Venezuela guide
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| © New Internationalist |
Emboldened by the strength of its oil reserves, Venezuela has launched an audacious development programme which rejects the hegemony of the neo-liberal free market economic model and its architects, the IMF and World Bank. Opinion is sharply divided as to whether President Hugo Chávez is a visionary democratic reformer or an authoritarian dictator. Unexpected defeat in the 2007 constitutional referendum was a painful reminder to Chávez that principled rhetoric counts for nothing against the reality of everyday life for ordinary Venezuelans.
updated July 2008
Poverty in Venezuela
The challenge of the Millennium Development Goals (MDGs) should be well within the grasp of a country which aspires to deliver “socialism for the 21st century” in which objectives for human welfare override cold economics. Indeed, in late 2007 the Minister of Education declared that “without a doubt that we are going to meet the goals”. The measure of extreme poverty (the income necessary to meet basic food needs) has fallen from 21% to 8% so that the first MDG of halving poverty has already been achieved, according to the Minister. President Hugo Chávez himself claims that, during the first decade of his government, the broader poverty line indicator has fallen from 67% to 27%.
Venezuela has unquestionably made major efforts to tackle poverty and social exclusion, especially through programmes known as misiones (Missions). Financed by oil revenues, these programmes invest substantial resources in healthcare and education for poor communities, discounted food, employment creation, reforestation, and energy saving measures. For example, a structured scheme of adult education is cited for eliminating illiteracy amongst 1.5 million people.
Unfortunately, Venezuela has limited capacity for collection of reliable human development data so that government claims of progress are vulnerable to challenge. Although the misiones were introduced over five years ago, there are no published impact assessments. The 2004 MDG progress report has disappeared from UN websites and the absence of any subsequent reviews adds to the difficulty of identifying simple criteria such as baseline data. Figures published by the Venezuelan National Institute of Statistics (INE) have on occasion been challenged by the president and amended accordingly. Detractors of the Venezuelan model may point to the 2007 UN Human Development Index which reports that in 2005 18.5% of the population survived on less than $1 per day, more than double the rate in peer countries such as Brazil and Colombia.
Health in Venezuela
Other official UN sources cast similar doubts over progress for health-related MDGs such as child and maternal mortality which, although moving towards the 2015 target, do not justify the certainty of government claims. HIV prevalence is below 1% but shows no sign of being halted and reversed as demanded by the Goals.
Over half of the population benefits from the innovative Misión Barrio Adentro (Inside Neighbourhood) which offers free primary and preventative healthcare in thousands of new clinics. The enabling mechanism is an agreement with Cuba in which 23,500 Cuban health workers, including 15,500 doctors, work in Venezuela in exchange for regular supplies of oil. This has improved access to primary healthcare, particularly for marginalised groups, such as residents of poor shanty towns or indigenous communities. However, the entire system is anchored on the availability of Cuban doctors and the health ministry’s main concern is the phasing in of local staff – 17,000 Venezuelans are believed to be in medical training – and the eventual consolidation of Barrio Adentro with traditional health facilities which currently run in parallel.
Food Security in Venezuela
There is no immediate risk of hunger or the need for food aid in Venezuela but the country’s overtly socialist approach to food security is informative, especially in the context of Chávez’ assertion that the global food crisis is the “greatest demonstration of the historical failure of the capitalist model”. About 10% of arable land is owned by wealthy farmers capable of investment in modern inputs and irrigation whilst the remainder comprises poor smallholdings, often of uncertain tenure. The inability of this profile to deliver food sufficiency has prompted a combination of land reform and farming subsidies. Production has increased gradually during the Chávez era but investment strategies for agriculture have been revitalised as Venezuela scrambles to achieve the ideal of food sufficiency in response to the steep rise in cost of food imports.
Distribution is more problematic. The relevant Misión programme centres on the Mercal chain of over 15,000 outlets at which over 40% of the population is eligible to purchase essential foodstuffs at discounted prices. This state control acts as a disincentive to growers and distributors - especially when prices are rising – and food shortages were experienced in early 2008. The government has responded by strengthening its control of distribution through a state food company and imposing tough penalties on businesses accused of hoarding food supplies.
The Economy in Venezuela
Since his re-election at the end of 2006, the president has set a hectic pace in delivering his vision of a socialist economy. He has nationalised key sectors including oil, telecommunications, steel, cement and electricity. He has put into practice the principles of the Bolivarian Alternative for the Americas (ALBA), a vision of regional integration based on social development rather than trade volumes (in contrast to the US-inspired Free Trade Area of the Americas). As a further controversial gesture, Chávez has not only pulled Venezuela out of the IMF and World Bank, but also offers comparable development loan facilities to neighbouring countries.
All of these dramatic steps have the stated aim of achieving a more equal society in Venezuela and reducing poverty. The idealism is not without important flaws, not least its dependence for more than 50% of government revenues on the bonanza of rising oil prices. In the process of nationalisation, Venezuela has fallen out with key partners Exxon and ConocoPhillips whose capital and technical capacity may be badly missed. Few observers believe that the state oil company, Petróleos de Venezuela SA (PDVSA), will achieve the ambitious growth projected by the government. And many feel that the profits of PDVSA should be retained for Venezuelan development rather than dispensed in regional largesse of uncertain returns – the Petrocaribe initiative, for example, allows 17 Central American and Caribbean countries to purchase oil from Venezuela on favourable terms.
