Letter From Caracas

EPA/Miguel Gutierrez

charles castaldi is a former National Public Radio reporter in Latin America, who is now living in Nicaragua.

Published May 2, 2016.


Pulling into the entrance of the Eurobuilding Hotel, I recognize the lush, palm-lined walkway where the body of one of the assailants came to rest after he was gunned down by hotel security guards. Also killed was his target, a German citizen who had arrived straight from the airport and whose sojourn in Caracas lasted less than two hours. Now, as I disembark, I recall the stream of articles I read online about this murder and so many others, even as I'm noting the number of soldiers in full combat gear guarding the door (four).

Inside, the dozen or so men dressed in dark colors and sneakers barely try to hide the fact they're private security guards. Welcome to Venezuela, which has the unfortunate distinction of having the highest homicide rate in the world.

Venezuela has other dubious distinctions – among them, the highest inflation rate in the world (100 percent last year) and the designation as the most corrupt country in Latin America. On the other hand, it's blessed with the world's largest oil reserves (that's right, more than Saudi Arabia). And it holds the record for producing Miss Universes and Miss Worlds.

What will probably come as no surprise: Venezuela has been mired in political turmoil for years. What might have come as a surprise, though, was the opposition party's landslide victory in last December's elections for the National Assembly. Venezuelan politics have, after all, been dominated since 1998 by Hugo Chávez and his successor to the presidency, Nicolás Maduro. Chávez's "Bolivarian Revolution," named after the leader of the war of independence against Spain, was anchored on a populist platform of social spending, price controls and expropriations of private businesses. Over the years, the Chavistas' United Socialist Party (PSUV) won election after election, thanks to support from poor Venezuelans, who remain a majority in spite of the country's oil riches and who have benefited the most from the state's largess.

Reuters/Jorge Silva
It's the Economy, Stupid

But that support now appears on the wane, and it is not hard to see why. When I attempt to change $100 at the black market rate of 800 bolivars to the dollar rather than the official rate of 6.3, I'm laughed at. For one thing, the street bankers say, I won't be able to find anything I want that's for sale in bolivars. For another, since the largest bill is only 100 bolivars, it would take a briefcase full to buy anything substantial, provided anyone was dumb enough to make the exchange. I insist, though, and they snap up my greenbacks.

My pockets now stuffed with funny money, I'm ready for my first foray on the streets. Exiting the hotel involves running a gauntlet of warnings delivered by concierges and bellboys that I will be kidnapped, shot or mugged unless I use the hotel car service (dollars only, of course). But it's quitting time for some of the hotel workers, and I fold myself into a small group of them as cover. We cross a bridge, practicing broken-field running through traffic to arrive at the bus stops, where long lines of bedraggled Caraqueños wait for clapped-out coaches.

Trundling north, my bus passes the Polytechnic University before I step off in downtown Caracas. From there it takes only a few minutes' stroll to run into a line that snakes around an entire city block. I discover that the object of attention is a store reportedly selling toilet paper without the need to show a ration card. I'm reminded of Nicaragua in the 1980s under the Sandinistas, where toilet paper also disappeared from circulation. Charmin and socialism don't seem to coexist well.

A woman near the front of the line tells me she has been waiting her entire lunch break and then some to buy six rolls, though they're sure to be more expensive than the price-controlled variety, which are hardly ever to be found. In Venezuela, many basic goods are a bargain. At black market exchange rates, gasoline costs a U.S. penny a gallon; meanwhile, a typical utility bill runs a couple hundred bolivars a month (you do the math).

Before the woman makes it to the door, the store manager steps out and delivers the bad news: they've run out of supplies. The interviewee seems more resigned than angry. "This is what it means to shop in Caracas," she explains, showing me her empty shopping bag. "I'm supposed to be at work, but if I see another line, I'll get in it. I might get lucky."

Things aren't much better in the supermarkets I subsequently visit. In an effort to ensure that everyone can afford staples, the government imposed rationing in 2014 on basics, including milk, rice, coffee, soap and cooking oil. But when rationed products do appear, the shelves are cleaned out in no time. The government has, on numerous occasions, sent soldiers to ensure that fights don't break out.

