Crude World (31 page)

“PDVSA now belongs to all Venezuelans,” he said. “Before it was just a small group who profited from it.”

He meant that PDVSA, though state-owned, had not served the state well. In 1976, when a nationalization law went into effect, PDVSA gained control of the country’s oil reserves. By the 1990s, most of the firm’s gross revenues were plowed back into its operations; the rest went to the government. Because oil revenues were the government’s largest source of income, the company ended up with a larger budget than the government, and this had the perverse effect of creating a prosperous first-world company in an impoverished third-world nation. The firm had a talented and well-paid cadre of engineers, its facilities had up-to-date equipment and it smoothly pumped out large amounts of oil—reaching a peak of nearly 3.5 million barrels a day. But like the foreign companies with which it operated joint ventures, PDVSA spent only a token amount of its considerable revenues on social or economic programs.

When Chávez was elected, PDVSA was quasi-independent of the government that owned it. This would not last. In 2002, after a series of political conflicts that included an anti-Chávez coup, PDVSA workers went on a two-month strike that ended with Chávez firing eighteen thousand managers and engineers—most of the firm’s white-collar workers. Chávez proceeded to turn the firm’s priorities upside down. Instead of about 40 percent of its revenues going to the state, two-thirds did. But there was a twist: instead of the oil money being transferred to the government and then to ministries that oversaw health, education and welfare programs, PDVSA was put in charge of the blitz of new programs. Chávez calculated that PDVSA’s revamped staff would be more loyal and more capable than the civil servants whose uninspired presence lent government ministries the aura of early retirement homes for bureaucrats.

“Sowing the oil”—in Venezuela, this phrase is often used to describe the spending of oil revenues on human development—had a quick impact on the lives of people like Quintero. Thanks to his reasonable work hours at the nucleus, he had enough time to attend an
adult-literacy course for which he received a “scholarship” of nearly $100 a month; he was being paid to take the course, which was held at a nearby school. PDVSA subsidized these courses—not only the scholarships but teachers, textbooks, televisions and videocassettes. PDVSA funded these adult schools across the country, as well as a network of new universities and secondary schools named after Chávez’s nineteenth-century hero, Simón Bolívar, who fought for Latin American independence.

Because oil prices rose from almost the moment he was elected, Chávez was able to pour tens of billions of dollars into these programs. He had the same fortunate timing as another statesman who came to power as oil prices took off—Vladimir Putin. Chávez called his reform movement a Bolivarian revolution, and poor Venezuelans were its beneficiaries. For the first time in his life, Quintero even had access to decent medical care, thanks to the nucleus clinic, which had six pediatricians, two gynecologists, a radiologist and three GPs, as well as X-ray and ultrasound machines. Everything—the clinic building, the medical equipment, the tongue depressors, the television and air-conditioner in the bright waiting room—was paid for by PDVSA. Oil revenues even fed Quintero, who shopped at a subsidized grocery store, part of a chain called Mercal, adjacent to the nucleus. This store sold sugar, rice, milk, cheese and other items for discounts as high as 50 percent; the walls of the Gramoven Mercal were covered in murals that showed a slave breaking his chains. The country had thousands of these stores and, it seemed, a larger number of revolutionary murals.

It was stirring if you did not let your mind linger too long on economics or history.

In the early 1980s, I’d visited Yugoslavia and toured a factory cooperative. The Yugoslav economy revolved around workers’ cooperatives, a proud achievement of the country’s longtime leader, Josip Broz Tito, who claimed to have found a third way to prosperity that avoided the brutishness of capitalist managers and the dimness of party apparatchiks. At the cooperative I visited, the workers were the owners, or so the pitch went, and all decisions were made democratically by the
workers or a council they elected. Shifts, pay and even disciplinary measures were decided by them. Everything was done fairly, and everyone was happy.

It was splendid and unreal, because Yugoslavia’s economy was a sort of Ponzi scheme. The cooperatives did not produce goods that people wanted, and behind the scenes, dim-witted apparatchiks were making the big decisions. The country’s showcase industrial product, a compact car called the Yugo, was a punch line for late-night comics. The economy held together because Western nations loaned about $20 billion to the Yugoslav government so that it would not fall under the sway of the Soviet Union. The loans were dispersed by Belgrade to cooperatives like the one I visited, and they stayed afloat until the decline of the Soviet Union meant the West no longer needed to subsidize Yugoslavia. The subsequent contraction of the Yugoslav economy helped trigger civil war in the 1990s.

