Country Profile

At night Caracas looks fantastic. From the modern, high-rise centre the surrounding hillsides seem festooned with what look like twinkling Christmas lights. By day the sight is less festive. The steep mountain sides are covered with a dense network of ranchos, the ramshackle slums which encircle the city. Over a million of the capital’s four million people live in the precarious and violent shanty towns. In 1994 hundreds were killed or injured when a hurricane washed their shacks down the hillsides.

The rancheros are the most visible casualties of Venezuela’s economic decline. Once the wealthiest country in Latin America, its huge oil exports paid for its transformation from a sleepy, coffee-exporting backwater into a brash consumer society. In the 1970s the Middle East crisis and the rise of OPEC brought a windfall of petrodollars, filling government coffers and private pockets.

In the heyday of ‘Saudi Venezuela’ the country was the world’s largest per-capita importer of Scotch whisky. Peasants abandoned their villages to enjoy the bright lights. Migrants from Colombia and other countries poured in, hoping that something would trickle down to them. The ranchos spread around the glittering city centre.

In 1983 the party abruptly ended. Falling oil prices coincided with high interest rates on the huge debts which the Government had incurred during the boom. The bolívar was devalued, the economy sank into recession, unemployment and food prices rocketed. More than a decade later, Venezuela is still struggling with austerity measures and a massive foreign debt.

The other casualty of the economic crisis was the two-party political structure which had brought stability to the country since the end of military rule in 1958. Oil money lubricated a system in which the parties alternated in government, rewarding their supporters with jobs and subsidies. For as long as the coffers were full the system worked. A large middle class enjoyed a good standard of living, while the political élite hoarded millions in their Miami bank accounts.

The crash derailed the gravy train. Four years after his election on an anti-corruption ticket, President Carlos Andrés Pérez was impeached on charges of embezzling 250 million bolívares. Two attempted coups in 1992 rocked Venezuela’s image of stability. Voters rejected the traditional parties and elected an old-style populist, Rafael Caldera, who promised better times. Within months of his election Venezuela’s banking system began to unravel, revealing endemic corruption in government and financial circles.

Despite other natural resources, oil still rules in Venezuela. Under pressure from the IMF to break up the state monopoly, the Government is inviting foreign prospectors and producers into joint ventures. In Lake Maracaibo, where oil slicks escape from corroded pipes, the pumps work around the clock. In the jungle of Guyana and offshore the search for new fields continues. But few Venezuelans believe that the good old days can return. Some estimates suggest that 60 per cent of people are living in poverty, and crime has become an epidemic. Looking up at the menacing masses of ranchos, the wealthy few dread the day when the poor descend from the hills in search of a long-gone fortune.

James Ferguson

AT A GLANCE

LEADER: President Rafael Caldera (formerly president 1969-73) Advert ECONOMY: GDP per capita $2,800 (US $22,240) Monetary unit: bolívar Main exports: petroleum (80%), metals Main imports: machinery, transport equipment External debt: $38 billion (1994) Despite attempts to diversify, oil remains the dominant export. Agriculture was neglected as Venezuela became a 91-per-cent urban society; many staples are imported. PEOPLE: 20.7 million. Population growth rate 2.6% per annum. HEALTH: Infant mortality 35 per 1,000 live births (US 9 per 1,000). CULTURE: Population mostly descended from Spanish, Italian and Portuguese immigrants. Afro-Venezuelans make up about nine per cent of the population. There are 27 distinct indigenous groups, numbering about 250,000 people. Religion: Roman Catholic; several popular ‘cults’ and evangelical churches. Languages: Spanish; 21 separate indigenous languages are spoken. Sources: World Bank; UNDP; Third World Guide 93/94; Economist Intelligence Unit; Latin American Monitor. Previously profiled April 1985 Advert

STAR RATINGS

	INCOME DISTRIBUTION Extensive poverty partly offset by price subsidies. A large middle class. 1985		LITERACY 62% (1985-90). Adult literacy is estimated at 89%. But austerity measures are cutting the education budget. 1985
	SELF-RELIANCE Over-dependence on oil exports means too many goods are imported. 1985		FREEDOM Mostly free media, but police and military deal violently with demonstrations. 1985
	POSITION OF WOMEN Some progressive legislation and career opportunities available. But machismo remains rife. 1985		LIFE EXPECTANCY Men 67, women 73. 1985

POLITICS

NI ASSESSMENT Shaken by corruption scandals, attempted coups and social unrest, the Government is becoming more authoritarian. But so far democracy has survived, with a thriving new left-wing party, Causa R, making important gains.

NI star rating

EXCELLENT GOOD FAIR POOR APPALLING