What's still available at high uncontrolled prices is generally imported, since a whole host of regulations have nearly brought private domestic production to a standstill. One exception is Empresas Polar, Venezuela's largest private corporation. Polar's success as a producer and distributor of food and beverages has made it the Chavistas' favorite target. The company has been accused of hoarding, while its CEO has been branded a plotter against the Maduro regime. By no coincidence, Polar has been inspected 1,835 times – apparently, somebody's counting – since the PSUV came to power.

take a number

EPA/Miguel Gutierrez

I stroll on to the Sambil shopping mall; inside, it's a parallel universe of glass, marble and consumerism. Nike, Hard Rock Cafe, Tommy Hilfiger are all there. And then I see the line of people standing in front of the Adidas store. A sign in the window announces 30 percent off all store products. But this is no retail discount; it's the work of the National Superintendency of Fair Prices, a Chavista attempt to limit price gouging. The results are, once again, excess demand. Nevertheless, this mall confirms there is still money circulating among the privileged – mainly those connected with the government, the military and the part of the private sector able to buy and sell in dollars.

On my way back to the hotel, I stop at a bookstore-cafe to meet Natalia Castañon, the dean of humanities at the private Metropolitan University. Over coffee, she tells me public education has fallen apart in the past few years. "Chávez made education more accessible, which was good," she says. "But then the system became politicized, the university system lost its autonomy and in the process standards went out the window." Castañon tells me her salary is frozen at 40,000 bolivars a month – that is, $50. Her daughters (both chemical engineers) have emigrated.

Elena Osorio, a 23-year-old college graduate, pipes in that she's moving to Spain, where she has family, to work and attend graduate school. She tells me that of her graduating class, only a handful have remained in Venezuela. "Lots of people wanted to immigrate here in the 60s and 70s," she says. "We were the mecca of Latin America. But now those who can, leave. The young, educated middle class has almost disappeared."

Her motives for decamping aren't just economic; the high crime rate plays a part. "I've been mugged five times," she says. "It used to be that you knew somebody who knew somebody who had been mugged. Now it happens to you multiple times."

She repeats the mantra I've heard many times: don't walk around showing a phone, especially a smartphone. "An iPhone is worth a million bolivars. They don't even bother to take your cash."

Beyond the rampant violence, she says, ordinary life in Caracas has just become too difficult. "I can only buy certain controlled products like chicken or butter twice a week, but I can't go during work hours and I hardly want to spend half my Sunday in line," she notes. "So my parents bring me those things. They have a friend who works in the government."

Back at the hotel, I try to chat up a couple of the security guys. They turn out to be retired cops, a bit reluctant to engage at first. But when I tell them that I'm surprised an authoritarian country can have such a high crime rate, they laugh. "Venezuela has a government, and it might be authoritarian, but it doesn't do much policing," one of them explains. "Go into the streets at night, and you'll see almost no police; it's become too dangerous."

Chávez, it seems, encouraged the formation of paramilitary groups called "colectivos" that received guns, radios and motorcycles to support his Bolivarian Revolution. "At first, they were used to intimidate the opposition. Then, they turned into gangs who got into crime and kidnappings. Nobody wants to mess with them."

The true extent of crime in Caracas is anybody's guess. The reputable Venezuelan Violence Observatory estimates that there were 82 murders per 100,000 citizens last year, almost twice the rate of the most violent American cities (Detroit and St. Louis). The government would have you believe that the rate is less than half that, but most experts think that, in fact, the numbers are even higher because so many crimes go unreported.


Reuters/Marco Bello

In the hotel lobby, statuesque women teeter about on impossibly high heels. The hotel is a respite from the tumult of Caracas. So, on most nights, there are throngs of affluent Venezuelans on view. This night, the aforesaid include contestants in a beauty pageant (hence the heels) and members of the national baseball team. Venezuelans are fanatical consumers of both.

