University of Florida the Gran Misión Vivienda Venezuela Under The

University of Florida

The Gran Misión Vivienda Venezuela under the Socialism of the 21st Century

Isamar Viveros

Undergraduate Political Science Honors Thesis

Supervised by: Dr. Carlos A. Suárez Carrasquillo

2018 Especial agradecimientos a mi mamá, mi papá y mi abuelita

Introduction

Many capitalist societies facilitate housing aid for a given population, yet there is a difference between the aid that capitalist societies give and what socialist societies do. In the socialist cases, the government owns the property whereas in capitalist projects the economic aid is given to the private sector. Government own housing projects are common in most socialist or communist societies; moreover, Venezuela is no exception. The socialist government developed a housing project they want to internationalize, called the Gran Misión

Vivienda Venezuela. The objective of this thesis is to demonstrate that under the political model of Socialism of the XXI Century the government can create enough housing for the Venezuelan population.

At the beginning of Chávez’s term, the Cámara Venezolana para la Construcción explained in a journal article that there was a deficit of 2,000,000 units. During the capitalist times in Venezuela, the housing aid was not enough (Camara Venezolana de la Construcción,

2015). Thus, this deficit drove people to build and live in ranchos. The word rancho is a

Venezuelan term that refers to irregular settlements; moreover, these housing constructions have hollow bricks and cement as walls and zinc or cardboard-stone as the roof. These constructions do not meet the minimum standard of human habitability.

The incompetence of the capitalist leaders, in matters of housing, made socialist ideas more attractive to the population. The Socialism of the XXI Century became the political mean to solve the housing crisis in Venezuela. Specifically, the socialist government created a project called La Gran Misión Vivienda Venezuela. This thesis will try to explain if the project was

3 successful or not under the new socialism applied in Venezuela by Chávez and his successor

Maduro, the current president.

Historical Background

At the end of the 19th century and the beginning of the 20th century, the Venezuelan economy was based on agricultural and livestock exploitation. Even though, there was also exploitation of oil and precious metals, Venezuela’s economy survived by the commercialization of coffee and cocoa (Machado C. , 2009). The economy undertakes a radical change after 1950 when Venezuelan commerce intensified their oil exploitation. The monopolization of oil as the main revenue created socio-economic changes as the high per capita income that aided the Venezuelan citizens but harmed the agricultural production. The harmed made to the agricultural sector was a slow but constant decrease; moreover, in 1968 the agricultural production was reduced by 20% and by 1998 the production was reduced to 64%

(Rodríguez, 2000).

Consequently, the economic boom created a political change in Venezuela. A new way of democracy called democracia representativa, representative democracy, came after the death of the dictator Gómez and after other militarized leaders in 1958. The high oil revenues due to the Middle East organization and the nationalization of oil in the 1970s allowed the government to use the resources to aid the nation. Furthermore, the massive revenue that came to the country also brought corruption to the government.

The agricultural Venezuela comes to a huge crash due to the Dutch disease that the oil revenue created. The Dutch disease refers to the negative impact on the economy of a massive rise that allows foreign policy, which in this case is the oil revenue. The consequence on

4 agriculture is that as the flow of currency enters in the country leads to currency appreciation that makes the country’s other products less competitive in the export market. Thus, the shortcomings in the agricultural sector encouraged an immense wave of farmer migration from the rural areas to the urban areas caused many settlements that were poorly planned and located in areas without enough services. The creation of settlements is called Barrios Populares and those barrios are areas where all the housing is considered a rancho.

On the other hand, Venezuela faced a significant crisis as the prices of the oil barrel dropped in 1983. The government had to face a drastic reduction in the countries' revenue which reduced their ability to fulfill the needs of the citizens causing social discomfort. The problem was at its climax in 1989 when the people raised together to violently manifest against the government in a movement called El Caracazo.

The Venezuelan people were desperate and aspired a political changed due to their dissatisfaction with the political system that was established at the time. The manifestations permitted the entrance of a new leader, the hero behind the movement, Hugo Chávez. Chávez in

1992 was the main leader behind a coup d’état that failed. He was imprisoned and after pardoned; moreover, as a free man, he was elected president of Venezuela in 1999 as the people put their hopes in him to change the political system.

Hugo Chávez and his political ideology

Chávez arrived at power with the promise of change with His proposal to substitute the representative democracy with a new model based on Simón Bolívar’s principles. However, his unexpected proximity with the Cuban Dictator Fidel Castro created a new political agenda for

Chávez. He aspired to become the socialist leader in Latin America. With his new aspiration in

5 mind, Chávez starts to promote his socialism. The scholar Ernesto García (2017) avers that

Chávez had delusions of greatness. García mentions the need of Chávez to be like Simón

Bolívar and for that Chávez took on the task of unify Latin America under a socio-political system (García E. , 2017). Yet, according to Chávez, the socialism that he proposed is different than socialism in the past.

Socialism of the XXI Century

Socialism of the 21st century was a concept developed by Dieterich Stefan, a German political analyst, who worked with Chávez to popularize the idea. The concept was introduced in by Hugo Chávez in his speech on January 30th of 2005 in the V Foro Social Mundial (V

International Social Forum) in Porto Alegre, Brazil. In his book, Stefan used the concept to differentiate Venezuelan socialism from the socialist movements of the 20th century such as the

Soviet Union, Cuba, and North Korea. The socialism of the 21st century is also called democracia participativa, which translated means active/participative democracy.

