Stoned

Oliver Stone has never been one to shy away from a controversy. Over the past two decades, the director’s filmic output has included a conspiracy-laden take on John F. Kennedy’s assassination, provocative (and factually unconstrained) portraits of the two most polarizing U.S. presidents in recent memory, and not one but two flattering documentaries about Fidel Castro.

So it is not terribly surprising that South of the Border, his new documentary coming to U.S. theaters later this month, offers a similarly admiring take on Castro’s protégé, Venezuelan President Hugo Chávez. The film’s website even mounts a pre-emptive attack on Chávez’s detractors, offering a detailed rebuttal to "Media Misperceptions" about the Venezuelan leader.

I would have very much liked to contribute a few misperceptions of my own. Sadly, though, I wasn’t able to obtain a copy of the film by my deadline. I did, however, speak recently with Mark Weisbrot, one of the two people credited with writing it. (The other is Tariq Ali, a British-Pakistani author with a long involvement in left-wing causes.) Weisbrot, an economist and co-director of the Washington-based Center for Economic and Policy Research, is one of rather few people with both an economics Ph. D. and a Hollywood screenwriting credit to his name.

Weisbrot’s — and Stone’s — subject in the film is a new generation of Latin American leaders who have risen over the past decade to challenge Washington’s traditional claim to dominance of the Southern Hemisphere. These leaders generally subscribe to left-of-center political views, reject "neoliberal economics" and the hegemony of the International Monetary Fund, and push instead for national control of natural resources, income redistribution, and varying degrees of state intervention. They include, to varying degrees, Brazil’s Luiz Inácio Lula da Silva, Bolivia’s Evo Morales, Cristina and Néstor Kirchner in Argentina, Rafael Correa in Ecuador, and Fernando Lugo of Paraguay. Most prominent among them, of course, is Chávez; the others, Weisbrot and Stone aver in the film, look to him as a friend and role model. (Stone also throws in Cuba’s Raúl Castro for good measure, though it’s hard to see how the 79-year-old ruler of the region’s most entrenched government could have much to do with an argument about change in Latin America.)

The rise of these leaders, says Weisbrot, "is a series of events that have changed the entire history of this hemisphere in ways that haven’t happened in 50 or 100 years." The U.S. media have failed to tell this story, he argues, because the corporations that own them "would never allow that story to be told" — and have unfairly demonized Chávez in particular. That’s because journalists "tend to follow the lead of the State Department" in their reporting. Weisbrot says he was happy to participate in South of the Border because he wanted to help Stone tell the real story about what’s been happening in Latin America.

One of the film’s underlying arguments — previously voiced by Weisbrot in a series of papers and op-eds — is that the Chávez years have been a big economic success for Venezuela. Contrary to the conventional wisdom north of the border, says Weisbrot, Venezuela under Chávez has witnessed a remarkable economic expansion. Chávez has invested enormous amounts of cash in anti-poverty programs, such as food subsidies and cheap, accessible health care, and succeeded in drastically reducing social inequality. Yes, Chávez has nationalized a number of big companies, Weisbrot says, but the private sector has actually grown in recent years. Venezuela is in good fiscal shape, too, he argues; its public debt as a share of GDP is much lower than America’s. In a word, not such a bad picture.

This stands in sharp contrast to quite a bit of recent reporting from the country, which tends to feature rampant inflation, food shortages, and electricity rationing. Venezuela’s GDP slid a sharp 5.8 percent in the first quarter of this year — unlike that of other Latin American countries, which have already begun to climb out of the global recession. One recent piece on Venezuela in the Washington Post described an economic landscape of empty warehouses, layoffs, and shrinking export markets. It also included a dark quote from Augusto de la Torre, the World Bank’s chief economist for Latin America: "What we’re seeing in Venezuela is a phenomenon where productivity, private activity, and private business is falling." When I asked Weisbrot about this piece, he dismissed it as "editorializing," a tissue of "anecdotes" without any statistical basis.

So what about inflation? Venezuela’s is out of control at 27 percent a year, the highest annual rate of 78 economies tracked by Bloomberg News, according to a recent report. Weisbrot acknowledges that inflation is a problem, but says that it’s not really as bad as it’s made out to be, given Venezuela’s context as a developing country and its history. He insists that reporters are blowing the whole issue out of proportion, because they don’t understand that people’s incomes have been increasing even faster due to the economy’s overall growth. Weisbrot believes that Chávez and his government have all the tools they need to get it under control.

