by Rory Carroll
Guides in red T-shirts took us to a pediatric clinic, a factory that cut granite, and a botanical garden, all impeccable. Over lunch the next day, at a beautiful spot overlooking the Caroní River, some of the chaperones relaxed. “I used to be a journalist too,” confided one, an affable middle-aged woman. “But the newspaper went bust, and, well, there’s really no other employer here except the state.” She indicated her red garb. The tone was vaguely apologetic.
The drought had ended a year earlier, in mid-2010, and the reservoir was full at the Guri Dam. Water thundered from the sluices in great, foaming arcs. The comandante had declared the electricity crisis over, but blackouts continued to roil the country, prompting suspicion—denied by the government—that several if not most of the dam’s fourteen turbines were sputtering for want of maintenance.
“Not at all,” said our guide, Carlos Sequea, a personable young man in the inevitable red T-shirt. “They are all working perfectly.”
A rectangular slab of black granite in the middle of wasteland caught our attention. It was a sundial dating from the 1970s, when this field of weeds had been a visitor park with flower beds. Now it was abandoned. The dial was thirty minutes fast. “Since the president changed the clocks, it’s been out of sync,” explained Carlos. He shrugged. “There’s no way to fix it.”
Later, as the sun was beginning to set, we made a detour to Cambalache, a sprawling waste dump outside Ciudad Guayana. Mounds of garbage stretched as far as the eye could see. Every so often municipal dump trucks emblazoned with the words “Socialist Beautification Plan” tipped new garbage onto the site. Smoke from small fires cast the scene in haze. Hundreds of vultures swooped and pecked at the refuse. Competing with them, picking through cans, cartons, clothing, and metal, were human scavengers. Adults and children blackened from the smoke worked in teams methodically sorting what had value from what did not. This was their home. Mangy dogs snuffled alongside them. Flies buzzed everywhere. “I’ve lost weight working here,” said Carolina Moreno, a wrinkled pixie who looked older than her thirty-seven years. “I can’t stand to eat with the smell,” she explained. She had improvised a tent out of fabric, which flapped in the breeze, and furnished it with a salvaged plastic chair. Bags of tin cans and scrap metal ringed her little office. “Been here five years. I’d like to leave but have nowhere to go.” Here she earned $45 a week bagging bits of aluminum. Moreno tapped her baseball cap, which was emblazoned PSUV, the comandante’s party. “I’ve voted for him up to now but don’t know if I will again.” She started coughing, a hoarse hacking sound, and sheepishly waved us away. This hellish scene was not Chávez’s creation. The scavenging predated him, and the revolution had brought some improvements to this community of the damned: a dozen cinder-block houses, a literacy program, visits from a Cuban doctor. But most still lived in tents, still suffered rashes, tuberculosis, and other diseases, and still had nowhere else to go.
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At Venalum, the country’s biggest aluminum maker and exhibition of “worker control.” Years earlier the government had told its humblest machinists and technicians that they now ran the company. “Capitalism had its chance. Now let the workers take charge, let socialism flourish,” the comandante had exulted.
Workers in red T-shirts milled around a reception area dominated by a faded billboard of Chávez with his famous quotation: “We are in a fertile moment to plant everything anew.” At the director’s office, where another seven portraits of the comandante hung on the walls, each with its own slogan: “Advancing together!” “The future belongs to us!” “Productivity with social commitment!” “Let tenderness reign.”
The director was a tall, bearded man named Rada Gamluch. An engineer by training, he had been in the comandante’s movement since the early days. During the 2002 coup he had reputedly led a convoy to an opposition television station and made a slitting motion across his throat to journalists. When sworn in as Venalum’s president, he had worn militia-style fatigues. But the Gamluch who greeted us wore a spotless cream guayabera shirt, pens poking from a chest pocket. His manner was smooth and professional.
