- - Wednesday, February 10, 2016

MARACAIBO, Venezuela — The late Hugo Chavez kept his “Bolivarian Revolution” alive by picking fights — mostly with the United States and Venezuela’s traditional elites — while sailing on a sea of oil. But with energy prices plummeting and the economy cratering, Venezuelans aren’t buying the old formula anymore under Chavez’s handpicked successor.

“I feel indignation, and I turn off the radio,” taxi driver Danilo Puche, 53, said about the president’s bellicose statements broadcast on state-controlled media flush with incessant government propaganda. “What Venezuela is going through — I never lived through anything like it.”

Record-low oil prices have pushed Venezuela to the brink of economic collapse, and observers predict that President Nicolas Maduro’s inaction in the face of a toxic mix of hyperinflation and goods shortages might soon spell an end to his socialist regime. A Bloomberg Business forecast released this week projects that Venezuela is on track for the second straight year to have the world’s worst-performing economy — and it’s not even close.

“With no end in sight for Venezuela’s economic woes — estimates predict consumer price growth of 152 percent and joblessness averaging 7.7 percent — economists polled for the 2016 index see it remaining the [world’s] unhappiest country,” according to the Bloomberg survey.

Under intense pressure to regain control over a supply crisis limiting Venezuelans’ access to basic food and drug items, Mr. Maduro earlier this month again blamed the country’s business elite of waging an “economic war” aimed at toppling his government and ending the political and social revolution launched by the populist Chavez.

Meanwhile, a senior Central Bank official, who declined to be quoted by name for fear of reprisals, told The Washington Times that Venezuela had already entered a “commercial default” and will likely find itself unable to repay its sovereign debt very soon.

Even if the government were to immediately implement drastic corrections to stem the “deepening of the macroeconomic imbalance,” there is no guarantee a default could still be averted, the central banker said.

“Time is short,” the official said. “The cash flow situation is not going to be solved from one day to another.”

Plummeting reputation

The country’s international reputation has taken a nosedive along with the domestic economy. Just on Tuesday, Brazilian-based low-cost carrier Gol Airlines announced it was ending its flights to Venezuela because of the foreign exchange controls imposed by the Maduro government, while U.S. tiremaker Goodyear became the latest corporate giant — joining the likes of GM, Ford and American Airlines — to take a major hit to its bottom line because of losses here.

Goodyear Tire & Rubber Chief Financial Officer Laura Thompson said the one-time pre-tax charge of $646 million was enough to put the company in the red for the final quarter of 2015, with its holdings of near-worthless Venezuelan bolivars leaving it unable to pay for raw material purchases.

“These conditions, combined with Venezuelan regulations, have increasingly limited our ability to make and execute operational decisions at our Venezuelan subsidiary,” Ms. Thompson said.

Despite the terrible economy and elections late last year that gave anti-Chavez opposition parties an overwhelming majority in the National Assembly, at a Feb. 4 event commemorating the anniversary of Chavez’s 1992 failed coup, Mr. Maduro again declined to offer any change of course and instead singled out Lorenzo Mendoza, the head of Empresas Polar — the largest company still in private hands — who had proposed a seven-point plan to stabilize the nation’s food supply.

“We will not allow Lorenzo Mendoza to continue to sabotage the country’s economy,” the president said, calling the entrepreneur a “thief,” “bandit” and “traitor.”

But fewer and fewer Venezuelans are buying into Mr. Maduro’s tales of conspiracy. Instead, many blame Chavez’s dream to build the “socialism of the 21st century” or the current president’s ineptitude to handle the crisis — or both.

Driving through the streets of Maracaibo — the epicenter of Venezuela’s oil industry and capital of its most populous state — Mr. Puche chats with customers about the daily struggle with shortages that have defined people’s lives here ever since oil began its decline.

