Venezuela’s Mission to Fight Poverty

Despite the politically provoked economic crisis, Venezuela is currently going through one of its most intensive efforts to reduce poverty in twenty years. An analysis of Venezuelan poverty and past and present poverty reduction programs.

Over the past two years or so there has been much polemic between the government and the opposition over the issue of poverty. Chavez was originally elected on a platform to pay particular attention to the needs of Venezuela’s poor. Also, without a doubt, the poor represent Chavez’ most important constituency. Opinion polls, whose accuracy one can legitimately doubt for being biased towards the opposition, consistently show that Chavez draws most of his support from Venezuela’s poor.

However, in an effort to discredit Chavez and to cast doubt among his followers, the opposition, with the help of poverty research centers, such as of the Catholic University Andrés Bello (UCAB), argue that poverty has increased dramatically during Chavez’ tenure as president. One of the opposition’s favorite anti-Chavez ads, shown quite regularly whenever the TV stations mobilized for an anti-Chavez demonstration, shows a poor woman in one of Venezuela’s slums, who says, “Chavez said he would put an end to poverty – what he is really doing is putting an end to the poor.”

Whether poverty has increased or decreased with Chavez, what all sides agree upon is that poverty has become the number one political issue in Venezuela ever since Chavez came to power. Opposition parties recognize that if they really want to beat Chavez in an election, they have to offer a credible alternative of how to combat poverty in Venezuela. While they have not yet offered such a program, it is clearly on their minds.

No matter what the government or opposition programs are, when examining the data on poverty, there appears to be an odd contradiction. On the one hand many research centers show an increase in poverty since Chavez came to power. On the other hand, some indicators suggest that poverty has become less severe in the past five years. In what follows, I will examine some of the poverty data and policies during the Chavez administration and compare these with earlier presidencies.

Poverty Data

There are two fairly incontrovertible trends in Venezuela over the past twenty years, which have had a profound effect on increasing poverty. The first trend is a steady increase in inequality. The second is a steady decrease of per capita income. These two trends combined, have produced in Venezuela the greatest poverty rate increase of any country in Latin America.

The standard measure for inequality, the so-called “Gini-Coefficient,” which measures income inequality in any country, does not show significant change over the course of almost thirty years in Venezuela. From 1971 to 1997 it fluctuated irregularly, but generally remained between .45 and .50, ending at almost the exact same level in 1997 as it was in 1971.[1] However, the Gini index only measures wage and salary income, not capital income. Other data shows, for example, that the share of capital income (income from capital investments) increased substantially more than wage and salary income increased over the past thirty years in Venezuela. Research done by Francisco Rodriguez, for example, shows that labor lost 11% of GDP to capital between the seventies and the nineties.[2]

Thus, if one takes capital income into account, according to Rodriguez, Venezuela’s inequality increased quite dramatically, so that Venezuela is now one of the world’s most unequal societies, surpassing the inequality of even South Africa and Brazil.[3] The reason for this can be traced to several factors, the most important of which are an increasing concentration of capital and a collapse in wage rates during this period.

One can trace this collapse in wages rates to some extent to a declining per capita oil income in Venezuela. Even though per capital oil exports doubled from 1973 to 1983, per capita oil income declined. The main reason for this can be traced to declining oil prices, which dropped from a high of about $15.92 per barrel in 1982 to $3.19 per barrel in 1998 (both figures in 1973 prices).[4] The value of oil exports, per capita, thus dropped from $955 in 1974 to $384 twenty years later, in 1993.[5]

Since oil is Venezuela’s principal source of income, its decline, combined with growing inequality in Venezuela, had a significant impact on the poverty rate. Depending on which statistics and measurement methods one uses, poverty increased dramatically from 33% of the population in 1975 to 70% in 1995.[6] While poverty more than doubled, the number of households in extreme poverty increased three-fold, from about 15% to 45%. Other poverty measures, particularly ones that are not just based on income, are slightly lower, but all of them paint the picture of a large increase in poverty in Venezuela over the past 25 years. Compared to other countries in Latin America, Venezuela has the largest increase in poverty in this time period and among the larger countries, it has the largest proportion of the population living in poverty.