The previous government, said Gamluch, had been on the verge of privatizing Venalum in 1998. Chávez had arrived just in time. “Thank God the revolution averted that. We were able to recuperate the plant for the state. For the people.” There followed, he said, a golden decade of increasing production to over 400,000 tonnes per year. “We exported everywhere. The workers were proud and grateful to the comandante presidente.” But from 2009, he said, the voice dropping, it all went wrong. “The world economic crisis hit us.” He corrected himself. “The capitalist crisis hit us.” The West’s economic mismanagement meant demand for aluminum collapsed, and with it prices. “Then, in 2010, prices rose, and we were poised to recover but . . . we were hit by the electricity crisis.” Gamluch crossed and uncrossed his legs. This was delicate terrain. “Venalum is a big consumer of energy, and, well, some difficult choices had to be made. Venalum had to be”—he groped for a euphemism—“had to be factored into those choices.” The word he was trying to not use was “sacrifice.” Venalum, along with the rest of Ciudad Guayana’s industries, had been sacrificed.
As the drought worsened in the spring of 2010, Chávez faced three options: reduce the subsidy that gave Venezuelans extremely cheap electricity to compel his citizens, per capita the continent’s biggest energy guzzlers, to reduce consumption; ration electricity through scheduled blackouts in Caracas and other cities; or pull the plug on Ciudad Guayana. The first two would hurt his popularity; the third would devastate the industrial heartland. Chávez didn’t hesitate. Functionaries from the palace flew to Ciudad Guayana to yank cables from half its machines. Shutting down smelters and furnaces takes time and care to protect complex equipment, but such was functionaries’ haste that entire plants were ruined. This was the story from Gamluch, speaking in circumlocutions to avoid criticizing Chávez (two portraits gazed from his desk).
Politically, the strategy had largely succeeded. By 2011, Caracas, the comandante’s electoral priority, was privileged with regular electricity. Provincial cities and towns received the remainder, which still meant sporadic blackouts but not, the palace calculated, to the point of provoking collective revolt. Chávez’s ratings, which had dipped in 2009 and 2010, began to recover in 2011. Ciudad Guayana had paid the price of having too few voters to threaten the government. Production at Venalum, on which 150 smaller companies depended, had almost halved, and much of that output, because of the damaged machines, was of low quality and unexportable. It needed years of painstaking work and specialized equipment—which the company could no longer afford—to repair the damage. Venalum owed, and couldn’t pay, $25 million to suppliers and multiple times that to the tax authorities and state utilities. The company was broke. So were most of its customers—other state firms in Ciudad Guayana. Gamluch’s balcony overlooked factories, warehouses, cranes, and conveyor belts. It all looked motionless and rusty, like a landscape painting from an earlier era. The only movement came from the Orinoco, its brown waters surging past the silence. “No one denies there is a crisis,” said the director. Venalum was still breathing, just, thanks to a $300 million transfer from the government. “To get back on our feet, we need another $400 million.” For an additional emergency injection of funds it had mortgaged future production—should it recover—to China.
As company president it was Gamluch’s job to put a brave face on the fiasco. The good news, he said, was Venalum had signed production deals with Cuba and Nicaragua, two of the comandante’s regional allies. They were among the poorest countries in the hemisphere; how they could help Venalum seemed unclear, and Gamluch did not elaborate. The even better news, he said, was that the firm had not fired a single worker. All six thousand staff were still on the payroll. Instead of creating jobs and decent public services for the scavengers of Cambalache, in other words, Venezuela’s oil boom was keeping decaying industries on life support. “Thanks to the support o
f the Bolivarian process and its social commitment, we have been able to protect the workers from hardship,” said Gamluch. “This shows the revolution’s compassion and solidarity.”
A tour of the plant was dispiriting: ghostly factories that echoed if you shouted, assembly lines with cobwebs, a yard of dusty buses missing wheels and windows.
