A light rain fell on the corrugated metal sheeting that hung over the massive gathering space of the Fabricio Ojeda cooperative complex. From there, in the middle of one of the largest social projects in Venezuela, you could see the adjacent textile factory, a community meeting hall, and a free health clinic—just a few of the buildings that make up the large conglomerate of cooperatives and community areas in the relatively poor neighborhood. Only a few people ambled across this enormous concrete courtyard, giving the recently built space, separated by a chain link fence from the rest of Caracas, a ghost town feel.
The Fabricio Ojeda cooperative is in fact one of the crown jewels of Venezuelan President Hugo Chávez’s new socialist platform, a symbol of his effort to empower Venezuela’s poor. On this rainy day, only two cooperative directors were there to tell its story. One was Omar Orsini, whose red baseball cap read, in Spanish, “The people continue on their path! Power now to socialism!”
Orsini explained that this complex, funded by the national oil company, is part of a revolution sweeping his native Venezuela. As he told The Yale Globalist, “Before President Chávez was elected in 1998, 80 percent of the population was below the poverty line, there was no access to healthcare, education, or food.” Changes since then have made Orsini an ardent supporter of the government’s socialist rhetoric. “Chávez is leading a movement that existed already, but previously lacked leaders here in Venezuela. At Fabricio Ojeda, our policy is to support him.”
Fabricio Ojeda and its director embody the spirit of Venezuela’s new oil-financed socialism—a spirit cultivated by Chávez’s eagerness to court lower-class Venezuelans whom the country’s ruling political elites have long ignored. Fabricio Ojeda and other social projects like it are just some of the ways Chávez has been acting on his promises to bring a new egalitarian future to Venezuela. But while Chávez and his supporters boast of these projects, there are empty buildings, pervasive propaganda, and a cloud of secrecy that suggest a fatal flaw. Built entirely with oil money, Chávez’s new Venezuela is not sustainable. It is not simply that the oil might one day run out; rather, mismanagement—swept under the rug by oil revenues—seems to have forsaken Chávez’s revolution from its start.
Oil—the country’s chief export responsible for approximately one-third of the national GDP—is financing President Chávez’s revolution. For decades, multinational corporations such as Chevron and Shell had pumped the oil from Venezuela’s oil fields, refined it, and shipped it abroad to world markets. Last May, however, Chávez completed his oil nationalization program when he took over the last privately held oil operations in the country. Six oil companies had been extracting oil from the abundant reserves in Venezuela’s Orinoco Belt. With Chávez’s nationalization program, they were forced to cede majority control to the state oil company, left only to argue about the degree of compensation they would receive. Four firms—Chevron, BP, Total, and Norway’s Statoil—agreed to sign on for minority stakes. Two firms, ExxonMobil and ConocoPhillips, refused to sign the new contract, abandoning any stake in Orinoco. Orinoco is proven to have at least 80 billion barrels of oil, and continuing exploration indicates that it is possible that it may be the world’s largest remaining source of oil. Now that Venezuela’s oil industry—everything from extraction to refining—is fully controlled by the state, revenues from sales of Orinoco’s oil now go, either directly or indirectly, to finance Chávez’s government.
The national oil company, Petróleos de Venezuela, S.A. (PDVSA), is the vehicle through which Venezuela now extracts and sells its oil. Yet it is not a typical oil company. Chávez has mandated that PDVSA itself—and not just the state—take responsibility for funding many of the social initiatives that form the basis of Chávez’s socialist platform. These projects range from the building of schools and hospitals to enormous sports complexes in rural villages.
Oftentimes, the social projects or “misiónes” that Chávez creates are partially funded and executed by PDVSA as well. PDVSA has enthusiastically tackled the task Chávez has assigned to it, and in fact support for Chávez within PDVSA is particularly strong. After a 2002 strike among PDVSA employees protesting Chávez’s politics, Chávez dismissed more than 19,000 of them, leaving only the most loyal workers in the company. Today the workers at PDVSA openly support Chávez’s government and, at least publicly, boast of their company’s government-mandated social responsibility initiatives.
“We are no longer a standard oil company like Chevron or Exxon or any working in the U.S. right now,” Luis Vierma, Vice President of Exploration and Production at PDVSA, told the Globalist. “Our purpose is to make life better for Venezuelans. We have a responsibility to allow people in the very lowest sectors of Venezuela to benefit from our work.” PDVSA has mandated that ten percent of all investments made must go directly into the community. “There are places in this country where people don’t know what a light switch is or what it means to take a shower,” Vierma lamented, “and we thought: how could you ask people to work if they are hungry? How could you ask them to work in a whole other world from what they know?”
Vierma said that most PDVSA employees have at some point volunteered for one of the company’s projects. The workers the Globalist spoke with agreed and even echoed Vierma’s sentiments. As one PDVSA official at the Paraguaná Refining Complex remarked, “I am proud of what we are doing. We are a beautiful country and we are in a beautiful process.”