Trends which accompanied this increase in poverty are a dramatic decline in real industrial and minimum wages, which dropped to 40% of their 1980 levels in twenty years, leaving them at a level below that of the 1950’s.[7] Overall government social spending dropped from 8% of GDP in 1987 to 4.3% in 1997. Also, the percentage of people working in the informal economy grew from 34.5% in 1980 to 53% in 1999. Finally, the level of unionization dropped from 26.4% in 1988 to 13.5% in 1995.

Oddly, however, Venezuela’s Human Development Index (HDI), as measured by the United Nations Development Program (UNDP), does not reflect the poverty trend. The HDI measures not only per capita income of a country, but also factors in health and education statistics, such as mortality, schooling, literacy and other rates. Between 1970 and 1990 Venezuela’s HDI rose from 0.689 to 0.821. It then declined slightly in the second half of the 1990’s and then increased again in 1999 to 2001, during the early years of the Chavez presidency, ending at 0.7694 in 2001.[8]

There are perhaps two major possible explanations for this apparent contradiction. First, one possibility is that since inequality increased between 1975 and 2000, the wealthier portions of the population raised the HDI because their HDI improved disproportionately with regard to the HDI of the poor, thus increasing the HDI for the overall population. Second, it is possible that even though the proportion of the population that is poor increased, their HDI, just as that of the population in general, improved because government measures strengthened the country’s social safety net. While lacking concrete data make the argument conclusive, I would suggest that an examination of the poverty policies shows that the improvement in the HDI during the Chavez presidency is mostly traceable to renewed public policies that are focused on the country’s poor.

Anti-Poverty Policies before Chavez

The evolution of anti-poverty policies in Venezuela before Chavez followed the overall development of poverty and the economy, going through a build-up phase during the boom years, from the mid 70’s to the mid 80’s and a decline (as marked by the decline in social spending) during the bust, from the late 80’s to late 90’s. Prior to the oil boom, the main government program against poverty was the rural land reform program, which redistributed land to 150,000 families during the early 1960’s. However, with the oil boom, Venezuela was intent to become a modern industrialized country and neglected the land reform program in favor of programs that would move the country away from agriculture. Primarily, during the boom years, anti-poverty policies meant providing free universal education, free health care, a decent minimum wage, and massive public works projects. All of these were dependent on high oil revenues and ended up having a clear impact on reducing poverty in Venezuela. Other social assistance programs existed as well, but all of them suffered from clientelism and paternalism.

However, with the previously mentioned 20-year down-turn, which began in the mid 1980’s, the most important measures, which were originally meant to benefit the country’s poor, ended up benefiting the middle class. As the country became poorer and poorer and median wages declined dramatically, the middle class could no longer afford private health care and private education. As a result, the middle class gradually took over the country’s public education and public health system. Also, other programs originally targeted for the working class, such as the home buying assistance program, international study abroad grants, or the tax-free automobile increasingly became policies that supported the middle class.

An important factor in the gradual class shift in beneficiaries of government programs was that the services were no longer free. Public education, for example, gradually instituted registration fees and ever increasing costs for school supplies. Similarly, public health care, while nominally free or low cost, required patients to pay for all treatment supplies. The government’s sporadic shifts towards neo-liberal economic measures during the Carlos Andrés Perez administration (1989-1993) and towards the end of Rafael Caldera’s presidency aggravated the problems of poverty in Venezuela, due to privatization measures, social spending cutbacks, and increasing costs of public services.

Not only did the target population of government policies gradually shift towards the middle class, but poverty itself gradually changed. In addition to encompassing an ever larger proportion of the population, poverty began affecting people who would, based on their education, normally be considered part of the middle class. Poverty thus became much more diversified and generalized. Also, with large streams of migration coming from Colombia and other Latin American countries, the poor became ethnically more diverse. By the time of the second Caldera government (1994-1998), the state’s resources for alleviating poverty had become so scarce that hardly any programs were left that directly benefited the poor.

Anti-Poverty Policies during the Chavez Presidency

Plan Bolivar 2000

Chavez got elected in late 1998 on three basic promises: first, to break Venezuela’s old political system, known as “puntofijismo,” named after the location, Punto Fijo, at which Christian Democrats (Copei) and Social Democrats (Acción Democrática) signed an accord to limit Venezuela’s political system to a competition between these two parties. Second, Chavez promised to end corruption. And third, Chavez promised to alleviate poverty in Venezuela.

