<http://online.wsj.com/article_print/0,,SB110384192022808595,00.html>
The Wall Street Journal
December 24, 2004
PAGE ONE
Visible Hand
To Fix Venezuela,
Ex-Guerrillas Want
To Make 'New Man'
Grand Utopian Experiments
Are Funded by Oil Money;
A Boost to Ch�vez's Power
Job for a Former Kidnapper
By JOS� DE C�RDOBA
Staff Reporter of THE WALL STREET JOURNAL
December 24, 2004; Page A1
CARACAS, Venezuela -- Trying to foment a Communist revolution here in 1976,
Carlos Lanz and five other men kidnapped an American executive, who then
spent much of the next 31�2 years chained to a tree in the jungle. The
revolution didn't arrive and Mr. Lanz went to prison for military rebellion.
Thanks to Venezuela's fiery president, Hugo Ch�vez, Mr. Lanz is getting a
second go at revolution in the world's fifth-largest oil exporter. Buoyed
by oil billions and back-to-back electoral victories, Mr. Ch�vez recently
gave the ex-guerrilla a new job: devising a plan for economic
self-sufficiency in which selfless workers would labor contentedly in
utopian cooperatives. Mr. Lanz says he wants to create nothing less than
Venezuela's "New Man."
"We are talking about the transformation of man's attitudes," says Mr.
Lanz, now 60 years old, during an interview in his office high above the
armies of peddlers who bivouac in Caracas's decaying city center. Among his
goals: having Venezuelans eschew Pepsis and Big Macs for sugar-cane juice
and Venezuelan-style pancakes called cachapas.
Ch�vez officials say they are creating "endogenous" development, borrowing
a term that economists use to describe a process that comes from within an
economy, as opposed to, say, changes brought about by globalization. In
Venezuela, this is often overlaid with Marxist rhetoric and signals the
presence of a heavy state hand running an economy walled off from
international competition -- the kind of development most Latin American
nations rejected as unworkable in the 1990s. If Venezuela's ambitious
experiment collapses, the ensuing instability could shake the region and
global oil markets.
Hugo Moyer, the official in charge of endogenization at the state oil
company, Petroleos de Venezuela, or PDVSA, calls the policy "development
from within, with materials from within, by those within for those within."
To accomplish that goal, the Ch�vez government is plowing billions of
dollars into new programs, called "missions," which act as social welfare
agencies. Mostly financed by the PDVSA and run by a hodgepodge of
bureaucratic offices, the missions are largely devoted to health-care
education and jobs training. They exist as a sort of parallel government
and are controlled by Mr. Ch�vez. The missions provide hundreds of
thousands of Venezuelans with monthly stipends to learn everything from
reading and writing to setting up cooperative farms. Mr. Ch�vez plans to
combine the dozen or so existing missions into a megaproject dubbed "Mision
Cristo," or Christ's Mission, which he proclaims will end poverty in
Venezuela by 2021.
The programs are a hit among Venezuela's poor and are helping solidify Mr.
Ch�vez's political base. Mr. Ch�vez has made a political career
exacerbating Venezuela's bitter social divisions. Despite the country's oil
wealth, about 61% of the people survive on less than $2 a day, according to
a survey by the Andr�s Bello Catholic University in Caracas.
Mr. Ch�vez's critics charge that his programs cost PDVSA billions of
dollars needed to keep up oil production. Analysts say production has
fallen to about 2.6 million barrels a day from about three million in the
aftermath of a devastating strike that ended last year. The government
disputes that estimate. Mr. Ch�vez's program, detractors say, will produce
subsidy-dependent enterprises that compete unfairly with private Venezuelan
companies and foreign firms. They add that Mr. Ch�vez's tendency to throw
money at Venezuela's deep-rooted social problems is unlikely to provide
lasting solutions.
Government and private business have been at each other's throats since
shortly after Mr. Ch�vez took office in 1999. The mercurial Mr. Ch�vez
loves to excoriate his mostly middle-class opposition -- from small shop
owners to matrons -- as "oligarchs." He regularly lays into the U.S., which
is Venezuela's biggest customer for oil and also the source of most of its
imports.
After the oil strike, opponents organized a recall referendum on Aug. 15.
