Hugo! (67 page)

One of the first targets could hardly have packed more symbolic
weight. Government investigators descended on a thirty-two- thousand-acre
ranch owned by Lord Vestey, an English aristocrat and meat
tycoon. Government authorities questioned whether the lord's ancestors
obtained the vast swath legally since land acquisition in Venezuela
was rife with corruption. Vestey's representatives swore they could produce
all the necessary legal papers, and depicted themselves as victims
of a misguided government reform program. Chávez's heated rhetoric
about land reform had long ago prompted hundreds of peasants to
invade El Charcote (the puddle), set up shanties, and start farming the
land. Government officials insisted they would expropriate only land
that was idle and pay its owners. They would seize property outright
only if it had been obtained illegally.

Critics contended that Chávez was on a far-fetched, quixotic mission
that was doomed to failure — just like numerous other land reform
efforts throughout Latin American history. Some suggested he was even
flirting with the same fate as other leaders who had tried land reform
and been overthrown in CIA-backed coups, including Salvador Allende
in Chile in 1973 and Jacobo Arbenz in Guatemala in 1954. The message
seemed to be: Don't bother trying.

Environmentalists also criticized Chávez for attempting to break
up prized conservation centers such as the whopping 195,000-acre Hato
Piñero ranch in Cojedes state. The ranch was home to endangered or
unusual species including the jaguar, the yellow-knobbed curassow, the
capybara — the world's largest rodent — and tapirs, which looked like a
cross between a pig and an anteater. The ranch also raised nearly eleven
thousand head of cattle, hosted scientists conducting investigations,
and attracted ecotourists from around the world who paid $100 a day
or more to see some of South America's most exotic wildlife. Ecologists
warned that carving up the ranch into small holdings would ruin its
conservation value and destroy one of the last relatively untouched
examples of the wild llanos.

But to some of Chávez's supporters, Hato Piñero was little more
than a walled-off fortress that only dollar-bearing foreign tourists and
affluent Venezuelans could afford to enjoy while many Venezuelans
could barely eat. They questioned the owners' claims that they were
preserving the environment, and pointed to allegedly widespread deforestation
on the property. Chávez portrayed Piñero's owners as part of
Venezuela's out-of-touch and insensitive landowning elite.

He was determined to push forward with his land reform. He made
efforts to rectify past mistakes, providing
credit and technical assistance to
the new landowners and requiring 15 percent of bank loans to go toward
agriculture. Despite widespread fears, the government generally respected
private property.
Expropriations were limited. In the end it reached an
agreement with El Charcote's owners. The company agreed to sell the
ranch in Cojedes state for $4.2 million, and another 106,000-acre ranch
it owned in Apure state for $4.7 million. The company kept eight others
whose 638,000 acres represented the vast majority of its holdings. Chávez
praised the agreement as a model for other large landowners. The government
itself also owned vast swaths that could be distributed.

If Chávez could achieve a lasting land reform in Venezuela, it
would be a monumental achievement. By early 2007, the government
had distributed nearly nine million acres to one hundred eighty thousand
families. The price was not cheap: some one hundred seventy
campesino leaders were assassinated in the struggle.

Beyond land reform and the cogestion movement, Chávez acted to
create state-owned businesses in telecommunications, air travel,
and
petrochemicals. He founded state companies that produced everything
from tractors to "Bolivarian computers." He reined in PDVSA, bringing it
back under government control and raising
taxes on foreign oil companies.
A new study initiated in 2006 indicated that Venezuela's proven oil
reserves, previously calculated at 80 billion barrels, might be 316 billion
when heavy crude in the east was counted. That would make them the
largest in the world, surpassing Saudi Arabia's 260 billion barrels.

Chávez's emerging economic model was not greeted with unanimous
acclaim. Critics said it was not only a work in progress — it was
a piece of work. They contended that "endogenous development" and
"cogestion" were little more than
warmed-over versions of the import-substitution
policies that had swept the region in the 1960s and 1970s
and in their view had limited success. They doubted Chávez's plans
would lead to long-term
prosperity, and believed his entire project
would collapse once oil prices dropped.

