The Death of ‘Chavismo’ in Venezuela

Caracas-based bond trader Russ Dallen looks for small signals with which to gauge Venezuela and its economy. He found one last year when he ran out of toilet paper and searched for it unsuccessfully in three stores. “I found this great Argentine wine,” he recalls, but no toilet paper. The government subsequently ordered 50 million rolls of the stuff, including some from Costco, which, according to Dallen, it bought retail in the U.S. and imported—all of which sold out in short order.

Such shortages are common in Venezuela, and spark discontent in the long lines that form at supermarkets running low on everything from paper products to corn flour to cooking oil. Inflation, meanwhile, registered at 56 per cent last year, among the highest rates in the world, although the unofficial tallies reach the triple digits....

President Nicolás Maduro, who won a tight 2013 election and claims Chávez has appeared to him in prayer as a “little bird,” has dismissed the protests as an attempt to overthrow his government and called the students “Nazi fascists.” But he sees a growing threat in the student protests to the “chavista” system and he has used the unrest as an excuse to censor the media. He pulled the plug on Colombian cable news channel NTN. Many Venezuelans took to Twitter, only have the Internet cut and the site allegedly blocked.

The regime Maduro inherited from Chávez, who succumbed to cancer last year, appears to be teetering after years of mismanagement. Chávez promoted “21st-century socialism” and showered money on the poor from what was treated as a bottomless barrel of petrobucks. He also gave oil to allies in the region—allowing them repay with beans, if they bothered to repay at all. “Chavismo is durable because it tapped into a deep history of economic divide in Venezuela,” says Eric Farnsworth, vice-president of the Americas Society/Council of the Americas. “But the model is financially unsustainable....”

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