Chavez’ first year in office, 1999, however, was dedicated to breaking with the puntofijo system, via a new constitution. Because of the recession which hit Venezuela during 1999, few resources were available for anti-poverty policies. As a result, he focused on the one institution in Venezuela that was relatively expensive, but did not do much for social well-being: the military. That is, he ordered all branches of the military to devise programs that would benefit the poor. The overall name for the civilian-military program was “Plan Bolivar 2000.” Each branch of Venezuela’s military developed a different program under this larger program.

The Air Force developed a plan to transport people who could not afford to travel but urgently needed to, for free, to different parts of the country. The Navy developed Plan Pescar (fishing) 2000, which involved repairing refrigerators, organizing cooperatives, giving courses. The National Guard became involved in police activity, particularly in areas where the state’s presence was minimal. Another program was Plan Avispa, also organized by the National Guard, to build homes for the poor. Plan Reviba was similar, except instead of building new homes from scratch, involved rebuilding old homes. Other aspects of Plan Bolivar 2000 involved distributing food to remote areas of the country.

Plan Bolivar 2000 generated much controversy during its three years of existence, from 1999 to 2001. Perhaps the most important criticism leveled against it was that it was poorly managed and with little transparency. The result was that many charges of corruption were leveled against the officers in charge of the program.

However, in the year of the program’s existence, Plan Bolivar 2000 repaired thousands of schools, hospitals, clinics, homes, churches, and parks. Over two million people received medical treatment. Nearly a thousand inexpensive markets were opened, over two million children were vaccinated, and thousands of tons of trash were collected, just to name a few of the program’s results.

Certainly, much of the program was of an ad-hoc nature, where government officials and military forces identified a social problem and then tried to figure out how to solve it in the short term. While this is a valid criticism, one has to see the program in the context of a severe lack of resources, given that 1999 was a recession in Venezuela. Also, towards the end of the year, the Vargas disaster occurred, in which over ten thousand people were killed in mudslides and over a hundred thousand were made homeless, with nearly $4 billion in estimated property damage. Given the seriousness of the problems, the lack of resources, and the government’s focus on reforming the constitution, Plan Bolivar 2000 had an important positive impact on the poor of Venezuela, which probably also had a positive impact on Venezuela’s human development index (HDI).

Mission Chavez: Long-term and medium term anti-poverty policies

It was not until 2001 and 2002 that the Chavez government was able to concentrate more on an overall macroeconomic policy for alleviating poverty. The most important elements of this plan were to reduce inflation, diversify the economy, and increase non-oil revenues. All of which were goals of previous governments in one form or another. However, almost all previous governments failed to achieve these goals. It now remains to be seen if the Chavez government, if given the chance, will have more success.

With respect to program devoted specifically to fighting poverty in the short term, 2002 was another crisis year, due to a coup attempt, three employer-led general strikes, and the shut-down and sabotage of the country’s most important industry, the oil industry. As a result, the government had few resources to devote to specific anti-poverty programs, beyond the on-going programs it already had. The on-going, or perhaps medium term policies (with the macro-economic representing long-term policies), included the urban and the rural land reform programs, the micro-credit programs, increased spending on primary education, and the efforts to promote cooperatives throughout the country.

While it still is too early to judge the long-term effectiveness of these programs in fighting poverty, it is a generally established fact among poverty researchers that land redistribution, providing educational opportunities, and the promotion of small-scale private enterprise help people get out of poverty. Let’s take a brief look at each of these in turn.

Rural Land Reform

Venezuela’s rural land reform program probably represents one of the key turning points in Chavez’s presidency. When it was introduced in November 2001, it was one of the laws the opposition objected to the most of the package of 49 laws, which were passed at the same time. The law basically states that all adult Venezuelans have a right to apply for a piece of land for their family, as long as they meet some basic prerequisites.

This land is to be taken from state-owned land holdings, which are enormous and make up the largest part of Venezuela’s agriculturally viable land. Also, the law opens up the possibility for the state to redistribute privately held land, if it is part of a large land estate of more between 100 hectares of high quality agricultural land to 5,000 hectares of low quality land. The land would be expropriated at market rates, making Venezuela’s land reform a relatively non-radical program in the history of land reforms around the world.