The overdependence on oil was a valid point, although Chávez
argued that the cooperatives were aimed precisely at developing
alternative sources of income. He was convinced that
unfettered
capitalism had failed the region. His allies pointed to the dismal economic
record of the region since the advent of the
"free-market revolution."
From 1980 to 2005 income per person grew just 10 percent,
according to the IMF. But it grew 82 percent between 1960 and 1980
before the reforms were adopted. "The past twenty five years have
been an unprecedented failure for Latin America," concluded economist
Mark Weisbrot, who called it the region's worst long-term economic
performance in a century.

Meanwhile, after suffering through the upheavals of the 2002 coup
and the
oil strike, Venezuela's economy was rebounding. Growth skyrocketed
by 28 percent in 2004 and 2005, the best rate in the region.
The boom continued in 2006 with 10.3 percent growth. Even
The
Economist
, while noting some "worrying" trends, concluded that
Chávez's
economic policies "do not remotely add up to Cuban communism."
By some accounts, the private sector actually held a
larger
share
of the economy than before Chávez took office. While he talked up
twenty-first-century socialism, many economists considered his policies
"gradualist reform" that had far more in common with European-style
social democracy than Cuban communism. Former Marxist guerrillas
such as Douglas Bravo even thought their onetime ally was a
sellout.
Rather than a revolutionary, Bravo said, Chávez was a
neo-liberal.

Chávez's idea of a new economy did not rely on traditional notions
of trade among nations based simply on extracting the most profit for
oneself. He introduced the idea of solidarity. Instead of competition,
he fostered cooperation. The most obvious example was the oil pacts
he signed with countries throughout Latin America. Some agreements
offered discounted financing that allowed countries to pay up to 40 percent
of the bill over periods as long as twenty-five years. Interest rates
were as low as 1 percent. In return, Chávez received everything from
Cuban doctors to Argentine cows to Caribbean rice. He was not simply
giving the oil away. As he said, "How much would 20,000 Cuban doctors
cost?"

He used the oil deals to foster his vision of a united
Latin America
as his hero Simón Bolívar had proposed nearly two centuries earlier. He
created
regional alliances through pacts including
PetroCaribe, which
offered fourteen Caribbean nations a total of 198,000 barrels of oil a day
with
"soft financing." PetroSur united Brazil, Uruguay, and Argentina
with Venezuela.
PetroAndina brought together Colombia, Ecuador,
Peru, and Bolivia. Chávez envisioned uniting them all through a massive
joint endeavor he called
PetroAmerica.

One of the most ambitious projects to unite the region was a proposed
natural gas line that was to stretch fifty-six hundred miles from
Venezuela through Brazil and down to the southern tip of Argentina.
Branch lines would connect to Uruguay,
Paraguay, and Bolivia. The
cost of the project was estimated at $20 billion, although some experts
believed complications might double the price. It would be twice as
long as the US border with Mexico and possibly the longest gas pipeline
in the world. Chávez dubbed it the "pipeline of the south." He depicted
it as a symbol of a new era of regional cooperation and diminishing
US influence in Latin America. "This is the end of the Washington
consensus," he declared. "It's the beginning of the
South American
consensus."

Some energy experts dismissed the project as a pipe dream. They
believed it was driven more by Chávez's political ambitions than by
economic common sense. They noted the difficulties in traversing the
vast and delicate ecosystems of Venezuela's and Brazil's Amazon rain
forests.
Environmentalists warned of damage not only to the exotic
bird and animal species that inhabited the region but to isolated indigenous
tribes as well. Groups such as Greenpeace were not impressed
by Chávez's track record, although he had begun to show greater sensitivity
toward their concerns, issuing warnings about global warming,
urging emissions controls, exhorting his followers to drive less and use
public transportation, distributing millions of energy-saving fluorescent
light bulbs, and even installing solar-powered streetlights. But the
Venezuelan leader continued to insist that the natural gas project was
feasible. He noted that Russia had built a gas pipeline stretching thousands
of miles to Europe. Brazil's Lula and Argentina's Kirchner supported
the idea. Some experts believed it could be completed in five to
seven years, while Chávez asserted it would pay for itself within five to
eight years of completion.