In “Aló Presidente”, which is a TV program, on March 27 of 2005, Chávez expressed publicly that Venezuela was going to become a socialist state. The socialism in Venezuela, later called Socialism of the XXI Century, is based on the original ideas of Karl Marx and Frederich

Engels (Dieterich, 2007). Dietrich (2007) claims that Marx and Engels failed to create a project or plan to implement the socialist economy. He posits the need to move the market towards a socialist economic plan where the government had more control of the economic variables.

Hugo Chávez defined Socialism of the XXI Century as a theory drawn from the Marxist philosophy but with a focus on four pillars: the democratic regional development, a balanced

6 economy (equity), the active/participative democracy of citizens, and the basic socialist organizations (institutionalism).

Hugo Chávez elucidated the concept by explaining in many interviews that the socialism of the 21st century was based on solidarity, equality, fraternity, love, freedom, and Christianity

(Chávez, 2006). During a cadena nacional, which is a joint broadcast over various media

(usually radio and television) directed at the general population of a state, in 2012 Chávez claimed that the base of the socialism of the 21st century is the “Socialist Plan of Socio-

Economic Development”. Dieterich expressed in 2005 that socialism of the 21st century means to substitute the status quo of the public administration and the democracy toward the benefit of the majority.

¿Qué es el Socialismo del Siglo XXI? Es una civilización cualitativamente distinta a la

civilización burguesa. ¿Distinta en qué? En su institucionalidad. De ahí, que ser revolucionario

significa hoy día luchar por sustituir la institucionalidad del status quo, es decir: 1. la economía

de mercado por la economía de valor democráticamente planeada; 2. el Estado clasista por una

administración de asuntos públicos al servicio de las mayorías y, 3. la democracia plutocrática

por la democracia directa. (What is the Socialism of the XXI Century? It is a civilization

qualitatively different from the bourgeois civilization. How is it different? In its institutionality.

Thus, being revolutionary means today to fight for the substitution of the status quo, meaning 1.

Changing the economic market for an economy that is democratically planned; 2. Changing the

bourgeois administration towards public services matters; 3. Changing the plutocratic democracy

for a direct democracy. (Heinz Dieterich; Ponencia en el Festival de la juventud y los

estudiantes; 2005, translation by the author)

In his book “Hugo Chávez y el socialismo del siglo XXI” in 2007 he explains the aspects of such socialist economy. First, he avers the need of the Venezuelan people to be involved in macroeconomic decisions as well as microeconomic elements. Second, he states that the economic institutions should be ruled by the values of objectivity and equivalence. In the

Socialism of the XXI Century Chávez stated that there are seven strategies to follow in order to accomplish his socialism. The strategies are (1) a new socialist ethic; (2) the search for the happiness of the people, which is the aid of the socialist government; (3) the revolutionary democracy; (4) economic socialist model; (5) new national geopolitics; (6) new international geopolitics, which is the union of Latin America under a socialist model; and (7) Venezuela as a world power.

Moreover, to further continue the Socialism of the XXI Century, Hugo Chávez proposed

2012 the Plan de la Patria (Plan for the Homeland). According to Hugo Chávez, the Plan de la

Patria was going to be the guidelines for the application of this particular socialism (Chávez,

2012). That plan would transcend to be the peak of the what Socialism of the 21st Century was for him. Moreover, he passed away in March 2013 which left him unable to continue to execute, supervise or observe the fruits of the plan, which was later called Chávez legacy. His legacy was not only an idea that Chávez promoted, but it was also a governmental legal decree from the

Venezuelan executive branch published in the Gaceta Oficial de la República Bolivariana de

Venezuela N°6.118 Extraordinario.

His death caused his successor Nicolás Maduro to continue to implement the Plan. The

Plan de la Patria has as a second objective built the Socialism of the 21st Century in Venezuela by securing the “highest amount of social security, political stability, and happiness for the people” (Pg. 21). Within this objective, he describes the need to continue creating and

8 maintaining Misiones and Gran Misiones. Moreover, misiones are a series of different social programs, aimed to help people with most needs, developed in Venezuela completely subsidized by the government (Chávez, 2012). The misiones are not programs that were made to interact with each other.

According to Díaz (2014), the abundance of oil revenue contributes to the deficiency of considerations for government spending while creating and coordinating those programs. The

Venezuelan law states that these government programs must publicly account for the expenses of the social programs. Yet, since is based on oil revenue, which is not directly coming from the citizens, they avoid such actions due to the lack of concern from citizens (Ross, 2012).

Venezuelan Missions

Hugo Chávez started the creation of Misiones since 2003, yet, the Plan de la Patria became the legal framework that turned the Misiones into Venezuelan national objectives.

Chávez created four missions particularly in the topic of housing, the Gran Misión Vivienda

Venezuela (GMVV), Gran Misión Barrio Nuevo, Barrio Tricolor, and Misión Hábitat. The ones related to creating housing are the Gran Misión Vivienda Venezuela and Misión Hábitat; moreover, Misión Hábitat was the antecedent of the GMVV building around 35.000 houses for the poor. Later, the government created the GMVV which had an even more ambitious goal.

They focused on the Gran Misión Vivienda Venezuela, which started on February 13th, 2011. It had the goal of building 2 million homes for the Venezuelan people subsidized by the government during the years 2011 – 2017. The objective was to alleviate the national housing deficit that was a huge problem at the moment. Also, their other main objective was to internationalize the project as Chávez legacy.

