Oil Wars

I have to say I am totally amazed by all the hot air being expended over the current flap between the Mexican and Venezuealan Presidents so let me just limit myself to a one sentence summary. In a nutshell, Fox pushes the FTAA in the Mar del Plata Summit, Kirchner criticizes it, Fox says Kirchner is pandering to his own electorate instead of being a statesman, Chavez then calls Fox a U.S. poodle, Fox demands an apology, Chavez calls Fox more names, and both countries withdraw their ambassadors to show how pissed off they are. There you have it.

Is there any real consequence to any of this? No. Trade between the countries still goes on, people travel back and forth, and I'm sure this will eventualy be smoothed over. So the lasting consequences of this are... not much other than some otherwise bored bloggers get to write in depth and meaningless analysis of it.

In the mean time there sure are things of substance to talk about. For example, in spite of the avalanche of good economic news coming out of Venezuela recently, there are actually some fairly significant problems. Fortunately for Chavez the opposition is too fixated on the Danilo Anderson and Fox-Chavez soap operas to beat him up over them. As I have said before, the Venezuelan opposition never misses an opportunity to miss an opportunity. But rather than waste time on Novelas lets spend some time looking at a serious issue.

One of the problems in Venezuela that is still not being adequatly addressed is the housing situation. Today in Rueters there appeared the following article on the housing situation:

Every morning for the last four months, Yara has connected to the Internet while still in her pajamas to search for an apartment in Venezuela's capital that fits within her tight budget.

The physical therapist is among hundreds of thousands of Venezuelans who are struggling without proper housing of their own. At 35 years old, she lives in a room in her brother's house, 19 miles from the capital Caracas.

While she voted for President Hugo Chavez in 1998 because he promised social reforms for the poor, she is among those who are disappointed the left-wing former army officer has yet to fulfill a vow to solve a pressing housing shortage.

"Where are all the houses they were going to build?" said Yara, who asked that her full name not be used for fear she may face discrimination in government housing loan programs.

Despite great oil wealth generated by the world's No. 5 oil exporter, many Venezuelans live in poor housing and the poorest often survive in ramshackle shanties that ring Caracas and other cities.

Lower middle-class families often construct informal extensions on their homes to accommodate relatives unable to afford their own housing.

Venezuela suffers from a housing deficit of around 1.6 million homes, according to the Venezuelan Construction Chamber (CVC) and experts estimate about 180,000 new homes must be built annually for the next 15 years to solve the problem.

Chavez, who has spent billions of dollars in oil revenues on social programs as part of his self-described socialist revolution, has vowed to solve the problem in 17 years though his "Mission Housing" project.

But of the 120,000 houses his government has promised would be built this year, only 10,000 have been constructed.

"We are far from reaching the required number of houses, and we think mechanisms should be put in place as soon as possible to reverse that," said CVC President Alvaro Sucre.

Sucre estimated the number of homes under construction for the poor would reach 15,000 to 20,000 by the end of the year.

"DIGNIFIED" HOUSING

Chavez seems to acknowledge the struggle to provide decent housing for Venezuelans and the failure of his team to get the job done.

He gave one housing minister a very public dressing down over the program's sluggish progress. The minister later resigned. He also complained about a plan to construct plastic houses in an area where temperatures soar above 104 degrees Fahrenheit (40 degrees Celsius).

As part of efforts to provide "dignified" housing to poor families, the government has ordered banks to allot 10 percent of their credit portfolios to mortgages with preferential terms.

But Sucre said the loans were not being approved as quickly as they could and this is slowing down construction of new housing.

"When the private developer knows that there are grants, that there are people who can buy in certain areas of the country, the housing will be built almost automatically because that means real demand," Sucre said.

The government plans to hand out around $130 million in housing grants for around 16,600 families. But that amount could reach $160 million if requests could be processed more quickly, Housing Minister Luis Figueroa said.

"As you build houses, you get more money to build more houses," Figuero said.

STATE BANKS TO RESCUE

This month three state banks will start financing a portion of the mortgages usually provided by the private sector in an effort to speed up distribution of loans and in turn stimulate construction of new homes.

The government calculates it could help 6,500 more families in 2005 with this measure. Officials have not yet set targets for 2006.

"We see that the private construction sector is seeking greater security. We say that the security they have is that the government is carrying out the work," he said.

Meanwhile, the apartment buildings in Caracas for middle class professionals are not covering the avalanche of demand, causing housing prices to surge 30 percent.

In the face of the shortage, some such as Yara are becoming "informal" builders. She is considering building a bathroom in her small room block by block by herself.

"I hope the room doesn't collapse on me," she said.

Although it would have been nice for the article to give the number of houses being built by the private sector so that we could get a better idea of how actuall construction compares to the 180,000 units needed annually the article does give a good appraisal of the situation. Further, irrespective of what the final numbers are its clear that they are not even close to constructing the amount needed.

Clearly, this is a major failing on the part of the Chavez government. Access to affordable and decent housing is very important to most Venezuelans and people will judge a government based on its ability to provide it. Due to his success in other areas such as health care, education, and jobs people may be willing to look past this failing for now. But they won't do so indefinitely. If major progress is not made on this within the next year this could become a major thorn in Chavez's side in the 2006 Presidential election.

Another very interesting point is that in spite of all the rhetoric about Chavez's alledged Communist tendancies and aversion to private property at least in the realm of housing he is moving away from government solutions and more towards working with the private sector. This is shown by the desire to give people grants with which they can then go out and have their own houses built and by mandating that banks increase their home loan portfolio. With these schemes the government would spend less time building homes itself, something it probably not very good at anyways, and the private sector could be called upon to use its efficiencies in home building to help low income people. Sounds like quite a good idea once they get all the kinks worked out.

And it sure is very non-socialistic. In fact it almost sounds like something Bush would do, save he would call the payments "vouchers" intead of grants. Not to mention Bush only does things like this when he wants to destroy something like the public education system.

Nevertheless, it sounds like a good and pragmatic solution long overdue for implementation. Lets hope they get it to work, and soon.
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