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More than 1,000 meters high, on the Venezuelan coast of the Caribbean, a city is being built from scratch. It occupies an area of 2,900 acres, in the state of Vargas, imbedded between the capital, Caracas, and the most important airport in the country. The allotment is intended to become one of the main showcases of the government of Hugo Chávez Frias, president of Venezuela since February 1999.

The project’s name in Spanish is “Ciudad Caribia.” Overseen by  a Cuban-Venezuelan company, the Construtora Alba Bolivariana, it already houses 7,000  people in 1,100 apartments. When it’s done, in 2018, it will be an urbanized area with more than 20, 000 housing units, where 100,000 Venezuelans will live.

Only very poor people were granted, and will continue to be, the right to own these 72- square- meter apartments, divided into three bedrooms, two bathrooms, laundry room, dining room, living room and kitchen. They’re fully furnished and equipped.

But it’s not only a housing estate. The complex also has schools, children’s parks, nursery schools, a library, a police department, a community radio, a sports club, a commercial center and areas for meetings and events. Inside, cars are not permitted. Mobility will be guaranteed by a public transport system that foresees even a trollie to take its inhabitants to the coast and to the capital.

The housing estate is directed by elected communal counsels, which have even enough power to create commercial and industrial companies. One of the projects that is already functioning is the waste management and recycling. It works in a model of self-management, supported by the national government, and revolutionizes the traditional state hierarchy.

“I hear a lot of people saying that Ciudad Caribia doesn’t exist, that it’s a lie told by the government”, says Carlos Marques, 45, who belongs to the first group of families that arrived there and who is a spokesman of one of the four communal counsels.  “We are part of an experience. I’m not a Chavist, the kind of person that observes everything the president says, but I’ll vote for him in October. He changed my life”.

This redeeming sensation, apparently widespread amongst the poorest population, is compensated by the more and more furious rejection of the richest population. When Chávez was first elected, people imagined he was going to be revolutionary in politics and a smooth remodeler of the economy. Even some of the entrepreneurs were supportive of him, because the rotten system of what is called the IV Republic (1958-1999) had become an unbearable wound. It was so corrupted that it was disturbing  businesses.

The country was ruled by a duopoly, shared by Democratic Action (AD), a centre-left party, and Political Electoral Independent Organization Committee (Copei), a social Christian centre-right party. When Dictator Pérez Jiménez fell, in 1958, these two groups made a deal (known as the Punto Fijo Pact, named after the place where it was signed) and created inflexible rules for those who tried to ruin their party. For forty years they were sitting pretty.

Oil

In Venezuela, the wheel of fortune is turned by oil. The country is the fifth largest exporter in world, and possesses the largest verified reserves. Until 1976, its exploration was private and controlled mainly by American companies. Local businessmen were becoming richer as minor partners or by providing services for large companies.

In the reign of predacious capitalism, Venezuela used its oil profits to import almost everything it consumed and had a very low rate of industrial or agricultural development. The ones that had access to black gold, lived as nabobs. The majority of the population, with no steady employment or stable income, were piling up in the cities and living off precarious jobs.

The political elite was also relaxed. The two parties that alternated in the government lived off large commissions paid by the exploration licenses and other public concessions. From top to bottom, the country was entangled in one of the largest bribery schemes on the planet.

The increase in oil prices, since the world crisis of 1973, inspired President Carlos Andrés Perez, from the AD party, to make the oil activity be ruled by the state and to create, in 1976, the PDVSA – Petroléos de Venezuela SA. The company didn’t get in the way of the multinational companies, because sectors like oil refinery and international commerce were still in private hands, but it fed the spectacular robbery system, giving of a false alibi: poorly built nationalism.

The hydrocarbons profits, administrated directly by the politicians connected with the Punto Fijo Pact, made the parastatal plutocracy grow, benefited by all kinds of contracts with PDVSA. These oil barons fortified their positions as bankers, controllers of television chains, owners of importing companies, amongst other low risk branches.  The truth is that the political assembly merged for good with the people that possessed the money.

During the ten wealthier years, pieces of happiness would trickle down to the ones bellow. After all, even with their pockets full of money, the politicians needed votes, and that requires pleasing the clients. The “oil Venezuela” was a Saudi country, but in an electoral democratic regime.

When the oil prices fell rapidly, starting in the 80’s, the whole system fell apart. Inflation went from 7.4% annually in 1978 to 103% in 1996. The debt interest represented 30% of the national income. The GDP per capita, discounting inflation, fell almost 19% between 1978 and 1998. In the same period, the real salary lost 48% of its value, causing a 25% drop in family consumption, while unemployment jumped from 4.3% to 14.5%.

Ruin, nevertheless, wasn’t for everybody. The private sector, which used to live freely because of the increased oil revenue, started compensating eventual losses with financial gains obtained through the interests the State started offering by issuing public debt bonds. Proof of this abundance is the more than $30 billion dollars that were sent abroad between 1984 and 1998, while the country was breaking down.

The accelerated transfer of public resources to private companies, during the governments before Chávez, was accompanied by one of the most radical versions of the structural adjustments recommended by the IMF (International Monetary Fund): readjustment of the public service fares, a cutback in social budgets, privatization of state-controlled companies.

