Chavez Should Get Credit for Economic Miracle

Andres Oppenheimer

Venezuelan President Hugo Chávez's critics have taken advantage of his nearly three-week absence for treatment of an undisclosed illness in Cuba to blame him for all kinds of misdeeds, but it's time to give him credit for having performed a true economic miracle in his country.

I'm not kidding. What Chávez has done in Venezuela over the past 12 years is nothing short of an economic miracle: despite benefitting from the biggest oil boom in Venezuela's history, he has somehow managed to turn the country into shambles.

Venezuela has one of the highest inflation rates in Latin America, one of the lowest economic growth rates in the region, daily electricity blackouts, food shortages, and unprecedented crime rates. What's even more amazing for one of the world's biggest oil producers, Electric Energy Minister Ali Rodriguez announced June 15 that Venezuela has started importing electricity from Colombia to restore power to various parts of the country.

It's an amazing feat if you consider that oil prices have skyrocketed from $9 a barrel when Chávez took office in 1999 to $100 a barrel nowadays. While Venezuela has enjoyed two-year-long oil booms in 1974 and 1979, this has been by far the country's longest and biggest oil bonanza.

According to Venezuelan Central Bank figures, Venezuela's oil income has reached $700 billion since Chávez took office. "Venezuela's oil income over the past 12 years exceeds what it had received in the previous 25 years," says Jose Guerra, head of the Economy Department of the state-run Central University of Venezuela.

And yet, this is what Chávez has to show:

- While Latin America's economies grew by an average of nearly 6 percent last year, Venezuela's economy fell by 1.6 percent, after falling by another 3.3 percent the previous year, according to the United Nations Economic Commission for Latin America (ECLAC). The Venezuelan government is predicting a 4 percent growth this year, which -- if it happens -- would still be one of the region's lowest growth rates.

- While most Latin American countries have single-digit inflation rates, Venezuela's inflation rate rose from 12 percent a decade ago to 27 percent last year, according to ECLAC. The official inflation rate nowadays is about 25 percent.

- While most Latin American countries are benefitting from record foreign investments, Venezuela is suffering from capital flight. The country's foreign debt has risen from $35 billion in 2001 to $58 billion in 2010, ECLAC figures show.

- The power outages that are affecting most of the country, with the exception of the capital, are the first in recent memory. The government at first blamed them on a drought, but economists say the power outages are due to a near total lack of investment in electric facilities in recent years.

- The latest food shortages include cooking oil, coffee, meat and sugar. Venezuela, once the world's fifth-largest world coffee exporter, is now importing coffee from Nicaragua.

- Venezuela's education, science and technology levels are plummeting. The number of patents of new inventions registered in Venezuela -- a key measure of innovation -- has fallen from nearly 800 patents a year in 1988 to fewer than 100 patents a decade later, according to official figures.

The Chávez's government cites ECLAC figures showing it has reduced poverty from 45 percent of the population to 28 percent over the past 10 years. But, over the same period, Argentina has reduced its poverty rate from 45 percent to 11 percent of its population, Chile from 20 percent to 11 percent, Brazil from 38 percent to 25 percent, and Peru and Colombia by similar rates, ECLAC figures show. Most of these countries have reduced poverty while attracting investments and creating industries that will generate long-term growth.

My opinion: Venezuela is one of the Latin American countries that has benefitted from the biggest economic windfall in recent years, but it has squandered it in cash subsidies and grandiose international propaganda projects that, once oil prices fall, will leave the country bankrupt for generations.

Part of it is Chávez's chaotic economic management, part of it is implementation of a narcissist-Leninist model aimed at destroying the private sector and creating a country of government-dependent zombies, and part of it is frankly unexplainable. When Chávez returns from his prolonged absence, he should be greeted as the author of a true economic miracle -- but in reverse!

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