The land reform program got off to a slow start, mainly because the necessary infrastructure needed to be put into place. While the government distributed very little land in 2002, the next year it went into high gear and turned over 1.5 million hectares to about 130,000 families. This comes to about an average of 11.5 hectares per family and a total beneficiary population of 650,000 (based on an average of five persons per household). It should be noted that so far no land has been expropriated. However, there has been much conflict over land which the government considers state land, but which large land owners claim to be theirs, even though they lack the documents to prove it.

The land reform is supposed to be a comprehensive program and thus aims to avoid the problems such programs have faced in many other places by making sure that the new farmers have the skills, credit, technology, and marketing channels to actually make a living off of their newly acquired land. So, in addition to the national land institute (INTI), there is an institution that provides credit and skills training and an organization for marketing agricultural products that are produced by beneficiaries of the land reform.

Overall, the rural land reform program is designed to pursue both long-term and short-term goals. First, in the long-term, it is supposed to contribute to the diversification of Venezuela’s economy and to assure what is known in Venezuela as “food sovereignty,” meaning Venezuela’s ability to produce its own basic food necessities. Second, in the medium term, the program is aimed at reducing rural poverty (and urban, to a very small extent, insofar as people decide to move out of urban slums and into the countryside).

Urban Land Reform

Another very important anti-poverty measure of the Chavez government is the urban land reform, which is to redistribute the land of the barrios, the urban slums, to its inhabitants. The concept is quite similar to the one Hernando de Soto has promoted in Peru and in other countries,[9] but it incorporates some interesting additional elements that could make this program an example for other countries.

The concept of urban land redistribution addresses many issues simultaneously. First, when people acquire title to their own self-built home in the barrio, they have some security for the first time that the home is theirs and will not be repossessed by the original landowner. Second, they can use the home as collateral for a small loan, to either improve their home, to buy a better home, or to invest in a small business. Third, it creates a real estate market, which, if regulated, can improve the general quality of the neighborhood. Fourth, the process of acquiring urban land titles is a collective process, which brings the neighborhood together in the interest of improving the neighborhood’s infrastructure, such as roads, access to utilities, security, comfort, etc.

This last point about the collective nature of the process is perhaps the most innovative aspect of the government’s urban land redistribution program. That is, in order to acquire titles, 100 to 200 families in a neighborhood have to get together and form a land committee, which then acts as a liaison with the government on regularizing the land ownership of the families that the committee represents. As a perhaps unintended positive consequence, what has happened in many cases is that the land committees have begun working on many more issues besides the negotiation and acquisition of land titles. They have also formed sub-committees that deal with public utility companies, such as the water company, the electric company, and so forth. The land committees for the first time provide partners for different governmental agencies and utilities to deal with directly. Previously these agencies and utilities had to deal with local government officials, who generally were too removed from the problems of the specific neighborhoods to make a difference.

Until now the urban land reform process is based on a presidential decree, which means that only governmentally owned land can be redistributed to barrio inhabitants. There is a law that has been drafted, so that all barrio inhabitants might be a part of the process, but this law has been put on the backburner in favor of more pressing laws. However, just via the decree as many as a third of the barrio inhabitants could acquire titles, since it is estimated that about a third of the barrio land is on government property (another third is on private property and one third on land where ownership is as yet undetermined). The process is extremely slow, though, because the process is quite complicated, involving many technical and legal steps. By November 2003, throughout Venezuela, about 45,000 families (befitting 225,000 individuals) had received titles to their homes, with another 65,000 families (or 330,000 individuals) in the pipeline to receive them soon.

The “Social Economy”

The social economy project of the Chavez government is not “just” an anti-poverty measure, but constitutes a fairly central element in Chavez’ Bolivarian project. That is, it is not only designed to alleviate poverty, but is also a central aspect for creating a more egalitarian, more democratic, and more solidaristic society. The government’s website on the social economy defines the social economy as encompassing the following seven elements: [10]

1. The social economy is an alternative economy.

2. Where democratic and self-governing practices dominate.

3. It is driven by forms of work based on partnership and not on wage-earning.

4. Ownership over the means of production is collective (except in the case of micro-enterprises).

5. It is based on the equal distribution of surplus.

6. It is solidaristic with the environment in which it develops.

7. It holds on to its own autonomy in the face of monopolistic centers of economic or political power.

The above definition is probably an idealization, since it was written by a team that worked under the former Planning and Development Minister Felipe Perez and Vice-Minister for local planning Roland Denis, who were dismissed from their posts in early 2003. Generally, the social economy project of the Chavez government has boiled down to the promotion of cooperatives and micro-finance.