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Six trade union leaders tramped into the room and squeezed into chairs around the table. Chunky men with brown skin, chipped nails, work boots, jeans, and leather jackets. Between them they represented thousands of miners, machinists, truckers, and technicians in six state companies in Ciudad Guayana. Their spokesman was the one who looked like a grandfather, Rubén González. He had a white mustache and a big, bulbous nose. He had spent most of his life working at the state iron ore company, Ferrominera Orinoco, and was proud of it. He was a member of the PSUV and called himself a revolutionary. “Fighting for workers’ rights is the noblest cause,” he said in a husky voice. He had supported Chávez’s establishment of the National Union of Workers, a pro-government federation, and cheered in 2007 when Chávez promised better pay, conditions, and worker control, declaring, “I stake my future with the working class.” González smiled at the memory of that speech. “We got generous collective contracts, more than we asked for. The glass wasn’t just full; it was overflowing. Of course we celebrated. And then, well, then it all began to get sticky.”
His colleagues chimed in with denunciations. Political managers from Caracas with no background in industry. Ideological schools set up in factories. Investment abandoned, maintenance skimped, machinery cannibalized. A catalog of grievances detailing blunders, looting, and broken promises. Venalum, they said, had for a time stopped exporting to the United States to vainly seek “ideologically friendlier” markets in Africa and South America. After months of stockpiling, aluminum managers returned to U.S. buyers, but by then the market had crashed, losing the company millions. To curry favor with Miraflores, another company imported trucks from Belarus, Chávez’s European ally, but the cabins were too high for the region’s twisting paths, terrifying drivers. The trucks were abandoned. Managers at another factory halted production and sold the company’s entire stock before disappearing with the cash. On and on went the denunciations, one anecdote bleaker than the last. Worst of all, said the union men, was that for the previous five years bosses had refused to renew collective agreements, meaning workers lost their rights and half their wages to inflation.
“So,” said González, raising a hand, interrupting the flow of recrimination, “we went on strike.” At this his comrades went silent because they knew what had happened after he led a stoppage in 2009. He was arrested, charged, and jailed for unlawful assembly, incitement, and violating a government security zone. He spent seventeen months behind bars. He was now on parole with the threat of a seven-year sentence hanging over him. One of the others had also been jailed. All said they were under surveillance by SEBIN, the successor agency to DISIP. “We have been punished for representing workers’ interests,” said González. “They are criminalizing protest. It’s a continuous process of persecution to intimidate us from demanding our rights.”
The comandante had made a genuine effort to transform Ciudad Guayana. He sent Marxist academics to organize worker councils and teach revolutionary theory in 2004. The workers understood solidarity as better pay and conditions, not seizing the means of production, so the initiatives became mired in marathon meetings and squabbles. To break the logjam, the comandante sent political fixers, pragmatists rather than ideologues, who substituted “worker control” for “co-management,” a euphemism for top-down hierarchy. Few knew anything about industry or running a business. And they were saddled with excessively generous terms that the comandante in a flush of enthusiasm had awarded to the workers. Under pressure to control soaring costs, the fixers cut investment and maintenance, slowly crippling the plants. Few had opportunity to learn from mistakes because they were swiftly rotated and given additional jobs that kept them in Caracas. The ceaseless, merciless struggle for advancement and survival in El Silencio, in which ministers and courtiers vied for Chávez’s fleeting attention, created a parasitic ecosystem that atrophied the roots of distant realms such as Ciudad Guayana.
Without oversight, pilfering exploded into a grabbing frenzy. Supervisors sold entire depots in private deals. One director was accused of redirecting twelve trucks with 366 tonnes of steel bars to the black market. Drivers removed GPS devices from trucks so they could make clandestine deliveries. Companies spawned rival mafias whose ambushes and shoot-outs gave Ciudad Guayana the air of Dodge City. Factory after factory ran out of money. The revolution’s great hope for the future staggered and tottered. The palace pumped in billions to avert collapse but, alarmed by the vortex of cash, reneged on promises over pay and conditions. The unions insisted the promises be kept, and thus went from palace allies to palace foes.
The comandante admitted problems but shunned blame. He accused striking workers of sabotage and said they did not appreciate his generosity. “They must be conscious of the reality.”
