An earlier version of this article misspelled the name of an industrialist in Venezuela. It should be Alejandro Uzcategui.
With Chávez, Some Venezuelan Entrepreneurs See Opportunity
Sunday, December 3, 2006; 11:50 AM
CARACAS, Venezuela, Dec. 2 -- Venezuela's business establishment often warns that if President Hugo Chávez wins reelection Sunday, it won't take long before the populist firebrand transforms Venezuela into a communist state, dooming its oil-rich economy. Alejandro Uzcategui, an industrialist here, couldn't disagree more.
Overseeing a variety of companies, Uzcategui is among a growing number of business leaders who reject the doom-and-gloom scenario and see something else entirely in Venezuela's free-spending government: opportunity.
"We think President Hugo Chávez has done a very good job," said Uzcategui, president of an association, Entrepreneurs for Venezuela, that is closely allied with the government. "Here there has been incredible growth in companies. There are businesses that close, sure, but they don't close because of Chávez."
Eight years into what Chávez calls "21st century socialism," Venezuela's economy has evolved into one marked by contradictions: the highest growth rate in the Americas and grinding underemployment, out-of-control consumerism and a lack of investment, troubling uncertainty and golden prospects.
The economy is expected to expand by more than 8 percent this year, the highest rate in South America. Gross domestic product has shot up from about $92 billion in 2002 to a projected $170 billion this year. The torrent of oil revenue filters down to companies and consumers, who are on a buying binge for luxury cars, penthouse apartments and 48-inch plasma television sets.
It is also a country where foreign investment has collapsed, falling from $5.6 billion in 1997 to a projected negative outflow of $2.7 billion this year, according to calculations by Tamara Herrera, an economist with LatinSource, a New York-based group of Latin American economists. The economy is unable to create enough jobs for those entering the workforce, and inflation, at 15 percent, is among the highest in Latin America.
In a foreshadowing of possible trouble, the price of oil has experienced a four-month slide that recently dropped the Venezuelan barrel below $50, about as low as the government wants to go.
"The data continues to shine, but behind it in our opinion are serious problems of sustainability, and of the possibility of stagnation," said Herrera, also chief economist of Sintesis Financiera, a consulting firm in Caracas. "Behind these numbers are a huge dependence on oil, more than we've ever seen."
The question now is where Chávez will take this country of 26 million should he win another six-year term, as the majority of public opinion polls predict. His promise to further consolidate his revolution would surely mean more state control over the private sector, the creation of hundreds, if not thousands, of state cooperatives and the founding of more state-owned companies. If the price of oil holds, billions more would be funneled into social programs.
"Socialism is the only path that will permit us to save the human being, the human species," Chávez said in a recent speech. "Capitalism is the path to the destruction of the world, the destruction of the human being. Capitalism is the path to the destruction of life."
Capitalism, though, along with Venezuela's state spending, seems to have been very good to a new class of entrepreneurs in Venezuela who have either allied themselves with the government or found a way to have a cordial relationship. Many of them have secured lucrative government contracts, and the opposition has dubbed them the Boliburguesia, short for the Bolivarian bourgeoisie.
"Ninety percent of those businessmen are there because they give them the money to be businessmen," said Flavio Fridegotto, owner of a national chain of hardware stores and a leader in Fedecamaras, the nation's largest business association. "They are there because they are opportunists."