One partygoer is a man named Jose in his mid-40s who sells imported foundry equipment in Guayana City, a mining center in southern Venezuela. Business is tough, he says. Production is way down, so his clients aren't buying much.

In any event, demand may not be the binding constraint. "I have to bribe the authorities to get import permits, to get cheaper dollars, to get the merchandise through customs," he says. "I built my business from nothing, and it's slowly going back to nothing."

Later, I hear a very different story from a young bartender. "Because of Chávez, they put a school where there wasn't anything," he explains. "I got an education. I moved to Caracas, and now I'm studying law at night. … I know many people are going through difficult times, and it's Maduro's fault," he acknowledges. "But you have to understand why so many of us have a deep love for Hugo Chávez."

The following day, I'm on my way to meeting two young Venezuelan journalists for lunch at a restaurant where the arepas, a Venezuelan staple that resembles a smaller, puffier tortilla, are considered the best. Since I'll be buying, all four pockets of my jeans are bulging with bolivars. And, recalling earlier conversations, I'm keeping my phone hidden in the small of my back.

Thanks to the comically low price of gasoline and utter absence of urban planning, Caracas traffic is world class. To get around with speed, there's either the Metro or the so-called mototaxis, which are just guys on motorcycles carrying extra helmets. I opt for the latter, which are apparently safer as well as faster than four-wheeled vehicles since thieves are more attracted to carjacking and grabbing phones from people stuck in traffic.

After we agree on the price, we're off. But what seemed like a clever idea a few seconds earlier turns into a near-death experience as the driver accelerates through lines of barely moving cars and darts around a bus with only inches to spare. The upside: I arrive early.

Luis Carlos Diaz works for an independent radio program hosted by César Miguel Rondón, the most listened to in Caracas. His wife, Naky Soto, is, among other things, a blogger for ProDavinci, an independent online publication that attracts many opposition intellectuals.

We talk about the state-owned media, which pretty much control television at this point. Maduro is constantly on the air signing decrees and approving new projects. "He is a poor imitation of Chávez, who could spend hours on the air but at least had some charisma and sense of humor," Luis Carlos says. Maduro's big attraction is his more than occasional malapropism, like his saying that Christ multiplied penes (penises) instead of panes (fishes).


Reuters/Jorge Silva

"The Chavistas saturate the audience with the same message over and over again," Naky laments. "People have become so bored with it that they look for other sources. Social media, private radio, all have grown exponentially."

The first lady, Cilia Flores, who is widely considered the real power behind the throne, hosts a program called "With Cilia and Family." "Unintentionally, it's become a joke, since she's given government jobs to 46 family members." Two of her nephews were arrested in Haiti last year on drug charges and extradited to the United States.

I pay the bill (seventy 100-bolivar notes). We head downtown by Metro, packed so tightly that conditions would be considered cruel for sardines. I'm the only light-skinned person in the car – skin color is class identity in Venezuela.

Soon we're on the street again, passing the National Assembly, which has now become the battleground between the Chavistas and the newly emboldened opposition. We come to the Plaza Bolivar, where the mayor's office is located. Except that the mayor, Antonio Ledezma, is under house arrest. After running as an opposition candidate and winning in 2008, Chávez pulled the rug out from under him by appointing a Chavista to run a newly created administrative structure that would actually hold the reins of power in the city.

Ledezma went on a hunger strike, becoming one of the regime's most visible opponents. In 2015, he was arrested after Maduro accused him of participating in an American-led conspiracy against his government.

Much the same thing happened to Leo-poldo López, the mayor of the Chacao sub-district of Caracas. In 2008, he was barred from public office, though not charged with a crime. But his good fortune ran out in 2014 when, as the leader of an opposition party, he called for peaceful protests. He was arrested, charged with inciting violence through subliminal messages and convicted in short order. The lead prosecutor later decamped for the United States, declaring the trial a sham. López remains in jail.

