CNN
May 14, 1999
 
 
With oil booms over, Chavez vows to attack bloated bureaucracy

                  CARACAS, Venezuela (AP) -- It's arguably Latin America's most bloated
                  bureaucracy -- over a million people, including operators for automatic
                  elevators, secretaries on perpetual coffee breaks and messengers whose main
                  errand is to fetch a paycheck.

                  President Hugo Chavez is vowing to impose a crash diet on Venezuela's fat
                  government, which is blamed for stoking inflation, increasing poverty,
                  thwarting economic growth and eating up a third of the national budget.

                  As the first president from outside Venezuela's traditional political parties,
                  Chavez owes few favors to the political patronage machine that swelled the
                  bureaucracy, giving him a special opportunity to trim it.

                  But laying off thousands of workers could alienate many of the same people
                  who catapulted him to the presidency seven years after his failed 1992 coup
                  attempt. And critics charge the president's moves so far constitute mere
                  window dressing.

                  "The question is whether he's ready to pay the political price," political analyst
                  Alfredo Keller said. "I'm not sure he's willing to accept boos instead of
                  cheers."

                  Venezuela's bureaucracy ballooned in recent decades as the country's huge oil
                  reserves -- the world's largest outside the Middle East -- produced billions of
                  dollars in revenue.

                  Three or four doormen often attend a single door. State-run Viasa airline --
                  before it went bankrupt in 1997 -- had 12 airplanes and 291 pilots, or 24 pilots
                  per plane. Public hospitals often employ a dozen or more ambulance drivers,
                  even when they have only one ambulance.

                  Today, Venezuela's oil boom has turned to bust. The government is saddled
                  with a record $8 billion fiscal deficit and most of the population of 23 million
                  lives in poverty.

                  State employees account for one in six workers. The government employs 6.1
                  percent of the population, compared to Brazil's 4.5 percent and Colombia's 2.2
                  percent.

                  Chavez, who took office in February pledging to shake up a corruption-ridden
                  political system, says he will sell off government-owned cars, yachts, houses
                  and most of the 128 airplanes it uses just to shuffle around officials.

                  He also has begun reassigning political police after investigators found that
                  agents designated to protect former officials were instead chauffeuring wives
                  to beauty parlors and maids to supermarkets.

                  Those moves may carry symbolic weight, but many experts say the real
                  solution is trimming the payroll, privatizing state companies and casting off
                  unproductive enterprises.

                  Chavez has said he has no intention of throwing public workers into the street,
                  but instead will transfer them to more productive endeavors, such as helping
                  build public works and developing the tourism sector. It remains far from clear
                  how this could be accomplished.

                  In a television interview late Thursday, Labor Minister Leopoldo Puchi said
                  Chavez's goal of streamlining the central government implies laying off
                  thousands of state workers. But he said there wouldn't be sudden, massive
                  cutbacks in state personnel.

                  Chavez came to power promising to bring a "human face" to what he called
                  "savage capitalism." But fears that he will return Venezuela to a statist
                  economic model so far have not materialized _ and many of his policies
                  appear to be market friendly.

                  His administration is preparing to privatize three electric utilities, for instance,
                  and he has announced plans to cut the budget deficit in half.

                  Some analysts think Chavez's popularity -- a recent poll put his approval rating
                  at 80 percent -- could help him convince Venezuelans of the need for layoffs.

                  Peruvian President Alberto Fujimori laid off tens of thousands of state
                  workers in the early 1990s and until recently remained popular. But that was
                  largely because he also slashed hyperinflation and decimated the Shining Path
                  rebels.

                  Similar firings could provoke violent unrest in Venezuela, where the official
                  unemployment rate is 12 percent and where half of all workers are in the
                  so-called informal economy, selling their wares in flea markets and on street
                  corners.

                  A 1989 hike in gasoline prices and bus fares provoked mass riots in which
                  hundreds of people were killed.

                  "People are tired of being told that we're going to sacrifice one generation so
                  that another can live," said political scientist Amalio Belmonte.

                  It's also difficult to fire government employees, with party-controlled unions
                  putting up a thick web of obstacles. And Venezuelan labor laws require hefty
                  severance payments, possibly beyond the government's means.

                  Chavez may also be loath to alienate voters in an election year. On July 25
                  Venezuelans will elect a constituent assembly to write a new constitution,
                  which in turn is to be voted on in a national referendum early next year.

                  Many experts think the obstacles will keep him from making major changes --
                  at least in the short run.

                  "He can't make a deep transformation," Belmonte said.

                    Copyright 1999 The Associated Press.