In Venezuela, the National Census of 2011 shared a light on the deficit of housing that the population faced. Even though they many citizens had a roof on top of their heads, the ranchos did not mean a habitable place. The statistic of the census showed that 625.000 units are considered inadequate out of 7.128.000 houses. Furthermore, there is also an account of 721.888 houses that are considered in a not-extreme poverty situation, yet they lack services like running water and electricity. For that reason, Chávez declared they would build 150.000 homes the first year, 200.000 homes the second year and 300.000 homes on average per year after the third year until they accomplished their goal (Agencia Venezolana de Noticias, 2011). The program was made to move the people from the ranchos to better-equipped housing on the idea of:

… garantizar la participación protagónica de las comunidades, a fin de procurar a las familias

la satisfacción progresiva del derecho a viviendas y hábitats dignos, saludables y pertinentes,

así como la ocupación racional del territorio … orientado hacia la satisfacción progresiva del

derecho humano a una vivienda y hábitat dignos que humanicen las relaciones familiares,

vecinales y comunitarias (guarantee the protagonist participation of the communities, in order to

procure to the families the progressive satisfaction of the right to decent, healthy and pertinent

dwellings and habitats, as well as the rational occupation of the territory ... oriented towards the

progressive satisfaction of the human right to housing and worthy habitats that humanize family,

neighborhood and community relationships) (Ministerio del Poder Popular, 2013, translated by

the author)

Consequently, the analysis of the GMVV between the years 2011 – 2017 is necessary to evaluate the accomplishments or failures of the program within the socialist system. The international importance of this program was promoted by Chávez who posited that this housing program is the best project in the world (Chávez, 2012). This program is also significant due to

10 the enormous magnitude which was intended for. The project originates its objective of internalization as one of the strategies of the Socialism of the XXI Century on creating new international geopolitics. The Ministerio del Poder Popular para Relaciones Exteriores (2013) publicly stated that the GMVV was only a model implemented in Venezuela to prove its success so it could be implemented internationally. Moreover, in 2016 Manuel Quevedo the Minister of

Housing and Habitat confirmed that Cuba and Haiti will become beneficiaries of this program starting on 2018 (Quevedo, 2016) However, that statement has faced many doubts from scholars as the oil revenue decreases.

In general, several scholars have tried to argue for or against the misiones as a concept in general. Díaz Polanco (2014) took as his personal task to analyze only one of the so far 56 programs. He specifically studied the Misión Barrio Adentro, which is one of the 9 misiones that dealt with health, meaning treating medically low-income families. He concludes that the misión is not rentable for the state. In the particular case of the misiones that focused on housing, there are only a few reports on the actual statics of this program. The Programa Venezolano de

Educación Acción en Derechos Humanos (Provea), which is the Venezuelan Education-Action

Program on Human Rights, is one of the most prominent nongovernmental Venezuelan human rights organizations. They took the task of reviewing the GMVV first and second year of implementation, yet, beyond those first two reports, there has not been more information.

Clearly, there is a whole in the academic literature about this program and its success or failure based on the socialist system and its applicability in international countries. The necessity to continue researching the information and evaluating it is related to the performance of the government’s socialist policies that are attempting to be internationalized.

Gran Misión Vivienda Venezuela

How does it work?

The program is based on socialist ideals. Specifically, the socialist idea of a unified Latin

America under socialist economic policies and projects. The goal of the GMVV is to be a socialist project implemented in Latin America. Also, the legal framework is stipulated by the

Gaceta Oficial Venezolana, as mentioned before. This is a legal document that clarifies and gives more details of the specific laws regarding GMVV. In order to get housing through

GMVV, it is necessary to register oneself in the Ministerio del Poder Popular para el Hábitat y la Vivienda (MINHVI). The MINHVI is the government's department focused on all aspects related to Venezuelan housing. After the person is registered, the MINHVI will contact them depending on their conditions and the availability of housing (Ministerio del Poder Popular para

Ecosocialismo, 2018) (Venezuela G. B., 2018). However, since December 2016 the government made a slight change in the way the Venezuelans in need could get the benefits of the GMVV.

Furthermore, the official GMVV page indicates that now it is absolutely necessary to present a Carnet de la Patria. This is a new type of ID that it is free and non-mandatory for all citizens. The new web page demands that for registering in the system to apply for subsidized housing you must enter the information of the Carnet de la Patria. After that, they ask for your information including your name, where you live, your bank account, the number of kids you have, and other demographic questions. From there, the MINHVI would contact the person and assign them a housing unit if they fit for the program aid.

The aid is targeted towards low-income families; additionally, depending on the household income the repayment fluctuates. In the case of the GMVV the repayment may vary according to the next format (a) If residents earn less than minimum wage they get the house

100% subsidized, (b) If the income of the house is equal minimum wage the government subsidizes 80% of the cost and the residents pay only 20%, (c) if the residents add up to two minimum wage salaries they must pay 44% of the cost. Furthermore, the timeframe for the payments is 30 years with an interest of 6.91%, 9.16% y 11.42% depending on the income

(Noticias, 2011; Gobierno Bolivariano de Venezuela, 2018). The internalization of the program causes doubts regarding the sustainability of the program in countries that do not have oil revenue to support those slow repayment conditions.

