Oil Money Aids Venezuela's Poor, for Now

CARACAS, Venezuela – The government grocery store has run out of chicken, milk and sugar, but Katiuska Oliveros is still pleased to find rice, margarine and pasta at exceedingly low prices, emblazoned with promotional slogans like "When the people have needs, its revolutionary government responds!" The 27-year-old mother fills her shopping basket, adding in beans, matches and two bottles of cooking oil, and moves on to the cash register where she hands over the equivalent of $5.12 — easily half what she would pay at a commercial supermarket.

Millions of Venezuelans like her have come to rely on the heavily subsidized state-run grocery stores established by the government of President Hugo Chavez, and she says it's a big reason why she will vote to re-elect him in Dec. 3 elections.

"He has done many things. You can see it," said Oliveros, who struggles to raise two children on her husband's salary of $230 a month at a car wash.

The cheap food and other programs funded by Venezuela's oil wealth haven't lifted her family out of poverty, but she says getting by is easier today than when Chavez was elected in 1998.

It's a view often echoed in the poor barrios of Venezuela, where Chavez remains popular as he seeks another six-year term. He has pledged to eliminate poverty completely by 2021, when he hopes to be in office still.

Drawing on billions of dollars in oil revenues, Chavez has started a long list of social programs, called "missions," which offer everything from job training to cash assistance for single mothers.

But critics warn short-term gains against poverty may not necessarily bring long-term solutions. Top presidential challenger Manuel Rosales, who trails in the polls, accuses Chavez of using handout populism to curry favor without offering substantial solutions to poverty.

He says stable jobs will do more than cheap groceries, and argues there are still alarming levels of malnutrition among Venezuelan children.

Government statistics show the percentage of Venezuelans in poverty has declined from about 44 percent in 1998 to less than 34 percent today, while the number considered extremely poor fell from 17 percent to nearly 10 percent.

But opposition-aligned researcher Carlos Meza says those figures are deceptive, skewed by disproportionately factoring in price controls on foods that are flaunted by many private supermarkets.

Inflation has pushed up prices in private supermarkets even as the government guarantees zero inflation in its Mercal grocery stores, which have expanded nationwide amid sporadic supply problems that sometimes leave empty spaces on the shelves.

On one recent trip to the store, Oliveros found no tomato sauce, sugar, chicken or mayonnaise. A store clerk, speaking on condition of anonymity because he feared for his job, said an informal strike by unpaid truck drivers has kept some foods from being distributed, while corrupt officials have stolen some supplies.

The government recently outlawed the resale of Mercal foods to crack down on opportunists who try to profit off the markup.

Terry Lynn Karl, a Stanford University professor who studies development efforts by oil-producing countries, says a lack of adequate financial controls has for decades encouraged corruption in Venezuela, and the problem remains today.

"There is no question that these programs have brought hope to people. There is still a question about whether they're well enough targeted and efficiently run, and whether there are strong enough controls against corruption," she said.

She also said the programs face serious long-term dangers from the boom-and-bust cycle of oil prices.

"If the price falls, there's not enough money to sustain these programs," she said. "If the price rises and spending continues at its current rate, this creates inflation, which in turn eats away at the gains of the poor."