Hugo Chávez and Petro Populism (Page 7)

Garcia also has some very concrete criticisms. He says that the current economic boom is a chimera based on oil prices. In 2004 government spending jumped 47 percent, much of which went to pay for healthcare and education--the missions. But despite the oil windfall, the government has had to borrow heavily. Instead of turning to international financiers, it has increased its internal debt to Venezuelan banks.

Garcia says that in the past four years this internal debt has gone from $2 billion to more than $27 billion. The Finance Ministry confirms these figures and says that 60 percent of this debt is held in government bonds.

"But what makes this really crazy," says Garcia, "is that the government is depositing all its oil revenue in the same banks at about 5 percent, then borrowing it back at 14 percent. It's a very easy way for bankers to make money. That's why I say this is a government for the rich."

Last year Venezuelan banks made $1.38 billion in profits, just a bit more than they did the year before. And most of that money came from lending to the Chávez government and trading in special government-approved, dollar-denominated bonds, a legal loophole in the new currency-control law. Garcia's bank actually does no business with the government, but the huge increase in oil revenues has doubled his loan portfolio. The economy is awash in money: Growth was 17.3 percent in 2004.

So if the economy is booming, why does Garcia dislike Chávez?

"These people are crooks," he says. "Look, Venezuela has always been corrupt, but these guys are the worst." When I point out that the government just fired 120 managers in Zulia state for corruption, Garcia waves it away as insufficient.

"What are they doing with all the money? They are not investing. They spend it all on food and medicine. As soon as oil goes down, their party is over." So what should the government do to avoid this? "They should privatize everything."

Getting a Chávez government response to charges of mismanagement, corruption and overdependence on freakishly high oil prices is difficult. My inquiries are fed into the labyrinthine bureaucracy of the Information Ministry, where every few days a new official loses my paperwork and needs a full CV and another letter from my editors and another complete written explanation of my project.

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