At one end of the plaza stands an open-sided tent that's almost deserted. I spot Juan Carlos Dugarte walking through. Dugarte is the de facto mayor of Caracas, holding the office created to trump Ledezma. He's surrounded by security guards and acolytes, but known to all by his Venezuelan flag-themed jacket popularized by Chávez.

I identify myself, and Dugarte invites me to follow him into Expo Productive Caracas, which is intended to show off the products that the Bolivarian Revolution has to offer. There are shoddy-looking knockoffs of American goods with names like Timerland boots, doors that look like high school woodshop rejects, and packaged foods that don't exist yet – mockups of what's on the Bolivarian agenda. And then there's a guy selling pool chlorinators, who seems unsure why he was asked to participate. Who says socialists don't have a sense of humor?

© Aaron Sosa/DPA/Corbis
Meet the Boliburguesia

That evening, it's dinner with Wilmer Ruperti, one of the richest men in Venezuela. We drive in a couple of armored cars with bodyguards to a restaurant in Altamira, an upscale Caracas neighborhood. Ruperti is quick to explain how he started with nothing, the son of Italian immigrants. He worked around ships and became a tanker master. Ruperti's big break came during the oil strike in 2002 in which anti-Chávez officials of PVDSA, the national oil company, tried to force Chávez to resign. While other ships lay immobilized at anchor, he found a way to break the strike with some Russian tankers – and in doing so, provided Chávez with the economic lifeline to survive.

Ruperti made a fortune in oil distribution and became a star in the Boliburguesia (bourgeois, but pro-Chávez) firmament. He has since branched out, starting his own TV network and going into film. "We were the envy of Latin America in the 60s and 70s," he says. "But we managed to squander our oil riches through corruption and mismanagement. By the time Chávez came along, the situation was desperate for the masses of Venezuelans. Suddenly, someone was speaking for the poor – someone who made them feel like he really cared."

Ruperti is a bit more critical of the regime's management of the PVDSA. He says the state oil company has added 100,000 employees since the strike, but its output has nonetheless dropped 30 percent. "Nobody's even remotely suggesting this government is perfect," he says. "But you have to understand: Venezuelans have become so accustomed to government handouts that the sad fact is, they don't really want to work."

Francisco Monaldi, a professor at the Kennedy School at Harvard and an expert on Venezuela's oil industry, takes a longer view. "After World War II and into the 80s, oil made Venezuela the Latin American economic miracle, with lower levels of poverty, the highest income per capita, good health and education, and a quite vibrant democracy," he says.

In the OPEC years, however, the country was undone by oil riches, which were squandered on patronage and corruption. By the nineties, Venezuela had become one of the worst economic performers in Latin America.

This is when Chávez, an army lieutenant colonel, appeared on the scene. The military coup he led was rebuffed, but he nonetheless was elected president in 1998. It was hardly smooth sailing thereafter, though. Oil prices tanked, and "the popularity of presidents of oil-producing countries like Venezuela is directly related to the price of oil – it doesn't really depend on what they do or don't do," Monaldi argues.

But just when Chávez's popularity was at its nadir, oil prices took off again, and he made the most of it. "Chávez not only enjoyed a period of boom prices, he was clever at spending heavily on social programs just before electoral cycles; then, post-cycle, he would rein in those expenditures," Monaldi explains.

Chávez seems to have subsequently lost his sense of timing, however. He overran high oil revenues with even higher spending, and attempted (vainly) to control inflation by maintaining a grossly overvalued currency exchange rate. "He created a series of grotesque [market] distortions that pushed Venezuela into recession even before oil prices starting collapsing," Monaldi notes.

After Chávez died of cancer in 2013, his successor, Maduro, continued those profligate policies, running up budget deficits in excess of 20 percent of GDP and borrowing heavily from China to pay for imports. "Maduro is like a deer in headlights, afraid to do anything that might cause pain in his base," Monaldi says. "I think he really has no clue as to what to do."

