Leftist talk cannot deter Venezuela's big spenders http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-12-08T193223Z_01_N07210829_RTRIDST_0_VENEZUELA-ELECTION-LUXURY.XML&rpc=66&type=qcna
Fri Dec 8, 2006
By Christian Oliver
CARACAS, Venezuela, Dec 8 (Reuters) - Sleek Maseratis grace car showrooms, maids take pampered poodles for walks past high-walled mansions and women decked out in Prada nibble on delicate pastries at street-side cafes.
Opulent east Caracas, flush with oil cash, shows scant sign of the anti-capitalist campaign President Hugo Chavez is vowing to intensify after winning a landslide re-election this week in the polarized OPEC nation.
"In some countries instability makes people save their money, here people are accustomed to political crisis and their only obsession is to spend," said Vicente Amengual, manager of a Mercedes-Benz (DCXGn.DE: Quote, Profile , Research) dealership.
"Car sales are at record levels. It is madness. There is so much money around," he added.
Despite Chavez's dependence on oil exports to the United States, he condemns capitalism and the influence of U.S. culture which he accuses of spurring profligate spending that defies his self-styled revolution.
But undeterred Venezuelans still brave soaring street crime to flaunt their Rolex watches.
In September, car sales rose a scorching 90 percent on the year. Diageo (DGE.L: Quote, Profile , Research) reported a 55 percent increase in Scotch sales last year, with 18-year-old whiskey at $60 a bottle leading Venezuela's alcohol surge.
Amengual sells 20 cars a month, with top models fetching $200,000.
Chavez calls the buyers "the squalid ones" or "oligarchs."
The labels resonate with his legions of poor supporters in a country where one out of every four Venezuelans lives on $2 a day, many in sprawling slums that stare down onto the richer classes' villas and swimming pools.
Amengual said making enough money to buy a Mercedes was not necessarily a matter of knowing the right people, citing clients who struck it rich on real estate.
"You do not need to be close to power," he said.
Still, another car seller and a jeweler, who both spoke on condition of anonymity, said some of their most valued clients were government officials who pay in cash.
Venezuela's consumer-oriented economy may be surging on the back of massive oil income, but many people worry that Chavez is not investing in enough infrastructure, with trouble ahead.
PLAYING CHAVEZ'S GAME
Chavez has confiscated land from giant ranchers such as Britain's Vestey and stripped oil majors of their control of production projects.
But many firms still make money with ease, escaping Chavez's ire which is mainly leveled at the big names such as Exxon Mobil (XOM.N: Quote, Profile , Research), the world's largest company.
Some of the rich have even realized they can keep Chavez on their side. Alberto Vollmer, owner of rum-maker Santa Teresa (RST.CR: Quote, Profile , Research), is the archetype of a businessman who quickly adapted to Chavez's new order.
When his estates were threatened with occupation by families from nearby shantytowns in 2000, Vollmer opened his land up for housing programs and offered kids from violent gangs schooling and a place to play rugby. He lost some land but still runs his business. Still, other members of the elite have labeled him a class traitor. \ On Wednesday, the government slapped 15 to 35 percent surcharges on luxury imports from jewelry to champagne, both increasing revenues and trying to deter rampant consumerism.
But in the American-style malls of Caracas, shoppers mill past the Christmas trees and enormous plastic elves, filling their shopping bags to the soundtrack of canned carols.
"A few years back spending was not so imbalanced, now we have those who spend excessively and those who spend to survive, for a square meal," said art dealer Valentina Hernandez, 29.
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