Investors and businesspeople are somewhat less sanguine. One recent note from Swiss bank UBS, for instance, called Venezuela "the weakest and potentially most explosive story for Latin America investors." It diagnosed the causes of Venezuelan inflation as "basically the result of too much aggregate demand via expansionary fiscal, monetary and income policies, in a context in which there is little incentive to increase supply due to government over-regulation and the promotion of a very hostile business environment." There’s plenty more in this vein out there — pick any bank. Try as I might, I couldn’t find many investment analysts who portrayed Venezuela as an upbeat story. Chávez, of course, blames the business community itself for inflation, and according to Bloomberg, is "declaring an ‘economic war’ against the ‘bourgeoisie.’"

For the hearty companies that do try to do business in Venezuela, there’s also the matter of the country’s peculiar system of multiple exchange rates, part of Chávez’s unwieldy arsenal of capital controls. Right now, for example, many firms are having trouble getting their hands on dollars to pay for imports — and the trend appears to be worsening as the reluctance to hold the local currency increases. This is one problem that Weisbrot acknowledges: He hopes, he says, that Venezuela will find its way to a "managed float" — essentially allowing exchange rates to follow market fluctuations but allowing the Central Bank to intervene through currency purchases where it sees fit — in order to do away with the mess. But that appears unlikely; it could be hard for Venezuela to manage the transition without rapidly running down its foreign reserves. In the meantime, Chávez looks more inclined to resort to time-honored scapegoating traditions like cracking down on "speculators." He has already taken over brokerage houses and thrown 10 of their directors in jail — just the sort of policies that the caudillos of yore would have resorted to.

I don’t doubt that Chávez, like other neoleftist leaders in Latin America, has spent a lot of money fighting poverty (though some of his critics dispute even that). I also don’t think he’s a dictator — more an authoritarian demagogue who has been justifiably criticized by a long list of reputable human rights organizations for hollowing out the country’s democratic institutions even as he has preserved some elements of pluralism. Setting aside politics, however, I don’t see what there is to emulate economically in Venezuela. Brazil’s Lula has combined effective poverty-reduction programs with a vibrant market sector that derives much of its mojo from manufacturing and global trade (the latter, perhaps, is why Weisbrot saw fit to scold him in a letter to Foreign Affairs a few years back). Chávez may have done more than his predecessors to redistribute the profits from Venezuela’s vast petroleum wealth, but given the record oil prices during most of his time in office, that probably wasn’t too hard.

But now the weaknesses of the "model" are beginning to show. Venezuela’s economic dependence on petroleum shows no sign of slackening, yet oil production in the country is steadily declining. (I wonder whether it has anything to do with Chávez’s routine seizures of foreign oil companies’ in-country assets and use of the national oil company as a political patronage machine, moves that have stripped the Venezuelan oil business of much of its expertise and production capabilities.) Infrastructure is getting creaky, and investors, presumably leery of the president’s penchant for nationalization and off-with-their-heads rhetoric, don’t seem keen to rush in. Johanna Mendelson Forman, a Latin America expert at the Washington-based Center for Strategic and International Studies, says she’s reminded of Zimbabwe. "When you start out rich, like Venezuela has, you can go for a long, long time," she says. "Your downward spiral continues, but it just takes much longer to destroy it because there was so much there to begin with."

Michael Shifter of the Inter-American Dialogue, a Latin American affairs think tank in Washington, says that all of this will take a toll on the Venezuelan president’s popularity as the country gears up for its next parliamentary election in September. Shifter cautions, though, that Washington policymakers have often made the mistake of underestimating Chávez’s genuine popularity among large swaths of the Venezuelan population. Perhaps Weisbrot is right; perhaps the Chávez vision for Venezuela’s economy will yet prevail.

It’s hard not to be skeptical, though. Chávez himself recently admitted that none other than Raúl Castro warned him not to rush forward in his pursuit of "21st-century socialism," confessing that Cuba "committed many errors" in its pursuit of communism. I wonder if Oliver Stone will put that in the next movie.