He devised other plans to foster regional unity. He proposed a
"Bank of the South" that would serve as a Latin American version of the
IMF. He suggested a common Latin American currency like Europe's
euro. He joined a trade pact known as
Mercosur that included Brazil,
Argentina, Paraguay, and Uruguay. He even proposed sending a Latin
American satellite into space and creating a Latino version of NATO.
That idea attracted little support in a region plagued by a history of
bloody military dictatorships.

Still, the common theme of all these initiatives was to foster unity
among Latin American nations — a unification that was part of Bolívar's
vision — and to promote a
multipolar world. It wasn't based just on
opposition to the US empire, but on a belief that there would be more
stability in a world with a number of power centers.

Acting on that belief, Chávez extended his geopolitical economic
project beyond the region and across the globe. Faced with increasingly
hostile relations with a Bush administration that was trying to isolate
him internationally, he sought allies wherever he could find them.
His biggest international
initiative outside of Latin America involved
China. The Asian giant was emerging from decades of communist control
and increasingly embracing elements of capitalism. In search of
new markets, its trade with Latin America was soaring. Chávez decided
to get in on the boom. China's starving energy market made it a perfect
match for Chávez's plans to divest himself as much as possible from the
United States and foster a "multipolar world." He struck a deal to send
China oil.

It started with a commitment in 2005 to supply thirty thousand barrels
a day. By 2007 that was to jump to three hundred thousand, with
an ultimate goal of half a million barrels a day by 2009 or 2010. It was
part of a plan to increase from 15 percent to 45 percent the amount of its
crude and other oil products Venezuela sent to Asia.

Chávez needed more tankers to get the oil to China and other
parts of Asia where he was expanding distribution, so he struck a $1.3
billion deal with the Chinese to buy eighteen ships. He signed other
deals with Brazil for ten more tankers and Argentina for four, including
one to be named the
Eva Perón
. In total, he hoped to triple Venezuela's
fleet to fifty-eight tankers by 2012. He also signed accords with China
for everything from building computer and cell phone factories to offshore
drilling platforms in Venezuela. In August 2006 he made his
fourth trip to China as president. By then PDVSA was operating an office
in
Beijing.

Skeptics dismissed Chávez's oil plan as unrealistic, given the vast
distance between Venezuela and China — forty-five days by ship,
according to some estimates. Experts calculated that the transportation
alone would cost Chávez $5 to $10 a barrel. They contended Venezuela's
natural market was the United States, where it was sending 60 percent
of its oil. Chávez responded that he could get around the transportation
problems by striking swap arrangements with new allies such as Russia,
Indonesia, and Australia to deliver the oil to China so he could avoid
sending it all across the Pacific Ocean himself.

The most stunning member of Chávez's expanding international
alliance of developing nations was Iran. Chávez first cultivated the
Middle Eastern oil giant early in his presidency when he successfully
pushed for the OPEC cartel to decrease supplies and boost prices. By
2006, with the Bush administration openly agitating for his demise,
Chávez accelerated ties with Iran, which made up part of George W.
Bush's "axis of evil" along with Iraq and North Korea. Chávez figured
he had nothing to lose. The US government was showing it was no
friend of his, and he needed allies in high places. He signed a range of
accords with Iran that called for setting up joint Venezuelan-Iranian factories
in the South American nation to churn out everything from shiny
red tractors to cement, surgical tools, bricks, bicycles, cars, and buses.
The countries also agreed to produce oil and petrochemical products
together, start a student exchange program, and establish a direct airline
flight between Caracas and Tehran.

Beyond the trade agreements, Chávez turned into Iran's most
vociferous supporter of its right to develop nuclear energy, which Iran
insisted was intended only to produce electricity despite allegations by
the United States to the contrary. When Chávez visited Tehran in July
2006, he was awarded the country's highest state medal, the golden
High Medallion of the Islamic Republic. Iranian president Mahmoud
Ahmadinejad made his own visit to Venezuela several weeks later in
September, and in return Chávez gave him a medal in honor of Simón
Bolívar. The two referred to each other as "brother," and made common
cause in denigrating their common enemy, the US government led by
Bush, and the main US ally in the Middle East, Israel. "Let's save the
human race," Chávez said. "Let's finish off the US empire."