The Thing that Ate Venezuela

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With its recent mass of fresh expropriations, the Venezuelan government has reverted to its old, troubling ways. Now that the Parliamentary elections are behind us, it is unburdened by having to pretend it believes in private property. Like a monster from a 1950s B-movie, Hugo Chávez has gobbled up major food distributors, a glass factory, milk distribution companies, newly-built shopping malls, and entire rows of apartment buildings.

But while this has been dramatic, it has also been strangely targeted. Apparently, Hugo Chávez has opted to install a socialist-style economy by, roughly, taking over a company  a day. Companies, such as Ireland’s Smurfit-Kappa, are even starting to expect that their day of reckoning will soon come.

Call it trickle-down communism.

Is this strange strategy the product of cold calculation? Or is Chávez really like one of those monsters and simply binges without strategy? Does he take because he must, or does he take because he can?

For all we discuss Hugo Chávez, there are two things about him we know for sure: he values holding on to power above everything else, and he really, seriously prefers Cuban-style communism over a capitalist – or even a mixed – economy. In light of these facts, what is the ultimate goal of deepening his attacks on private property?

The country envisioned by chavistas is not necessarily a North Korea-style autocracy, where all forms of private property are banned. Let’s remember that there are private hotels and grocery stores for tourists in Cuba, and the government on the island is taking tiny-little baby steps to expand private property.  So regardless of the outcome, Chávez will always allow some space for private property in Venezuela, even if our worst fears come to pass.

And yet the Venezuelan public, by and large, rejects expropriations and cherishes private property. Chávez must be thinking that if he takes over just enough, slowly but surely, he will get to his nirvana without the public noticing. If that holds true, pretty soon the only private things in Venezuela will be … what? Banks? Newspapers? A few stores here and there?

The problem for Chávez is that he doesn’t have enough time to take over all he needs to in order to make us into another Cuba.  Trickle all he wants, there are way too many companies, sectors and housing complexes in Venezuela for him to gain complete control at this rate.

The change to another Cuba will require significant waves of nationalizations in which large sectors of the economy are brought under direct government control.  A company each day won’t get him there.

So how does this all play into his thirst for power? For one, it probably scares the bejeezus out of those willing to finance the opposition.

I have no way of knowing, but it wouldn’t surprise me if there was some link between the owners of Agoisleña or Owens-Illinois and the opposition.  The direct threats to Polar, our country’s largest private company, is not going to make Lorenzo Mendoza feel all that comfortable writing a check for Maria Corina Machado’s 2012 campaign.

This is just a theory, of course, but it holds up well when one considers that one of the largest companies recently nationalized, Sidetur, was owned by Machado’s family.

But if this is what he’s thinking, I doubt it would work. The opposition has a number of ways of getting financing, and the Venezuelan authorities are simply too incompetent to prevent it.  Even after the massive nationalization waves of the past few years and the panic he has engendered, even with strict currency exchange controls, there are little signs the opposition’s parliamentary campaign was under-funded. Even if it was, it didn’t prevent the government from losing the popular vote.

Regardless of the ultimate goal, government-by-gluttony is a high-risk strategy for Chávez. It increases scarcity, delays the country’s emergence from the recession, and the workers of the affected companies simply don’t want it.

This all plays into the opposition’s hands and enforces their message. Chávez’s gamble seems to be that this won’t matter in the end, either because the opposition will not have the funding needed to campaign effectively in two years, or because targeted nationalizations will not make people think private property has ceased to exist.

There is another, simpler theory to explain why they are doing this: thuggery. It could well be that there is no strategy at play, and that they are taking companies and property left and right simply because they want to and they can, damn the torpedoes.

We used to call him The Fat Man in the Palace. But the combination of his rapacious appetite for everything that does not belong to him and his lack of political capital in succesfully pulling it off, Hugo Chávez has become somewhat of a a contradiction: a monster to be feared but one that is still easy to caricature.

He’s become The Thing that Ate Venezuela.

1 COMMENT

  1. It has a lot to do with thugery.
    I would still be careful about putting one single label to it. There are no simple labels to anything, each new phenomenom being a combination, a new shade of old stuff.

    Think Belarus (which, by the way, will have elections very soon, elections that will be won by Lukashenko with cheating but without real need to cheat).
    Think Chávez thinking he is the new Magician who can produce the “best of the best” from the Chinese, Cuban and Belorussian model (although the only thing he will get from China will be the weapons, the IT spying equipment his thugs are ALREADY using and bills galore).

