Venezuela: Does an increase in poverty signal threat to government?

Former President Chávez targeted the country's poor with subsidies and programs funded by oil revenues. But with oil prices plummeting and poverty on the rise, this core base of supporters is being tested. 

Carlos Garcia Rawlins/Reuters/File
People walk on the street close to a building with a giant mural depicting late Venezuelan President Hugo Chávez in Caracas March 4, 2015.

Andre Mendes stands under a hot tropical sun, keeping a careful eye on the busy street in front of him. He diligently patrols the entrance to a complex of shops and condominiums, but what's offered inside is out of his reach. A hamburger in the building’s food court costs more than Mr. Mendes, security guard, makes in a day.

“I used to shop without worrying,” he says. “Now I stop and ask the price before buying even a piece of candy.”

Amid soaring inflation and shortages of basic goods and medicine, Venezuela is seeing a steady increase in the number of people who struggle to meet their basic needs. Anywhere from about one-third to nearly half of the population now lives in poverty, according to studies released in recent weeks. And greater hardship for Venezuela's working class could mean trouble down the road for its government.

Two years after President Hugo Chávez’s death, his allies are struggling to keep the country together in the face of protests and falling approval ratings. Mr. Chávez fashioned himself a champion of the poor during his 14 years in office, funneling billions of dollars of Venezuela’s oil wealth into social programs. As poverty fell during his rule, loyalty from this long-ignored sector of the population grew. But Chávez’s handpicked successor, President Nicolás Maduro, inherited a stalling economy, made worse by plummeting international oil prices.

Now, public approval for government leadership has fallen from around 60 percent for Chávez in 2013 to only 23 percent for President Maduro as of March. With poverty on the rise, many are starting to question what it could mean for the fate of Chavismo, as the former president's political project is called. 

“If the situation gets worse, the government will have to face a population with very few opportunities, including its own political base,” says Dimitris Pantoulas, a Caracas-based political analyst.

'Oil party is over'

Frustrations have boiled over in recent months. The government has installed fingerprint scanners in state-run grocery stores to track purchases and deployed the National Guard to maintain order at supermarkets and pharmacies. Lines for hard-to-find items often stretch into the street. Many government-subsidized products wind up in the hands of illegal traders, who resell them at prices that few low-wage workers can afford.

“The oil party is over,” says Luis Pedro España, a sociologist at the Universidad Católica Andrés Bello in Caracas and the lead author of a recent study on poverty and social programs here.

Windfall oil revenues allowed Chávez to provide subsided food, housing, medical care, and education to the country’s poor. With oil prices at a five-year low, Venezuela is short of money and that means greater scarcity and price inflation, which officially stood at 197 percent in the first two months of this year. Up to 70 percent of all households could fall below the poverty line this year, according to Mr. España’s research, the highest level since poverty statistics started being tracked in the 1980s.

These abstract figures translate into real problems for Venezuelans living on the edge. “Everything is more expensive. Everything is more difficult,” says fast-food restaurant employee Carolina Alfaro, who makes about 5,600 Bolivars a month, worth between $24 and $36 at black-market rates.

Mendes, the security guard, says he has been working six days a week to get by. “I used to support the government,” he says. “But now I don’t see the point. I feel let down.” 

In 2013, the share of the country's population living in poverty rose by nearly 7 percentage points, to 32 percent, according to an annual survey by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). This compares with an average Latin American poverty rate of 28 percent.

España's team found that the share of households living in poverty here rose to 48 percent in 2014. And a local NGO, Provea, said that its analysis showed that Venezuela was likely to finish 2015 with the same number of people living in poverty as in 2000, erasing the progress made under Chavez.

'Could get worse'

Venezuela hasn’t hit rock bottom. Things “could get worse,” says David Smilde, an analyst at the Washington Office on Latin America, who lives in Venezuela. He says famine and extreme hunger are not challenges at this point.

Moreover, many poor Venezuelans enjoy a better standard of living today than they did before Chávez overhauled the government, Mr. Smilde says. The poverty rate in Venezuela ran as high as 62 percent in 2003, during Chávez's first term, before dropping to 25 percent in 2012, his last full year in power, according to statistics from the World Bank.

On Mar. 5, thousands of admirers filled the streets of Caracas waiting for hours in a different kind of long line. They were queuing up to pay respects at Chávez’s tomb on the two-year anniversary of his death.

The government has room to survive the economic turbulence, says Mark Weisbrot, co-director of the Washington-based Center for Economic and Policy Research. “If present trends continue, [the government is] in trouble, but there’s no reason to believe that they won’t make the necessary changes,” Mr. Weisbrot says.

Since 2007, Venezuela has borrowed tens of billions of dollars from China to help shore up its finances. It has also pared back on foreign aid programs created by Chávez, like Petrocaribe, which traded oil to largely Central American and Caribbean nations on preferential terms. The government’s also debating the reduction of a popular gasoline subsidy that costs the country upwards of $15 billion annually.

This month, the National Assembly granted Maduro emergency decree powers, allowing him to pass laws without congressional approval, the second such waiver since taking office in 2013. The powers will last him the rest of 2015, and many fear they will be used to quash political dissent within the country.

And many Venezuelans remain deeply committed to Chavismo, despite the economic hardship. “If we’re in such bad shape, why do I keep voting for the government?” asks Jain Torrealba, a father of three who makes minimum wage as a gas station attendant. “I have to have patience with this system,” Mr. Torealba says, “because I don’t see any [other] solution … for me as a poor person.”

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