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"Venezuelan President Hugo Chavez may have been the only leader of an oil-producing power in the world who believed — or at least claimed to believe — that his country was immune from the meteoric drop in the price of crude," The Globe's Marina Jiménez wrote Tuesday in her article Venezuela's hard truth .

"For weeks, he vowed that his brand of 21st-century socialism would triumph — even if the price of oil plummeted to zero.

"But now, even El Presidente is facing a hard truth.

"Oil prices are very low," he acknowledged in a speech at a recent military parade in Caracas. For Venezuela, this is tough and difficult.

But even so, I will stick to what I have said: We are not going to cut spending on the missions … food, health, education and housing."

His dramatic admission regarding the price of crude illustrates the impact of its collapse on oil-dependent governments around the world. While Russia, Canada and others are suffering, Venezuela may fare the worst.

"More than any other leader, Mr. Chavez has staked his success, domestically and internationally, on the commodity boom. He was in the vanguard of a surge in resource nationalism that led producing countries to drive tougher bargains with international oil firms.

"Or, in the case of Mr. Chavez, make them completely unwelcome.

"Now, Mr. Chavez is backtracking as his government invites foreign oil companies to participate in the next stage of development in the Orinoco field, Venezuela's equivalent to Alberta's oil sands. Global oil companies will look to drive a hard bargain, eager to force Mr. Chavez into leading the reversal of the global trend that limited their access to international oil reserves."

"Even the President's most ardent supporters concede that the global recession will also lay bare the structural problems in Venezuela's boom-and-bust economy: a failure to diversify, a lack of productivity, an overreliance on imports and an overvalued currency."

Whatever you think of Mr. Chavez, it's a fascinating turnaround for his troubled country in a very short time.

Ms. Jiménez took your questions on her article, on Mr. Chavez, on Venezuela and the broader trends underlying this phenomenon. 

Marina Jiménez won a National Newspaper Award in 2003 for beat reporting (immigration) and was one of three finalists in 2004 for the same award.

Dave Michaels, globeandmail.com:  Hi Marina, and welcome to our readers, too.   Let's get right to the questions.

Alan Pater from Canada writes: The Canadian PM is another leader of a fossil-fuel-rich province who believed until recently that his country was immune to the collapse of oil prices. He did not save all the revenues while prices were high, and is also allowed to run for re-election indefinitely. Given these similarities between the two countries, do you think they are doomed to similar fates?

Marina Jiménez: Venezuela has other problems that Canada doesn't have. It has never diversified its economy and fully 94 per cent of its exports are oil. It has the highest inflation rate in the Americas (30 per cent) and it has a lack of productivity in its oil sector and relies overly on imports. As well, though Mr. Harper may seek re-election indefinitely, there are checks and balances on his power. In contrast, Hugo Chavez, Venezuela's president, has nationalized several industries, has control over the judiciary, much of the media, and the Congress. Often there appears to be no difference between "the state" and the government. For example, while campaigning last month for a constitutional amendment allowing him to run for the presidency indefinitely, Mr. Chavez used state workers in his political rallies, and held demonstrations on the steps and in the lobbies of government buildings. Can you imagine Mr. Harper campaigning inside a Ministry of Finance building, and asking bureaucrats to carry his campaign signs and wear "Yes to Harper" T-shirts?

Liz Fox from Nanaimo, B.C., writes: Your article says "even the president's most ardent supporters concede that the global recession will lay bare the structural problems of Venezuela's boom and bust economy, a failure to diversify, a lack of productivity and an over-reliance on imports and an over-valued currency." It's true, Venezuela still has many economic problems, but the "structural problems" mentioned above apply also to Alberta, Canada, Iceland, Ireland, etc., as well as other oil-producing countries as well as economies over-reliant on finance. Why is it only Venezuela, particularly Chavez, who is personally blamed for these problems whereas other countries seem to get away with blaming the "global recession"?

