Business Week : Chavez Not So Bad For Business

An update on the "New Axis of Evil"^TM

Okay. You could hardly expect Business Week to give a ringing endorsement to a man NewsMax calls "a threat to freedom" and a "Castro wannabe," and who Pat Robertson suggested we might think about assassinating, but in this week's issue the magazine puts forward what is at worst something less than a stinging condemnation and at best an objective appraisal of Hugo Chavez and his program of investing in the poor via "21st Century Socialism."

No doubt, Venezuela is a pretty scary place to invest these days. But in some respects business is better than ever. Thanks to soaring oil revenues, Chávez is spending heavily--some $13.3 billion last year alone--to win support for his "Bolivarian Revolution." For the past three years the economy has grown at an 11%-to-12% clip, while consumption has expanded by 18% annually. The poor, 58% of all Venezuelans, have seen their meager household incomes more than double since 2004 thanks to cash stipends, subsidized food, and scholarships from the government's social-development programs. The result: Sales of everything from basics such as Coca-Cola (KO ) and Crest toothpaste to big-ticket items like Ford (F )SUVs and Mercedes-Benz (DCX ) sedans have taken off.

While the Venezuelan government has maintained modest spending on defense (Venezuela's defense spending as a percentage of gross domestic product was 1.17% in 2004, compared with our Latin American "ally" Colombia's 4.34% and the US's 3.98% of its much, much larger GDP -- source: Global Security), much of their spending goes to social welfare and edcation for the poor. Sending on the poor can nourish an economy too.

Other industries are not only putting up with Chávez but also benefiting directly from his programs. Take Intel Corp.: Sales of its microprocessors in Venezuela jumped by 15% in 2006 and look set to grow at the same pace this year as the government equips schools and public offices with new computers. In December, Caracas started a joint venture with China's Lanchao Group to manufacture low-cost machines called "Bolivarian PCs." The venture, 60% owned by Lanchao, will produce 80,000 computers in Venezuela the first year and 150,000 in 2008, including a stripped-down desktop model that will cost $450. Intel says the government alone could buy as many as 300,000 computers. "There's a lot of money in the Venezuelan market now, and it's important to take advantage of that," says Guillermo Deffit, Intel's business-development manager in Venezuela.

Look. No one says creating the conditions for true equality, shared prosperity, and global peace will be easy. And it will demand sacrifices from many. But isn't it worth trying?