    By the way: even in Soviet Russia expropiations did not happen overnight.

  2. I’m with Foucault on this one: Power -raw power-, isn’t held on to, it is *used* (“Le pouvoir ne se detient pas, il s’excerse”). Some governments exercise or use power in ways to change the country’s retirement laws, prop up friends companies or finance expansionist wars. Others, who seem insecure and incapable of thinking long-term and drawing a plan, have the tendency to panic and then act on a whim in order to feel they are “really” in charge.
    Must be comforting sitting back in your throne going, “I’m definitely the big dawg, I just passed this law or decree”, without stopping to think if what you did makes any sense at all (Changing time zones) or will be actually respected and followed by the people (banning smoking in public places in Spain, for example).

  3. Thuggery, no question. But the monster being fed is his army of robolutionaries. The ranks of his bureaucracy are growing, and he needs more posts to fill and more opportunities for those in positions of power to steal. In spite of intentions, his government just isn’t producing wealth. So, in order to stay in power, he has to continue stealing in order to feed the beast. Of course, the beast is growing bigger and more rapacious everyday, and thus Chavez has to keep feeding it more and more to avoid having the beast turn on him.

  4. “So regardless of the outcome, Chávez will always allow some space for private property in Venezuela, even if our worst fears come to pass.”

    Not private property. A privilege and charter for limited uses granted by His most Gracious Majesty Hugo I: “Incur in Our Displeasure and be Expropriated”.

    “And yet the Venezuelan public, by and large, rejects expropriations and cherishes private property. Chávez must be thinking that if he takes over just enough, slowly but surely, he will get to his nirvana without the public noticing.”

    He passes from whore monger’s strategy (term is Beppe Grillo’s), to strategy of whore monger taking advantage of a hapless victim.

    • Loroferoz,

      I had the same reaction regarding the “private property”. Property which is private only at the whim of the President, is not private at all. We are no longer owners here in Venezuela. We are merely tenants occupying until Chavez deems otherwise.

  5. Look back and see how many bridges Chavez has burned in the years he’s been in power and you will be astonished. The secret of his formula: he has many bridges (oil) to burn. When you are as reckless as Chavez, you will see people simply moving aside to avoid the reck. He is a bully (a mental case in my humble opinion) with no sense of responsibility that does not feel any remorse for the profound damage he is causing. This allows him to set up the field conditions to play his game, conditions that very few people can accept to play. Consider that and the fact that he is acting under the mentality of surviving one more day. Under that mentality, the dreadful consequences of his acts on the population are irrelevant for him. He is not thinking about what will happen in a year, but how to ensure that he’ll be in power tomorrow. One day at a time. That’s why every day that goes by we think this is it, this is as far he’s going to get! Yet everytime he’s been cornered he takes a quantum leap in recklesness. Shockingly, he’s been able to remain in power for 11 years operating this way…one day at a time.

  6. Expropiar

    The government is not expropriating, it is stealing.

    To expropriate, or even better using the spanish term expropiar (in order to avoid translating errors http://buscon.rae.es/draeI/SrvltConsulta?LEMA=expropiar), entails the payment of just compensation. That is not the general case in Vzla, but for some very few cases, as far as I can tell.

    In the interest of straight forward comunication, let us use a proper term for what the goverment is doing to private property

    Does anyone have a measure of how many cases have been indeed compensated? That should put the record straight

  7. Expropiar

    The government is not expropriating, it is stealing.

    To expropriate, or even better using the spanish term expropiar (in order to avoid translating errors http://buscon.rae.es/draeI/SrvltConsulta?LEMA=expropiar ), entails the payment of just compensation. That is not the general case in Vzla, but for some very few cases, as far as I can tell.

    In the interest of straight forward comunication, let us use a proper term for what the goverment is doing to private property

    Does anyone have a measure of how many cases have been indeed compensated? That should put the record straight

  8. Onmypalm,

    The correct term is “expoliar” which in spanish means taking by whim, by force.

    Expropiation is, depending on how you see it, a guarantee on property rights, which ensures that takings are duly compensated.

    Clearly that is not what´s happening here. As for proper compensation being paid, its mostly international corporations, owned by countries that have BITs with Venezuela (Bilateral Investment protection Treaties) that can challenge the expropiation in an international arbitration, that get the compensation. The locals, whose only opcion is the local courts are basically screwed.

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