Chávez, Seeking Foreign Allies, Spends Billions

Chávez, Seeking Foreign Allies, Spends Billions

http://www.nytimes.com/2006/04/04/wo...age&oref=login

By JUAN FORERO
Published: April 4, 2006

CARACAS, Venezuela — President Hugo Chávez is spending billions of dollars of his country's oil windfall on pet projects abroad, aimed at setting up his leftist government as a political counterpoint to the conservative Bush administration in the region.

With Venezuela's oil revenues rising 32 percent last year, Mr. Chávez has been subsidizing samba parades in Brazil, eye surgery for poor Mexicans and even heating fuel for poor families from Maine to the Bronx to Philadelphia. By some estimates, the spending now surpasses the nearly $2 billion Washington allocates annually to pay for development programs and the drug war in western South America.

The new spending has given more power to a leader who has been provocatively building a bulwark against what he has called American imperialistic aims in Latin America. Mr. Chávez frequently derides Mr. Bush and his top aides. In March, he called Mr. Bush a "donkey," a "drunkard" and a "coward," daring him to invade the country.

But with the biggest oil reserves outside the Middle East, Mr. Chávez is more than an irritant. He is fast rising as the next Fidel Castro, a hero to the masses who is intent on opposing every move the United States makes, but with an important advantage.

"He's managed to do what Fidel Castro never could," said Stephen Johnson, a scholar at the conservative Heritage Foundation. "Castro never had an independent source of income the way Chávez does. Chávez is filling a void that Castro left for him, leading nonaligned nations."

It remains unclear exactly how much the government has spent, because the state oil giant, Petróleos de Venezuela, has not made detailed financial records public, and its balance sheets have been shielded from independent audits. Mega-projects, like Mr. Chávez's utopian plan of building a gas pipeline through the Amazon from Venezuela to Argentina, are not likely to materialize.

But Mr. Johnson estimates that Venezuela pledged $3 billion in aid last year to its neighbors, including generous bond purchases that made the government a lender of last resort across the continent.

The Center of Economic Investigations, an economic consulting firm in Caracas, issued a study recently that said Mr. Chávez had spent more than $25 billion abroad since taking office in 1999, about $3.6 billion a year, while First Justice, a leading opposition party, put the figure at $16 billion, based on Mr. Chávez's own declarations.

What is clear is that upward of 30 countries as far away as Indonesia have received some form of aid or preferential deals.

His government has purchased $2.5 billion in Argentine debt, the Venezuelan finance minister, Nelson Merentes, recently said, and was selling oil at cut-rate prices to 13 Caribbean countries and buying a big stake in Uruguayan gas stations. Some projects are as ambitious as the planned $3 billion purchase of 36 Brazilian oil tankers. Others are as modest as the $3.8 million in aid Venezuela has provided to four African countries.

Critics see the spending as a reckless exercise in populist decadence intended to burnish Mr. Chávez's image as the region's leading statesmen while embarrassing the Bush administration, the Venezuelan leader's principal obsession since American officials gave tacit support to a failed coup against him in 2002. Venezuela may be enjoying record high oil prices, they say, but it remains poor and mismanaged.

Mr. Chávez is "spending considerable sums involving himself in the political and economic life of other countries in Latin America and elsewhere, this despite the very real economic development and social needs of his own country," said John Negroponte, the American director of national intelligence, in February at a Congressional hearing in Washington.

Antonio Ledezma, an opposition leader and one of the president's more determined foes, said the policy's aim was to build "a political platform with an international reach."

Mr. Chávez celebrates the spending as revolutionary largesse, intended to further his dream of unifying Latin America in a way Simón BolÃ^var could only dream of.

With the price of Venezuelan crude rising fivefold since Mr. Chávez was first elected in 1998, the spending has not hurt international reserves or Venezuela's credit worthiness. Oil analysts say the sustainability of that situation depends on the flow of revenues, the price of oil and the amount of crude Venezuela's oil industry is able to produce.

"From a fiscal perspective," said Michelle Billig, director of political risk at the Pira Energy Group, a New York consulting firm, "there's a lot of concern over the lack of savings and what an expansionary fiscal policy could do to their macroeconomic outlook should there be a downturn in prices or supply."

Critics who have questioned Venezuela's spending are roundly denounced by the government, which says its focus remains on providing for Venezuela's poor. Indeed, Venezuela plans this year to deposit $10 billion into a fund for social programs, Mr. Chávez said in February, up from $8 billion in 2005.

The programs, government officials contend, have helped reduce poverty to below 30 percent of the population. Social scientists in Venezuela dispute the claim, saying that poverty still hovers at well over 50 percent.

Whatever the truth, polls show that Venezuelans, even those who strongly support Mr. Chávez, are increasingly concerned about the spending abroad.

While the president enjoys the support of a majority of Venezuelans, polls by Greenberg Quinlan Rosner Research, a Washington polling company that has worked for Venezuela's opposition movement, show that fewer than 30 percent of Venezuelans believe the country should spend its oil revenue abroad.

Even in Mr. Chávez's strongholds like Catia, a tumbledown neighborhood in western Caracas, it is not hard to find those concerned about the foreign spending, even if they support the government.

"They should first take care of their own house before taking care of others," said BenjamÃ^n Delgado, 71, a retiree who otherwise backs the government. "I think Chávez does it so he seems bigger. He wants to be seen as an international leader. There are many things about him I support. Giving away money for exactly nothing, I don't like that."

Big deals — often announced on Mr. Chávez's weekly nationwide television and radio broadcast — go to the heart of the president's persona, that of a revolutionary out to remake a region he says has suffered under Washington's thumb. In the process, critics note, the Venezuelan government has fallen short on the more mundane aspects of governing, like fixing bridges, building homes or running hospitals.

"I do think this is a vulnerability of Chávez, that he prefers the grandiose to the pedestrian," said Michael Shifter, a policy analyst at the Inter-American Dialogue, a Washington-based policy group, who recently visited Caracas.

There is little doubt, however, that the spending has won Mr. Chávez stature and support abroad. For Argentina, the debt purchases helped President Néstor Kirchner, Venezuela's left-leaning ally, to pay off that country's $9.8 billion debt to the International Monetary Fund, ending Argentina's stormy relationship with the group.

In Cuba, Venezuela has supplied nearly 100,000 barrels of cut-rate oil per day — a deal Cuba repays with doctors and other services — making Mr. Chávez a benefactor on a par with the Soviet Union, which once bankrolled Castro's economy.

In the Bronx this past winter, Citgo, a subsidiary of Petróleos de Venezuela, provided heating fuel at a 40 percent discount to some 8,000 low-income residents of 75 apartment buildings.

Even in Philadelphia, where thousands of households are benefiting from a program by Citgo to provide heating oil at a significant discount, people were won over, despite Mr. Chávez's antagonism toward Mr. Bush.

"All I can say is thank God for him for being able to help me and some others get some oil," said Geraldine Shields, a homeowner who received 200 gallons of free oil in January and will be able to buy fuel at a 40 percent discount. "It's time somebody starting thinking of the little guy."