The Foreign Service Journal, April 2019

42 APRIL 2019 | THE FOREIGN SERVICE JOURNAL he addressed a packed auditorium at the Sorbonne in Paris, reverting to time-tested leftist rhetoric, for which he received a rapturous reception from French leftists. In fact, the continued support of the champagne-sipping European left, parts of which still inexplicably worship Fidel Castro and accept Maduro, con- tributed to Chavez’s detour into irrational economics. As Lord Acton famously observed a hundred years earlier, “Power tends to corrupt, and absolute power corrupts abso- lutely.” Chavez was a prime example. Though popularly elected, he increasingly undermined Venezuela’s democratic institutions to become a de facto dictator, using the oil bonanza to all but buy votes. It would have been easy for him to follow the tactics of his peers in Bolivia (Evo Morales), Ecuador (Rafael Correa), Nicaragua (Daniel Ortega) and Brazil (Luiz Inácio Lula da Silva), who used leftist political rhetoric to keep their base engaged while hiring rational economy and finance ministers to (more or less) keep their economies on track. Instead Chavez, proud of having become the icon of the international left and increas- ingly manipulated by Castro, turned to bankrupt state-run, Soviet-era economic policies. While such dirigiste models might be feasible in certain Asian countries with a supportive history and social structure, in Latin America they have always failed. Venezuela is a tragic example. Moreover, although Chavez’ policies were well-intended and had some early success, they were increasingly run by cronies or ideologues, who had their own often-corrupt agendas and little experience. The state-run oil company, PDVSA, in charge of the world’s largest oil reserves, is an example. Once one of the world’s best-run oil companies, under Chavez it started spend- ing its money on political projects instead of oil production; and when in 2002 employees went on strike in protest, 19,000 were fired. As a result, Venezuela’s production slowed to a trickle, hardly enough to cover Chavez’s lavish spending, including free oil for his friends like Cuba. This kind of shoot-yourself-in-the-foot policy, which weakens your main revenue source, was unfortunately only one of many examples. Chavez also started mass expropriations of success- ful agricultural ventures and companies, mostly handing them to incompetent friends and military supporters. And a policy of multiple exchange rates enriched those with good access to an obscene degree. It seemed that, while other countries were courting foreign investors, Chavez was doing everything pos- sible to scare them away, depriving Venezuela of money and expertise. In addition, his laudable social program “ Barrio Adentro ” and support for agricultural cooperatives were badly administered, cir- cumventing established organizations. For example, my brother- in-law, who is a small-time farmer in the remote village where my wife grew up, applied to become a fish farmer. All went well at first, with a government agent giving him a refrigerated truck and measuring out the fish ponds. But that was it; the ponds were never dug, nor other supplies delivered. After 10 years of holding on to the truck and no follow-up, he finally sold it. Such mismanagement accelerated after Chavez’s death in 2013 when his chosen successor, the hapless Nicolás Maduro, came to power in a questionable election. In spite of falling oil prices, Maduro continued Chavez’s discredited, state-run eco- nomic model, turning Venezuela into a textbook case of how not to run an economy. Currency and price controls stoked corrup- tion and the black market; relentless printing of money raised inflation to more than one million percent a year; expropria- tions and lack of industrial inputs led to the exodus of world- class companies and killed investment; and the exploitation of PDVSA for political ends savaged government revenues. Venezuela now ranks 188th out of 190 countries in the World Bank’s “Doing Business 2019” report and has “won” the Misery Index (based on inflation and unemployment) every year since Maduro’s election. After another stolen election in 2018, people have started voting with their feet, with well over two million flee- ing their homeland. And in the last wave it is not just the better-off classes, but the very people the “Bolivarian revolution” was meant to help—the poor, whose numbers mushroomed under Maduro. The “Socialism of the 21st Century” that Chavez proudly declared in 2005 after various attempts to remove him from power, has unfortunately been no more successful than the socialism of the 20th century that impoverished the Soviet Union, Cuba and others. It is a tragedy that Chavez, with such an incredible mandate to do good, did not stick with the more social democratic model of his earlier years. He was sidetracked not just into state-run socialism, but into badly managed A brilliant populist, Chavez was the right man at the right time— his rise to power largely the result of the corruption and self- serving policies of his predecessors and the Venezuelan elites.