March 20, 2006

Venezuela consumption booms under leftist Chavez

By Fabian Andres Cambero

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo
Chavez spends much of his time extolling socialism and deriding
free-market values, but don't expect 29-year-old Steve Telleria
to pay much heed.

In the huge Sambil shopping mall in eastern Caracas,
Telleria joined the heaving crowds on a recent weekend browsing
through expensive boutiques and shops looking for a bargain
gift for a friend.

"This is fundamentally not a socialist society," the
business administrator said, standing next to a rack of mens'
jackets in a packed store. "People here would prefer to stop
eating than to stop spending."

Even as Chavez promises a 21st century socialist revolution
to end "savage capitalism," rejects the very rich and promotes
collective values, Venezuela is enjoying a consumer spending
boom as its oil exports bring in record revenues.

While the tough-talking former soldier has spent billions
of dollars on social development programs that have made him
popular among the poor, consumers in 2005 spent roughly $8.3
billion at the nation's shopping malls.

Whiskey distributor Diageo said Scotch whiskey sales grew
by 55 percent in 2005 with the largest growth in

sales of 18-year scotch, which costs around $60 per bottle
-- equivalent to a third of the monthly minimum wage.

Meanwhile, vehicle sales jumped a whopping 70 percent in
2005 over 2004, and the country's BMW distributor said its
sales tripled last year.

"Honestly I can't understand -- I wish I could understand
-- the parameters of this 21st century socialism," said Arnold
Moreno, president of the nation's shopping mall chamber.

The group reported shopping mall sales shot up by almost 40
percent in 2005 over 2004.

Riding a wave of high oil prices, Venezuela's economy grew
by 9.3 percent in 2005, and government spending left
Venezuelans of all walks of life with more money in their

The state itself has helped fuel some of the boom. The
government provides an exoneration of the country's 14 percent
sales tax on certain family vehicles and maintained subsidies
on gasoline allowing drivers to pay 25 cents a gallon.

Government mandated currency controls, credited with
preventing massive capital flight, provide preferential dollar
sales to some importers that may have contributed to last
year's 45 percent increase in imports, economists say.


Many Venezuelans became accustomed to luxury consumption
during the oil boom of the 1970s that gave the country
unprecedented windfall profits.

Shoppers went on weekend trips to Miami, where Venezuelans
became known for the catch phrase "Dame dos" in Spanish or
"give me two."

Venezuelans also developed during this period their taste
for whiskey, which nationalist Chavez has dismissed as an
example of slavish adoration of foreign cultures. Venezuela
currently consumes the most whiskey per capita in Latin
America, according to industry figures.

Leoncio Barrios, a social psychologist and professor at the
Venezuelan Central University in Caracas, said today
consumption is similar to what Venezuela witnessed 30 years

Chavez, a close ally of Cuba's Fidel Castro, has promised a
socialist revolution to end poverty after years in which
U.S.-backed free market reforms failed to help the region's

Fearing he would copy Cuban communism, his adversaries in
2002 attempted to force him from office through a botched coup
and later with a massive oil industry strike.

Chavez has often said "it's bad to be rich," and often
quotes from the Bible passage about how rich men will have a
difficult time getting into heaven.

Still, the Venezuelan leader, who faces an election in
December, enjoys widespread popular support even though he
repeatedly condemns the wasteful consumer culture of developed
nations and in his own country.

Such concerns rarely come up at the Sambil mall, once
considered a playground for rich Venezuelans, that is now
packed with shoppers from all of the city's social classes.

"Venezuelans are much more likely to spend than to save,"
said Telleria. "You give me money today, I'll spend it today."

(Additional reporting by Brian Ellsworth)