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Venezuela's oil wealth funds social programs

Associated Press
Published May 8, 2005


SABANETA, Venezuela - Workers are cutting sugar cane on fields that once lay fallow, stitching together T-shirts at state-funded cooperatives and building thousands of homes to replace shantytowns.

Venezuela's booming oil wealth is bankrolling its most ambitious effort in decades to help the poor, an integral part of President Hugo Chavez's "social revolution" that is drawing both praise and skepticism while he strengthens ties with Cuba and increasingly clashes with the United States.

Critics say Chavez is ruining Venezuela's oil industry and squandering the proceeds of high oil prices on programs that won't do away with poverty in the long run.

His supporters say no president in Venezuela's modern history has given so much to the poor.

"Before it was the rich who benefited from oil. Now oil is helping a lot of people," said William Riascos, a 31-year-old cutting sugar cane on fields planted by the state oil company outside the western town of Sabaneta, where Chavez was born.

"Here there used to be nothing. Now there is all of this," Riascos said, sweeping a hand across a vast expanse of cane.

Under Chavez, the state oil company Petroleos de Venezuela SA spent more than $3.7-billion last year on social and agricultural programs, housing and other projects - about a third of its earnings.

Chavez has promised to keep up the spending.

The state oil company is paying to build medical clinics and support government "missions," ranging from adult education programs to state-run markets. The government says oil money helped build 15,000 homes for the poor in 2004, and 120,000 more are planned.

Across the country, oil proceeds are flowing to about 130 centers with agricultural and industrial cooperatives. One center, built at an abandoned fuel depot in Caracas, has a sign over the gate that reads, "Venezuela: Now It Belongs to Everyone." It includes a farming cooperative, shoe factory and textile plant.

Chavez's opponents say that while they favor helping the poor, the president is spending too much from an unstable source.

"Petroleos de Venezuela, after paying its taxes to the government, should reinvest its earnings," said Humberto Calderon Berti, a former oil minister. "The volume of production is falling," he said, and with it the amount of money generated for society.

Before Chavez, the state oil company never directly funded social programs but rather paid taxes to the government, which doled out some funds.

It is one of many changes under Chavez, a former army paratrooper who accuses the U.S. government of plotting against him in a bid for oil.

Chavez claims he isn't employing Soviet-style socialism but rather a new "socialist model for the 21st century."

Venezuela's economy has grown dramatically as oil prices have skyrocketed, but about 14 percent of adults still are listed as unemployed, and many others eke out a living as day laborers or street vendors.

The question of whether Chavez's programs are easing poverty generates much debate. Some experts say Venezuela is supporting "subsistence programs" that only deepen a precarious dependence on oil.

While the social programs bring some relief to the poor, it's unclear how the government will sustain the effort, Tinker Salas said. "In the long run, the question the country will have to grapple with is its dependence on oil."

[Last modified May 8, 2005, 00:46:16]


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