To boost employment in the non-oil economy, the government encourages the establishment of cooperative businesses owned by the workers – the relevant Misión programme offers incentives of loans and tax breaks. Despite claims that 180,000 coops were active at the end of 2006, there is consensus that the scheme has been undermined by abuse and inefficiency. Although the official unemployment rate fell below 8% in April 2008, more than half of the labour force participates in the informal sector, mostly in unlicensed street businesses, illegal farming and women working from their homes. Inflation at around 30% pa is the highest in Latin America.
The OneWorld Venezuela Guide was first published in July 2005 with a text written by Volunteer Editor Maria Madrid.
The challenge of the Millennium Development Goals (MDGs) should be well within the grasp of a country which aspires to deliver “socialism for the 21st century” in which objectives for human welfare override cold economics. Indeed, in late 2007 the Minister of Education declared that “without a doubt that we are going to meet the goals”. The measure of extreme poverty (the income necessary to meet basic food needs) has fallen from 21% to 8% so that the first MDG of halving poverty has already been achieved, according to the Minister. President Hugo Chávez himself claims that, during the first decade of his government, the broader poverty line indicator has fallen from 67% to 27%.
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| Venezuelan microcredit beneficiary Hilso Ramírez © Rebecca Janes / ACCION International |
Unfortunately, Venezuela has limited capacity for collection of reliable human development data so that government claims of progress are vulnerable to challenge. Although the misiones were introduced over five years ago, there are no published impact assessments. The 2004 MDG progress report has disappeared from UN websites and the absence of any subsequent reviews adds to the difficulty of identifying simple criteria such as baseline data. Figures published by the Venezuelan National Institute of Statistics (INE) have on occasion been challenged by the president and amended accordingly. Detractors of the Venezuelan model may point to the 2007 UN Human Development Index which reports that in 2005 18.5% of the population survived on less than $1 per day, more than double the rate in peer countries such as Brazil and Colombia.
Health in Venezuela
Other official UN sources cast similar doubts over progress for health-related MDGs such as child and maternal mortality which, although moving towards the 2015 target, do not justify the certainty of government claims. HIV prevalence is below 1% but shows no sign of being halted and reversed as demanded by the Goals.
Over half of the population benefits from the innovative Misión Barrio Adentro (Inside Neighbourhood) which offers free primary and preventative healthcare in thousands of new clinics. The enabling mechanism is an agreement with Cuba in which 23,500 Cuban health workers, including 15,500 doctors, work in Venezuela in exchange for regular supplies of oil. This has improved access to primary healthcare, particularly for marginalised groups, such as residents of poor shanty towns or indigenous communities. However, the entire system is anchored on the availability of Cuban doctors and the health ministry’s main concern is the phasing in of local staff – 17,000 Venezuelans are believed to be in medical training – and the eventual consolidation of Barrio Adentro with traditional health facilities which currently run in parallel.
Food Security in Venezuela
There is no immediate risk of hunger or the need for food aid in Venezuela but the country’s overtly socialist approach to food security is informative, especially in the context of Chávez’ assertion that the global food crisis is the “greatest demonstration of the historical failure of the capitalist model”. About 10% of arable land is owned by wealthy farmers capable of investment in modern inputs and irrigation whilst the remainder comprises poor smallholdings, often of uncertain tenure. The inability of this profile to deliver food sufficiency has prompted a combination of land reform and farming subsidies. Production has increased gradually during the Chávez era but investment strategies for agriculture have been revitalised as Venezuela scrambles to achieve the ideal of food sufficiency in response to the steep rise in cost of food imports.
Distribution is more problematic. The relevant Misión programme centres on the Mercal chain of over 15,000 outlets at which over 40% of the population is eligible to purchase essential foodstuffs at discounted prices. This state control acts as a disincentive to growers and distributors - especially when prices are rising – and food shortages were experienced in early 2008. The government has responded by strengthening its control of distribution through a state food company and imposing tough penalties on businesses accused of hoarding food supplies.
The Economy in Venezuela
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| Cooperative garden in downtown Caracas © FAO |
All of these dramatic steps have the stated aim of achieving a more equal society in Venezuela and reducing poverty. The idealism is not without important flaws, not least its dependence for more than 50% of government revenues on the bonanza of rising oil prices. In the process of nationalisation, Venezuela has fallen out with key partners Exxon and ConocoPhillips whose capital and technical capacity may be badly missed. Few observers believe that the state oil company, Petróleos de Venezuela SA (PDVSA), will achieve the ambitious growth projected by the government. And many feel that the profits of PDVSA should be retained for Venezuelan development rather than dispensed in regional largesse of uncertain returns – the Petrocaribe initiative, for example, allows 17 Central American and Caribbean countries to purchase oil from Venezuela on favourable terms.
To boost employment in the non-oil economy, the government encourages the establishment of cooperative businesses owned by the workers – the relevant Misión programme offers incentives of loans and tax breaks. Despite claims that 180,000 coops were active at the end of 2006, there is consensus that the scheme has been undermined by abuse and inefficiency. Although the official unemployment rate fell below 8% in April 2008, more than half of the labour force participates in the informal sector, mostly in unlicensed street businesses, illegal farming and women working from their homes. Inflation at around 30% pa is the highest in Latin America.
The OneWorld Venezuela Guide was first published in July 2005 with a text written by Volunteer Editor Maria Madrid.
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