The GMVV’s goals, in relation to the economic status of Venezuela, present a challenge for Venezuela due to its economic recession. After 2013, the government declared that they were going to build 300.000 homes on average per year (Agencia Venezolana de Noticias,

2011). However, if the amount is broken down to the amount on average per month is 25.000 homes. More specifically, they should build on average 834 homes per day. The goal imposed by the government is not only incredible ambitious but also aligns with the biggest economic recession in Venezuela (Benítez, 2018). This would mean that the government faces more challenges when it comes to building the houses since the country is in an economic crisis. The government has only stated publicly that they accomplished the established goal, yet they do not show statistical information to back up their statement.

In an interview with La Razón, Aquiles Martini Pietri, former president of the Real

Estate Chamber of Venezuela and president of the Infrastructure, Housing and Habitat

Commission of Fedecamaras, gave his reasons for doubting the official statements. He expressed that the amount of housing the government said it did could not possibly be reached.

He avers that with the lack of material and the poorly production of cement and other construction companies the goal was unreachable in their set time (Brassesco, 2018).

Failure of the Socialism of the 21st century

In his regime, Chávez wanted to promote his social projects and within that goal, he needed to increase the oil revenues to succeed. In his search for financial help, Chávez used his international recognition to convince the members of the OPEC to rise up the oil prices. After the control of the monopoly of oil sales, the enormous amounts of dollars that entered in the country allowed him to develop many misiones and to maintain the people’s loyalty with alms and gifts.

Lack of Information

The incredible flow of resources allegedly created a window for corruption among the ruling elite since there is no information on the use of funds. This incident caused members of the government to work for their individual interest and not the collective interest. This argument can be supported by the findings of many members of government and businessmen related to government that are currently prosecuted internationally because they stole money, example cases are Alejandro Andrade, Raul Gorrín, and Roberto Ríncon. Alejandro Andrade,

Former National Treasurer, was charged in the United States on charges of money laundry from the money he took from Venezuela (Tal Cual, 2018). Raul Gorrín, a businessman, is charged in the United States for money laundry in complicity of Chávez’s bodyguard. Also, the US government expressed that Gorrín is accused for the use US $ 159 million for bribes of high- ranking leaders in Venezuela (BBC News Mundo, 2018). Lastly, the case of Roberto Rincón, another Venezuelan businessman, who is accused for fraud. Rincón ripped off a deal with oil industry PDVSA of US $ 1 million (Méndez, 2017).

Moreover, the political specialist Emilio Sanmarti (2015) expresses:

Algo muy importante a destacar de la revolución bolivariana es que la economía se ha manejado

como un coto cerrado. Esto es, solo los que forman parte del Gobierno conocen la realidad

económica. La mayoría de los reportes e indicadores económicos como PIB, desempleo,

inflación y otros, son manipulados para dar una mejor impresión ante la población y los

organismos internacionales. (Something significant of the Bolivarian revolution is that the

economy has been managed as a reserve or private space. Meaning that only the ones that form a

part of the government know the true economic reality. There is a manipulation of the reports

and economic indicators, like GDP, unemployment, inflation, etc., to give a better impression of

the real situation to the people and to international organizations) (Herrería, Farah, & Pazmiño

Silva, 2015, translated by the author)

Expropriations

As a political and economic policy, the president started to nationalize and expropriate most of the companies in the private sector. Moreover, Chávez tried to transform the

Venezuelan society. He tried to promote a social fight between social classes, encouraging poor people to consider the rich to be “the bad guy”. In all Venezuela, the government expropriated around 700 companies and managed to close 500.000 companies. By 2017, there are less than

270.000 active companies from all sectors (Oliveros, 2017). With all the expropriations he did, he tried to inspire the workers to plot against their employers. This social conflict helped him move onto his political agenda under the support of the lower income population.

On the other hand, he blamed the businessmen and businesswomen of being corrupt. He constantly claimed they were the cause of the problems for the low-income class. And with the support of the workers, he started processes of confiscation, nationalizations, and expropriations

15 of industries which lead to an escape of capital as many industries moved out of Venezuela

(Escudero, 2018).

As the expropriations, the leak of capital, the inexperience of new management, and the lack of indemnity to owners continued, authors Herreríam Farah, and Pazmiño Silva (2015) make a mention of the destruction of the industrial apparatus. They describe the lack of productivity, the negative consequences in the satisfaction of the demand, the distortion of prices, and the inflation as part of the failures of the economic measurements implemented in the name of the Socialism of the XXI Century (Herrería, Farah, & Pazmiño Silva, 2015).

Due to the expropriations of the socialist government the industries that produce the basic elements for constructions have declined their production. By 2016, the resources for construction are scarce. Siderúrgica del Orinoco (SIDOR), the Venezuelan company that produces steel is producing less than 10% of its capacity. Moreover, between all the national companies that produce cement, they only work at 30% of their capacity (Batista, 2017).

According to the Banco Central de Venezuela (BCV), the Central Bank of Venezuela, in their report on 2015 report the Venezuelan construction industry declined 20.2% during that year

(BCV, 2016). Furthermore, by 2017 the companies in the construction industries only work at their 30 - 35% of capacity (Machado, 2017).

However, the government claims to manage the continuation of the project regardless of the economic variables. By having public support, Chávez started to shift the balance between the executive, legislative and judicial Venezuelan powers, concentrating most of the powers in the executive branch and ruling in an autocracy thought executive decrees. Chávez and his successor Maduro, even though they have been elected democratically accompanied by

16 complaints of fraud, have ruled in a more dictatorial way but with the backup of the lower class.

