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Outages dim Chavez's popularity

Power failures, unpaid civil servants and falling oil revenue play havoc with support for the Venezuelan leader.

November 21, 2009|Chris Kraul | Kraul is a special correspondent.

EL CONSEJO, VENEZUELA — Power outages are hitting Henrique Vollmer's rum distillery several times a week, interrupting production, damaging equipment and jeopardizing the jobs of his 375 workers.

President Hugo Chavez blames the inadequate power production by Venezuela's hydroelectric plants on low rainfall. But Vollmer says the problem has deeper roots.

"The blackouts have gotten more frequent over the last couple of years," said Vollmer, whose family-owned Santa Teresa distillery 50 miles southwest of Caracas, the capital, is the nation's second-largest rum producer. "It's not just us -- glass, paper and oil companies are suffering too."

Power outages in this sugar-growing region now last from a few minutes to four hours and are just one symptom of deteriorating conditions in an oil-rich but politically unsettled country. Others are regular cutoffs of running water, even in Caracas hospitals. So are double-digit inflation, rising crime and a sinking economy.

And the government's failure to pay its employees -- be they healthcare workers in San Cristobal in the west or professors in Caracas -- has become another rallying point for unrest, with numerous groups taking their complaints to the streets this week.

Several crises have appeared to converge recently in Venezuela, highlighting the effect of declining oil revenue and what Chavez's critics say is a failure to invest adequately in public works since he took office in 1999.

Chavez, on the other hand, blames Mother Nature, the news media and excessive consumption by upper classes for the nation's growing problems.

Owing partly to the decline in public services, the public's confidence in Chavez is flagging, according to a new public opinion survey released this week by pollster Alfredo Keller. Only 35% of those polled said they would vote for Chavez-aligned candidates in September's legislative elections, compared with 46% saying they favor opposition candidates.

The number of respondents pointing to public services as the biggest problems they face grew to 19% this month from 5% in August, Keller said.

On a more ominous note, two-thirds of 1,200 poll respondents believe that a popular uprising against Chavez is a possibility in this deeply polarized nation, Keller said.

"The public thinks the government isn't doing its job," Keller said, adding that rampant crime is the biggest public preoccupation. Caracas police reported 40 slayings over a 36-hour period last weekend.

The controversy over public services swirls as new data show Venezuela's economy is dropping deeper into recession, even as other countries in Latin America are emerging from the global crisis, said economist Francisco Monaldi at IESA, a Caracas graduate school and think tank.

Venezuela's central bank reported that the nation's total output of goods and services declined 4.5% over the quarter ended Sept. 30 when compared with the gross domestic product of the previous three months. Unemployment in October rose to 8.1%, according to official figures, a 1.4-percentage-point bump from a year ago.

"The worsening trend is clear and contrasts with most of the region. The . . . economic decline was worse than anyone expected," Monaldi said.

Chavez responded to the economic news by saying that the measurement being used is an old capitalist method and that new forms should be used to measure economies in socialist transition. He didn't offer any specifics, however.

Any way you measure it, Venezuela is in the midst of classic stagflation, a shrinking economy combined with rampant inflation, currently exceeding 30% annually, the highest in Latin America, one multinational bank economist in Washington said.

Much of the economic decline can be pegged to the falling price of oil, which accounts for 90% of the nation's exports and more than half the government's budget. For the first six months of the year, oil revenue plummeted to $32.5 billion, a 52% drop from the same period last year, the state-controlled oil company PDVSA reported this week, tracking the slide in global crude prices. As has happened before, Venezuela's oil-fueled boom economy is suffering a severe hangover with plunging prices.

Some economists say Venezuela's decline is exacerbated by price controls and the inefficiencies that have resulted from the nationalization of dozens of energy, telecom and manufacturing companies.

Peasant takeovers of 6 million acres of cattle and farm land have also cut food production, said Ismael Perez Vigil, director of the country's largest manufacturers' trade group, Conindustria.

The result has been periodic scarcities of chicken, cooking oil, milk and other items. Increasingly, Chavez has had to import food because domestic producers can't meet the artificially low prices set by his government.

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