Economic Woes Threaten Chavez's Socialist Vision [View All]

[naaman fletcher]

Venezuela's economy is in trouble despite the country's huge oil reserves. Blackouts plague major cities. Its inflation rate is among the world's highest. Private enterprise has been so hammered, the World Bank says, that Venezuela is forced to import almost everything it needs.

Take, for instance, the Three M metal works, tucked into an industrial zone in San Cristobal, the capital of Tachira state in western Venezuela.

On a recent day, big machinery stamps out sheet metal. For a moment, things seem normal in the plant. But more often than not these days, the contraptions are dead quiet — shut down.

"Just like us, everyone is suffering," says manager Marta Medina. She reels off a list of problems the company faces: lack of spare parts, power shortages and falling orders.

The workforce is down to just eight, from more than 50 people employed a year ago.

Jose Guerra, a former Central Bank economist, says state intervention in private businesses is hitting the economy hard.

"The government is nationalizing, expropriating, or confiscating," he says. "They are not creating new wealth; this is wealth that was already created."

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