement to implement popular democracy, economic independence, equitable distrivution of wealth and an end to corruption (Wikipedia 2013a). Being impressed by the presidency of leftist generals Juan Velasco Alvarado (Peru) and Omar Torrijos (Panama), Chavez came to believe that the military should overthrow the ruling class if they are perceived to act against the interest of the working class (Marcano and Tyszka 2007, 36). That was evidently the case in Venezuela, when a short oil boom after the 1973 OPEC crisis generated enormous revenues for the country that was not really shared with the poor. In 1982, Chavez founded the Revolutionary Bolivarian Movement-200 (MBR-200), which was a small cadre within the military willing to embrace the Bolivarian ideals. He taught at the military academy and indoctrinated and trained cadets to join his movement. The military leadership became suspicious of him and reassigned him to take command of barracks. He was successively promoted to the rank of major. In the early 1990s, president Carlos Andes Perez had implemented the neoliberal economic policies recommended by the IMF and the Washingon Consensus, which promised social spending cuts and liberalization of petrol prices. This policy led to enormous social unrest, which the then-Lieutenant-Colonel Hugo Chavez used as an opportunity to carry out a failed coup. Chavez was put to jail, but was freed two years later by president Rafael Caldera, who forced him to leave the military so he could not plot another overthrow. Chavez re-directed the Bolivarian movement’s focus on a military coup by taking the electoral route to power. He ran for president in 1998 and was elected with 56.2% of the vote, receiving heavy support from the poor and the disenchanted middle class, that had sacrificed its standard of living during the austerity policies of the 1990s. Chavez was so popular during his presidency that he was re-elected three times (2000, 2006, 2012).
Chavez was highly critical of neoliberal policies, but he initially continued to work together with the IMF to pay off debts and tried to woo foreign capital. Nicholas Kozloff (2008) described Chavez’ economic policies as follows, ”Chavez has not overturned capitalism, he has done much to challenge the more extreme, neo-liberal model of development.” (p.45) His presidency saw enormous investments in social programs. Poverty was lowered from 54% of households in 2003 to 26% in 2008. Extreme poverty had falled by 72%. Inequality fell from 48.1 in the GINI index to 41 in 2008 (100 perfectly unequal, 1 perfectly equal). Real social spending per person tripled between 1998 and 2006 (Weisbrot, Ray and Sandoval 2009). Social programs include education, health care, job training, food subsidies and loans to small businesses and cooperatives (Correo del Orinoco International 2011). When Chavez took office in 1998, there were 762 registered worker-owned cooperatives representing 20,000 members. In 2006, there were 108,000 co-ops representing 1.5 million people (Bowman and Stone 2006). The enormous social programs were mainly financed out of petroleum exports (93% of all Venezuelan exports; Weisbrot, Ray and Sandoval 2009). In order be able to support his social programs, Chavez needed to guarantee that oil prices would remain high. He reinforced the role of the OPEC to better control oil production and prices. The 9/11 attacks against the US, the Iraq war, and rising demand from rapidly developing India and China led to a surge in oil prices (Wikipedia 2013b). Another problem was that many oil companies were under private ownership, making it difficult for Chavez to carry out his social programs. In 2001, Chavez enacted the Hydrocarbons law, which empowered the state to control oil production and distribution, raised royalty taxes for oil companies, raised the public stake in those companies, and dedicated a fixed portion of the oil revenues for social programs. The macro-economic situation remains stable for Venezuela so long as the oil prices remain stable.
The overall positive record of the Chavez presidency is only marred by an increase in the homicide rates, which increased from 20.3 per 100,000 people in 1995 to 45.1 in 2010 (Downie and Eulich 2013). He is, furthermore, criticized for curbing press freedom. Chavez carried out a constitutional reform in 1999 that increased presidential power, and converted a bicameral legislature into a unicameral legislature. It also included provisions to protect indigenous people and women, established right to education, housing, health care food, environmental protection and more transparency in government. He once again changed the constitution in 2009 in order to be allowed to serve indefinite terms.
For his many reforms on behalf of the poor, Chavez became very popular among the masses, but was villified by the wealthy elites, who saw their wealth taken away from them. In 2002, they organized a coup d’etat to overthrow the Chavez government. Chavez relented to pressure and stepped down. But pro-Chavez protests were so strong that he was returned to power a few days later. Later that same year another failed attempt to destabilize the Chavez regime was made, in which management and professional employees of the oil industry went on strike. For the rest of his presidency, Chavez further continued to support his social programs; founded a new party- the United Socialist Party of Venezuela-; improved poltical relationships with the rising left-wing controlled governments across Latin America, such as Paraguay’s Fernando Lugo, Bolivia’s Evo Morales, Brazil’s Lula da Silva, Nicaragua’s Daniel Ortega, and Ecuador’s Rafael Correa; developed a Bank of the South that forms a financing alternative for poor countries to the IMF.
In June 2011, Chavez revealed to the public that he was battling cancer. He had multiple surgeries in Cuba, and his physical condition deteriorated after a December 2012 surgery. He died on March 5th, 2013. Hugo Chavez will leave behind a country, whose poor population had seen enormous improvements. To that extent, the business press is wrong in denouncing the achievements of the Chavez presidency. Chavez points his way forward not only to a “socialism in the 21st century”, but the real alternative to a neo-liberal model that leaves too many people behind.
Bowman, Betsy, and Bob Stone. 2006. “Venezuela’s Cooperative Revolution.” Dollars and Sense. http://www.dollarsandsense.org/archives/2006/0706bowmanstone.html
Correo del Orinoco International. 2011. “Venezuela Reduced Poverty by 50%, Affirms Eclac.” Venezuela Analysis, August 28. http://venezuelanalysis.com/news/6451
Downie, Andrew, and Whitney Eulich. 2013. “Chavez vs Lula: Two Distinct Approaches to Poerty Reduction in Latin America.” Christian Science Monitor, March 7. http://www.csmonitor.com/World/Americas/2013/0307/Chavez-vs-Lula-Two-distinct-approaches-to-poverty-reduction-in-Latin-America
Economist. 2013. “Now for the Reckoning.” March 9. http://www.economist.com/news/briefing/21573095-after-14-years-oil-fuelled-autocracy-hugo-ch%C3%A1vezs-successors-will-struggle-keep
Kozloff, Nicholas. 2008. Revolution!: South America and the Rise of the New Left. New York: Palgrave Macmillan
Marcano, Christina, and Alberto Barrera Tyszka. 2007. Hugo Chávez: The Definitive Biography of Venezuela’s Controversial President. New York: Random House.
O’Grady, Mary Anastasia. 2013. “O’Grady:Chavez the ‘Redeemer’.” March 11. http://online.wsj.com/article/the_americas.html
Weisbrot, Mark, Rebecca Ray and Luis Sandoval. 2009. “The Chavez Administration at 10 years: The Economy and Social Indicators.” Center for Economic and Policy Research. http://www.cepr.net/documents/publications/venezuela-2009-02.pdf
Wikipedia. 2013a. “Bolivarian Revolution.” Last modified March 11. http://en.wikipedia.org/wiki/Bolivarian_Revolution
Wikipedia. 2013b. “History of the Venezuelan Oil Industry.” Last modified March 12. http://en.wikipedia.org/wiki/History_of_the_Venezuelan_oil_industry
Wikipedia. 2013c. “Hugo Chavez.” Last modified March 14. http://en.wikipedia.org/wiki/Hugo_Ch%C3%A1vez