PDVSA’s concept of social responsibility in fact scarcely resembles that of any corporation in the U.S. At times, PDVSA seems like something of a government ministry, even if it is only financing literacy drives or school construction. Since assuming its role, it has even developed a process to implement its projects. The company has hired a number of consultants to send across the country to research local needs and decide where to implement its next batch of social projects. PDVSA officials then form a list of such projects, prioritized by need, to implement once funding is available.
As one company representative said, PDVSA’s appeal is due, in part, to its ability to work outside the government. “Things don’t get lost along the way and there are less existing regulations about putting money down for companies than for the government,” he explained.
There are signs, however, that PDVSA is not all it claims to be. Simply being able to put large sums of money down for social projects is not enough to make them successful.
One PDVSA spokesman proudly presented to the Globalist a slideshow of many of the schools, medical facilities, sports fields, and theaters PDVSA has constructed thus far as part of its social responsibility campaign. The presentation, though, was inconsistent. The spokesman’s financial figures—obviously carelessly put together and dotted with punctuation errors—displayed surprisingly large figures. And despite the spokesman’s enthusiasm, pictures from the slideshow of all the buildings PDVSA has constructed showed not a single person in any of them. In fact, the photographs seemed to indicate many of the projects were not even finished.
When asked who staffs the schools PDVSA builds, the spokesman faltered. “That’s not our responsibility. We build the schools, the rest is up to the Ministry of Education.”
Empty Buildings, Empty Promises
Chávez appeals to the people of Venezuela based on a platform of empowering the country’s poor—a unique position given Venezuela’s history of economic inequality. With seemingly unlimited oil revenues, Chávez easily appeals to the impoverished majority of the Venezuela, securing a powerful political base that consists of a large part of the country. His message of “empowerment” is ubiquitous. Billboards on the main highway in Caracas promote the collective political conscience with red banners proclaiming, “Together we construct quality!” and, “Let us unite: Ten million votes for Chávez!” Elaborate murals cover the facades of buildings from Caracas to Valencia, each celebrating some figure from socialist legend, be it Simón Bolivar or Che Guevara.
Some of Chávez’s domestic programs are implemented and funded by PDVSA, others by the government itself with state oil revenue. Misión Identidád, one such government sponsored project, aims to give identification cards—and voting status—to everyone in country. So-called “Bolivarian universities” supply accessible educational opportunities to the country’s underprivileged. Another example is the Barrio Adentro (“Into the Neighborhood”) program that provides free access to healthcare in the poorest communities of the country. Since its launch in 2003, 20,000 Cuban doctors have entered Venezuela to serve in Barrio Adentro’s clinics. The doctors receive less than what Venezuelan doctors would expect, but far above the typical doctor’s salary in Cuba. In exchange, Venezuela sends 90,000 barrels of oil a day to Cuba for below-market rates. This program has received the praise of the World Health Organization and UNICEF for providing care in shantytowns and poor urban neighborhoods, though they note that hospitals in Venezuela remain crowded and ill-equipped. Venezuelan doctors are the strongest critics of the program, and have staged various protests demanding the expulsion of the Cuban doctors, claiming the Cuban doctors are taking their jobs.
The improvement in healthcare seems to be an isolated success in a flood of less successful development projects. Josefina Bruni, a professor at IESA, the most prestigious private university in Caracas, does research in education policy and local development. To Bruni, many of Chávez’s projects are “white elephants” that do much to illustrate signs of progress though actually accomplish little.
Bruni has spent years conducting research on Santa Barbara, a rural community that she said is in many ways typical of rural communities under Chávez. In recent years, Santa Barbara has seen its share of white elephants: a large outdoor music venue, a sports arena, and a baseball field have been built—but all remain largely unused. Meanwhile, an unfinished sewage system has left the town a “dust bowl” without running water.
This pattern of poorly-planned projects repeats itself across many of the villages Bruni has visited. One town was to experiment in ethanol production, but nobody received instruction on how to operate the equipment imported from Argentina. Another village had a few dozen computers, but no Internet access. “A lot of what the government does is give gifts. They have a donation budget which is really, really big,” she said. The government in fact often gives money to specific families to generate employment.
Though such “gifts” are rarely implemented effectively, the money put into these gift funds is supposed to serve as reparation for desperate poverty and the wealth gap in society, but some argue that it is spent mostly to curry political favor. Ramon Velasquez of El Nacionál, one of the most widely read newspapers in Venezuela, told the Globalist that Chávez is taking credit for the economic boom but failing to make intelligent long-term domestic policy decisions. “You’re always going to hear ‘Bush is a donkey, Bush is a donkey’ but never about crime,” he said. “Chávez is in a revolution and he is only thinking about Castro and Evo Morales and not crime and domestic issues.” He also lamented the difficulty in getting details, budgets, and data about the programs that do exist, as there is a complete lack of data on the success of the projects.
