Venezuelan President Hugo Chavez said on Wednesday that a recession in his Latin American country marked the death of capitalism and had nothing to do with his government’s socialist revolution.
The OPEC member’s economy is bucking the global recovery trend, with the central bank posting a 5.8 percent contraction for the first quarter of 2010 on Tuesday.
The increasingly grim macroeconomic environment — which economists call “stagflation” because the slump has not cooled runaway inflation — is now a major challenge for Chavez with a legislative election looming in September.
“GDP shrank in the first quarter and the bourgeoisie are having a party,” Chavez said, referring to political opponents who blame his policies for the recession.
“They don’t realise that the party they are attending is the wake of capitalism … because the economy that is shrinking is the capitalist economy,” he said in a televised speech.
The poor fiscal performance in the first three months, compared with the same period of 2009, had been widely forecast by analysts who expect Venezuela to be the only country in the region to record negative growth this year.
The central bank attributed the contraction mainly to restricted access to foreign currency for imports, lower domestic demand and power rationing — despite the recovery of crude prices benefiting the region’s biggest oil exporter.
“We are going to bury Venezuelan capitalism,” Chavez said, adding that his administration would “take from the bourgeoisie control of the money which belongs to all Venezuelans.”
After 11 years in power, he blames the economic woes on a global crisis in capitalism and the impact of a traditional elite who he says are determined to drive him from office.
For some odd reason, though, the collapse of global capitalism of which Chavez speaks seems pretty much limited to his own country. In Brazil, for example, the first-quarter GDP grew by 9.85 percent, in Argentina by 3.37 percent and even in violence-plagued Mexico by 4.3 percent.
Quico at Caracas Chronicles puts Chavez’s reaction to the news of Venezuela’s imploding economy in perspective:
In celebrating the plunge in our nation’s economy, Chávez is, in effect, celebrating the fall into poverty of countless thousands of families, of his base, damnit. Thousands of regular folks see the gains they’d made during the oil boom cruelly clawed back by inflation and shortages, and the government’s response is to chalk it all up as a win!
Do stop to grasp what we’re seeing here, because in a way, it’s historic.
For any number of poor and near-poor Venezuelans, the distant abstractions of the first quarter GDP report mean all they can afford is two meals a day, instead of three. It means having to choose between medicine and school supplies for their kids.
The lethal combination of slowing economic activity alongside fast rising prices spells real economic hardship, proper suffering, for precisely the kinds of people the government claims to champion.
It took a radically pro-poor government to, in the end, come all the way around and cheer what the most conservative of right wing governments could never have allowed itself to celebrate: the further impoverishment of the poor, under its own watch.
It’s really too much.
Update: Al Jazeera has an interesting report about one of Venezuela’s pro-Chavez “Boligarchs.”