Chavez's 'reverse miracle' with Venezuela's economy

President Hugo Chavez , his daughters with him, greeting supporters in Caracas last week after his stay in Cuba for medical treatment. His critics were vocal during his absence.
President Hugo Chavez , his daughters with him, greeting supporters in Caracas last week after his stay in Cuba for medical treatment. His critics were vocal during his absence. (ARIANA CUBILLOS / Associated Press)
Posted: July 10, 2011

Andres Oppenheimer

is a Latin America correspondent for

the Miami Herald

Venezuelan President Hugo Chavez's critics took advantage of his absence for cancer treatment 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 Chavez has done in Venezuela over the last 12 years is nothing short of an economic miracle: Despite benefiting from the biggest oil boom in Venezuela's history, he has somehow managed to turn the country into a 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 had 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 Chavez took office in 1999 to $100 a barrel now. 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 Chavez 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 Chavez has to show for it:

While Latin America's economies grew by an average of nearly 6 percent last year, Venezuela's economy has shrunk by 1.6 percent, after shrinking by 3.3 percent the previous year, according to the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC). The Venezuelan government is predicting 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 rose from 12 percent a decade ago to 27 percent last year, according to the ECLAC. The official rate now is about 25 percent.

While most Latin American countries are benefiting 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 registered in Venezuela - a key measure of innovation - has fallen from nearly 800 in 1988 to fewer than 100 a decade later, according to official figures.

Chavez's government cites ECLAC figures showing it has reduced poverty from 45 percent of the population to 28 percent over 10 years. But, over the same period, Argentina has reduced its poverty rate from 45 percent to 11 percent, 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.

Venezuela has benefited from an 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 Chavez'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. Chavez is the author of a true economic miracle - but in reverse!

E-mail Andres Oppenheimer at

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