Out for Revenge?(Venezuelan general strike)

Under the heat of the midday sun, a strong smell of urine rises from the sidewalks of the once fashionable Sabana Grande district of Caracas. Street stalls selling pirated CDs assail the eardrums with clashing rhythms. Cafes where the middle-class intelligentsia used to gather have been swallowed up by a teeming bazaar of buhoneros--local slang for the capital's flourishing street traders. More than 5 million Venezuelans--over half the work force--scrape by in what is euphemistically known as the "informal" economy. Under leftist President Hugo Chavez, for the first time in modern Venezuelan history, that figure exceeds the number earning a formal wage. "The feeling we have," says one business leader of Chavez, "is that this man wants to do away with the private sector altogether."

That feeling has grown more palpable now that Chavez appears to have outlasted the two-month strike against his rule. Led by businesses and unions, the strikes had crippled the oil industry and brought the economy to a crawl, yet failed to push Chavez into early elections. Now strikers are heading back to work fearful that the president's latest moves reflect a desire to take revenge against business as a whole. On Jan. 21 the government slapped a temporary ban on foreign-currency trading, pending the introduction of exchange controls. These are ostensibly aimed at husbanding the Central Bank's dwindling currency supplies, but the controls will be administered by Chavez loyalists, who will have the power to choke the private sector if they choose. "Not one dollar for the coup plotters!" proclaims the president, who lambastes his opponents as "fascist conspirators" and "oligarchs" upset over a loss of wealth and privileges.

In charge of determining who gets the dollars will be a committee headed by a onetime Army officer who took part in Chavez's failed 1992 coup attempt. Another member, former vice president Adina Bastidas, has been nicknamed "La Talibana" for her radical devotion to the Chavez cause. If opposition economists are to be believed, a stroll through Sabana Grande is a glimpse into the future of the Venezuelan economy, which is headed for a crash that could dwarf even that of Argentina's. "We're expecting the economy to shrink by between 17 and 20-odd percent in 2003," says businessman and economic consultant Pedro Palma. "The pessimists are talking of around 25 percent. That's a dramatic collapse, especially coming on top of a 9 percent fall last year." The secretary-general of the Organization of American States, Cesar Gaviria, says the Americas have never seen a sharper economic contraction, "not even during a civil war."

When Chavez came to power in early 1999, there were more than 11,000 private industrial firms in Venezuela. By the end of last year, more than 5,000 had gone bust, and hundreds, maybe thousands, more are on the brink. "We've always been on the defensive, because this government's policies are not pro-business," says the general manager of one medium-size company that makes cartons and packaging for the food industry. The manager, along with the company's main shareholder, spoke to NEWSWEEK on condition of anonymity. "If you mention the company, I can't speak frankly," the owner said. "We're living in a dictatorship."

Their situation is typical of the crisis facing Venezuelan industry. The packaging company has 300 employees, who came back to work in early February, after strike leaders ended the walkout in all industries ...