The micro-finance program is in many ways modeled on the Grameen Bank of Bangladesh and has several different institutional bases. First of all, there are several banks dedicated to micro-finance, such as the Banco de la Mujer (Women’s Bank), Bandes (Bank for Economic and Social Development, Banfoandes (Bank for the Promotion of the Andean Region), and the Banco del Pueblo (People’s Bank). Then there are institutions such as the Fund for the Development of Micro-Finance and the Ministry of Development of the Social Economy. Also, there is a controversial banking law, which requires all conventional banks to dedicate a certain percentage of their loans to micro-finance.

Between 2001 and 2003 about $50 million worth of micro-credits have been given out by the banks named above. The Women’s Bank and the People’s Bank have given 70,000 micro-credits between them. For the next year, the government intends to expand the micro-credits program by tripling it, according to the Minister for the Social Economy, Nelson Merentes.[11] Private and public banks also gave out micro-credits for a total of $75 million just during the month of September 2003.[12]

Among the most important beneficiaries of the micro-credit program are the cooperatives, which represent the second dimension of the government’s social economy. While Venezuela had only about 800 cooperatives when the Chavez government came to power, it is now estimated that there are over 40,000 – a 50-fold increase. The active promotion of cooperatives not only boosts the small business sector, which is generally known to be the first place new jobs are created in an economy, but also provides for greater equality as the members of the cooperatives share their income much more evenly than in a conventional business.

Bolivarian Schools and Daycare Programs

As mentioned in the introduction, Venezuela’s free public education system gradually excluded larger and larger numbers of the poor, as the school system increased the barriers for poor children to participate. These barriers mostly took the form of registration fees, which were set by each school individually, often to compensate for the lack of resources it was receiving from the central government. By 1996 public spending for education had dropped to 2.1% of GDP.

When the Chavez government came to power spending on education was one of the areas the government focused on the most. By 2001 it increased public spending on education to 4.3% of GDP, twice the level of 1996 and one of the highest levels in twenty years. Much of the new investment in education went towards the building of new schools and the transformation of old ones into “Bolivarian Schools.”

Bolivarian schools are supposed to address Venezuela’s poverty in a variety of ways. First, they are day-long schools, thus freeing up both parents from daytime childcare duties, allowing them to work during the day. Also, the day-long program allows the incorporation of more cultural and sports activities. Second, Bolivarian schools provide breakfast, lunch, and a late afternoon snack, regular meals that many poor children often did not receive before. Third, the schools are supposed to be more closely integrated into the community than normal public schools.

As of 2003, approximately 2,800 Bolivarian schools have been opened, of which half are newly constructed. These schools now serve about 600,000 children, or 12% of all school-age children.[13] The government says that via the elimination of registration fees and the expansion of the public school system, over 1.5 million children have been included in Venezuela’s public schools system between 1999 and 2002, which were previously excluded. Venezuela’s percentage of children in school thus went from 83% in 1999 to 90% in 2002.

Complementing the Bolivarian schools program is the “Plan Simoncito,” which is supposed to provide free daycare and pre-school education to children from ages 0 to 6, so that parents may dedicate themselves to making a living. Since many poor households are single parent households who have a hard time finding ways to balance parenthood with a job, this program promises to help poor single parents, mostly mothers.

State-sponsored daycare is nothing new in Venezuela. Already since the late 1980’s such programs have existed and have expanded steadily. While in 1989 only 19,000 infants were in state-supported daycare programs, by 1998 just over 150,000 had been incorporated. However, when the Chavez government came to power, the day care programs were further expanded and now serve over 300,000 infants. The percentage of children in daycare thus went from 40% to 45%.

