by Mary Anastasia O'Grady
The Wall Street Journal, May 25, 2003

The Venezuelan Ambassador to the U.S., Bernardo Alvarez, met with members of The Wall Street Journal editorial page in New York a few weeks ago. Former Republican vice-presidential candidate Jack Kemp accompanied him. Mr. Kemp explained that he has a long-standing relationship with "Bernardo" and suggested that since much Venezuelan oil flows to the U.S., the U.S. relationship with Venezuela is important. Of course, U.S. oil supplies have nothing whatsoever to do with U.S.-Venezuelan relations. Venezuela has to sell its oil to survive, if not to Americans, then to others. So Venezuela is hardly in a position to curtail the world's supply of petroleum, the only thing that matters to the U.S. Other OPEC nations have the same urgency, which is why the strategy of cutting output to boost prices has serious limitations, all the more so because there are important non-OPEC oil-producing countries that don't comply with cartel quotas.

The upshot is that Venezuela needs to worry more about its image in the U.S. than the U.S. has to worry about good relations with Venezuela. That image could hardly be worse at the moment. The totalitarian aspirations of Hugo Chavez's "Bolivarian Revolution" have moved like a hurricane across the Venezuelan economy, wrecking everything in its path. The only thing left standing that can throw off revenue is the Venezuelan oil monopoly PDVSA. But since Mr. Chavez's absolute utopia also requires authoritarian control of PDVSA, he has had to fire every oil worker who doesn't agree with him. It's no coincidence that those fired also happened to be the company's most able and educated employees. To replace them he's brought in untrained chavistas who are loyal to the revolution but can't tell an oil rig from a desert cactus. Ergo, Mr. Chavez's survival depends on seducing foreigners who are by choice apolitical to invest and to provide technical know-how. It's the same model Fidel Castro has used in the tourism sector to stay alive since the Soviet Union collapsed, taking his subsidies with it.

This is really what Mr. Alvarez's recent U.S. charm offensive in which he quotes Thomas Jefferson, boasts of Venezuelan "democracy" and pals around with a well-known Republicanis all about. But while Mr. Alvarez is flitting about the U.S. paying lip service to American values, back home his political party the hard-left Patria Para Todos or PPT is nefariously aiding Mr. Chavez in draining the last bit of freedom out of Venezuelan society.

Mr. Chavez's political party is the MVR, which largely draws its power from the favelas (slums). But it is Mr. Alvarez's PPT, an elite party of ideological socialists close to Castro, that is now running the country. Ali Rodriguez, a PPT heavyweight, now heads PDVSA and has so politicized the company that Venezuelans have taken to calling it PPTsa. In her May 11 column in Venezuela's El Universal, prominent political commentator Marta Colomina referred to the "knife fight" going on inside the company for control of the oil "booty." At war are the PPT, MVR and the military, who she said doesn't want to be last in line to share the wealth. When he's not running PPTsa Mr. Rodriguez sits on the board of Sao Paulo Forum an international association started by Fidel Castro in the early 1990's along with Colombian guerrilla leader Manuel Marulanda.

The PPT's version of "democracy" holds that, once elected, the maximum leader calls all the shots. Mr. Chavez didn't have far to travel ideologically to close ranks with the PPT. Since he came to power in 1999 he has been perfecting his impersonation of an egotistical Cuban dictator, railing against his political adversaries, free enterprise, the media, the Catholic Church et al. He invites property invasions, foments hatred, and threatens opponents with retaliation. The country is rife with Cubans, who Mr. Alvarez told me are "helping" Venezuela as teachers and medicos. Yet none of this has been as effective in clamping down on the opposition as the heavy artillery Mr. Chavez brought out in January: exchange controls and price controls. Superficially these policies may seem minor offenses, next to the Chavez practice of arming paramilitary groupsthe infamous Bolivarian Circles. But by seizing power over every dollar that comes into the country and by imposing price controls he has done what no chavista thug could. He has gained a chokehold on the private sector.

Since January there has been almost no access to dollars by private businesses. Wholesalers and industrialists are running out of inventories and in a country that exports oil and imports almost everything else, this is devastating. Imagine the fleet of garbage trucks in Caracas that wants for spare parts and you have some idea of how the economy is breaking down. Businesses are closing, pharmacies are short on medicines and official unemployment -- 21% at the end of Februaryis ballooning. Dollars are now the government's most valuable weapon. It can withhold them to punish its enemies and use them to reward loyalty. Only it or its chosen few can import food. It's supplying its own chain of government stores and also distributing small food parcels to the poor at below market prices.
Packed in every bolsita is a colorful revolutionary propaganda flyer.

In recent days, Mr. Chavez has proposed new laws to censor the media and add 12 new seats to the Supreme Court, which he will no doubt pack. All of this will be stamped "democratic" because of his simple majority in congress and his elected office. To complete his totalitarian takeover of the country, all Mr. Chavez has to do now is make sure that the black gold keeps flowing.

And that's why Mr. Alvarez is trying to make nice with American oilmen.

**Mary O'Grady is a collaborator of the UNION LIBERAL CUBANA and a senior editorial page writer at The Wall Street Journal and editor of "The Americas," a weekly column that appears every Friday and deals with poltics, economics and business in Latin America and Canada.