PDVSA gas station. (Vawter/TYG)

The Fabricio Ojeda cooperative is in fact one of the crown jewels of Venezuelan President Hugo Chávez’s new socialist platform, a symbol of his effort to empower Venezuela’s poor. On this rainy day, only two cooperative directors were there to tell its story. One was Omar Orsini, whose red baseball cap read, in Spanish, “The people continue on their path! Power now to socialism!”

Orsini explained that this complex, funded by the national oil company, is part of a revolution sweeping his native Venezuela. As he told The Yale Globalist, “Before President Chávez was elected in 1998, 80 percent of the population was below the poverty line, there was no access to healthcare, education, or food.” Changes since then have made Orsini an ardent supporter of the government’s socialist rhetoric. “Chávez is leading a movement that existed already, but previously lacked leaders here in Venezuela. At Fabricio Ojeda, our policy is to support him.”

Fabricio Ojeda and its director embody the spirit of Venezuela’s new oil-financed socialism—a spirit cultivated by Chávez’s eagerness to court lower-class Venezuelans whom the country’s ruling political elites have long ignored. Fabricio Ojeda and other social projects like it are just some of the ways Chávez has been acting on his promises to bring a new egalitarian future to Venezuela. But while Chávez and his supporters boast of these projects, there are empty buildings, pervasive propaganda, and a cloud of secrecy that suggest a fatal flaw. Built entirely with oil money, Chávez’s new Venezuela is not sustainable. It is not simply that the oil might one day run out; rather, mismanagement—swept under the rug by oil revenues—seems to have forsaken Chávez’s revolution from its start.

Oil—the country’s chief export responsible for approximately one-third of the national GDP—is financing President Chávez’s revolution. For decades, multinational corporations such as Chevron and Shell had pumped the oil from Venezuela’s oil fields, refined it, and shipped it abroad to world markets. Last May, however, Chávez completed his oil nationalization program when he took over the last privately held oil operations in the country. Six oil companies had been extracting oil from the abundant reserves in Venezuela’s Orinoco Belt. With Chávez’s nationalization program, they were forced to cede majority control to the state oil company, left only to argue about the degree of compensation they would receive. Four firms—Chevron, BP, Total, and Norway’s Statoil—agreed to sign on for minority stakes. Two firms, ExxonMobil and ConocoPhillips, refused to sign the new contract, abandoning any stake in Orinoco. Orinoco is proven to have at least 80 billion barrels of oil, and continuing exploration indicates that it is possible that it may be the world’s largest remaining source of oil. Now that Venezuela’s oil industry—everything from extraction to refining—is fully controlled by the state, revenues from sales of Orinoco’s oil now go, either directly or indirectly, to finance Chávez’s government.

The national oil company, Petróleos de Venezuela, S.A. (PDVSA), is the vehicle through which Venezuela now extracts and sells its oil. Yet it is not a typical oil company. Chávez has mandated that PDVSA itself—and not just the state—take responsibility for funding many of the social initiatives that form the basis of Chávez’s socialist platform. These projects range from the building of schools and hospitals to enormous sports complexes in rural villages.

Oftentimes, the social projects or “misiónes” that Chávez creates are partially funded and executed by PDVSA as well. PDVSA has enthusiastically tackled the task Chávez has assigned to it, and in fact support for Chávez within PDVSA is particularly strong. After a 2002 strike among PDVSA employees protesting Chávez’s politics, Chávez dismissed more than 19,000 of them, leaving only the most loyal workers in the company. Today the workers at PDVSA openly support Chávez’s government and, at least publicly, boast of their company’s government-mandated social responsibility initiatives.

“We are no longer a standard oil company like Chevron or Exxon or any working in the U.S. right now,” Luis Vierma, Vice President of Exploration and Production at PDVSA, told the Globalist. “Our purpose is to make life better for Venezuelans. We have a responsibility to allow people in the very lowest sectors of Venezuela to benefit from our work.” PDVSA has mandated that ten percent of all investments made must go directly into the community. “There are places in this country where people don’t know what a light switch is or what it means to take a shower,” Vierma lamented, “and we thought: how could you ask people to work if they are hungry? How could you ask them to work in a whole other world from what they know?”