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What the visiting media won’t see when they come to Venezuela

What the visiting media won’t see when they come to Venezuela

With just 10 days to go to Venezuela’s presidential election on October 7, foreign media interest is just starting to pick up. But there’s one question that never fails to crop up: "Has Chávez really improved the lives of the poor?"

It’s a tricky question for government critics, because the early answer — "well, of course" — seems to close the debate. In fact, it only opens it up, because the somewhat modest social gains of the Chávez era have come amid a tsunami of waste, mismanagement, and corruption in a state that has become deliriously opaque.

Let’s back up a little: Fourteen years ago, when Chávez was first elected, oil prices were flirting with the $10 mark. They’ve spent the last four years hovering in $80-140 territory. An immense flood of petrodollars has washed into the country, directly into the pockets of a government that has to do little more than drill holes in the ground to cash in.

The reality is that any government in power over the last fourteen years would have improved the lives of Venezuela’s poor purely as a raw function of the political economy of a petrostate amid an oil boom. The real question is whether Venezuela has gotten anything like the poverty reduction bang-for-the-buck it might have hoped for in a petroboom context.

And here, the answer is an unambiguous no. To grasp why, it’s worth looking through Reuters’ recent special report on off-budget spending in the Chávez era. The report provides a sharp picture of the multiple feedback loops — linking incompetence, corruption, ideological rigidity, and lack of transparency — that have seen a huge portion of Venezuela’s oil windfall simply squandered.

As the Reuters investigation shows in some detail, president Chávez devised an ingenious mechanism to sidestep the constitution’s requirement that all public spending be approved and overseen by the elected National Assembly. The key mechanism involved — the National Development Fund — has come to act as an almost completely opaque discretionary fund where an off-the-cuff presidential remark in the middle of a televised speech is enough to appropriate hundreds of millions of dollars for this or that project.

In total, almost $100 billion have flowed through this completely opaque fund — an astronomical sum by Venezuelan standards.

Given the total absence of mechanisms for project oversight and evaluation, what comes next is not surprising: out-of-control waste and corruption. $530 million spent on a pulp and paper plant that never got off the ground, another $315 on an aluminum mill that was never built. On the financial side, the result is the same: billions spent buying up bonds issued by allied governments at far-above-market rates, with the eventual losses never reported, much less explained. And all behind a fearsome wall of official secrecy that allows boondoggles of any and every scale to go unreported.

In the coming week, as foreign reporters descend on Venezuela, the government will be sure to take them around to the barrio outpatient clinics and subsidized grocery shops that the revolution has managed to build with some of the proceeds of the last five years’ petroboom. Sympathetic outsiders will pen pious pieces noting Bolivarian social advances, and those of us who dissent will be painted in our habitual role as oligarchic wreckers.

But no tour buses will set off for the abandoned aluminum mills and paper factories, no powerpoint presentations will be produced on the millions squandered in dodgy bond buys, and no government spokesman will go into the details of any of the dozens of corruption scandals bubbling below the surface of the Bolivarian Potemkin Village.

Waste born of corruption, amplified by mismanagement and entrenched by lack of accountability ideological rigidity, is the real legacy of the Chávez era. Just don’t expect your morning paper to tell you that.