[News] Disinformation still clouds the US debate on Chávez's legacy in Venezuela

Anti-Imperialist News news at freedomarchives.org
Thu Jan 10 14:26:11 EST 2013


              Disinformation still clouds the US debate on Chávez's
              legacy in Venezuela

            Despite 14 years of catastrophist predictions for Venezuela,
            oil wealth has been successfully turned to social purposes

            Mark Weisbrot <http://www.guardian.co.uk/profile/markweisbrot>
            Wednesday 9 January 2013 10.30 EST

Imagine that you went to see the Steven Spielberg movie Lincoln, and all 
you got was the viewpoint of Southern white slaveholders during the 
civil war. That is analogous to what you are getting from almost all of 
the major media coverage on Venezuela 

Last week, the New York Times 
<http://www.guardian.co.uk/media/new-york-times> did something it has 
never done before: in its "Room for Debate" section, it offered 
differing views on Venezuela 
In the 14 years since Hugo Chávez 
<http://www.guardian.co.uk/world/hugo-chavez> was elected president of 
Venezuela, the Times has offered many op-eds and editorials against 
Venezuela -- including its own editorial board piece supporting the 2002 
military coup 
(from which it later backpedaled 
without acknowledgment or apology). But the Times has never seen fit to 
publish even a single op-ed that contrasted with their editorial line 
(or reporting 
for that matter) on this oil-rich country.

This contrasts with almost every medium-sized to large newspaper in the 
United States <http://www.guardian.co.uk/world/usa> -- from the LA 
Times, Boston Globe, or Miami Herald, to even the neoconservative 
Washington Post, and scores of other mainstream city newspapers, which 
have all published at least one op-ed offering another side of the 
story. It's worth revisiting this debate that lately appeared in the 
Times' online edition because it sheds light on some of the problems 
with what we read and hear about Venezuela.

Moisés Naím argues that Venezuela, whose economy grew about 5.5% in 
2012, is headed for "an economic crisis of historic proportions". (Well, 
at least he said "/headed/ for a crisis". Anita Issacs, a political 
scientist included in this debate, bizarrely refers to "Venezuela's 
tanking economy" -- possibly like the "United States' tanking economy" 
in 2004).

    "The crisis includes a fiscal deficit approaching 20% of the economy
    (in the cliff-panicking United States, it is 7%), a black market
    where a US dollar costs four times more than the
    government-determined exchange rate, one of the world's highest
    inflation rates, a swollen number of public sector jobs, debt 10
    times larger than it was in 2003, a fragile banking system and the
    freefall of the state-controlled oil industry, the country's main
    source of revenue."

Well, that sure sounds scary! However, the International Monetary Fund 
(as of September) estimates Venezuela's fiscal deficit at 7.4% of GDP. A 
"debt 10 times larger than it was in 2003?" -- there is no source for 
this, but it is clearly a meaningless number: because economies grow and 
there is also inflation, debt is normally measured against a denominator 
(fore example, the income of the country). According to the IMF (again 
September), Venezuela's debt for 2012 is projected to be 51.3% of GDP, 
not a particularly threatening number (the average for the European 
Union is 82.5% of GDP).

A more appropriate measure of the burden of the foreign public debt -- 
which is much more important than the domestic public debt -- for a 
country like Venezuela, where about 95% of export earnings are from oil, 
and that revenue is in dollars, would be the government's interest 
payments as a percentage of its public sector export earnings. This is 
also not very high -- peaking in 2012 at about 3% of export earnings 
(see here for more detail 

As for the "swollen number of public sector jobs in Venezuela", the 
figure stands at about 18.4% of the labor force 
To put that in context: France, Finland, Denmark, Sweden, and Norway all 
have public sector employment percentages in the 20s, with France at 22% 
and Norway at 29%.

I'm not sure what is meant by "the freefall of the state-controlled oil 
industry". Venezuela adheres to Opec quotas and is not trying to 
increase production beyond its quota. Naím also warns that "as a result 
of America's own oil boom, US imports of Venezuelan oil have recently 
hit a 30-year low." And? Oil is sold on a world market; there is no 
particular reason it has to go to the United States. In fact, the 
Venezuelan government is quite happy to diversify its exports to 
countries that are more friendly to it than the United States has been.

Inflation in Venezuela is clearly too high, although much lower than 
in the pre-Chávez era. But the most recent estimate (pdf) 
<http://www.bcv.org.ve/Upload/Publicaciones/mfa2012.pdf> is 19.9% for 
2012, which is down from 27.2% in 2010 
-- despite a rapid acceleration of growth from the recession, which 
ended in the second quarter of that year. The government will want to 
bring it down further, but this level of inflation is not, by itself, a 
serious threat to the economy of a developing country.