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Ciudad Guayana’s decay was replicated across the economy. Venezuela had too much money to collapse, but it peeled, chipped, and flaked into moneyed dysfunction. It was the fate of a system led by a masterful politician who happened to be a disastrous manager.
Chávez used a land law and a billion dollars to seize and distribute a million hectares of privately owned land to thousands of new cooperatives. Their members whooped in delight and rode around on subsidized tractors. But there were no financial controls, and many co-ops disappeared with the money. Others flailed for want of experience, training, and infrastructure. They lacked spare parts, warehouses, fridges, trucks, roads, buyers. Ninety percent collapsed. The comandante spent another billion and decreed tighter monitoring and training. Officials went too far and choked replacement co-ops with bureaucracy. (My friends at La Vecindad, I was happy to discover, proved an exception. The co-op did not thrive but at least survived.) The comandante ordered more equipment and credits and seized another million hectares to try again. This frightened private farmers, who feared expropriations, so they stopped investing and sold off their equipment and herds. Co-ops could not fill the gap, because regulated prices for food starved them of profits. Scarcity spread, and store shelves went bare. Rather than raise prices, which would have hurt his popularity, the comandante imported ever greater quantities of food. When co-ops protested, saying they could not compete, ministers played dumb. What imports? So much was imported the ports were overwhelmed and 300,000 tonnes rotted in containers. Prices jumped again, so the army arrested butchers suspected of selling over the regulated price. Squads of ruling party officials raided stores suspected of “hoarding.” Rather than risk arrest, supermarket managers kept stocks bare. The comandante insisted the country had achieved “food sovereignty.” He hosted episodes of Hello, President with cattle grazing behind him, in government food stores surrounded by tins of beans and packets of flour, and in government-run restaurants. He would order the camera to do a close-up of an arepa—preferably a reina pepiada filled with avocado, chicken, and mayonnaise. “Hmmmm, look at that, smells delicious . . . While some try to starve the people, I guarantee that while Hugo Chávez is president of Venezuela, while this revolution stays alive, every day the Venezuelan people will eat and live better.” In some ways he was right: statistics showed the poor were eating more chicken and beef. Thanks, of course, to oil-funded imports. Venezuela’s agriculture withered.
The oil industry itself atrophied. PDVSA became a bloated hydra so overloaded with social and political tasks it neglected its core business of drilling and refining. Starved of investment and expertise, production slumped. Foreign oil companies made down payments for drilling rights but delayed spending the billions needed to develop the Faja wilderness. They did not trust PDVSA as a partner and feared Chávez could decide one morning to expropriate their inve
stments. They played for time, feigning activity. Thus the comandante and chief executives from Chevron, Eni, and other corporations played out charades of grand announcements, signing ceremonies, and ribbon cuttings for projects that shimmered like mirages. Vertiginous world prices for oil, however, meant even a dysfunctional PDVSA of rising costs and dwindling production earned enough revenue to buy Venezuelans’ complaisance. It did so through subsidies. It subsidized food, subsidized electricity, subsidized mobile phones, subsidized cars, subsidized houses, subsidized almost everything. Not everyone benefited—you needed contacts, patience, and luck to get some of the juicier subsidies—but the fact the state offered such things cheaper than private businesses made Chávez lord of patronage and magnanimity. He filled the country’s cracks with sweet, sticky honey.
A huge gasoline subsidy meant that by 2011 you could fill an SUV’s tank for less than a dollar. Motorists tipped gas attendants more than they paid for the gas. The result was congestion, air pollution, and a fiscal loss to the state estimated at up to $21 billion each year. Enough to multiply the education budget, double pensions, give cash transfers to poor families, or rescue Ciudad Guayana’s industries. The comandante railed against his own policy as “immoral” since it benefited the car-owning rich more than the poor, but he followed his populist instinct to leave it in place. Venezuelans considered cheap gasoline a birthright. What mattered to the average Venezuelan was not that PDVSA was in ruins, or that the policy was insane, but that gasoline was virtually free.