Venezuela’s endogenous nuclei, adult-literacy programs and subsidized Mercals were not being kept afloat by loans. They floated on oil. Under Chávez, output was more than 2 million barrels a day, which meant that when prices were $100 a barrel, Venezuela was producing more than $200 million worth of oil every twenty-four hours. Even after deducting the cost of getting the oil out of the ground and shipping it to markets, it was a lot of money for a nation of 26 million souls—not Kuwait levels of drowning-in-oil riches, but higher on a per capita basis than Nigeria or Russia. You didn’t need to be a utopian or Marxist to believe it might be possible to reach the goals enunciated by Rafael Ramírez, who served as oil minister and PDVSA president: “To rescue and redistribute petroleum rent to the benefit of the people … to transform the terrible imbalances and social inequalities which, paradoxically, are present in one of the countries with the largest oil endowments on the planet.” Few governments had made this happen, and by pouring oil money into programs that reminded me of Yugoslavia, I suspected, Venezuela was galloping toward a mirage.

PDVSA’s fastest-growing subsidiary was Palmaven, which ran the firm’s social programs and was located in an office tower adjacent to the
luxury Radisson hotel. It was unusual enough that an oil company had an entire division devoted to good works, but even stranger that the man in charge of the marquee program—the endogenous nuclei—was a navy officer. Captain Rommel Rangel, whose handshake was military strong and whose civilian clothes were pressed to perfection, was not a typical naval
or
corporate man. He was a Chávez supporter who, like the president, had been born into poverty and become disenchanted with neoliberal policies that hollowed out his homeland in the 1980s. Rangel didn’t mind that I arrived at his immaculate office on a Friday afternoon, when the city was emptying out for the weekend; he happily talked as it became dark outside, and his fervor was an evangelical’s. When I mentioned the oddity of a navy officer running a social program in a petroleum firm, he smiled and responded by turning globalization on its head, Chávez-style. “Economic development is not as important as social change,” he said, with the enthusiasm of a man who has just solved a Rubik’s Cube. His optimism was admirable. His plans, less so.

Chávez’s policies were born of the notion that because neoliberal economics had failed, its opposite would succeed. His embrace of a radical alternative brought to mind Ryszard Kapuscinski’s description of oil as “the temptation of ease, wealth, strength, fortune, power.” Kapuscinski meant that oil seduces rulers into believing it is possible to build a new Rome with little difficulty, because money can do anything. The shah of Iran, Kapuscinski noted, promised to create a second America in a generation, but succeeded only in paving the way to an oppressive religious regime that, among its many failures, cannot produce enough gasoline for its drivers. Libya’s reserves spurred Muammar Qaddafi to a particular brand of change-the-worldism, hinted at by one of his titles, Brotherly Leader and Guide of the Revolution. After taking power in a 1969 coup, Qaddafi aspired to lead the non-aligned world, then scaled back his ambitions to the Arab world, then to Africa only. He planned to develop nuclear weapons and attack American targets. After three decades of failure, and with his country an economic wreck and politically isolated, Qaddafi finally let go of his radical visions.

Chávez’s visions of petrograndeur were geographically vast, too. In addition to subsidizing the barrios of Caracas, he was distributing discounted heating oil to poor families in New York, Philadelphia and Boston. Because these donations were intended to embarrass President George W. Bush, who treated Chávez as a grave menace, PDVSA paid for a full-page advertisement in the
New York Times
that boasted, “Venezuela is warming up the holidays in New York.” And not just there—Venezuelan oil was distributed at deep discounts throughout Latin America, with a generous portion going to Cuba. Chávez’s regime provided financing for a Latin American TV network, Telesur; bought Argentinean bonds when the government in Buenos Aires was reeling; and sent engineers to Bolivia to run gas facilities that were being nationalized. Venezuela’s hemispheric outlays were estimated at nearly $9 billion in 2007, which were several times more than the non-military aid doled out by the United States south of its border. Chávez made no secret of his desire to be this century’s Bolívar.

