Chavez touts `21st Century Socialism'

Despite his class-based rhetoric and tightening grip over the economy, Chavez has generally respected private enterprise and business is booming in an oil-fueled economy that grew more than 17 percent in 2004.

By Gary Marx - Chicago Tribune
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CIUDAD GUAYANA, Venezuela -- Standing before a group of nascent entrepreneurs, Carlos Lanz looked less like a former communist guerrilla than an aging university professor as he laid out the next phase of Venezuela's revolution.

Aiming a light pointer at graphics projected on a large screen, Lanz--who long ago laid down his weapon but not his ideals--outlined Venezuelan President Hugo Chavez's plans for transforming this oil-rich nation into something approaching a workers' paradise.

"Venezuela suffers a distortion because many of us are excluded from production, from wealth and services," said Lanz, 62, a key architect of Chavez's reforms. "We are constructing a new economic model."

The road so far has been rocky. Faced with violent protests and a bitter recall referendum, Chavez spent his first six years in office fighting for his political life even as he poured billions of dollars into social programs.

But now, with the political opposition vanquished and oil prices near record highs, the Venezuelan leader is in a strong position to launch what he describes as "21st Century Socialism."

Eschewing Marxism-Leninism, Lanz says, Chavez has developed an economic model called "endogenous development" whereby state oil money will finance the creation of thousands of small-scale cooperatives in agricultural and other areas to provide jobs and foster community development.

A second leg of Chavez's master plan is something known as "cogestion," roughly translated as co-management, where the state is helping workers purchase shares of companies they work in to give them a greater say in management.

The goal of all this, they say, is to lift millions out of poverty by reducing Venezuela's reliance on oil, which has left the country with a weak manufacturing and agricultural base and over-dependent on imports of food and almost everything else.

Managers are elected

"We hand over cheap raw material to The Empire [the United States] and the multinational corporations, and they sell us very expensive goods," said Lanz, who describes the nation's business elite as a "parasitical oligarchy."

"So who benefits? People in the North."

The son of a wealthy farmer who became a leftist rebel in the 1960s, Lanz is using cogestion to revamp CVG Alcasa, an obsolete state-owned aluminum plant in this scorching city about 330 miles southeast of the capital, Caracas.

The key change Lanz has implemented in his three months at the helm is allowing workers to elect their own managers, the first step, he and others say, to improving efficiency.

"Now decisions are not made by one person in an office," explained Alcides Rivero, a 23-year Alcasa employee, as he walked past huge stacks of aluminum ingots. "Now decisions are made around a table. We elect who will direct us. It's not imposed from the top."

Critics say electing managers is fine but it won't lift an uncompetitive plant like Alcasa out of the red. They say Chavez's economic plan resembles the import-substitution polices that were tried with limited success in Latin America decades ago.

"This is nothing new," said Teodoro Petkoff, editor of Tal Cual, a respected Caracas newspaper critical of Chavez. "This is a project that has short legs."

Whether Chavez succeeds or fails in his economic gambit could have enormous impact across the continent, where the Venezuelan leader is gaining influence amid a resurgence of the Latin American left.

The outcome also is crucial to the United States, which imports large quantities of Venezuelan oil despite Washington's hostility toward Chavez and Chavez's anti-Americanism.

The former army paratrooper first came to national prominence leading a failed coup in 1992. He was elected president six years later and, after changing the constitution, re-elected in 2000, surviving a brief but bloody coup, a devastating opposition-led national strike and last August's presidential recall referendum. In that contest, he won with a decisive 59 percent of the vote after many had predicted his downfall; the United States had helped fund several opposition groups.

Today, many of Chavez's most vocal critics have either left the country or are relegated to the inside pages of newspapers.

The president and his allies control the National Assembly, 22 of 24 state governorships, the Attorney General's Office and the Venezuelan Supreme Court.

Chavez supporters also form a majority in the National Electoral Council, which will oversee presidential elections next year.

With his approval rating above 70 percent, Chavez is almost certain to win a six-year mandate in 2006 despite critics' assertions that he is a populist demagogue who is undermining Venezuela's democracy.

"They control everything," lamented Petkoff. "There is a serious danger of autocracy."

An engaging personality whose down-home style resonates with many Venezuelans, Chavez's popularity stems in large part from spending billions of dollars on educational programs, subsidized food for the poor and other efforts.

Yet, despite his class-based rhetoric and tightening grip over the economy, Chavez has generally respected private enterprise and business is booming in an oil-fueled economy that grew more than 17 percent in 2004.

On a recent evening, sidewalk cafes and upscale restaurants in Caracas' wealthier neighborhoods were packed with fashionable couples--the kind who last year led street protests against Chavez but now seem weary of the political fight.

But economists and other experts say there are warning signs on the horizon.

Private investment remains low because of uncertainty over Chavez's long-term goals and his feud with the U.S. Then there is the issue of oil prices, which provide a windfall now but could become a liability.

"Chavez is strong. Chavez is popular. And Chavez has a lot of money," said Luis Vicente Leon, an opposition pollster. "But Chavez knows that he could have trouble in the future."

Chavez has begun a media blitz to sell his new economic plans to Venezuela's 24 million people. Public service spots are appearing on state-run television, and brochures are distributed at work sites.

"Unstoppable Revolution," read a headline in CVG Alcasa's company newspaper.

Making salsa from mangos

In a recent television appearance, Chavez listened to public school students outlining their own ideas for diversifying the economy away from oil, a homework assignment that fit neatly into Chavez's agenda.

The students offered proposals ranging from opening a bakery to produce bread to making wine and salsa out of mangos.

"Do you think this is an important need for the community?" Chavez asked the student making the mango presentation.

"I think so because otherwise they would have to buy an expensive salsa," the student responded. "This is much more economical and it's a product that is native to our region."

"It's true that we have tons of mangos that go to waste," Chavez said. "This is a good idea."

Antonio Frausto, a state oil company worker who is overseeing about two dozen endogenous projects, acknowledged that many of them are in their early stages or remain on the drawing board.

The ideas range from organizing a cooperative to manage a new milk production plant to helping Warao Indians set up a market to sell baskets, hammocks and other products to tourists.

"We have a lot of plans and a lot of money, but the plans are not completely linked," Frausto said. "It's like changing a tire when the car is moving."

One model for Chavez's new economy sits on a hill overlooking Catia, a working-class neighborhood in Caracas.

There, the government spent about $3 million to build a shoe factory and clothing factory employing about 400 people. The project includes a health clinic and basketball court.

Inside the clothing factory, several dozen women belonging to a new cooperative sat at sewing machines making aprons, sweatpants and other items.

The government is providing the employees an interest-free loan, technical support and other assistance to get them started and has been paying each employee a $90 monthly stipend.

"This is a source of work for the neediest," said Ana Guedez, a 39-year-old former homemaker who now works as a seamstress. "We are just starting out."

But Frausto, who manages the Catia project, said it is uncertain whether the factory's production and quality will ever be high enough to ensure its long-term viability.

"If the cooperatives are not competitive, they will survive as long as we have petro-dollars or as long as the government survives," he said.