Economic policy of the Hugo Chávez administration

From his election in 1998 until his death in March 2013, the administration of the late Venezuelan President Hugo Chávez proposed and enacted populist economic policies as part of his Bolivarian Revolution.

[1][2] Domestically, Chávez used such oil funds for populist policies, creating the "Bolivarian missions", aimed at providing public services to improve economic, cultural and social conditions.

[3] Despite warnings near the beginning of Chávez's tenure in the early 2000s,[1] his government continuously overspent in social spending and did not save enough money for any future economic turmoil, which Venezuela faced shortly before and after his death.

Chávez also explored the liquidation of some or all of the assets belonging to PDVSA's US-based subsidiary, Citgo, which received criticism amongst the Venezuelan public due to corruption.

[17] The secretary general of the United Federation of Petroleum Workers of Venezuela (FUTPV) said "PDVSA is falling apart" and that "lack of direction, investment and maintenance are wrecking the oil and natural gas industries".

Critics have also accused Chavez of letting loyalists run PDVSA instead of those qualified for the positions[18] since the company only hires political supporters of the president.

[19] Since Chávez was elected in 1998, over 100,000 worker-owned cooperatives—representing approximately 1.5 million people—were formed with the assistance of government start-up credit, technical training, and by giving preferential treatment to cooperatives in state purchases of goods and equipment.

[21] One of the primary ways that the Chávez administration attempted to fix the problem of economic inequality was by wealth redistribution, primarily via land reform, and social programs.

[21] The Chávez government pursued a series of Bolivarian Missions aimed at providing public services (such as food, healthcare, and education) to improve economic, cultural, and social conditions.

[31] A 2010 OAS report criticizing Venezuela's human rights standards indicated achievements in addressing illiteracy, healthcare and poverty, and economic and social advances.

[4] On 31 March 2000, Chávez initiated policies that resulted with the Venezuelan government spending more than it received as oil prices began to rise.

[36] The Venezuelan government also set price controls in 2003 on around 400 basic foods in an effort according to The Washington Post, to "counter inflation and protect the poor", and in March 2009, they set minimum production quotas for 12 basic foods that were subject to price controls, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce.

[41] Many projects initiated during his presidency have remained incomplete and have experienced difficulties due to funding issues, political costs, corruption and bad execution.

[47] In January 2008, Chavez ordered the military to seize 750 tons of food that sellers were illegally trying to smuggle across the border to sell for higher prices than what was legal in Venezuela.

[48] In February 2009, Chavez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which he claimed they had been avoiding in response to the price caps.

[50] In March 2009, Chavez set minimum production quotas for 12 basic foods that were subject to price controls, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce.

[57] In 2006, the Chávez government began nationalizing several industries as part of its policy of wealth redistribution and reducing the influence of multinational corporations.

[88] One of the Chávez administration's primary goals was to reduce the influence of foreign capitalists in Venezuela, as part of its overall push towards localized economic democratization.

[117] According to the Economist, the Chávez government's economic policies, including strict price controls, have led to Venezuela having the highest inflation in the world at the time.

[119] Teresa A. Meade wrote that Chávez's popularity "rests squarely on the lower classes who have benefited from these health initiatives and similar policies".

As Venezuela printed more money for their social programs, the bolívar continued to devalue for Venezuelan citizens and merchants since the government held the majority of the more reliable currencies.

This leads to businesses selling their goods and making a low profit, such as Venezuelan McDonald's franchises offering a Big Mac meal for only $1.

Venezuela's largest food producing company, Empresas Polar, has stated that they may need to suspend some production for nearly the entire year of 2014 since they owe foreign suppliers $463 million.

[129][130] In January 2008, Chávez ordered the military to seize 750 tons of food that sellers were illegally trying to smuggle across the border to sell for higher prices than what was legal in Venezuela.

[48] In February 2009, Chávez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which he claimed they had been avoiding in response to the price caps.

[133] The Mercal network was criticized by some commentators as being a part of Chávez's strategy to brand himself as a provider of cheap food, and the shops feature his picture prominently.

The Mercal network was subject to frequent scarcities of basic staples such as meat, milk and sugar – and when scarce products arrived, shoppers had to wait in line.

[54][138] In May 2010, during a shortage of beef, at least 40 butchers were detained on charges of speculation for allegedly selling meat above the regulated price; some of them were held at a military base and later strip-searched by police.

As measured by prices on local stock exchanges, foreign investors were willing to pay on average 16.3 years worth of earnings to invest in Colombian companies, 15.9 in Chile, 11.1 in Mexico, and 10.7 in Brazil, but only 5.8 in Venezuela.