<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html>
<head>
<meta http-equiv="content-type" content="text/html; charset=ISO-8859-1">
</head>
<body bgcolor="#ffffff" text="#000000">
<ul class="article-attributes trackable-component b4"
data-component="comp: r2: Byline">
<li id="contrib-shift">
<ul>
<li class="byline">
<div class="contributor-full">
<div id="main-article-info">
<h1 itemprop="name headline ">Disinformation still clouds the
US debate on Chávez's legacy in Venezuela</h1>
<p itemprop="description" id="stand-first"
class="stand-first-alone"
data-component="comp : r2 : Article : standfirst_cta">Despite 14 years
of catastrophist predictions for Venezuela, oil wealth has been
successfully turned to social purposes</p>
</div>
<span itemscope="" itemprop="author"
itemtype="http://schema.org/Person"><span itemprop="name"><a
class="contributor" rel="author" itemprop="url"
href="http://www.guardian.co.uk/profile/markweisbrot">Mark Weisbrot</a></span></span><a
itemprop="publisher" href="http://www.guardian.co.uk/"><br>
</a><small><a class="moz-txt-link-freetext" href="http://www.guardian.co.uk/commentisfree/2013/jan/09/us-debate-chavez-venezuela-legacy">http://www.guardian.co.uk/commentisfree/2013/jan/09/us-debate-chavez-venezuela-legacy</a></small><time
itemprop="datePublished" datetime="2013-01-09T10:30EST" pubdate=""><br>
Wednesday 9 January 2013 10.30 EST</time></div>
</li>
</ul>
</li>
</ul>
<div id="article-wrapper">
<div id="article-body-blocks">
<p>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 <a
href="http://www.guardian.co.uk/world/venezuela"
title="More from guardian.co.uk on Venezuela">Venezuela</a>.</p>
<p>Last week, the <a
href="http://www.guardian.co.uk/media/new-york-times"
title="More from guardian.co.uk on New York Times">New York Times</a>
did something it has never done before: in its "Room for Debate"
section, it <a
href="http://www.nytimes.com/roomfordebate/2013/01/03/venezuela-post-chavez">offered
differing views on Venezuela</a>. In the 14 years since <a
href="http://www.guardian.co.uk/world/hugo-chavez"
title="More from guardian.co.uk on Hugo Chávez">Hugo Chávez</a> was
elected president of Venezuela, the Times has offered many op-eds and
editorials against Venezuela – including its <a
href="http://www.nytimes.com/2002/04/13/opinion/hugo-chavez-departs.html">own
editorial board piece supporting the 2002 military coup</a> (from which
<a
href="http://www.nytimes.com/2002/04/16/opinion/venezuela-s-political-turbulence.html">it
later backpedaled</a> 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 <a
href="http://www.cepr.net/index.php/blogs/the-americas-blog/embarrassing-quote-in-nyt-article-says-a-lot-about-nyt-reporting-on-venezuela">reporting</a>,
for that matter) on this oil-rich country.</p>
<p>This contrasts with almost every medium-sized to large newspaper in
the <a href="http://www.guardian.co.uk/world/usa"
title="More from guardian.co.uk on United States">United States</a> –
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.</p>
<p>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 "<em>headed</em> 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).</p>
<blockquote>
<p>"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."</p>
</blockquote>
<p>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).</p>
<p>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 (<a
href="http://www.cepr.net/images/stories/report_images/venezuela-2012-09-fig13.jpg">see
here for more detail</a>).</p>
<p>As for the "swollen number of public sector jobs in Venezuela", the
figure stands <a
href="http://www.cepr.net/index.php/blogs/the-americas-blog/public-sector-employment-in-venezuela-is-not-so-large-as-the-associated-press-suggests">at
about 18.4% of the labor force</a>. 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%.</p>
<p>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.</p>
<p>Inflation in Venezuela is clearly too high, although <a
href="http://www.cepr.net/images/stories/report_images/venezuela-2012-09-fig13.jpg">much
lower than</a> in the pre-Chávez era. But the <a
href="http://www.bcv.org.ve/Upload/Publicaciones/mfa2012.pdf">most
recent estimate (pdf)</a> is 19.9% for 2012, which is <a
href="http://www.reuters.com/article/2010/09/08/venezuela-inflation-idUSN0813597820100908">down
from 27.2% in 2010</a> – 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.</p>
<p>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.</p>
<p>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.)</p>
<p>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.</p>
<p>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.</p>
<p>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. <a
href="http://www.guardian.co.uk/world/china"
title="More from guardian.co.uk on China">China</a>, which is sitting
on <a href="http://www.bloomberg.com/quote/CNGFOREX:IND">more than
$3tn in reserves</a>, considers Venezuela to be a <a
href="http://www.chinadaily.com.cn/cndy/2012-06/28/content_15528289.htm">strategic
ally</a> and has loaned the government <a
href="http://www.bloomberg.com/news/2012-08-28/china-lends-venezuela-4-billion-to-renew-fund-chavez-says-1-.html">$36bn
since 2007</a>. Most of it has been paid back, and <a
href="http://www.cepr.net/documents/publications/venezuela-2012-09.pdf">about
$20bn was loaned</a> at extremely low interest rates (1-3%).</p>
<p><a href="http://www.guardian.co.uk/world/brazil"
title="More from guardian.co.uk on Brazil">Brazil</a> and Russia are
also among the countries that consider Venezuela to be an important
partner in the region. They also have <a
href="http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/bra/eng/curbra.htm">hundreds
of billions</a> of <a
href="http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/rus/eng/currus.htm">dollars
in reserves</a>.</p>
<p>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.</p>
<p>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
reserves.</p>
<p>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.</p>
<p>And that is the irony: Washington's never-ending battle against
Venezuela has, in some ways, made the Chávez government and its
political party <em>stronger</em>, 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.</p>
<p>Of course, the most important source of Chávez's continued electoral
success has been the <a
href="http://www.cepr.net/index.php/publications/reports/venezuelas-economic-recovery-is-it-sustainable">improvements
in living standards</a> that the majority of Venezuelans have
experienced <a
href="http://www.cepr.net/index.php/blogs/the-americas-blog/economic-growth-in-venezuela">over
the past decade</a>: 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.</p>
<p>In the New York Times' debate, historian <a
href="http://www.nytimes.com/roomfordebate/2013/01/03/venezuela-post-chavez/for-hints-at-venezuelas-future-follow-the-oil">Miguel
Tinker-Salas made the best contribution</a> – as he often does – by
emphasizing the centrality of who controls Venezuela's oil reserves:</p>
<blockquote>
<p>"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."</p>
</blockquote>
<p>Indeed it does, and will.</p>
</div>
</div>
<div class="moz-signature">-- <br>
Freedom Archives
522 Valencia Street
San Francisco, CA 94110
415 863.9977
<a class="moz-txt-link-abbreviated" href="http://www.freedomarchives.org">www.freedomarchives.org</a>
</div>
</body>
</html>