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Monday, November 16, 2009

The sad decline of Caracas

By Nathan Crooks:

Living in Caracas has never been easy. While the oil boom that started in the 1950s turned the city into one of the most sophisticated capitals in the western hemisphere, growing socioeconomic imbalances and increasing political tension that existed long before Hugo Chávez have always made Venezuela a challenge to navigate.

One glance at the US Department of State's travel fact sheet on Venezuela - which in the first paragraph warns of murders, express kidnappings and armed robberies - is enough to scare away even the most seasoned traveler. The city, however, maintains a magnetic draw on anyone who has lived there before.

Blessed with year-around spring-like weather, Caracas is within hours of some of the best beaches in the world. The shopping is probably the best in South America, and world class restaurants have always pleased the palates of the most discerning diners. With all its problems, the city has been able to retain even those opposed to Chávez's Bolivarian Revolution. Despite the crime, political black lists and social instability, few Venezuelans that live well in Caracas have found a better life elsewhere.

But that could all be changing. Three key events this year have pointed to a decline which may be irreversible. While every aspect of Chávez's project can be debated, it's possible to run any kind of government in a way that works or in a way that doesn’t. And Venezuela is simply not working anymore.

First, Caracas is becoming prohibitively expensive because of Chávez's exchange rate controls and import-dependent economy. According to consulting firm Mercer's 2009 cost of living report, Caracas is now the 15th most expensive city in the world, ahead of famously pricey metropolises including London, Rome and Dubai. When a box of Froot Loops in a Caracas grocery story costs US$54, authorities should realize they have a real problem on their hands.

Venezuela's electric power problems come second. The country nationalized its power industry in 2007 and consolidated generation, transmission and distribution activities under state oil company PDVSA and the newly created state power company, Corpoelec. It's been nothing but downhill since, and El Niño has pushed the power industry to the brink of collapse this year because of low rain levels. Demand, meanwhile, is continuing to increase, despite pleas from the government for power conservation.

Isn't it ironic? One of the most energy endowed countries in the world can no longer provide enough power for its own citizens. Even if you agree with the Bolivarian Revolution, it's hard to argue that the government ministries or political operatives running the state companies are doing their job well.

But the biggest sign of Bolivarian incompetence is the water rationing that started in Caracas on November 2. Entire zones of the city are being cut off from water service for 48 hours at a time. Both public hospitals and five-star hotels alike are having to make plans for the weekly 48-periods they will be without water.

El Niño is affecting many countries across the region, and hydro levels are giving more than one government headaches. But don't the authorities realize that programmed water rationing will only increase demand as everyone will hoard water the days before the scheduled cuts? The fact that water rationing has to be implemented in a major city because of a recurrent weather event is evidence of criminal bad planning.

Power and water service are the basic fabric of any civilized city. One expects problems with such basic services in a war zone or in some other far off locale where Westerners sometimes go to escape modern life. But in Caracas? In a capital city of five million? In a global energy hub? No. It's not something even those most ardently opposed to Chávez would have expected a few years ago. Venezuela's inability to guarantee such basic services takes one's breath away. It was mildly humorous when shortages of eggs and milk complicated daily life in Caracas, but being without reliable power and water service is an entirely different matter.

Without debating the merits of socialism or the Bolivarian Revolution, without even talking about democracy or politics, it's obvious that Chávez's government is doing something wrong. There won't be much to debate anymore in Caracas. One will only have to flick a light switch or turn on a faucet to realize that something is not working.

Caraqueños are used to putting up with crime, political instability and a government bureaucracy that seems schizophrenic at best. The well-off can still eat their Froot Loops, even if a box costs US$50. What remains to be seen, however, is if they will want to do so in the dark. And will even the most loyal Chavistas want to endure Caracas without taking a shower or flushing the toilet for 48 hours?