Louis Proyect lnp3 at
Tue Sep 24 08:52:43 MDT 2002

(Although many of us had high hopes that Venezuela could move forward 
through a mixed economy, it seems that once again we are witnessing what 
happens when a revolution stops short of transforming the mode of 
production. The local capitalist class--assisted by imperialism--will 
strangle any progressive initiative and alienate the popular classes from 
the government.)

NY Times, Sept. 24, 2002

Venezuela Economy Falters, Despite Abundant Oil

CARACAS, Venezuela — When Pasquale Iachini and Alfonso Marozzi arrived here 
from Italy half a century ago, they started small, buying an old Fiat truck 
to transport dirt and supplies. Venezuela boomed in the years that 
followed, and their company, Yamaro Construction, grew into a leading 
builder of bridges, highways and other public projects.

But now, the government of Hugo Chávez is pinched for cash, the economy is 
sliding fast and company officials are worried. Yamaro's payroll, once 
1,000 strong, is down to 400 workers, and three major road projects are at 
a standstill, casualties of nonpayment by the government.

"The private sector is not investing, and the public sector has no capacity 
to do so," said Armando Iachini, 38, a son of the co-founder who helps run 
the company. "There are projects we want to start, but we cannot get them 
going because of a lack of resources."

The outlook is not likely to improve anytime soon, economists say, as 
Venezuela is convulsed by the deepest and most troubling economic recession 
it has experienced in more than a decade.

The economic fortunes of oil-rich developing countries often soar and dive 
with swings in the price of crude, but this crisis in Venezuela is 
different: it comes when oil prices are high — now above $30 a barrel — and 
rising, and could shoot up further if the United States attacks Iraq.

What is destabilizing the economy here now is politics, not petroleum. The 
left-leaning Mr. Chávez, survivor of one coup already, is still struggling 
to keep at bay the big-business groups and old-line politicians who are 
bent on removing him from office.

Huge protests turned violent in April in the days surrounding the abortive 
coup; the upheaval claimed 18 lives. Mr. Chávez returned to power after two 
days, but his adversaries have not given up, and are now pressing for a 
referendum on the president's rule.

The turmoil has turned the economy bleak. It contracted by 7.1 percent in 
the first half of the year, according to government figures, including a 
drop of nearly 10 percent in the second quarter. Unemployment reached 16.2 
percent at the end of June, and inflation, which had been slowing for 
years, shot up again, to double last year's rate.


Louis Proyect

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