Cursed By Black Gold : Venezuela's leader counts on popular resentment of the rich to keep him in power. But the country's real problem isn't its wealth so much as where it comes from.(Hugo Chavez, petroleum industry, distribution of wealth)

Venezuelan president Hugo Chavez has supporters with active imaginations. In recent street demonstrations a Chavez supporter has raised aloft a political prop dubbed "The Rats Attack." A large papier-mache tableau mounted on poles, the creation depicts a mountain topped by an oil well, and a quartet of life- size rats, labeled with the names of the traditional Venezuelan parties--the labor confederation CTV, AD, Copei and Fedecamaras, the business chamber. When a string is pulled, the rats scurry up the side of the mountain toward the oil.

The rat tableau needs no explanation for the swaying, chanting crowds. It's an emblem of a powerful national myth, one that--perhaps more than any other factor--led to the election of the former Army officer with the fiery, populist stump speech. As economist Fernando Martinez puts it, the logic is simple: "This is a rich country, and if I'm poor, that means someone stole my share."

Oil is central to that belief--and to the current political stalemate. A broad-based opposition that includes political parties, labor unions, the media and business groups has effectively shut down the nation's economy with a monthlong general strike, calling for Chavez either to resign or to hold an early vote on his presidency. Work stoppages at Petroleos de Venezuela, the state petroleum corporation, are costing the country $50 million a day; last week the company's chairman announced plans to import more than a million barrels of oil from Brazil, Trinidad, the United States and Russia to fill local gas tanks. Yet many of Venezuela's poor have not turned against the president--not least because they believe they never saw any benefit from Venezuela's natural riches anyway. When Chavez argues that the strike is nothing more than an attempt by a corrupt clique to frustrate his bid to redistribute more fairly $50 billion in annual oil revenues, they are ready to believe him. "A spiteful elite wants to recover its privileges, whatever the cost," says Victor Montilla, a 45-year-old schoolteacher and pro-Chavez demonstrator from the Guayana region.

That kind of suspicion isn't hard to understand. Although Venezuela is home to the largest oil reserves outside the Middle East, the number of Venezuelans living in poverty has risen from about a quarter to more than 60 percent of the population in the past two decades. More than half the national income goes to just 20 percent of the population, while the poorest fifth receives a scant 4 percent of the country's wealth. In 2000, according to one poll, one in two people between the ages of 18 and 24 wanted to emigrate.

A gift of geography and circumstance, oil has long served to disguise the country's underlying economic problems. At the beginning of the 20th century, Venezuela was a poor, backward exporter of coffee, cocoa, animal hides and egret plumes. But a mere 14 years after commercial drilling began in 1914, the country had become the world's No. 1 oil exporter. Indeed, the modern Venezuelan state grew out of the need for a go-between for the people and the transnational oil ...