Venezuela Copes With Severe Recession - Under Chavez all will be destitute

MARACAIBO, Venezuela - Children in clown costumes perform tricks for pocket change at street corners. A teenage dropout sells fish by the highway and engineers drive taxis. Indians abandon their ancestral lands to beg in the cities.

Venezuela's economic crisis, the worst in decades, has spared no one - posing the greatest challenge to President Hugo Chavez's grand design of bridging the gap between wealthy and poor in this South American nation.

Like Argentina at the opposite end of the continent, Venezuela has tried to remake its economy by breaking with the past.

Argentina embraced Washington-backed free market policies. Venezuela under Chavez launched a left-wing, populist "revolution" emphasizing statist economic policies and protectionism.

Venezuela's economy shrank by 9 percent in 2002. Many economists predict a 10 percent contraction this year, the worst in Latin America.

A short-lived coup, constant political strife and a two-month general strike erased thousands of businesses and tens of thousands of jobs.

Out-of-work nurses offer blood-pressure checks at sidewalk tables for a small fee. People hawk pirated videotapes, DVDs, and even cell fone calls, charging pennies a minute. A firing freeze imposed by Chavez is widely ignored because companies just can't afford to keep workers.

Even Venezuela's abundant oil - its reserves are among the world's largest - cannot stop the slide in such places as Maracaibo, Venezuela's western petroleum capital.

Wilmer Jose Villalobos celebrated his 13th birthday, then quit school so he could sell fish on a Maracaibo highway.

"I liked school. But now I need to make money. Some of my friends are doing it too," said Villalobos, who stands for hours under the tropical sun, holding up a string of fish he sells for 1,000 bolivars (63 cents).

In January, Chavez imposed foreign currency controls to defend the evaporating bolivar. The move increased foreign reserves but stopped the flow of U.S. dollars, thus restricting imports ranging from food to machinery.

Officially, a dollar costs 1,600 bolivars. Its real worth is close to 3,000 bolivars.

Tens of thousands lost their jobs when Chavez fired half the 36,000-strong work force of the state oil company. A ripple effect prompted hundreds of oil contractors and suppliers to lay off personnel or close their doors.

"The company I worked for provided me with a driver. Now I'm driving a taxi," Torres said. "There's no sign the situation will improve anytime soon. It's very frustrating."

Torres wanted to leave Maracaibo for the United States or Spain. But his wife refused, unwilling to abandon family ties.

Immigrants who left Italy or Spain decades ago are applying to go back. In Caracas, lines form daily outside foreign consulates. Many in those lines are elderly.

One out of four Venezuelans is jobless, the government says. But the state counts anyone who works more than one hour a week as employed.

Tourists who prefer more stable destinations have deserted Venezuela's pristine beaches, Andean peaks and rain forest.

Their absence is especially felt in Sinamaica, a lagoon of Wayu and Anu Indian towns built on stilts north of Maracaibo. Tourists used to crowd boats to see Sinamaica's "palofitos," or wood and palm-thatch homes.

"On a Saturday or Sunday, I used to do six or seven boat tours," said Cardenas, who charges $15 for a one-hour tour. "Nowadays, I'm lucky if I do one."

Cubans in Venezuela sow seeds of controversy*** For the government of Mr. Chávez, the Cubans provide invaluable aid in areas where Cuba's socialist revolution has made internationally recognized strides, such as health and education.

But for Chávez's opponents, who have long charged that his goal is to transform Venezuela into a communist dictatorship, the Cuban workers are really preparing the ground for the "Cubanization" of Venezuela. Although the first Cubans came here shortly after Chávez took office in 1999, the controversy has heated up since the launch in recent months of three new programs: urban gardening, literacy training, and medical care for the poor.***

Venezuelan President Hugo Chavez holds the sword of Simon Bolivar in Caracas, during a ceremony celebrating the 220th anniversary of the birth of the national hero, July 24, 2003. Two thirds of Venezuelans disapprove of President Chavez's government, his lowest approval rating since taking office more than four years ago, according to a survey published on Thursday. Venezuela has faced political instability for more than a year as Chavez's opponents stepped up a campaign to oust a leader they accuse of driving the world's No. 5 oil exporter to economic ruin and favoring Cuba-style communism. REUTERS/Howard Yanes

Another Castro protégé.

Zimbabwean President Robert Mugabe, watched by a police woman and a bodyguard, arrives for the opening of Parliament, July 22, 2003. Mugabe addressed the house with the opposition Movement for Democratic Change (MDC) President Morgan Tsvangirai listening from the public gallery. The MDC legislators did not carry out previously threatened disruptions. REUTERS/str

Zimbabwe and Venezuela - two former "breadbaskets."

Residents of the Mbare suburb in Harare, queue to buy sugar Friday July 11, 2003. Zimbabwe braced for at least a 500 percent increase in the price of corn meal as the government appeared Friday to have given up enforcing its price freeze on key foods in the beleaguered economy. (AP Photo)

John does his shopping in a government supermarket in a poor neighborhood in Caracas, Thursday, July 3, 2003. Food basic products in Venezuela, such as flour (which is used for typical foods such as 'arepa') are beginning to be scarce. Most poor people eat 'arepa' as a basic meal. Venezuela's economic crisis, the worst in decades, has spared no one _ posing the greatest challenge to President Hugo Chavez's grand design of bridging the gap between wealthy and poor in this South American nation. ( AP Photo/ Natacha Pisarenko)

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