Venezuela's Chavez fights off criticism of economic record

By Matthew Garrahan
Wednesday, June 16, 2010; 4:30 PM

Venezuelan President Hugo Chávez has strongly defended his economic record after a turbulent year in which the country has been rocked by recession and 30 percent inflation.

In an interview with the Financial Times, Chávez assailed his critics in the United States and Europe, saying the Venezuelan economy contrasted favorably with its performance under previous administrations.

"Certainly, inflation is still high," he said at the Miraflores presidential palace in Caracas. "But in the previous decade inflation reached 80 percent on average. There was a year when it was 100 percent, in 1996."

Chávez is the subject of "South of the Border," a new documentary by filmmaker Oliver Stone, who says that Chávez has been unfairly demonized in the United States. Stone was present for part of the interview, in which Chávez said the Venezuelan economy had grown in his 12 years as president, while public borrowing had been sharply cut.

"Venezuela had 22 consecutive quarters of growth in GDP," Chávez said. "In the last six years, growth was 7.8 percent. . . . There was a year when growth was 12 percent. Only China was higher."

However, Venezuela continues to grapple with a damaging recession. Its economy shrank 3.3 percent last year and 5.8 percent in the first quarter of this year -- the worst performance of all Latin American economies.

Chávez's economic policies -- particularly the enforced nationalization of some operations owned by international companies -- have dismayed the United States and Europe. The government says such nationalizations have helped fund social programs. Meanwhile, the oil-rich country has gained from booming energy prices.

Chávez argued that social programs had been successful. "Poverty when we arrived was close to 60 percent" of the population, he said. "Today, it's 23 percent. Extreme poverty was 25 percent -- today it's 5 percent."

Spending on social programs has increased fivefold since 1999, he added. "Today the average is $30 billion a year in education, housing, social security. We are facing this economic crisis [but] I think we will overcome" the problems.

Still, the economic picture in Venezuela is far from rosy. The government recently tightened exchange controls, and it faces increasing shortages of basic goods. It has threatened to nationalize Polar, the country's largest remaining private-sector company, against its unionized workers' wishes.

Chávez conceded that recession had hit the country hard. "It's true that we have to face a difficult situation," he said.

He has challenges on other fronts: His government's human rights record has been sharply criticized by Amnesty International, which has accused it of targeting political opponents.

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