Mr. Ch�vez won the poll by a large margin, amid claims the voting was
rigged. Earlier, he survived a short-lived coup. The constant strife has
battered Venezuela's economy, which has lost 2.5 million jobs in the last
five years. "He is the anti-Midas," says Heinz Sonntag, the former head of
the Central University of Venezuela's economic development center. "He
turns gold into dung." Thanks to sky high oil prices and a spurt in
government spending, Venezuela's economy is expected to grow as much as 16%
in 2004 after falling sharply in recent years.
PDVSA says it will spend $3.7 billion this year and an equal amount next
year for Ch�vez-approved social and economic-development programs. Earlier
this year, the company turned an empty fuel-storage depot into a
development zone dubbed the Fabricio Ojeda Endogenous Development Nucleus.
The center boasts clothing and boot-making cooperatives, a state-of-the-art
clinic and school, a food market and a 10-acre farm built on a steep
hillside in the middle of the city's slums.
At one recent training session, a group of mostly middle-age women workers,
dressed in white blouses and blue pants, cut cloth for T-shirts. A PDVSA
employee, Omar Ruiz, gave 18 co-op members a primer on the flaws of
capitalism. Mr. Ruiz encouraged his students to imagine a regular factory.
They soon came to the conclusion that the owner, played by their short,
bearded teacher, was appropriating the fruit of their labor. "They realize
they are very poor and I am very rich," said Mr. Ruiz. "Then we change that
by setting up an alternative, non-capitalist model, and everybody wins."
Then the class turned to the problems of their own clothing cooperative,
named "Venezuela Advances." The co-op, which has a $2,600 order from PDVSA
for a thousand T-shirts, received a 20-year, interest-free loan from the
state of $2.6 million. The 280 people who work there each agreed to invest
about $26 of their own money over five months. Only three out of the 18
class members were up to date on their monthly quotas, not enough to
support the company, even with its fat subsidies.
"To live from the company, we must invest in the company!" thundered Mr. Ruiz.
To plot Venezuela's new direction, Mr. Ch�vez has recruited a mix of
radicals, ex-guerrillas and military officers. Planning Minister Jorge
Giordani, who is charged with devising the government's poverty-fighting
strategy, was once known as "the Albanian" for the orthodox Marxist views
he held in graduate school. He formed part of Mr. Ch�vez's early brain
trust, tutoring Mr. Ch�vez when the future president was serving time in
military prison for leading an unsuccessful coup in 1992.
Elias Jaua, the head of the newly created Ministry of the Popular Economy,
was until 1991 a student leader of Bandera Roja, a former Marxist-Leninist
guerrilla group, according to Gabriel Puerta, the national director of
Bandera Roja. That group, which has since disavowed armed struggle, opposes
Mr. Ch�vez.
In his former role, Mr. Jaua helped lead violent protests at the Central
University of Venezuela every Thursday, in which students known as
"encapuchados" or hooded ones, threw rocks and Molotov cocktails at police,
Mr. Puerta says. A spokesman for Mr. Jaua says the minister was a student
leader, but not in Bandera Roja, and didn't participate in such
altercations. He says such accusations are part of a campaign to discredit
him.
Then there is Mr. Lanz, one of the principal ideologues for endogenization.
Mr. Lanz wants to move slum dwellers from beehive-like barrios to new lives
tilling the soil in government-planned farm cooperatives and other rural
businesses. He faults the Khmer Rouge, the murderous Communist regime in
Cambodia, for compelling people out of the cities in 1975 and promises that
the Ch�vez government won't use force. "We will conduct, convince, have
them fall in love and seduce them with successful alternative proposals
showing that one can live, under 'X' conditions, in rural areas," he says.
In 1976, Mr. Lanz and five other men entered the Caracas home of William F.
Niehaus, Owens-Illinois Inc.'s top Venezuelan executive, pretending to be
investigating an auto accident. They bound and gagged his wife Donna and
the maid and locked them in the sewing room. Mrs. Niehaus escaped from
after half an hour with the help of a pair of scissors. The kidnappers
injected Mr. Niehaus with a sedative, and took him off to the jungle. The
kidnapping was designed to gain international attention for the group's
goals.