PDVSA’s Vierma disagreed with Velasquez. “There are some things that can’t be measured with numbers. I don’t like international organizations that come in and count male/female data,” doing massive surveys to evaluate certain programs. “We are starting to define our own parameters to measure how effective we are,” he assured. Whatever these may be, the lack of numerical data casts doubt onto the effectiveness of expensive social programs.
Daniel Aleman, owner of the newspaper El Carabobeño, explained how he sees Chávez’s hold on the electorate: the poor get more from Chávez’s handouts than they have ever gotten from the government before. “It’s like he says they’ll get a house. They know they might not get it. But they know they won’t get it from anyone else.” Marginal improvements are all that Chávez needs to find support.
A Mixed Verdict Among the Masses
One example of the marginal improvements that mark many of Chávez’s projects are companies that, under pressure from the government, reorganize as cooperatives. Cooperatives are small groups of people in the same trade who split costs and business and share their profits. They have existed in Venezuela for years. Since Chávez’s rise, though, their numbers have snowballed. When Chávez was elected, there were 762 operating cooperatives in Venezuela. Now, there are around 70,000. New contract laws that favor small cooperatives for government bids have allowed thousands of businesses to reformat their operations in the preferred cooperative format.
Workers at one maintenance company in Carabobo that was reorganized as a cooperative enjoy their new structure. Their 58–member cooperative makes all decisions by assembly, under the guidance of an elected board of directors. “Before, we had a private company with a hierarchical structure like a pyramid. The cooperative destroyed the pyramid and regrouped workers in a circle so everyone has rights and responsibilities,” said one worker who now feels, for the first time, that his job matters. While workers agreed that the cooperative structure is ideal, and that it even makes them more efficient workers, they still believed they had fared better before the changes. As a cooperative, the company doles out wages based on a fixed amount received from the government. For a while, they said, benefits were improving, but now wages are worse than ever. Workers from the company have gone to Caracas three times to appeal for more funding, but so far their requests have been ignored.
Waste is not the only reason for the failures of these programs; poor planning is key. One of the strongest criticisms of the social programs is that they have no incentive structure built in. “It’s paternalistic, it’s all handouts,” said a representative of Nuevo Pueblo (“New Village”), a NGO that has sought to maintain its independence from the government by seeking funding from international organizations. The organization has given pigs to 36 families and trained the families on how to raise them hygienically and sustainably. Now Nuevo Pueblo is working on diversifying production by introducing citrus planting and quail egg harvesting— activities more suitable for the mountainous terrain. The organization was created 40 years ago to teach families how to gain financial independence in a sustainable fashion, a kind of long-term project that Chávez’s misiónes don’t seem to include. Fabricio Ojeda, recently constructed, boasts almost all the amenities that a cooperative and community space can have. Yet it too shows signs of mismanagement. In the cooperative’s beautiful hillside garden designed to provide agricultural training to members, Orsini explained that, in a few years, it would have to be rebuilt further up the hill because of erosion. And in a country in which 80 percent of the population still lives in poverty, the shoemaking cooperative sent 5,000 pairs of shoes to Cuba and 2,000 pairs to Bolivia in the past year, free of charge. While Orsini contended that neoliberals cannot understand generosity to other countries, the fact remains that large sums of money are being invested in activities that cannot last very long, and they do much less in helping the country’s own citizens.
First Steps
Even though there are myriad opinions on the success of Chávez’s projects, objectively they have done some good. As PDVSA’s Vierma boasted, “We decided to get rid of illiteracy in three years. We are proud to say that in Venezuela there are no illiterates anymore.” While a study of household survey data done by Wesleyan University researchers found no evidence of more than a small improvement in literacy, if that, it is generally accepted that literacy has widely improved because of the government’s efforts to send people of all ages to school and send volunteers to remote villages to teach reading. Educational opportunities for the poor are increasing as well. PDVSA has financed a number of universities that accept any student wishing to attend. They also provide free tuition and low-cost meals. Classes in the morning, afternoon, and evening are designed to accommodate the many students with working schedules.
PDVSA officials also proudly pointed to all the infrastructure they have created: medical facilities as part of the Barrio Adentro program, universities, schools, sports fields, community centers, and low-priced supermarkets called mercales. These programs, according to PDVSA, benefit many people, who in turn notice a significant difference from times before the programs existed. According to some, one can occasionally spot upper-class Venezuelans—wearing their worst clothing—shopping at mercales for the cheaper goods.
Nevertheless, Fabricio Ojeda is deserted, despite its impressive facilities. Orsini explained that PDVSA was encouraging people to stay indoors to foil expected protests over the revocation of the television station RCTV’s license, slated to occur the following day.
On a hill above Fabricio Ojeda stands the skeletal frame of a building. Excited cooperative members boasted of its purpose: it is to be a technical training school so children in the barrio can learn a trade if they are not eligible for university work. Yet no one can answer when it will be completed, who will teach, and who will attend. Will this building fulfill its promise, providing an option for young adults in the barrio, simultaneously getting them off the streets and getting them a job? Or will the building join the many others in Venezuela that, due to mismanagement, keep springing up only to wait endlessly to be occupied?