The support of the lower class was legitimate at the beginning of Chávez’s term, however, at the end of his ruling and continued by Maduro, the social control over those populations has increased.

Oil Revenue

The behavior of the Venezuelan economy and its influence in the state capacity to keeping the misiones projects sustainable have been affected by the consequences of the failures of the socialist economic measurements. The GMVV, as well as the other misiones, has faced a weakening in its capacity of reaching future national and international goals. Sanmarti (2015) posits that the oil revenues are unknown to the population as well as the management of finances regarding the misiones. He avers that the government gave many alms and “political gifts” from the country’s oil revenue to many nations in Latin America without receiving any economic benefit.

Also when he wrote his book, he explained his concern regarding the GMVV and other misiones as the sale of oil barrels dropped. He shows that in 1997 the daily sale of barrels reached 3.5 million, yet in 2015 it does not even reach the 2.5 million (Herrería, Farah, &

Pazmiño Silva, 2015). The study of the International Energy Agency (IEA) further shows the drop in the oil extraction in Venezuela and indicates that by 2018 there was only a daily sale of

1 million barrels (Urrutia, 2018). The drop in oil revenues depicts the fluctuation of the finances of the GMVV project.

Inflation

Venezuela faces a hyperinflation due to the economic measurements that were taken by the government. According to the estimated inflation made by IndexMundi, there is being an exponential increase in the Venezuelan inflation. In 2011 there was a percentage of inflation of

26.1%. Followed by a decreased in the inflation in 2012 which closed in 21,1%. However, they posted that in the years 2013, 2016, 2017 inflation closed with a percentage of inflation of

56,2%, 720%, and 860% respectively.

The hyperinflation is a consequence of the socialist economy implemented by the government. This price difference between the regulated currency and the parallel market is what generates inflation. Since the government made a currency control of exchange, the

(illegal) parallel currency market quotes the national currencies at their real market value

(Herrería, Farah, & Pazmiño Silva, 2015). The problem is further perpetuated as the government tries in the short term to solve the inflation. The government printed more bills to finance the

Venezuelan deficit which continued to cause a drop in the value of the currency (Carrasco,

2018).

Lack of Material

There is also a lack of raw material in Venezuela. First, considering the government nationalized many of the companies, now the production is less than before. Second, as explained by Sanmarti (2015):

Otra consecuencia de lo anterior es la carencia de productos lo cual se ha hecho evidente en la

economía venezolana principalmente en los últimos años, al no tener los productores acceso

rápido a materias primas importadas (debido al control de cambio), no pueden satisfacer la

demanda de sus productos. El desabastecimiento también ocurre por otro factor que

mencionamos al principio: la fuga de capitales. (Another consequence to the prior point

[inflation] is the lack of products that has been more evident in the Venezuelan economy the

later years. Since the producers do not have quick access to imported raw materials (due to the

currency exchange control), the demand is not met (Herrería, Farah, & Pazmiño Silva, 2015,

translated by the author).

Migration

At the same time, the loss of credibility of the Government and the non-fulfillment of the goals in the social works has weakened the relationship between the Government and the popular sectors. The massive immigration that search for better conditions are caused by the controversial political and economic policies (García, 2018)

The political and economic socialist model represents many problems regarding its sustainability. That causes many consequences on the social projects of Venezuela including the

GMVV. Also, the hyperinflation and the dependence on the oil revenue share light on the problems for the continuation and internationalization of the GMVV.

Repercussions on the GMVV

The alleged corruption and lack of public information on the finances, made by the socialist government, have caused direct and indirect problems in the GMVV. One of the issues regarding the GMVV is the problems of poor management of the program. First, the program is not established with a clear set of measurable goals. According to Díaz Polanco (2014), the problem with the mission is its perception as a goal that would never be fully finished; for example, one of the goals of the project is the happiness of the citizens. The government avoids the repercussions of “failure” since their misiones can never be completely done.

Missing Information

Alternatively, there is a significant lack of information concerning the statistical data.

(Transparencia Venezuela, Informe sobre Memoria y Cuenta Del Ministerio Del Poder Popular para Hábitat y Vivienda, 2016). For starters, the institution that controls the program has faced many transformations in the last years under the autocratic regimes of Chávez and Maduro. The problem is not the change in the institution but the lack of transparency when transferring the information from one department to the others. All governmental institutions by law have to make available to the public the budget information yet there is a lack of 51% of information required by law from the institutions (Transparencia Venezuela, Informe sobre Memoria y

Cuenta Del Ministerio Del Poder Popular para Hábitat y Vivienda, 2016). The majority of the information found is as recollections of several sources. Most of the analysis has to follow up of the newspaper articles to recreate the information said by the different government officials and contrasted with what the little information the government publishes.

In Venezuela, by law, all the departments must give to the National Assembly the

Memoria y Cuenta each year. That roughly translates to memory – of what was done – and balance – of how the spending was done (Transparencia Venezuela, Informe sobre Memoria y

Cuenta Del Ministerio Del Poder Popular para Hábitat y Vivienda, 2016). However, when the

20 date to show publicly the Memoria y Cuenta, the new departments did not inform on the projects taken by the former departments. For example, in 2016, the Ministerio del Poder

Popular para la Vivienda y Hábitat should have informed about the projects of 2015 including the ones at the beginning of 2015 when the ministry was operating under a different name.