Marina Jiménez: Mr. Chavez uses the nationalized oil company, Petroleos de Venezuela (PdVSA) to run social programs, and has funnelled some of the state resources into a special discretionary fund. By involving the oil industry in other sectors of the economy, he is staking his presidency on this resource in a way other leaders have not, and thus is more vulnerable to a cyclical downturn.

Vivaldo Latoche from Ottawa writes: Hello, Ms. Jimenez! You seem to have a good grasp of Venezuelan political affairs. Under present and past circumstances, if you were to advise Presidente Chavez, what would you suggest he do?

Marina Jiménez: I would suggest that he introduce austerity measures immediately, stop selling discounted oil to regional allies, and curtail other international aid programs. I would suggest he tackle corruption within his own government, and consider trimming a bloated bureaucracy. He should introduce measures to tackle inflation, and increase productivity by encouraging the country to boost local food production (tomatoes, peppers, onions, eggs, meat) and thus reduce Venezuela's reliance on food imports.

Dave Michaels, globeandmail.com: A reader, Nitro Meyi from Toronto, wrote in the comments to your story: "Chavez clearly has no real long term plan for Venezuela other than turn it into a capitalist style Cuba ("socialist" regime with an actual protectionist economy)." Do you think that's true? What do you think his dream is?

Marina Jiménez: I think his dream is to continue spreading the country's oil largesse to the poor, and to keep himself in power. He appears to believe that he alone is capable of carrying out the "Bolivarian Revolution" of 21st century socialism. No successors are being groomed. And in that way, it does resemble Fidel Castro in Cuba. The difference with Venezuela is that it is a country with huge oil resources and money to fund a revolution — as long as the price of oil remains high.

Dave Michaels, globeandmail.com: Marina, several readers left comments on globeandmail.com asking about the likelihood of major oil companies once again investing in Venezuela's oil fields, after previously being shown the door. Can you address this further?

Marina Jiménez: Definitely I think the oil companies will be wary of re-investing in the country. Two companies — ExxonMobil and ConocoPhillips — are currently fighting through the courts for legal compensation after Venezuela expropriated their holdings in 2007. So there is concern both about shrinking margins due to falling oil prices, as well as the unpredictable record of President Hugo Chavez and his propensity to change fiscal terms and conditions and increase royalties, nationalize projects, etc. Analysts have said that oil companies are showing "cautious interest" in re-investing in current projects.

Dave Michaels, globeandmail.com: Here's another statement from a reader, Jay Crawford of the U.S.: "The last two centuries have shown us that, in a world of increasing social and economic complexity, dictators (especially military ones) don't grasp the details ... or trust those who do. That is what dooms them." Do you think this describes President Chavez?

Marina Jiménez: Hugo Chavez, a former paratrooper, is today an elected official who has won all but one of the many referendums and plebiscites he has held over the past 10 years since he came to office 1998. I think the problem is that he isn't paying as close attention to the country's long-term economic health as he should, and this may ultimately affect his political support, which relies to a large extent on his ability to invest in social programs and to support the poor through subsidized groceries, free health clinics etc.

Annie Lewis from Ottawa writes: I'm interested in how Venezuelans in general are reacting to their country's changing fortunes. I know Mr. Chavez just received a show of support when the restrictions were lifted on how many times he can run for president. But, based on your recent visit, is there any sign that the population may be questioning his methods and goals? Or are his "missions" strongly supported by the people?

Marina Jiménez: That's a great question. President Chavez won the recent constitutional amendment allowing him to run for president indefinitely by 54 per cent of the vote. And that was after he ran a very visible campaign and spent a lot of public money on it. In contrast, the "no" campaign was under-funded and not as visible.

Pollsters say there has been, in the last decade, a slow but steady increase in the numbers who support opposition forces.

While there are some pro-Chavez ideologues who truly believe in "21st-century" socialism, there are also a great number of "soft" supporters who may abandon Chavismo once the money dries up. So the next few months are crucial for Mr. Chavez and that is why he will do everything possible to avoid cutting back on the social programs, which remain immensely popular. Many in the country of 26 million remain poor — and Mr. Chavez has reduced poverty through greater access to food, education and health care.

