Page 2 of 2   <      

Oil-rich Venezuela gripped by economic crisis

Chávez's popularity has fallen below 50 percent, rare during his tenure and problematic for his followers as they gear up for parliamentary elections in September. Analysts say opposition could carve out space for itself in a Congress once wholly controlled by the president's allies.

Chávez has publicly expressed no concern, though he acknowledged the economic downturn in a Sunday speech.

"Is that reason to worry?" he asked the party faithful. "Not at all."

Chávez instead posited that declining car imports were a key reason economic figures had slumped. "And what does that have to do with socialism?" he asked.

The "world capitalist crisis," he explained, "for us is no tragedy."

"It's a marvelous opportunity to push a new model," he said, referring to Venezuela's increasingly state-controlled system.

Crippling blackouts

The downturn has only been compounded by the inability of Venezuela's hydroelectric dams to generate enough power. The government blames a long drought. But energy experts say Venezuela failed to make billions of dollars in investments to upgrade hydroelectric dams and power-generating plants.

To save energy, the government has imposed rolling blackouts in major cities since Jan. 13. In some cities, the blackouts can last four hours or more a day.

"They failed to do everything," said Nelson Hernández, a professor of energy policy at the Metropolitan University in Caracas. "If you do not develop your infrastructure -- your hydroelectric generation, your electrical generation -- you're going to have a collapse."

The government has tried to ease the crisis by imposing fines on companies that use too much electricity and by "bombing" clouds to induce rainfall. Chávez also tapped his closest ally, Cuba, for help, bringing in Ramiro Valdés, a 77-year-old former rebel, to advise Venezuelan energy officials.

But Cuba has suffered through serious blackouts for a generation, and Venezuela has made little headway, even as the rains returned in recent days.

Here in San Cristobal, the capital of Tachira state, the blackouts have affected every level of an export-driven economy, said Gov. César Pérez, an opponent of the president.

"Tachira is one of the states hardest hit by the electrical crisis. The rationing is the most severe," Pérez said in an interview. "This is the result of a socialist vision."

The blackouts mean that diners at Iris Coisa's sandwich shop eat in the dark, even though she can still fry burgers on a gas grill. Across town, a company that makes buses for the state reports that production is on the verge of collapse because metals from eastern Venezuela, which has been hard hit by nationalizations and electricity shortages, are barely arriving. A toy factory has let go of half its staff because orders have plummeted.

Isidoro Teres, president of the industrial chamber of commerce in Urena, says the blackouts and state interventions have hurt his business. His warehouses store imports from Colombia.

But he said business is down more than 40 percent also because Colombian exporters are looking to other markets.

"Evidently, no one escapes the economic crisis," he groaned, standing in a warehouse that was nearly empty.

<       2

© 2010 The Washington Post Company