Bolivarian University

Just as primary education gradually excluded more and more poor children from the school system, so did higher education. This development accelerated particularly due to the fact that Venezuela’s population grew much faster than the university system. While technically anyone with a high school degree (“bachiller”) is supposed to have access to the university, public universities had to restrict entrance via entrance examinations. These, as is usually the case, ended up filtering out students coming from poor or working class backgrounds. An important factor in this filtering process is that middle and upper class students can afford to take special classes that prepare them for entrance examinations, while those from poor backgrounds cannot. While in 1984 70% of students from poor backgrounds who applied for entrance to the university were admitted, by 1998 only 19% were admitted.[14] For working class students the admission rate dropped from 67% to 27%. As a result, it is estimated that there are over 400,000 Venezuelans who formally fulfill the requirements and would like to attend the university, but cannot because they did not score well enough in the entrance examinations.

The Bolivarian University of Venezuela (UBV) is thus supposed to fill the gap which exists between university supply and university demand. More than that, it is supposed to prioritize its admissions towards students from poor backgrounds. So far 2,400 students are enrolled in the university, which began its first classes in October 2003, and another 20,000 are pre-registered. The university will have branches throughout the country and is eventually supposed to reach a total enrollment of 100,000.[15]

Short-Term Anti-Poverty Measures – The Missions

With the severe economic crisis that the April 2002 coup attempt and the December 2002 oil industry-shut-down provoked, few resources were available to continue the short-term anti-poverty measures of the Plan Bolivar. So during most of 2002 and 2003 little was directed towards programs of that nature. However, by late 2003 the state’s finances were recovering and the government could focus once again on implementing short-term anti-poverty measures. Of course, the presidential recall referendum process and the need to improve the president’s popularity probably added urgency to the development of such policies.

Mission Robinson – Primary Education

By October 2003 President Chavez announced seven different “Missions” for fighting poverty. The first mission was Mission Robinson, named after Simon “Robinson” Rodriguez, who was Simon Bolivar’s teacher. Mission Robinson is supposed to address illiteracy. While illiteracy is fairly low in Venezuela, only about 7% (for all of Latin America and the Caribbean it is 11%), illiteracy is certainly one of the most serious contributing factors to poverty.

Thus, via a cooperation agreement with Cuba, Venezuela invited hundreds of Cuban literacy experts to come to Venezuela and to train teachers. In the first phase of the program, which was launched July 1, 2003, students are taught to read and write, using a Cuban methodology which is based on numbers, since most people who are illiterate do know numbers. According to government statistics, over 1 million Venezuelans are currently benefiting from the program, with the help of over 100,000 literacy teachers, who work throughout the country.

The second phase, Mission Robinson II, goes beyond literacy and aims to teach participants everything they need to reach 6th grade. The program is very compressed, so that in two years students would complete the Robinson II program, in stead of the usual six years it takes for Venezuelan primary education. Mission Robinson II began October 28, 2003, and intends to incorporate over 629,000 students for this year, most of whom had participated in the first Robinson program.

Venezuela’s opposition claims that the literacy program is nothing other than a cover for a Cuban indoctrination program. However, even a cursory glance at the materials used (so-called “libraries” of a dozen books, which every household or participant receives for free) and conversations with people who have graduated from the program, shows that there is nothing to such accusations.

Mission Ribas – Secondary Education

Parallel to the literacy and primary education programs of Mission Robinson, the government has created Mission Ribas, named after independence hero José Felix Ribas, for individuals who dropped out of high school to complete their high school education. According to government statistics, there are over five million Venezuelans who dropped out of high school. Mission Ribas is supposed to incorporate these into an educational program that would allow them to graduate in a maximum of two years. The Minister of Energy and Mines, who is one of the main coordinators of the program, announced in early November that slightly over 700,000 Venezuelans indicated an interest in participating in Mission Ribas. The first 200,000 will begin classes on November 17th and the rest at a later date.

Just like all of the missions, the program is free. However, 100,000 participants will receive scholarships, based on financial need. Most of the courses will be in the form of “tele-classes,” or videos, with the help of a facilitator. Once students complete their studies, the state-owned oil company PDVSA and the electric company CADAFE will offer to place students in the mining, oil, and energy sector. The whole program is being primarily coordinated by PDVSA and CADAFE, which are also providing most of the funding for the program.