There were three projects under the Ministerio del Poder Popular para Ecosocialismo, Vivienda y Habitat; nevertheless, in 2016 report, there is no publication on the use of the money for those projects.

The missing balances are related to a housing project of the GMVV. In 2015, the goal was to build 25.000 units, yet there were only 11.062 units declared that year by the Ministerio del Poder Popular para la Vivienda y Hábitat. The missing balance of the remaining units is still unknown. The lack of transparency of the project may lead to corruption and unaccountability from the government. This elucidates on the lack of public information on the subject. The missing data regarding budget creates difficulties to hold anyone accountable and may allow space to misuse of funds.

That also shares light on the issue of the budget. La Cámara Venezolana de la

Construcción (CVC), which is the Venezuelan Construction Union, claims that the budget is poorly made. They have posited their concerns regarding what they consider the amount the government should have paid versus what the government is paying the contractors since is too high (Cámara Venezolana de la Construcción, 2015). The lack of control in the budget has caused the loss of Bs. 25.000 million between three missions, including the GMVV. The independent Labor Union stated that the government is paying the contractors absurd amounts for the housing projects they consider to be possible to make with less expenditure before the inflation started to drastically increase.

That budgeting issue can create disparities in the Memoria y Cuenta, starting in the

2011-2012 report. The report made by the government indicated that in a Venezuelan state,

Lara, the units are most costly than building two units in Apure, Vargas, and Miranda, which are other states. The official report does not specify the reasons for the budget discrepancies

(Provea, 365 días de la Misión Gran Vivienda Venezuela (GMVV), 2012). Furthermore,

PROVEA (2012), exposes the discrepancies in general of the money destined to the housing ministry.

El dinero destinado al sector vivienda según la Ley de Presupuesto ha tenido una actitud

oscilante desde el año 2010. La Ley de Presupuesto 2011 destinó la cantidad de 2.073.600.000

Bs. para el MINVIH, 575.354.033 Bs netos menos que para el año 2012. Sin embargo, esta cifra

representa 341% menos que lo erogado para el mismo ministerio en el año 2010, cuando se le

otorgó 7.069.005.361 Bs. (The money destined to the housing sector according to the Law of

Budget has had an oscillating characteristic since 2010. The Law of Budget 2011 assigned the

amount of 2.073.600.000 Bs to the Ministerio del Poder Popular para Vivienda y Hábitat

MINVIH. The amount assigned is 575.354.033 Bs less than the amount assigned for 2012. Yet,

this amount represents 341% less than what was assigned for 2010 when they were assigned

7.069.005.361 Bs (PROVEA, 2012, translated by the author).

The budget is made ostensibly without a set structure or study. Not only the budget for the housing project is subject to question but the stipulated amount to be paid for international contractors is different from the amount that is paid to national agencies.

Clientelism

Before the implementation of the Carnet de la Patria, the GMVV was used to favor certain electoral candidates from the socialist party. The control starts because when a family

22 receives a new house, they have a 6 months trial before the MINVIH hands them the official ownership documents. Closer to elections many socialist candidates will give out personally some of the housing projects to the people in need with a warning of the need to vote for them to maintain their house during the trial time (Provea, 2013). For the 2012 election, there are many cases of candidates that delivered housing to new families in an attempt to gain favoritism. A few examples are the socialist candidate Elías Jaua delivered 144 houses from the housing projects in Miranda right before elections; in Zulia, Francisco Arias Cárdenas gave 214 new houses. For the elections of 2013, the socialist candidate for Zulia, Miguel Ángel Pérez gave out

219 units with the help of the socialist incumbent Arias Cárdenas.

Continuing with other issues of the GMVV, José Rafael López Padrino, Alexis Ortíz,

Eugenio Martínez, Valentina Lares, Alexis Correia, Oswaldo Ramírez, examples of journalist and political analyst, that considers this mission as an act of clientelism that helps further on the manipulation from the ruling party. This issue is mainly exposed after the appearance of a form of ID called El Carnet de la Patria (the ID of the nation/homeland). The ID is a new form of identification that is based on the socioeconomic level of the people. The ID is also linked to the

PSUV, which is the socialist party, and it discriminates other citizens that do not have it. The government uses this ID as a requirement to receive any type of government aid including housing (Leon, 2018).

The government has the opportunity to control the citizens applying for the units in the

GMVV through the Carnet de la Patria because that ID has information on the social participation of the citizen. The citizens can swipe their ID to add points of participation in manifestations or other events from the PSUV which is the ruling socialist party. The

23 government may not be able to control the citizens directly through their vote, but it forces them to participate for them in order to receive financial aid, housing aid, and health aid.

Contractors

The government has not reported how they selected the contractors for the projects

(Transparencia Venezuela, Informe sobre Memoria y Cuenta Del Ministerio Del Poder Popular para Hábitat y Vivienda, 2016). The project was supposed to take bids from different contractors and choose the most convenient. The government receives the online bids from several contractors and, according to the law published in the Gaceta Oficial N. 5.556 Extraordinaria, the government has to post in the Venezuelan journals the information about the contractors once they selected the best-budgeted bid. This is not the case when it comes to the information on the contractors used for GMVV.

Another issue with the program is the process of selection for the contractors. For international companies, the government pays between $80,000 and $120,000 for each property, yet for domestic companies, the top payment is 500,000 bolívares, which is at 2015 the equivalent of $1,250 (Rodriguez, 2015).

