Strategies of Development: Venezuela under Chavez by Daniel Eugene Patrick Sturby A Thesis Submitted to Saint Mary’s University, Halifax, Nova Scotia in Partial Fulfillment of the Requirements for the Degree of Masters of International Development Studies April, 2007, Halifax, Nova Scotia Copyright Daniel Eugene Patrick Sturby. Approved: Dr. John M. Kirk Supervisor Approved: Dr. Anthony H. O’Malley External Approved: Dr. John D. Cameron Reader Date: April 2, 2007 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 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To my parents for their endless love and support To Professor John Kirk for showing me the way To St. Mary’s University for helping me get there Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table of Contents 1. Abstract Pg. 4 2. Introduction Pg. 5 3. Chapter 1 Pg. 13 4. Chapter 2 Pg. 38 5. Chapter 3 Pg. 63 6. Conclusion Pg. 103 7. Appendices Pg. I l l 8. Bibliography Pg. 115 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Abstract Strategies of Development: Venezuela under Chavez By Daniel Eugene Patrick Sturby Abstract: With the 1998 election of Hugo Chavez the Venezuelan people signaled a willingness to change. Over the next 7 years, in exchange for their votes, Chavez gave the populace something that previously had not existed, a chance at a better life. Through the implementation of social programs, the Venezuelan standard of life has risen, but it is not yet ideal. For too long neglected (due to numerous faulty development strategies, including neoliberalism), the country and its people were left in such massive disrepair that it will continue to take time in order to fully heal. Yet, the current progress has shown that it is possible. Looking at Venezuela’s history, various development strategies, and current development programs, this dissertation shows that Chavez has been able to implement his new Bolivarian development philosophy and not only improve the lives of his people, but also enhance the appeal of socialism within the region. April 2, 2007 4 with permission of the copyright owner. Further reproduction prohibited without permission. Introduction 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. He’s destroying the country. Oil He is doing what other governments prices are higher than ever, but there’s haven’t done. He brought in Cuban doctors more poverty and more crime. Then Who come to the door of our houses. He he flies off to other countries and offers brought in neighborhood supermarkets. No them things that he doesn’t offer us. Other president has done this. Long live (Sullivan, 2005, p. 2) Chavez! (Nieto, 2004, p. 4) Quotation from a Venezuelan shopkeeper Quotation from a Venezuelan adult bicycle vendor. One group does not like the country’s current direction, while the other can not imagine it going in any other course. In many ways these polarized views reflect the vested interests, and fears, of the Venezuelan people winning or losing under Hugo Chavez . The ‘haves’ and the ‘have nots’ can be found in all countries. These polar opposites often (but not always) represent two completely different sets of ideals, truths, and concerns. The ‘haves’ usually lose the most from such a significant change in power, whether financially or strategically, while the ‘have nots’ predominantly gain, not always financially but often socially, and spiritually.1 With the ‘have nots’ traditionally (and vastly) outnumbering the ‘haves’ in Latin America, the political inequality surrounding the two is troublesome, as the ‘haves’ (for centuries) have largely controlled the political spectrum.2 Only recently has a significant modem shift begun supplanting this trend, 1 Although there are a number of different social and political classifications, this thesis will be written based on the understanding that all can be categorized under two separate broad views, the ‘haves’ and the ‘have nots’. Since there is not a solid definition for either, the broad categories can be used to identify a number of different groups depending on the circumstances. Although not completely accurate, the constants are that the poor are normally the ‘have nots’ and the rich are the ‘haves’. In the Venezuelan case in particular, the ‘have nots’ are those who cannot afford the cost of living without government subsidies (the poor/very poor), while the haves are everyone else. 2 Just as political inequality exists between the two groups, economic inequality also exists (as will be examined in Chapter 2). With 68.7% percent of the population in 2002 (down from 70.8% in 1997) earning less then the calculated national average, and with 38.8% percent of those earning less then 50% of the average, one can see a distinct level of economic inequality (ECLAC, 2004, p. 14). Using these statistics, one could assume that a maximum of 32.3 percent of the population are “haves” and the rest are not. These numbers would be significantly higher if in 2000 Chavez had not increased the salary of Venezuela’s 1.3 million public sector workers by 20 percent, and began the practice of continuing to increase workers’ salaries by 20-30 percent each subsequent year (Lamrani, 2006, p. 4). 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. particularly in Venezuela and Bolivia.3 Once silent, the surfacing of the ‘have nots’ into the political spectrum has created a shift in long-standing political ideologies. By targeting the record number of poor (Venezuela’s Instituto Nacional de Estadistica lists the percentage of households in poverty in 1998 at 49%), President Hugo Chavez is rewriting Venezuelan politics (Wiesbrot, Sep/Oct 2005, p. 52).4 Capitalizing on the public’s disenchantment with past governments, Chavez has formed a government based upon a new theoretical framework of political advancement through the promotion of major development initiatives (in particular poverty alleviation) (Gobiemo Bolivariano de Venezuela, 2006, p. I).5 Under the guise of populism, Chavez created a Bolivarian alternative utilizing pieces of traditional populist ideals, combined with his own contemporary ideas on social transformation.6 Satisfying the majority who elected him (his key supporters, the poor) while earning the enmity of many of the rich, he is taking Venezuela in a radically new direction—a socialist one.7 3 Bolivia is a recent example of this trend as “Bolivia is also one of the poorest countries in South America. Whereas wealthy city elites, who are mostly of Spanish ancestry, have traditionally dominated political and economic life, the majority of Bolivians are low-income subsistence farmers, miners, small traders or artisans” (BBC, p. 1). 4 Between the years of 1998 when Chavez first came into power, and 2002 (when a political coup against him was attempted), the percent of households in poverty in Venezuela had decreased by almost 10 % (From 49.00% in 1998 to 39.10% in 2001). After 2001, the percentage started to climb because of the economic recession caused by the coup and the oil strike (the number of households in poverty finally peaked in 2003 at 54.00%). The government could not continue to support its poverty alleviation programs, as its methods of financing where severely hindered (after the coup poverty rates started to again descend). As a result “it would not be fair to hold the government accountable for the loss of output due to opposition actions aimed at toppling the government. The oil strike of 2002-2003 caused enormous damage; one might also include the military coup and other destabilizing actions. If not for these efforts, economic growth would have almost certainly been substantially higher and well above the average for the region” (Weisbrot, June 2005, p. 2). Since 2003 it is clear that the country has reverted back to its pre-coup development programs as poverty once again has begun to decrease (as will later be seen).