National Agenda : Trouble in Paradise? Venezuelans Sense It : Prosperity and democracy aren't enough to overcome the national malaise--or fears of another coup.

TIMES STAFF WRITER

Computer store owner Julio Armaz, 37, is a disillusioned man. He sees nothing but hardship for himself and political and economic disaster for Venezuela. "The way things are going," he says, "we're going to see a military dictatorship. To tell you the truth, that could be a good thing."

Ironically, business has seldom been better for Armaz, or his lifestyle more opulent. His weekends are divided between his condominium in Miami and his beach house on Venezuela's Caribbean coast. He eats several nights a week at Caracas' varied and plentiful international restaurants. He drives a German luxury car.

Yet, he complained as he served coffee in the sunny patio of his elegant townhouse in the hills overlooking the capital, "life is a mess. Prices are too high, services are poor, the politicians are corrupt. We've lost what you Americans call the 'moral center.' Why, I haven't had water (service) for nearly a week."

That same sense of discontent, even whining in the midst of plenty describes Venezuela as a whole.

On the one hand, this is a country with one of the world's highest rates of economic growth, and one of Latin America's longest democratic traditions. It has a large middle class, a relatively low unemployment rate, a wonderful climate and huge reserves of oil. Yet, seven months ago, Venezuela barely survived a clumsy attempted military coup. And today it faces the prospect of potentially violent street disorder, political gridlock and, possibly, another coup and a military government.

"We've created a situation for fascism or authoritarianism," said Arturo Uslar Pietri, who at age 84 is one of Venezuela's most venerable politicians and writers. "It is very difficult to see the future, but what is certain is that it can't go on like this."

Looking at key economic measures, it is difficult for an outsider to understand the pessimism. Real economic growth last year averaged 10.5%, the highest in Latin America and one of the best records in the world. The rate for the first half of this year was 8.5%. The U.S. growth rate for the same time was under 2%.

Unemployment, now at 8.4%, is dropping steadily. Inflation is at 30%, down from 81% two years ago and far below the soaring price increases that mark Brazil, South America's largest and most powerful economy.

A combination of government austerity, privatization of government-owned businesses and a reduction of tariffs has seriously reduced the federal deficit and opened Venezuela to foreign goods, particularly consumer products. Another bright spot is foreign investment--$555 million worth just in the first six months of 1992.

And, of course, there is oil. Venezuela holds some of the world's largest reserves, pumping an average of more than 2.3 million barrels a day, with plans to increase that amount by stages to 3.3 million barrels a day by 1998.

"From an economic point of view," said a diplomat, "things couldn't be better. There is an economic boom. They have a long democratic tradition, there are no outside threats, the society is opening up. But I have to admit the country sits on the edge of self-destruction."

It almost fell over that edge last February when a small group of mid-level army officers attempted a takeover, including the proposed murder of President Carlos Andres Perez. The revolt was crushed in 12 hours when senior military officers rallied the troops, rushed Perez out of danger and captured the rebel leader, Lt. Col. Hugo Chavez.

Although a democratic system has been in place since 1958, there was a notable lack of public opposition to the coup attempt: There were no street demonstrations nor rallying of the political leadership on Perez's behalf.

And afterward, the streets were taken over by anti-government student demonstrations, then protests by middle-class women banging pots and pans and efforts by political leaders--even members of Perez's own political party, Action Democratica--to destabilize his administration.

Within a month, even the generals who had saved Perez were considering their own coup, according to diplomatic and military sources. But "it was made clear that the United States wouldn't tolerate a coup," one diplomat said, "and that the economic consequences would be disastrous."

How did a country with Venezuela's comparative advantages make its way to the political abyss? The answers run from the historical to the personal.

According to Uslar, the reasons are rooted in the country's colonial past, which "started with the paternalism of the ruling country and led to the paternalism of a strong, even authoritarian government after independence."

Even after Venezuela turned finally to democracy in 1958, the government remained highly centralized, with a strong president and relatively week legislature. In fact, the country will begin electing governors and mayors this year for the first time--until now they've been appointed by the president.

Another factor, according to Theodoro Petkoff, a onetime revolutionary and now an elected congressional deputy for the leftist Socialist Movement Party, is the highly centralized organization of the major political parties.

"All the politicians were beholden to one another. They claimed the privileges for themselves and their friends," Petkoff said. Even the Socialist parties "are conservative and work to protect the Establishment. No one really is willing to change. The result," he said, is "not a real democracy but elected authoritarianism."

A foreign political expert added that Venezuela's "over-dependence" on oil also contributes to instability. "Oil riches led to the feeling they never had to maintain anything. They could just buy whatever was needed, rather than fix it. They spend on a First World level, but what comes out is Third World crap."

President Perez, meanwhile, comes under regular attack not only from the political opposition but also from within his own party. Several party members voted against him in a key Senate ballot that was aimed at forcing him to leave office a year before his term expires in 1994. He survived only because he was able to persuade a few opposition senators to abstain.

Early last month, the head of the president's Action Democratica said the party would lead public protests against an increase in utility rates called for by Perez. All this has led to a general dissatisfaction with the entire political structure--if not a loathing for it.

Polls show that the two most popular figures in the country are Rafael Caldera, a former president who is running an independent campaign for the presidency, and Lt. Col. Chavez, the leader of February's aborted coup. Caldera rates highly despite promising to turn back all the economic reforms credited for the country's current prosperity.

According to several businessmen and diplomats, the real reason for the discontent and the popularity of Caldera and Chavez is a feeling that things should be better but are not because of corruption.

Uslar says that "over the last 20 years, Venezuela has developed a culture of corruption that grew out of the appearance of immense (oil) wealth that neither government nor citizenry were prepared to manage. To make matters worse, this wealth fell totally into the hands of the state."

This led, he wrote in a newspaper column, to "an immense fool's paradise, in which all, as in a trance, stood in line to achieve some share of this great supply of personal benefits." The country, Uslar wrote, "became a carnival of appetites, of corruption."

While most observers say President Perez is not personally corrupt, he is accused of allowing friends and supporters to loot the country. Also, in order to keep the military leaders in line, he has permitted them great opportunities for personal gain.

In fact, a new round of military discontent in the middle and lower ranks is blamed on the perception that Perez's backers in the high command get all the advantages while the rest of the military must deal with hardship.

The fears of a coup are real, with the focus of concern on this month's resumption of high school and university classes.

"A likely scenario," according to a senior diplomat, "would be a large student demonstration egged on by opportunist politicians. The police would react to brick-throwing by shooting students. This would bring even more demonstrations; the police and the national guard would loose control. Then comes the army, not just to break up the demonstrations but to take over and establish stability."

Perez's political opponents think that after a coup, the army would either ask the opposition to run things or call for a constituent assembly to draw up a new constitution and provide for new elections.

"It's as if they live in a dream world," said a longtime foreign resident and political consultant. "The army, if it takes power, will keep power. That is what happened in Chile, in Argentina, in Brazil (countries where army coups led to long military dictatorships).

"The opportunists don't understand that it just isn't Perez people are sick of, it is them as well. Venezuela may survive this, but it will be due more to bumble and stumble than to anything else."

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