Simultaneously, the hiring of unknown local contractors to the public has generated problems for the citizens. First, since the hiring process is not auditable it allegedly creates ties between the government and the contractors, they pick contractors due to the benefits for the individuals in the government and not the citizens. Many residents living in the housing provided by the GMVV have complained regarding the construction of the buildings (Avedano,

2017). The citizens have expressed the poor quality of the installations that is opposite to what it was marketed (Pardo, 2015). Moreover, there is no homogeneity on the design of the buildings

(Transparencia Venezuela, 2013). Furthermore, not only the micro scale is affected, the contractors have created issues on a macro scale of the projects. In many states of Venezuela, the GMVV’s buildings have been made in lands that were not adapted for the project.

In Caracas, the Terraza 10 building in Petare, a Venezuelan neighborhood, collapsed in

2017 because the contractors did not build the base correctly, there was no field study to prove the land was suitable for the weight of the building, and the use of poor materials (Rojas de

Garcia, 2017). However, the issue dates back to the beginning of the GMVV.

In 2011, the land and the foundations of the buildings that began to give way in Coche,

Caracas. (Estímulo, 2011). The structural defects are accompanied by installation defects. Many of the buildings in Petare have major leaks that become issues of not only one apartment but the whole building. In Caracas, in 2013 have been reports on GMVV’s buildings in Montalbán that have part of the roof coming down due to leaks. This also occurred in 2014 in Catia (Navas,

2013). In Caracas, there is also the example of the complex Estrellas Revolucionarias. The building was built on a hill; however, the building is a structural hazard because the contractors did not do a proper job building the foundations and it started to collapse (Transparencia

Venezuela, 2016).

Moreover, Rodriguez (2015) posits that “the pace of construction is poor, and the works are precarious. Companies that ignore regulations are hired. ... The quality of mechanical, plumbing and electrical installations are not optimal”; and there are structural deficiencies regarding fire prevention, adequate ventilation, parking, areas for drying clothing, green areas, and elevators. However, they were deemed habitable. Those doubts can contradict the government statement of the success of the project.

Similarly, the issue of the contractors can be seen from a different angle. Even though the government manages to create the amount of housing they had set to do, many of the buildings are now abandoned. Many of the constructions were never finished and were left behind since there is no follow up to review the projects. In Merida, a Venezuelan state, there are many buildings that were abandoned and now are unfinished. The missing constructions might open the government to questions on the accuracy of the availability of the 2 million homes.

According to Rodríguez (2015), “The Grand Housing Mission, launched in April 2011, has been unable to solve the housing shortage. That year it was estimated that 2.7 million units were missing. However, until 2014 it had delivered 658,047 properties, according to government data”. In Merida, there are several extreme cases of missing units. The case of the complex Brisas del Ávila. That residence was meant to have 5 buildings, yet the last two buildings, supposed to be done by 2017, are abandoned. The second case is the residence

Habitacional Bicentenario, which was also set to have 5 towers, has three towers “under construction” unfinished. The third example is the case of the complex Conjunto Villas del

Cobre and their unfinished last third tower. Worse cases in Mérida are the residences called

Urbanismos Héroes del 4 de Febrero and Victoria Revolucionaria. The last two cases have been under construction since 2012. The construction is paralyzed and has yet to be habituated by citizens.

Dependence on Oil Revenue

On the other hand, there is an issue with the cost of the project vis-à-vis the government’s revenue having in mind the drop in the oil revenue. The information on the balances of the GMVV is not available to the public. Since the projects are based on oil revenue

26 there is no pressure from the population to get the numbers of the social programs. The lack of interest is what the socialist government uses as excuse to not publish specific data and to simply verbally state the information. This limitation is caused by the origins of the money invested by the government in those projects. The tax revenues are not what carries the projects forward; moreover, it is the oil revenue that is being used to create this socialist program

(Provea, Más Evidencia Sobre el Gigantesco fracaso de la "Gran Misión Vivienda", 2018).

The Ministerio del Poder Popular de Petróleo, the ministry of the popular power of oil, has published in 2018 in their official page the confirmation of the use of oil revenue for the

GMVV project (Venezuela, Ministerio del Poder Popular para el Petróleo, 2018). When a project is based on the oil revenue it is important to consider the fluctuation in income that the project faces and the lack of accountability it creates (Ross, 2012). The support of the program on oil revenue affects the possibility of the program to be sustainable in other non-producing countries in the case of the internationalization of the GMVV (Díaz Polanco, 2014).

Economic Obstacles

In addition, the political and economic socialism model established by the Venezuelan government has many obstacles to continue the GMVV further nationally and internationally.

The goal of internationalizing the project depended on the oil revenue and the value of the

Venezuelan currency. The continuity of the GMVV is challenged by several elements.

One of the factors is the drop in the value of the Venezuelan currency and the loss of the purchasing power of the population, which will require greater subsidies. The hyperinflation that the country faces creates a harsh environment for construction projects. The budget they create today is not the same for the next month as the prices rise (Prieto, 2018). The uncontrolled

27 inflation prevents the planning of future constructions (Amaro, 2018). As for the projection of the inflation by the end of 2018 is 1 million % (Casey, 2018). The indetermination of the true value of the currency, which constantly changes, influences the parallel market preventing any further plans of the social projects.