The problem was not, as the Bush administration fretted in those days, that Chávez would turn South America into Cuba writ large. That fear overlooked a geopolitical fact, which is that you can rent political friends in this world but you cannot buy them. Chávez’s billions in direct aid were no match for the cultural, corporate and political influence Washington retained in the region; American dominion would not be ended with a few years of subsidies from Caracas. The problem was that Venezuela, believing its mirage, could not afford its friends any more than the Soviet Union could afford its satellites in Eastern Europe. The Gramoven nucleus was replicated throughout Venezuela, but these cooperatives, created at great cost to PDVSA, provided a fraction of what the country needed in the way of jobs. Caracas was drowning in the usual mix of oil and unemployment. A core feature of the resource curse, as we’ve seen, is that although the oil industry dominates an economy, it creates few jobs. High-tech refineries can cost billions of dollars to construct, but once they’re up and running, perhaps a few hundred workers are needed to monitor them. If you have as much oil per capita as Kuwait, you don’t need to worry about real jobs—you can subsidize a life of indolence for everyone in
your kingdom. But Venezuela did not have enough oil for that, and the upshot was that its unemployment rate was well into the double digits even during the (relatively) good times. Caracas had a booming business in luxury cars
and
the highest rate of gun violence in the world for cities not at war. The capital’s infrastructure, ignored during decades of economic doldrums, continued to be ignored during the boom. A highway to the airport had to be rerouted for months due to a bridge that was in danger of collapsing; what had been an hour-long commute to the airport required three to four hours over a zigzag of back roads.

Chávez was not deterred. He was a true believer in a new economic order that captivated, for a while at least, most Venezuelans. To understand why, I turned on my television.

The day I watched
Aló Presidente
, Chávez was, as usual, a mix of Bill Clinton and Oprah Winfrey. He sat at a desk under a large outdoor tent, dressed in a short-sleeved shirt, talking and joking with an audience of several hundred people who fanned themselves to stay cool in the muggy shade. With a microphone in hand, he walked among the crowd and asked people about their lives, hugging and kissing whoever praised his government, as all did. When he encountered a Cuban doctor—thousands of them provide free medical care in Venezuela in exchange for free oil to Cuba—he waved at the camera and shouted, “Hello, Fidel!”

The show went on for hours, with Chávez extolling his Bolivarian revolution. Bolívar is something of a fetish object for Chávez, who has said he often talks to the great liberator, who has been dead for more than a century. Occasionally, Chávez leaves an empty seat at a table, so that the liberator’s spirit has a place to sit. Chávez has changed the country’s name to the Bolivarian Republic of Venezuela, and this episode
of Aló Presidente
was broadcast from a PDVSA facility that had been turned into a Bolivarian university, at which admission was open to all who applied. Chávez has also set up Bolivarian circles, local groups with millions of adherents working on behalf of his policies and, crucially, his election campaigns.

“We are not going to rest our bodies or souls until we get rid of the
chains around our homeland,” he said during the show. “We offer an alternative to those who want a better road, the Bolivarian path. We don’t need money from Washington or the IMF. We are not subordinate to their will. We can do it with oil money.”

A band played a tune with the refrain “Long live the revolution,” and after singing along Chávez embraced the musicians like old friends. His joviality was genuine; Chávez clearly was enjoying himself and drew energy from these people, who were not wealthy and seemed to love their down-to-earth president-host. Chávez eventually returned to his desk, began to sip a fresh cup of espresso and noticed that the time had flown by. “Okay,” he said. “It’s now three o’clock, which means I’ve been talking for four hours already. I feel good!”

The program continued for three more hours, during which Chávez warned of the evils of Halloween, took a call from the Venezuelan manager of the Chicago White Sox and announced a raise in doctors’ salaries. In certain ways, the show worked. A leader who hopes to fundamentally alter a dysfunctional economy will certainly benefit from personal charm and political popularity; a mild-mannered technocrat would have a hard time imposing the radical changes that would be the preconditions for prosperity in Venezuela or any blighted country that had failed to benefit from its oil.