CARACAS – For nearly ten years, Cuba has served as an inspiration, if not a template, for Venezuela’s “Bolivarian Revolution.” Venezuelan President Hugo Chávez has made no secret of his admiration for Cuba or his close friendship with the island nation’s former leader, Fidel Castro. Swapping everything from doctors to farming equipment, the two countries have developed a close partnership based on a shared commitment to socialist ideals.
A recent change in Cuban leadership has, however, sent the two countries’ economies moving in opposite directions. Raúl Castro, Cuba’s current president and younger brother of Fidel, has made small but significant moves towards opening-up the country’s staunchly socialist economy. Earlier this summer his administration announced that it was abolishing salary caps, a long-standing measure guaranteeing that all Cubans make roughly the same amount of money.
Carlos Mateu, Deputy Labor and Social Security Minister, told the Communist Party daily Granma that, under the new system, “the socialist principle of distribution will be achieved wherein everyone earns in accordance with his contribution, in other words, pay in accordance with quality and quantity.”
“Generally, there has been a tendency for people to earn the same, and that egalitarianism is not helpful,” the paper quoted Mateu as saying. “That is something that we have to fix … because if it is harmful to pay workers less than they deserve, it also is harmful to pay them what they have not earned.”
Cuba’s overtures to capitalism stand in sharp contrast to recent developments in Venezuela. A little over a week ago, President Hugo Chávez used the last day of his congressionally-awarded decree powers to pass 26 new laws. These laws, affecting everything from the military to housing and social security, are almost identical to legislation that narrowly failed a public vote last December.
Coupled with a move to nationalize The Bank of Venezuela, several of the new laws reflect an attempt to gain greater control over a national economy bolstered by the high price of petroleum. While chances are slim that Chávez will further nationalize the banking industry, public debate rages over inflation, which is widely suspected to be much higher than reported by the government. While the government claims that inflation remains slightly below its year-end goal of 19.5 percent, critics claim that it hovers somewhere over 30 percent.
One of the laws passed by decree, “The Law for the Growth and Development of the Popular Economy,” recognizes barter as a valid means of economic transaction. The law also recognizes community organizations and initiatives as the “tools that will propel the complete development of the nation” of Venezuela.
Another of the laws makes it illegal for food chains, distributors and suppliers to ignore government price controls or withhold “items of basic necessity” from Venezuelans. Last year, the Chávez administration argued that speculators were hoarding milk and other goods, leading to a nation-wide shortage.
Both the administration and its critics agree that the laws are an attempt to increase government control of the volatile, oil-rich Venezuelan economy.
Jorge Botti, an economist who heads a Fedecamaras committee studying the impact of government policy on the private sector, described the laws as an attempt to create a “state-run economic system” that will not work for Venezuelan businessmen and businesswomen.
Chávez, meanwhile, has argued that the laws are necessary and in the interest of the people.
“To all Venezuelans, revolutionaries or not, I tell them that we are with them and that we are working for them. All of these laws are discussed for the benefit of the country,” he said.
“Do they know who used to make the laws here? Lawyers paid by the oligarchs,” Chávez continued. “The banking laws were made by private bankers. They paid some lawyers to write-up the laws, and the gurus from AD and Copei (the two dominate political parties prior to Chávez) sent them over to the Senate. That’s over with. As long as Chávez is here, the people are in charge.”