As a consequence of the political and economic policies, many international sanctions by the United States and the European Union to Venezuela and to individual members of government affected the GMVV. The financial blockade affected the importation of resources of raw material and other supplies. In 2017, Donald Trump orders a financial blockade against

Venezuela; similarly, many banks suspended their operations in Venezuela due to their fear of not following the American blockade. This has caused difficulties for the Venezuelan government regarding new access to new credit opportunities and to do international purchases.

Those particular sanctions that are directed to the country and not to an individual affect all the population and directly affect the GMVV in matters of obtaining the construction material

(García, 2017).

The expropriations are to blame with regards to the incapacity of the business sector to provide the goods and services in the area of construction. The persecution of all private sector leaders, including construction, drove them to run off the country creating an even bigger demand that is not being satisfied. Moreover, the reduced capacity of the state to import goods that could substitute the internal lack of production further enhance the problem with the

GMVV. Supplementary, the nationalized cement companies have come to a point of stagnation

(Tejero Puentes, 2015).

The exchange control and currency devaluation have not stopped the massive flight of capital. The created bureaucracy that allocates with high discretion the resources in foreign currency at a preferential price are caused by the control of currency exchange implemented by the Venezuelan Government since 2003 in addition to other problems brought about by the lack of economic freedom.

A notable case is the disappearance of US $ 20,000 million through assignments to ghost companies, about which there is still no responsibility and over what that the chairman of the

Standing Committee on Finance of the National Assembly Ricardo of the United Socialist Party of Venezuela (PSUV) declared "(...) there was (...) a scam to the country with imports by obtaining preferential foreign exchange; it is estimated that they were 20 billion dollars" In addition to this type of irregularities, the control of changes has negatively impacted the quality of life of Venezuelans, reflected in the deterioration of real wage and poverty levels

(Transparencia Venezuela, 2015).

Migration of Labor

The paralyzation of the productive activity in the construction sector has affected the hiring of the workers. The cement plants in 2018 are working under 30% of their capacity.

Moreover, the stagnation of the companies generates a migration of qualified labor. The CVC

(2018), announced that there was a loss of 1.200.000 construction jobs in Venezuela

(CVC, 2018).

Additionally, there is a massive migration of companies and businessmen and women that generates a migration of talent to other countries. The president of Datanalisis, Luis Vicente

León, reflected on the Venezuelan diaspora and affirmed that Venezuela has lost both workers

29 and the professionals that drive the economic development (Globovisión, 2017). The leak of talent impacts the GMVV since the designers, architects, and the engineers that form part of the construction process keep leaving.

Current Humanitarian Crisis

The situation in Venezuela has driven the attention of the socialist government away from structural problems, as housing, to answer the prioritized necessities like medicine and food in the country. The country has a dependency of almost 80% on imported goods (Castro,

2015). The government started in 2015 to dedicate most of the funds to buy food and chemical inputs abroad to alleviate the scarcity of products in the markets (Castro, 2015).

Conclusion

The objective of the study was to conclude if the ambitious project GMVV could succeed under the development of a new political model called Socialism of the XXI Century.

Objectively, it can be evaluated as it partially accomplished its goals to build 2.000.000 houses and as it could not start financing the project abroad.

The goal of the GMVV is to partially solve the structural deficiencies for the need of housing for the population in need. The GMVV has a core social principle that lays in the humanitarian and socialist political model. The housing problem would have aided one of the biggest crises in Venezuela as it gave a worthy roof over many Venezuelan families. Chávez intentions to use the excess of resources under its socialist ideals separate him from many other countries and political systems that have never attempted to create a project as ambitious.

The logical answer is found throughout the paper. The crude reality is that the GMVV failed under the system. The Socialism of the XXI Century was a new political project born

30 from great expectations, however, its implementation has destroyed the good intentions that gave birth to projects as the GMVV. Goes without saying the defeated socialist system is represented in the current Venezuelan crisis. Many scholars, country leaders, several newspaper analysts, and the Venezuelan people, have judge the system as it has been a failure.

The indirect repercussions on the GMVV cause a magnificent project to succumb under the regime. The lack of success of the political system took down with it the good projects that hoped to implement. The government does not have the means to relaunch or to continue further the Gran Misión Vivienda Venezuela project. The absence of means is because the same socialist policies turn away (1) the international community, as well as their possible financial support, (2) the aid of the construction private sector, and as it (3), destroyed the Venezuelan economy and the government own industries.

The GMVV project is not sustainable under the socialist regime thanks to the rupture in the transparency of the institutions, the weakening of the labor force that could boost the possible success left, the dependency on the oil revenue, and other factors mentioned before.

In essence, under that socialist system - that prioritized the GMVV project as a demagogic instrument to maintain power by controlling the fundamental need of housing for citizens - the social project was meant to fail. Perhaps, some citizens benefited from some of the housing that the government created, yet as a project it fails to alleviate the settlement of ranchos in Venezuela. Definitely, the question asked by the paper has been answered as it proves that under the Socialism of the XXI Century the GMVV project is not feasible. In order for a project as such to be doable, there must be a radical change in the political principles or a substitution of the current regime that could generate hopes for the immediate future.

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue

of socialism is the equal sharing of miseries” - Winston Churchill

Annex

Picture 1

(Volume of the oil production, which is the blue line, and its projection, which is the red line, during the years 2002 - 2019)

Picture 2

(Image of a rancho)(Alonso, 2016)

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