1. President Chavez held office for 14 years, despite all the shortages in Venezuela’s economy. How do you explain this?
2. Can Venezuela afford to maintain its Petrocaribe program of subsidized oil exports?

American filmmaker Oliver Stone has spent a significant part of his career documenting Latin America’s political environment. Some observers criticized Stone’s 2003 film Comandante for making an anti-American statement while painting a sympathetic portrait of Cuban leader Fidel Castro as a moral individual. Stone’s most recent documentary is titled South of the Border. This time around, the filmmaker turned his camera on several South American leaders, including President Chávez and Bolivia’s Evo Morales. Stone objected to media descriptions of Chávez and his peers as “dictators.” On the contrary, the director portrayed these leaders as champions of the poor who worked to return their respective nations’ natural resources “back to the people” (see Exhibit 2-12).

Chávez, a former military officer, minced few words when expressing his disdain for American politicians and American-style, free market economic policies. Speaking about former U.S. President George W. Bush, Chavéz said, “You are a donkey, Mr. Bush.” Chávez once told an interviewer, “I’m not loved by [former U.S. Secretary of State] Hillary Clinton . . . and I don’t love her either.”

Meanwhile, in Chávez’s words, “U.S. capitalism is broken . . . we need to change the system . . . the future of capitalism in Venezuela is in the cemetery… . It is not a temporary crisis of the capitalist system—it is a structural crisis,” he said. “When you live in a democracy in such an unequal region as Latin America, you need to have a socialist vision. I believe in economies with markets—not in market economies. There is a difference.”

Why the mutual disdain between Chávez and American leaders? For one thing, Chávez’s policies went against the basic principles of free market economics. In fact, as noted in Table 2-3, Venezuela ranks near the bottom of the Heritage Foundation’s Index of Economic Freedom. Chávez’s actions included nationalization and expropriation of international companies. The government issued a statement condemning companies that, in its words, “wish to assault consumers to make a greater profit.” One target was Cargill, the giant U.S.-based grain trader; Chávez expropriated its local rice processing operations, charging that the company was sidestepping price regulations.

Likewise, ExxonMobil lost control of a project in Cerro Negro; an arbitration panel awarded the U.S.-based company $1.6 billion in compensation.

The ruling United Socialist Party also imposed price and currency controls. Venezuela once had a thriving agriculture sector. However, with price controls, farmers have less incentive to bring goods to market. Many live with the threat of having their land seized; the government has already taken control of vast amounts of farmland and formed collectives. Chávez said his goal was to ensure that affordable food would be available to all Venezuelans. However, foreign exchange controls mean that farmers don’t have access to supplies imported from abroad such as fertilizer, pesticides, and equipment. Production of beef and key crops such as corn, rice, and sugar cane has fallen sharply.

Venezuela is blessed with the world’s largest reserves of petroleum, and for many years Chávez was able to spend freely on social programs such as pensions for the elderly and subsidized grocery stores. In election years, Chávez supporters received free appliances such as washing machines and refrigerators. Free housing was another guaranteed vote-getter.