Mon, Jul 28, 2003 - Page 6 News List

Venezuela's dire economic crisis spares nobody


Children in clown costumes perform tricks for pocket change at street corners. A teenage dropout sells fish by the highway and engineers drive taxis. Indians abandon their ancestral lands to beg in the cities.

Venezuela's economic crisis, the worst in decades, has spared no one -- posing the greatest challenge to President Hugo Chavez's grand design of bridging the gap between wealthy and poor in this South American nation.

Like Argentina at the opposite end of the continent, Venezuela has tried to remake its economy by breaking with the past.

Argentina embraced Washington-backed free market policies. Venezuela under Chavez launched a left-wing, populist "revolution" emphasizing statist economic policies and protectionism.

Both ended up in deep trouble.

Venezuela's economy shrank by 9 percent last year. Many economists predict a 10 percent contraction this year, the worst in Latin America.

A short-lived coup, constant political strife and a two-month general strike erased thousands of businesses and tens of thousands of jobs.

Out-of-work nurses offer blood-pressure checks at sidewalk tables for a small fee. People hawk pirated videotapes, DVDs, and even mobile phone calls, charging pennies a minute. A firing freeze imposed by Chavez is widely ignored because companies just can't afford to keep workers.

Even Venezuela's abundant oil -- its reserves are among the world's largest -- cannot stop the slide in such places as Maracaibo, Venezuela's western petroleum capital.

Wilmer Jose Villalobos celebrated his 13th birthday, then quit school so he could sell fish on a Maracaibo highway.

"I liked school. But now I need to make money. Some of my friends are doing it too," said Villalobos, who stands for hours under the tropical sun, holding up a string of fish he sells for 1,000 bolivars (US$0.63).

In January, Chavez imposed foreign currency controls to defend the evaporating bolivar. The move increased foreign reserves but stopped the flow of US dollars, thus restricting imports ranging from food to machinery.

Tens of thousands lost their jobs when Chavez fired half the 36,000-strong work force of the state oil company.

A ripple effect prompted hundreds of oil contractors and suppliers to lay off personnel or close their doors.

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