Slumming It

The following morning, I head to Petare, one of the largest slums in Latin America and the area of Caracas with the highest murder rate. I stop off at city hall to meet Andrés Schloeter, a charismatic 20-something city councilman from the opposition party, Primero Justicia, who is known by everyone as Chola. The city hall is located on a small colonial square complete with a church painted cotton-candy pink. Children are playing in the square, and I start to wonder if this could possibly be the horrific slum Venezuelans warned me not to set foot in.

To get a feel for the place, Chola suggests – you guessed it – the back of a motorcycle. Only this time, in addition to a slalom race through traffic, we'll be navigating narrow roads that wind up and down the steep mountain onto which houses cling like badly assembled Legos. As soon as we turn off the main square, Petare shows its true face. The streets are potholed and strewn with trash. The only visual relief from to the grayness and dirt is children walking home in their spanking-clean blue-and-white school uniforms.

We stop to talk to Victor Barrios, a corpulent fellow in his 40s who is spray-painting a car parked on the side of the road. This is his paint shop, he explains, with a wry laugh. He pauses to hose down the section where he paints to avoid having passing cars raise dust.

Barrios paints a car here and there to make ends meet, he says. And he is quick to volunteer that he's grateful for what Hugo Chávez did for him. His kids are in school, which is free. Moreover, his whole family now receives medical care. But when I ask Victor how he's going to vote, his face darkens. "I don't know," he says. "This Maduro government is unable to run the economy. It seems like they don't run much of anything these days. We have a lot of crime, no jobs, no money. This can't go on."

This was by now a familiar refrain: a government that doesn't govern. And it points to a major problem for the Chavistas. While many Venezuelans venerate Chávez, they seemingly have little regard for Maduro and his handling of the economy – which is why the Chavistas did so poorly in the National Assembly elections. This isn't to say that Chavismo is dead. Far from it. For even while losing seats in the Assembly, the Chavistas took 40 percent of the vote, which still makes it the largest single party in Venezuela.

We pass by a spanking new sports complex that includes a soccer field and a large swimming pool, recently built in the lower part of Petare by the opposition-controlled city council. The emerald green turf and turquoise pool bottom are visible from the neighborhood's higher reaches.

Next stop: the police station in Valle Alto, near the top of the mountain. A couple of uniformed cops guard the entrance as if it were a bank. And for good reason. The police station was attacked three times in 2015 and has since been attacked twice more – once with tear gas, once with grenades. Grenades, incidentally, are becoming the gang weapon of choice, available on the black market for less than $20.

Cops are prime targets for gang members who want to rapidly ascend the ranks. One policeman admits that policing has become a secondary goal for the force; they're just trying to stay alive. Apart from the officers at the station, I see no cops during the entire time that I'm in Petare.

After I get back to city hall, Chola takes me for a walk around the neighborhood. It's an impressive display of grass-roots politicking to see this young man from an upper-middle-class background work the streets. Everyone seems to know him. People come up to talk about problems or just to shake hands. He listens, his assistant takes notes, he invites people to community meetings. And it's not just show: Petare boasts a number of improvement projects apart from the sports complex. There's a theater as well as assorted new schools and playgrounds that is a testament to the fact that the community hasn't entirely given in to the despair of poverty and violence.

* * *

The opposition's election victory in the National Assembly was clearly a turning point, even if President Maduro will do what he can to prevent the majority from exercising much power. The challenge for the opposition will be to measure how and where to push for change, understanding that their victory was more a cry of pain than a mandate.

Indeed, this victory won't be easy to build on. For while the economy was driven over a cliff by the Chavistas, the low, low price of oil will make it very difficult to placate the poor while sober heads attempt to fix the machinery of production.

Many other countries with more mineral wealth than institutional sense or respect for civil liberties have discovered they can't live with the treasure, yet can't live without it. What makes Venezuela's current situation so tragic is that this isn't your run-of-the-mill dictatorship whose citizens are helpless in the face of the avarice and indifference of its elite. But creating a successful market-driven social democracy from the wreckage of socialism's last hurrah will be a daunting task.

main topic: Region: Latin America
related topics: Economy, Development