So, this is probably more detail than you wanted, but remember that the 
catastrophic view of Venezuela's economy has been promoted by the 
Venezuelan government's opponents -- including most of the international 
and Venezuelan media -- for 14 years. Economic disaster was always just 
around the corner, but it never quite happened. There have been two 
recessions during the past 14 years: one was directly caused by the 
opposition itself, in the 2002-03 oil strike that was organized to 
topple the government; the other was during the world recession of 2009, 
when most countries in the hemisphere had negative growth.

Francisco Toro is an opposition blogger who, like Naím, has also spent 
most of the past decade forecasting doom and gloom for the Venezuelan 
economy. For him, the end of Chavismo will come when the government is 
forced to implement austerity as "the country runs out of money and out 
of people willing to lend it more." According to Toro, "Chávez has spent 
all of the windfall from Venezuela's enormous oil exports, and then 
some: the country's debt has quintupled in 14 years." (This is another 
meaningless number.)

To give them their best argument, what both Naím and Toro, and other 
doomsayers, are basically saying is that Venezuela will face a balance 
of payments crisis. Since they are not predicting hyperinflation, that 
is really the only thing in their fantasies that can collapse the 
Venezuelan economy -- as, for example, during the Asian crisis of 
1997-98, which collapsed a number of economies in that region.

But Venezuela has been running trade and current account surpluses for 
the past decade, since it recovered for the oil strike and political 
stability ensued. The exception was during the six months when oil 
prices collapsed at the end of 2008. Of course, dollars accumulated 
through trade surpluses can also leave the country, and the forecasts of 
catastrophe help promote capital flight by convincing Venezuelans that 
they should take their savings elsewhere.

But here's the kicker: even if their dream of a balance of payments 
crisis were to come true, the Chávez government has friends. And some of 
these friends have a lot of dollars. China 
<http://www.guardian.co.uk/world/china>, which is sitting on more than 
$3tn in reserves <http://www.bloomberg.com/quote/CNGFOREX:IND>, 
considers Venezuela to be a strategic ally 
<http://www.chinadaily.com.cn/cndy/2012-06/28/content_15528289.htm> and 
has loaned the government $36bn since 2007 
Most of it has been paid back, and about $20bn was loaned 
<http://www.cepr.net/documents/publications/venezuela-2012-09.pdf> at 
extremely low interest rates (1-3%).

Brazil <http://www.guardian.co.uk/world/brazil> and Russia are also 
among the countries that consider Venezuela to be an important partner 
in the region. They also have hundreds of billions 
of dollars in reserves 

These countries would not want to see their partner and ally, the 
government of Venezuela, collapse because it needed a few billion 
dollars of hard currency to pay for its imports for a while -- for 
example, if oil prices crashed temporarily, as they did in 2008. There 
are a number of reasons for this, but one is that a rightwing government 
is likely to ally with Washington. The Chávez government's support for a 
"multipolar world", described as "anti-American" here in the US, is 
quite appealing to most other governments in the world.

Venezuela has the world's largest oil reserves, and outside of 
Washington and Europe (the latter being not of much use to anyone these 
days), most governments don't think that it's a great idea for the 
country that is known throughout the world as an imperial power, with 
the world's largest military, also to control the world's largest oil 

The other side of the coin is that Venezuela's oil reserves are also the 
main reason that Washington has been so hostile to the country, 
supporting the military coup of 2002 and intervening as much as it can 
to try and discredit, undermine, and delegitimize the government. While 
these efforts have been enormously successful in influencing media, and 
therefore public opinion, in most of this hemisphere, they did not do so 
well with governments, especially in the Americas, but also in most of 
the world.

And that is the irony: Washington's never-ending battle against 
Venezuela has, in some ways, made the Chávez government and its 
political party /stronger/, by helping to infuse the left v right 
political contest there with an anti-imperialist dimension that would 
put most of the world's governments on the side of Chávez.

Of course, the most important source of Chávez's continued electoral 
success has been the improvements in living standards 
that the majority of Venezuelans have experienced over the past decade 
poverty reduced by half, extreme poverty by more than 70%, unemployment 
cut by half, a tripling of people eligible for public pensions and 
vastly increased access to healthcare and education.

In the New York Times' debate, historian Miguel Tinker-Salas made the 
best contribution 
-- as he often does -- by emphasizing the centrality of who controls 
Venezuela's oil reserves:

    "Control of the government implies control of the oil industry and
    the ability to dictate whether it benefits society at large or
    small, privileged sectors, as it did in the past."

Indeed it does, and will.

Freedom Archives 522 Valencia Street San Francisco, CA 94110 415 
863.9977 www.freedomarchives.org
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