Mission Sucre – Higher Education

For the poor, one of the greatest hindrances to a university education is their lack of financial resources for such an education. They generally have to work on the side, often supporting family members at the same time, making studies nearly impossible. Mission Sucre, named after another independence hero, is essentially a scholarship program for a university education, through which, in the first phase, which begins in November 2003, 100,000 poor Venezuelans can receive the Venezuelan equivalent of $100 per month for their university education.

Already in September 2003 over 420,000 Venezuelans indicated an interest in the scholarships. Guiseppe Gianetto, the rector of Venezuela’s largest public university, the Universidad Central de Venezuela, who is also an outspoken critic of the Chavez government, has said, though, that Mission Sucre is a “demagogic” program because the government will never be able to accommodate the 400,000 students who want to enter the university system, but for whom there is no place. The existing public universities cannot possibly accommodate these students, according to Gianetto. The government, however, says that most of these will eventually find a place through the new Bolivarian Universities, which are being opened throughout the country. It is unclear, though, where these 100,000 students will find a place to study until the Bolivarian University is in place. For 2004, there is space for only 20,000 students in the Bolivarian University. While the remaining 80,000 might eventually be accommodated, this leaves another 300,000 outside the university system.

Mission “Barrio Adentro” (Inside the Neighborhood) – Community Health Care

In order to address the severe health problems in the “Barrios,” the poor communities, the Chavez government launched a community health program called, “Barrio Adentro.” This program, with the help of just over 1,000 Cuban doctors, places small community health clinics in the Barrios, in areas that previously never had doctors nearby. The program was first launched in Caracas as a pilot project, and is now being expanded to the rest of the country. After six months of existence, the program had served almost three million Venezuelans, primarily in the greater Caracas metropolitan area.

While the inhabitants of the barrios generally welcomed these doctors, who also made house calls, something that was previously unheard of, Venezuela’s doctor’s association was up in arms. Immediately the association filed a for a court injunction against the Cuban doctors, saying that they do not have the credentials required by Venezuelan law. In July of 2003 a court granted the injunction. The Health Minister, however, said that the public’s health is a higher priority than the court injunction and that the government would this not recognize the injunction. Maria Urbaneja, the health minister at the time, said that even though there were plenty of unemployed doctors in Venezuela, not enough could be found who were willing to work in the barrios. There is a plan, though, to gradually replace the Cuban doctors with Venezuelan ones, as they can be found.

Mission Miranda – Military Reservists

Venezuela’s military has long been a place where people from poor backgrounds can find an education and a place to work. However, once they leave the military, they often end up unemployed. So as to address this segment of the population, the Chavez government launched Mission Miranda, named after yet another independence hero, General Francisco de Miranda. This mission creates a military reserve out of people who once served in the military. Everyone who participates in the program would receive the minimum wage, training in forming cooperatives, and the opportunity to apply for micro-credits. When the program was announced, on October 19th, 2003, 50,000 former soldiers had already signed up, with another 50,000 to be added before the end of the year. All of the reservists who signed up are currently unemployed.

The opposition questioned the intentions behind Mission Miranda, saying that Chavez is creating a parallel army that would be directly under his personal command. The suspicion is that Chavez intends to militarize the country and to create an armed force that would be completely loyal to him and which is being created in light of the possible recall referendum. The suspicion is that Chavez would use this armed force to keep himself in power, even if he loses the recall referendum. Whether or not one should believe that this is the intention depends ultimately on how Machiavellian one believes President Chavez is. So far, however, there is no indication that Chavez intends to remain in power by force, should he be defeated through democratic elections.

Mission Mercal – Food Distribution

Finally, there is the Mission Mercal, which is a network for distributing food throughout the country at slightly below market rates at government supported supermarkets. The concept for this program emerged partly as a result of the December 2002 employer sponsored general strike, which to a large extent shut down food distribution. As a result, the Chavez government decided to establish a state sponsored food distribution network. The program got off to a slow start, so that by November 2003 there were less than 100 throughout the country. However, the government is accelerating the building of these supermarkets, so that the number will double to 200 in December and increase ten-fold, to 2,000, by February 2004.

The opposition criticizes this program too, of course, saying that the Mercal markets undermine the private sector. This is probably the case in situations where a Mercal market is set up next to a regular supermarket. However, just as with the Barrio Adentro program, Mercal markets are supposed to serve areas that are currently underserved by the private sector. Thus, the impact these will have on the private sector will probably not been all that great.