Mr. Niehaus says he wasn't tortured, but that he slept chained to a tree
and lost 60 pounds. In 1979, policemen and farmers looking for cattle
rustlers stumbled onto the hut where he was held. They killed two
guerrillas guarding Mr. Niehaus and freed him. A year after the kidnapping,
Mr. Lanz was arrested. Mrs. Niehaus flew to Caracas and identified him as
one of the kidnappers.
Although Mr. Lanz and his comrades failed to overthrow the government, the
kidnappers got a lot of publicity -- including the publishing of guerrilla
manifestos in leading newspapers throughout the world. Mr. Niehaus, 73, now
a consultant in Toledo, Ohio, says of Mr. Lanz: "I try to forget him."
Mr. Lanz spent eight years in prison and used the time to write a book
called "The Niehaus Case and Administrative Corruption," which is now out
of print. He says he assumes "political responsibility" for the kidnapping,
without elaborating.
In a recently published pamphlet titled "The Revolution is Cultural or It
Will Reproduce Domination," Mr. Lanz wrote that the state must fight a
relentless war against junk food, replacing hamburgers and sodas with
native foods. That could help cure Venezuela of the consumerism it has
imported from the U.S., he says. "I've been called a gastronomic
fundamentalist," he adds.
Mr. Lanz and Mr. Jaua run "Mision Vuelvan Caras," or Mission About Face, a
program whose goal is to transform the economy into a network of
state-financed cooperatives producing everything from organic lettuce to
endogenous anti-riot vehicles modeled on the U.S. Hummer. Fifty-five of
these have already been built for the Venezuelan military.
So far, says Mr. Jaua, close to 34,000 cooperatives in agriculture,
construction, services and manufacturing are in the works. Some 206 centers
for endogenous production are already up and running throughout the
country, he says. The government is paying about 400,000 members of its
cooperative-training program a monthly stipend of roughly $100, for up to a
year, to take classes in setting up cooperatives. It wants to triple the
number of students.
Despite Mr. Ch�vez's admiration for Cuba, few expect him to go as far as
Fidel Castro and expropriate private and foreign businesses. The government
already owns the oil sector, which produces export revenue of $26 billion,
or about 80% of Venezuela's export haul. Opinion polls also suggest an
overwhelming majority of Venezuelans oppose any attempt to duplicate the
Cuban regime. Mr. Ch�vez has nonetheless constricted foreign participation
in Venezuela's oil industry and is using oil money to set up a new
state-run airline and a state-run telecommunications company -- years after
the government sold off those assets in a push toward free markets.
The endogenization program has boosted Mr. Ch�vez's popularity, especially
among the poor who benefit most. "I'm taking the opportunity President
Ch�vez has given me," says Ana Guedes, a 39-year-old seamstress. "He is the
best president we've ever had." Previously unemployed, she is now paid $100
a month as a member of Mision Vuelvan Caras. Mr. Ch�vez's approval ratings
have doubled from a low point of 30.8% in July 2003, before the Missions
began operation, to 59.2% in September, according to Datanalisis, a
Venezuelan pollster.
Even critics say some of the activities, such as bringing Cuban doctors to
the barrios, have helped millions of slum dwellers who had little access to
health care. It's less clear whether various education projects, which
essentially consist of funneling money to the poor, have had much effect,
says Luis Pedro Espa�a, an expert on social policy at the Andr�s Bello
Catholic University. For instance, says Mr. Espa�a, most Venezuelan
illiterates are women over 55 living in rural areas. Mr. Ch�vez's
alphabetization program, called Mission Robinson, is mostly aimed at the
urban population.
At Fuerte Tiuna, the headquarters of Venezuela's armed forces, base
commander Col. Antonio Alcal� says the program helps Venezuela. Col.
Alcal�, who like Mr. Ch�vez spent time in military prison after the failed
1992 coup, is teaching residents of nearby slums how to grow vegetables on
their roofs without chemical-based fertilizer, a technique developed by
Cuba. He says some 70,000 one-meter square "micro-plots" are being
cultivated in the slums around Caracas, helping wean Venezuela off food
imports.
Digging his hands into a trough of fertilizer made by millions of worms fed
on cow dung, Col. Alcal� praises the future of Venezuela's new agriculture.
"In a couple of years, we'll be selling vegetables to Cuba," he says.
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