He chooses not to wait in line to enter government-run supermarkets, which sell basic items at subsidized prices, and instead buys them from “bachaqueros,” or speculators who have made a business out of reselling such products at highly inflated prices.

That means that an oil change for his taxi might set him back some 60 cents when the “official” price tag is 10 cents — a steep difference in a country where the minimum wage in black-market terms amounts to just $13 a month. Finding scarce consumer staples, and investing the time in long lines to buy them, is another drag on productivity and prosperity.

“If I lose three, four, five hours of work [to shop], I lose money,” Mr. Puche said, so he prefers to pay “exorbitant” black-market prices. “I don’t even blame [Mr. Maduro],” he added. “In my view, this is the fault of the former president, the ‘supreme one,’ as they call him.”

A ‘birther’ challenge

Still, voices calling for Mr. Maduro’s resignation have grown so loud that a local “birther” movement is now claiming the onetime bus driver was born in Colombia and thus is ineligible to serve as president. And his “inaction, tardiness, fear and stubbornness” have led to a record monthly inflation of 20 percent in January, economist Luis Oliveros said.

The roots of the crisis go back to Chavez’s uncontrolled spending of oil dollars, a geyser of revenue that for years poured into Venezuela as a barrel of crude sold for well above $100 — more than three times what it is worth today, said Mr. Oliveros, a lecturer on petroleum-based commerce at the Central University of Venezuela.

Hugo Chavez’s government believed that the oil boom would last forever,” he said. Between Chavez and Mr. Maduro, “these were 17 years of missed opportunities.”

Throw in pervasive corruption and a lack of public accounting of both government finances and the books of the state oil giant PDVSA, and you have the perfect fiscal storm, the economist said.

Hugo Chavez was a serial killer of institutions,” Mr. Oliveros said. “Today, PDVSA is a company that is very difficult to audit.”

Whatever his errors, though, there is no doubt that the charismatic Chavez was squarely in charge during his 14-year reign. That does not hold true for Mr. Maduro, who lacks the leadership skills to control feuding factions within his socialist bloc, said Morelba Brito, a professor at Maracaibo’s University of Zulia.

“President Maduro is a prisoner of his ideologies and [of those who] surround him,” said Ms. Brito, a political scientist who teaches at the school’s Center for Sociological and Anthropological Studies. “I would not want to be in Maduro’s shoes.”

And even backers of the “revolution,” such as Wilenis Barboza, 44, are growing impatient that the president do something — anything — to help ease the crisis that had the lawyer scouring for subsidized products at a government-run Maracaibo grocery store on Sunday.

“I am a ‘Chavista,’ but the fault is with both,” Ms. Barboza said, referring to the government and the business community, which she believes are, in fact, in the midst of an “economic war.” But “Maduro is the president, and he has to use an iron fist.”

Unable to find deodorant for months, the attorney said she now makes due with a homemade mix of bicarb and lemon juice. And though milk, soap and sanitary towels are hard to come by, Ms. Barboza refuses to deal with the “bachaqueros.”

But what caused her and other shoppers’ troubles more than greedy businesses and ruthless speculation has been the government’s systematic attack on private enterprise, Ms. Brito said.

Nationalizations and bureaucratic persecution have shuttered entire industries and made the country wholly dependent on imports — and thus on an influx of now-scarce foreign currency linked to oil, the political scientist added.

“We have to import practically everything we consume,” she said. “This populism can [only] work when the government has lots of resources.”

Part of the reason food and drug shortages have become even more dire in 2016 is that the government needs to juggle foreign reserves in an increasingly desperate manner, the Central Bank official said.

“Obviously, the priority is the debt payments,” the banker said.

Venezuelans, in the meantime, are left to fend for themselves. And though used to the daily battles, some humiliations — such as the nightly two-hour blackout imposed on many Maracaibo residents — are still hard to believe, said Mr. Puche, the taxi driver.

“It’s incredible,” he said, “that here, with so much oil, the lights go out.”

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