Tuesday, July 8, 2008

Discontent is rising throughout Venezuela, and President Hugo Chávez’s popularity is in free fall

The lines outside the distribution centers of Mercal, the state-run company that distributes basic foodstuffs to low-income Venezuelans, are as long as they were on January 1.
Any near-term prospects for alleviating this consumer calamity are weak and uncertain because the Venezuelan economy, where the government plays a fundamental role, depends in large part on the economic health of PDVSA, the public enterprise that explores, extracts, and takes, to market the country’s oil. And PDVSA is in trouble—real trouble. After the oil stoppage of late 2002 to early 2003, Chávez decided to fire no fewer than 18,000 of PDVSA’s employees—almost a quarter of the total staff. Not only did he openly violate all labor laws, but he lacked the most basic common sense any business owner must possess. The dismissal left the company’s activities in complete disarray, especially because the majority of the dismissed employees were technical, scientific, and managerial workers—the backbone of the industry.

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