5 May 2015

Venezuela: choking on the poisonous legacy of Hugo Chavez


The Great Bolivarian Revolution is going awfully well, don’t you think? The economy of Venezuela is not only a nostalgic reprise of how things used to be in eastern Europe, in the glorious days of reported escalating tractor construction and the exhaust pipes of Trabant cars pumping pollution into the atmosphere beyond the Berlin Wall, but also a consoling reminder to Greeks of the truth of the old adage: “There is always someone worse off than yourself.”

From around the time, in 2009, when the late, great Hugo Chavez appointed a Minister for Electricity Shortages – in oil-rich Venezuela – it became evident that this latest Marxist essay in pushing water uphill was rapidly heading towards the same outcome as all previous socialist revolutions. Chavez was the prime exemplar of the phenomenon that the free-market commentator Alvaro Vargas Llosa dubbed “The Return of the Latin American Idiot”, as several countries in that region re-embraced the revolutionary delusions of the 1960s and 1970s.

Suddenly, the rhetorically incontinent, economically illiterate Fidel Castro had company, as the kind of deluded fantasists who displayed Che Guevara posters on their bedroom walls came to power in the course of an emotional spasm that expelled market realism from countries such as Bolivia and Venezuela. When Chavez, known to his adoring followers in classic revolutionary style as the “Comandante”, died two years ago, his pseudo-religious cult was officially endorsed by the decision to embalm him like Lenin or Mao.

With the Comandante in the hands of the taxidermists it might have been hoped some modification of the extravagances of the Bolivarian regime would be implemented, but such is not the way of totalitarian socialism. The regime’s mechanism of repression is formidable, including the army, 120,000 Marxist militiamen and gangs of violent “colectivos”. Censorship is at extreme levels: “media hegemony” is one of the declared objectives of the Bolivarian state.

Last month an analysis published by the Economist revealed the scale of the suppression of free speech in Venezuela. The regime has refused licences to independent television and radio stations, controlled the supply of newsprint, fined hostile media and organized buy-outs of newspapers and broadcasting outlets by pro-government groups. Fewer than 50 per cent of television channels are now independent, for local and regional stations the figure is 40 per cent. Now the regime is moving against social media, with six individuals already in prison for Tweets critical of the government.

While this media reign of terror is dangerous even in health matters, since epidemiological information important for clinicians, the WHO, etc is being censored, the worst fog of non-information shrouds the country’s economic performance. Some external analyses of the Venezuelan economy have a tentative tone, for the good reason that accurate information is increasingly blanked out. The National Statistical Institute (INE) published no poverty data for 2014.

The deafening silence is even beginning to engulf oil, the staple of the Venezuelan economy which accounts for 95 per cent of the country’s export income: production figures for PDVSA, the state oil corporation, are months overdue. This heavy-handed censorship is pointless, even self-defeating, both domestically and externally. In a domestic context, the plain fact is that people know when they are suffering hardship, as riots in supermarkets over a shortage of lavatory paper testify.

Externally, markets are easily capable of making at least a broad-brush assessment of economic conditions and if they are denied reliable data are likely to err on the side of pessimism, further repelling investment or even continued financial engagement. In an article in Forbes magazine last February entitled “How Bad Is Venezuela’s Economic Chaos?” Nathaniel Parish Flannery pointed out that some 40 foreign companies hold assets worth US$11bn in Venezuela. These are under severe pressure because of the absurd system of currency controls propping up the bolivar.

Scotiabank has announced a C$129 million writedown on its stake in Banco del Caribe in Venezuela, Ford has written off its entire $800 million investment, Spanish telecoms firm Telefonica has taken major hit in the shape of a $3.23bn charge, and so on. Even Nicolas Maduro, Chavez’ successor in the dictatorship, has admitted a rate of inflation “above 64 per cent”, which makes the 22 per cent annual average under his predecessor look like the good times. The regime admits to a 2.8 per cent contraction in the economy last year, which provides some indication of what the actual level must have been.

Capital controls imprison the overwhelming majority of the population within the Bolivarian state: they cannot afford foreign travel. Managers and some professional people are existing on salaries of $200 a month. But the deadliest economic – as distinct from political – factor in the collapse of civilized life in Venezuela has been the plunge in oil prices. Even the most sophisticated and open free-market economy, if it is oil-based, would struggle in the current climate of low prices, but when a national economy has systematically been rendered sclerotic, over 16 years, by a bunch of Marxist fantasists its capability to survive is negligible.

But the cheerleaders for the Bolivarian nightmare on the British Left are not accessible to politico-economic realities. Last Year Owen Jones wrote a piece in The Independent headlined: “Socialism’s critics look at Venezuela and say, ‘We told you so’. But they are wrong.”  Simon Reid-Henry, in the Guardian on 11 March 2013, after the death of Chavez, uttered the imposing verdict: “Ultimately it doesn’t matter that things under Chavez looked messy, or even that he departed from liberal democratic proceduralism.” No, not if you live in London, it doesn’t.

The Bolivarian delusion is deeply embedded within the political class. After Chavez’ death a Commons EDM hailed the “social development model” provided by Chavez. Six of the Labour MPs who signed it became Shadow Ministers in Ed Miliband’s team. Is that what Labour means by “One Nation” politics?

Venezuela’s crisis is political. Along with several other Latin American nations it fell victim to Jurassic Park Syndrome, as Marxist dinosaurs unexpectedly emerged, resuscitated, from the permafrost of history to wreak havoc. Many might say it beggars belief that so heavily discredited a delusion as Marxism should have the resilience ever again to impose its bogus claims on the human imagination. The temptation is to regard it, patronizingly, as a consequence of the relative backwardness of much of Latin America. We in Britain, however, should be wary of such hubris when we consider the Bolivarian emotional spasm that currently threatens to engulf Scotland.

Venezuela’s agony will be protracted because a Marxist regime, no matter how discredited, retains the enforcement mechanisms to sustain itself in power, even when it becomes intensely unpopular. The unexpectedly bloodless collapse of communism in Europe a quarter of a century ago should not lull us into supposing the Marxist tyrant will go gently into that good night elsewhere. For Venezuela there are even harder times ahead.

Gerald Warner is a political commentator and writer.

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