When reviewing the many programs that exist to fight poverty in Venezuela under the Chavez government, it is clear that the greatest emphasis is on education. Both the medium term and the short term anti-poverty programs are mostly centered on education. This makes much sense since numerous studies of poverty have shown that education is one of the most effective ways to reduce poverty. However, it is also a strategy which takes a long time to bear fruit. If, in the course of the implementation of this strategy, there is a severe set-back, as was the case in 2002-2003, then the government’s anti-poverty measures will look like they are not having any effect in the short term.

The Chavez presidency is so far marked by four distinct phases. The first phase was 1999, which was a period of severe economic recession, constitutional reform, and natural disaster,[16] in which little was done about reducing poverty, other than the initiation of Plan Bolivar 2000. The second phase, 2000-2001 was a relatively successful period, in which the Chavez government consolidated its political power and began implementing its long and medium term poverty reduction programs, of macro-economic reform, urban and rural land reform, the creation of Bolivarian schools, and support for micro-credits and cooperatives. The third phase, from about December 2001 to May 2003, was the most difficult phase, in which the government had to cope with several employer-led general strikes, a coup attempt, and the shut-down of the country’s all-important oil industry. During this phase the country and the government suffered its greatest setbacks in terms of reducing poverty. There is little doubt that as unemployment and inflation increased, poverty also increased. Also, few resources or attention were available for actively implementing poverty reduction programs.

May 2003 one could say marks the beginning of a fourth phase, which is approximately when the country’s oil industry recovered and the opposition began focusing on political rather than economic or military strategies for ousting the president. During this phase the government once again had more resources, especially given the relatively high price of oil, to implement short-term anti-poverty measures and to refocus on its  medium term strategies, placing particular emphasis on land reform and on the Bolivarian University. How long this phase will last is, unfortunately, once again largely up to the opposition. If it plays straight during the upcoming recall referendum process, the government will be able to pursue its existing programs more or less as planned. However, if the opposition tries to provoke another crisis, then the programs could be derailed once again and poverty will once again increase, just as it has in Venezuela for the past 20 years or so.

[1] The Gini Index goes from 0, meaning complete equality (all incomes the same), to 1, meaning complete inequality (all income held by one individual). Source: Francisco Rodriguez (2000), “Factor Shares and Resource Booms: Accounting for the Evolution of Venezuelan Inequality” in World Institute for Development Economics Research – Research Paper from World Institute for Development Economics Research – Research Paper http://www.wider.unu.edu/publications/wp205.pdf

[2] ibid., p.5

[3] Rodriguez: “If our calculations are correct, Venezuela today is one of the most unequal countries in the world, with its 1997 Gini [of 62.6] surpassing that of South Africa (62.3) and Brazil (61.8).” ibid., p.6

[4] OPEC Statistical Bulletin, 2001

[5] In 1985 dollars. Own calculations, based on value of oil exports (IMF, International Financial Statistics Yearbook 1993), population (Instituto Nacional de Estadistica, Venezuela: www.ine.gov.ve), and 1985 exchange rate (Banco Central de Venezuela: www.bcv.org.ve).

[6] According to the income-based poverty line used by the Poverty Project of the Catholic University Andres Bello (Matias Riutort, “El Costo de Eradicar la Pobreza” in Un Mal Posible de Superar, Vol. 1, UCAB, 1999)

[7] Kenneth Roberts, “Social Polarization and the Populist Resurgence in Venezuela,” p.59, in Venezuelan Politics in the Chávez Era, edited by Steve Ellner and Daniel Hellinger (2002), Lynne Rienner Publishers.

[8] Instituto Nacional de Estadistica: www.ine.gov.ve

[9] See: Hernando de Soto (2000), The Mystery of Capital

[12] Source: Bulletin #56 (October, 2003) of the Finance Ministry (http://www.mf.gov.ve/acrobat/Boletin%20Finanzas%20Ed.%2056.pdf)

[13] Based on a primary school-age population of 5 million (grades 1-6 or ages 6-13), according to statistics of the INE (National Institute of Statistics).

[15] According to Aló Presidente, #168, of October 19, 2003.

[16] The Vargas mudslides, which took place in December 1999, in which over 10,000 people died and over 150,000 became homeless.