Sunday, January 13, 2013

Transcript excerpt from Fareed Zakaria's GPS on CNN

The following is excerpt of transcript from CNN’s Fareed Zakaria GPS broadcast on January 13, 2013:
ZAKARIA: Now, for our What in the World segment. For 14 years, Hugo Chavez has been a troubling global presence. He's been an avowed critic of American capitalism and, yet, he has generated billions selling oil to the United States.

He is a populist whom some revere, but others despise. One thing's for sure, Venezuela's president is a fighter. Last year, it seemed he had even defeated cancer, but the cancer is back and Chavez is set to be gravely ill.

The newly reelected president hasn't been seen for a month so when he couldn't attend his own swearing in ceremony on Thursday, it sparked a natural set of questions in Venezuela and around the world, what's next?

Whoever inherits the presidency, Chavez will cast a long shadow. Look at his record, on the one hand, the poorest are actually better off. According to the Center for Economic Policy and Research, poverty has declined by 50 percent since 2004. Extreme poverty has declined by 70 percent.

Over the same period, college enrollment doubled and millions of Venezuelans gained access to health care. Many are getting free housing. Chavez announced of television last year he would build 2 million homes for the poor.

But look deeper and you'll see that the programs that created these gains are built on an oil boom. They are badly designed and they are damaging the Venezuelan economy.

The economy is frankly in a shambles. Barclays Research puts Venezuela's annual fiscal deficit at nearly 20 percent of GDP, one of the highest imbalances in the world. Total debt has more than doubled since 2008 and that is despite the fact that Venezuela has the greatest proven reserves of oil in the world. More than Saudi Arabia, Iran or Canada. When Hugo Chavez first came to power in 1999, oil was trading at $11 a barrel. Today, it is trading at $111 a barrel. Chavez has presided over the greatest windfall in his country's history. And, yet, Venezuela is probably the only petro-state in the world where people regularly suffer power outages. Infrastructure is crumbling and public security is abysmal.

Venezuela has one of the worst homicide rates in the world, worse even than Colombia, Honduras or Mexico. Our recent foreign affairs essay pointed out that Venezuelan exports to the U.S. from the start of Chavez's rule through 2011 added up to nearly $350 billion. That's ironic for a presidency which marketed itself as anti-American. But even that trend may be reversing. According to a "Financial Times" report for every ten barrels of crude that are exported to the United States, Venezuela now needs to import two back because it lacks refining capacity, which has been made worse by a recent explosion at a Venezuelan refinery. In other words, America is selling oil to Venezuela. Meanwhile, Chavez continues to ship a reported 100,000 barrels of subsidized crude oil to Cuba every day. Venezuela's people have gotten used to tall promises, free housing, essentially free gasoline, but increasingly, the state cannot afford it. It's popular to be anti-American and, yet, the money has been coming in from Washington.

Cuba remains a staunch ally, but if it stops receiving cheap oil, it will pull out its tens of thousands of doctors from Venezuela, which would destroy Venezuela's health care system. All these years a popular Hugo Chavez has been masking all these fundamental flaws in his economy using oil wealth. But the problems are building. The next leader of Venezuela will face the build up of all these problems and probably without Chavez's charisma or guile. If you think balancing the budget in Washington is difficult
, spare a thought for what Caracas will have to do in the coming years.
Maru Angarita
My blog is: Twitter @maruangarita