The rat tableau needs no explanation for the swaying, chanting crowds. It’s an emblem of a powerful national myth, one that–perhaps more than any other factor–led to the election of the former Army officer with the fiery, populist stump speech. As economist Fernando Martinez puts it, the logic is simple: “This is a rich country, and if I’m poor, that means someone stole my share.”
Oil is central to that belief–and to the current political stalemate. A broad-based opposition that includes political parties, labor unions, the media and business groups has effectively shut down the nation’s economy with a monthlong general strike, calling for Chavez either to resign or to hold an early vote on his presidency. Work stoppages at Petroleos de Venezuela, the state petroleum corporation, are costing the country $50 million a day; last week the company’s chairman announced plans to import more than a million barrels of oil from Brazil, Trinidad, the United States and Russia to fill local gas tanks. Yet many of Venezuela’s poor have not turned against the president–not least because they believe they never saw any benefit from Venezuela’s natural riches anyway. When Chavez argues that the strike is nothing more than an attempt by a corrupt clique to frustrate his bid to redistribute more fairly $50 billion in annual oil revenues, they are ready to believe him. “A spiteful elite wants to recover its privileges, whatever the cost,” says Victor Montilla, a 45-year-old schoolteacher and pro-Chavez demonstrator from the Guayana region.
That kind of suspicion isn’t hard to understand. Although Venezuela is home to the largest oil reserves outside the Middle East, the number of Venezuelans living in poverty has risen from about a quarter to more than 60 percent of the population in the past two decades. More than half the national income goes to just 20 percent of the population, while the poorest fifth receives a scant 4 percent of the country’s wealth. In 2000, according to one poll, one in two people between the ages of 18 and 24 wanted to emigrate.
A gift of geography and circumstance, oil has long served to disguise the country’s underlying economic problems. At the beginning of the 20th century, Venezuela was a poor, backward exporter of coffee, cocoa, animal hides and egret plumes. But a mere 14 years after commercial drilling began in 1914, the country had become the world’s No. 1 oil exporter. Indeed, the modern Venezuelan state grew out of the need for a go-between for the people and the transnational oil companies that arrived to exploit what indigenous peoples had dubbed “the devil’s excrement.” Between 1920 and 1980, Venezuela grew faster than any other country in the world. And partly as a result of its ample oil reserves, the state was seen as responsible for financing the nation, rather than the other way around. Only recently have Venezuelans even begun to pay taxes, and the belief that the state owes the citizen a living remains widespread. “We have become accustomed to seeing the state as a [wealth] distributor and as the possible solution to all our problems,” writes Gerver Torres, an economist and former minister of privatization.
Yet while the “rats” the poor rail against may have gnawed away at national profits, many experts say something far more powerful explains the country’s economic collapse: the dependence on an oil-based growth model. In 1965, Venezuela produced 3.5 million barrels of oil a day and had an 11 percent share of the world market. Its population was less than 8 million. Today the population has trebled, but Venezuela produces less oil, more expensively, and has less than 3 percent of the world market. “Venezuela has grown too big for oil,” says Ricardo Hausmann, planning minister in the early 1990s.
Economists–and even politicians–have long understood that an excessive dependence on one commodity can be unhealthy. But, in Hausmann’s view, it’s the country’s very dependence that prevents diversification: ups and downs in the price of oil result in gigantic exchange-rate fluctuations, which turn investment decisions into a game of roulette and raise interest rates to a point at which no legitimate business can afford to borrow. Deep structural problems are left to fester whenever oil prices rise. While neighboring Colombia, for example, has diversified into nontraditional exports like cut flowers, oil still accounts for a third of Venezuela’s GDP. “You could almost say the oil rents have murdered the non-oil economy,” says energy specialist Victor Poleo.
The past four years under Chavez have only increased the country’s dependence on the black stuff. Thousands of industrial and commercial concerns outside the oil sector have gone bankrupt, partly because of competition from cheap imported goods. Unemployment–already high–may now top 20 percent. Indeed, more than half the work force is outside the formal economy.
But the most combustible element of Chavez’s rule could be the rhetoric he reserves for his opponents. By laying all the blame on the rich, the president–his critics say–is reinforcing the notion that all personal wealth is a result of theft. “If everyone who drinks whisky in a restaurant is a crook,” says economist Martinez, “you’re not offering people any incentive to work. If society adopts these values, we’re headed for chaos.” And if that’s all Chavez can bring his supporters, they may soon believe they have a fifth rat on their hands.