It’s known for a fact that when the current president began his administration, he was facing an economically broken country and a worn out society. Ten per cent of the population, then 23 million people, participated in the land of oil and finances. The other 90% watched their life standards fall, consumed by unemployment, the wage squeeze and the removal of rights. The majority of these people gave Chávez their blessing to bury the IV Republic and begin an impetuous process of changes.

The beginning

The first step of the new regime, named V Republic since the 1999 Constitution, was to blow up the political system it had inherited. Supported by the majority of the parliament, Chávez’s partisans were able to adopt a series of plebiscitary mechanisms and political participation mechanisms that terminated the institutional control that used to be in the hands of the duopoly. The forces defeated by Chavism lost their hegemony over the national assembly, the legal system and the armed forces.

The new rules of the game made it possible for the president, the parliament or even for popular initiatives with minimal support to call imposing consultations. Legislative or administrative mandates could be revoked by popular vote. Laws could be approved in spite of the parliament, if they were approved by votes.

These offensive politics weakened the most conservative sectors. By the end of 2001, Chávez was feeling strong enough to launch his opening structural economic reforms. The most important were the Land Law (that set the parameters for the land reform) and the Hydrocarbon Law (that raised the taxes private companies had to pay and increased state control over oil activity).

The reaction of the government’s opponents and of the big economic groups was immediate, inciting the middle class to go to the streets and inducing the militaries to rebel against the government. Taking advantage of their control of the instruments of mass communication, these groups created a climate of chaos and attempted to stage a coup d’état in April 2002. The adventure lasted less than 48 hours. Legalist militaries, driven by the hundreds of thousands that were protesting on the streets, gave Chávez back his constitutional mandate.

A new attempt occurred at the end of 2002, this time through a lockout that paralyzed the country’s economy, centered in the PDVSA, which was still controlled by directors and managers that refused to obey the government. The president won the fight again, after a 60-day battle. After April’s overthrow, the opponent groups inside the military forces were weakened. When the oil shutdown was overcome, Chávez finally managed to put the company under his command, though paying the price of the dismissal of 32,000 employees that adhered to the lockout.

The government’s opponents were still strong enough in 2004 to call a recall referendum, to depose the president constitutionally.  In Cháves’s Venezuela, by the way,where the president is painted by his enemies as a despot, the signatures of 20% of the voters can lead to a plebiscite to dismiss the head of state. Although they were able to gather the minimal subscription required, the opponents lost in the popular referendum.  The president kept his mandate and was re-elected, in 2006, with more than 60% of the votes.

Test for Chávez

This administration will come to an end in January 2013. It will be the third term of the Bolivarian leader (the first lasted only a year and a half, between 1999-2000: was finished early after the promulgation of the new Constitution). In the first five years his main concern was to go through with a political revolution that would drive away the old power elites and beat its unconstitutional activities. In the last six years, Chávez was dedicated to the construction of a new social economic project, which will be judged by the voters in October. 

The president invested in several projects at a time. His first invention was the social missions, destined to face mainly the needs in healthcare and education. At the same time, he sped up a large process of nationalizations, starting with the oil branch, but also reaching other strategic areas such as the financial system, ironworks and communication, and sometimes getting to less important areas such as retailer distribution and general services. Part of PDVSA’s profits, of the increase of the taxes rates and of the public debt was used to pay for the acquisition of these companies.

The Chavist strategy, since 2006 named “21st century socialism”, is centered on a strong State, which provides rights, regulates the economy, and possesses a large number of means of production. It doesn’t aim to eliminate the capitalists, as used to be the case with other socialist experiments. The government’s opponents, by the way, usually criticize Chávez for creating a “bolibourgeoisie” (sum of the words Bolivarian and Bourgeoisie), a group of businessmen that are connected to the government and the Bolivarian project. But there’s no doubt that, by swimming upstream against the liberal ideas that were successful after the collapse of the Soviet Union, Chávez managed to catch international attention to his country.

This attention is nowadays focused on the political and ideological polarization with the United States and other Western powerful nations, aside from the conflicts with the internal opposition. A defender of Latin-American integration and of geopolitics that is not ruled by the White House, the Venezuelan president became an important figure in the international scenario. The recent admission of his country in Mercosul, celebrated last July 31, highlights his role. 

But Chávez’s Venezuela deserves to be investigated beyond the battle of ideas. The results of these almost 14 years are not negligible. 

In spite of the problems, including the difficulties to vary the industry branches and the high level of crime in big cities, the country has promoted concreted notable deeds. It’s no small task to have been declared an illiteracy free nation by UNESCO. Or to have become the South-American country with the best income distribution, according to UNECLAC and measured by the Gini index. Or to have the best minimal wage of the area, according to ILO (International Labour Organization) figures. Or to celebrate the most accelerated pattern of HDI (Human Development Index) growth in the continent over the last ten years, according to a recent United Nation’s report.

The nation founded by Simón Bolívar is not only spitting oil. The experiences and changes that were promoted, whether appreciated or not, are relevant matters to those who wish to discuss seriously the contemporary challenges.

Translation: Kelly Cristina Spinelli