Jacques Beauregard from Canada writes: Hello Marina, thanks for the article. Will it be possible for Mr. Chavez to run deficit-style spending in the hopes that oil prices will skyrocket again in a year or two (assuming global recession recoups, of course)? Does he have the financial means/structure to do so? (Example: Canada and U.S.) Thanks for your feedback!

Marina Jiménez: Yes, Mr. Chavez has $42-billion (U.S.) in reserves and can cover his losses in oil revenue with these funds. Economists believe that if the price of oil recovers by 2010, the Venezuelan economy will recover as well. But the "strong bolivar," as the local currency is known, is over-inflated and it is harder to finance a deficit in a non-U.S.-dollar economy.

Stew Fettes from Regina writes: When Chavez expropriated the two oil companies, was there any compensation paid to them for their "real estate," so to speak, or was it taken for zero? Castro did that and there has been a United States embargo for years, as he simply stole the infrastructure without compensation. Is this the direction Chavez has gone, and is it likely there could be a U.S. embargo on that country for the same kind of theft?

Marina Jiménez: ConocoPhillips and ExxonMobil essentially abandoned their Venezuelan operations rather than agree to convert them to government-majority joint ventures, so discussions over compensation is still ongoing. Both companies filed legal actions, which are making their way through the courts. Progress has been very slow. Despite this, Venezuela is now trying to court investors once again … who are naturally very wary.

The Investors Business Daily also had this to say in a recent article: "Chevron, Shell, and France's Total have quietly been approached for investment, the New York Times reports, even as they still smart from the expropriation of their assets in 2007. It wasn't just the billions in losses. It's also unlikely they have forgotten the fireworks, troops, banners and torch-bearing Chavista mobs seizing their property in the name of "the people." So it's quite a humiliation for the strongman, who once boasted, "We are taking back our country," to be back begging for help. Expropriation hasn't worked so well. Chavez's state oil company had virtually nothing left in its coffers after squandering $700-billion in oil earnings on political schemes like light bulb and milk factories. It needs $20-billion to develop its Orinoco Basin projects, which could produce 1.2 million barrels a day, but it can only do it with partners who have both capital and technology."

D. Patrick from Canada writes: Could you comment on the government's domestic anti-poverty programs? These appear to be inherently political structures that aim to create dependent constituencies involving benefits that can be offered and withdrawn on the basis of political affiliation rather than inherent right. Also, are they a sustainable and desirable way to alleviate poverty, vs. the incremental gains of steady economic growth and targeted income support for defined at risk groups, such as the Bolsa familia programs in Brazil and Mexico? Finally, are the poor better off, in net terms, now than under previous "neo-liberal" regimes? An ex-Chavez minister recently argued in Foreign Affairs that pro-poor spending is no higher than before.

Marina Jiménez: Yes I saw that article in Foreign Affairs, and it was most interesting. It takes issue with the standard line that under Chavez, the poor are better off.

The government's own statistics show that it has been successful in reducing poverty since 2003, in increasing the numbers of people in university, and in increasing access to health care. (UN statistics also show poverty reduction.) But many of these advancements are not structural changes. For example, much of the increase in employment is as a result of a bloated bureaucracy and a larger number of people being employed by the government to carry out "the missions." The increase in access to health care is as a result of Cuban doctors working in poor barrios in exchange for very cheap oil going to their homeland. And access to university is as a result of Mr. Chavez opening new public universities. All these initiatives may not be sustainable once oil money dries up. For example, where will all the new university graduates work? How will access to health care continue once the Cuban medics return home?

As for your first question, I think left-leaning international fans want to believe in the rhetoric of the Bolivarian revolution and the idea that the country's oil wealth will be more equitably distributed and thus are sometimes blinded to what critics say are Mr. Chavez' authoritarian tendencies. It is true that before Chavismo, the country's vast number of poor people experienced no social mobility and were excluded from the political class. In this way, Chavismo has changed the country forever.

Dave Michaels, globeandmail.com:  That's all we have time for today.  Many thanks to our readers, and to Marina for her time.