Venezuelan President Chávez, scrounging for cash to pay for social welfare programs, is looking to tap the country's central bank.

BY RICHARD BRAND

CARACAS - Trying to pay for a social spending spree in the face of a possible recall vote, President Hugo Chávez has been seeking and using billions of dollars from government accounts previously off-limits to the executive branch.

Most recently, Chávez has renewed his effort to withdraw at least $1 billion from the autonomous central bank, which holds $23 billion in foreign reserves, most collected from oil export revenue. Chávez says the bank has $8 billion more than it really needs.

``That money doesnt belong to the central bank, or even to the government, the leftist populist Chávez said in a national television address Sunday. ``It belongs to all the people of Venezuela.''

The president says he is trying to help Venezuelas impoverished majority benefit from the countrys vast oil wealth. But critics who allege he is trying to impose an authoritarian regime say he is using money from rainy-day funds and the state-run oil monopoly, known as PDVSA, for political gain.

SPENDING SPREE

In the past year, Chávezs government has been on a spending spree -- building low-cost housing, digging water wells, launching healthcare and educational initiatives, including the creation of two universities -- that has swelled the national budget.

The boom in social spending comes as the opposition presses to oust Chávez with a recall referendum. Elected in 1998 with about 80 percent of the vote, Chávezs support has dwindled to the mid-30s, according to some polls.

Venezuela is the third- or fourth-largest oil supplier to the United States and sits on the largest crude reserves outside the Middle East. But decades of public corruption and mismanagement have left most of its people poor, a problem aggravated by recent political upheavals.

To pay for many of the new programs, analysts say, Chávez has looked outside the government's $26 billion budget for extra money. Hes found some of it at PDVSA, which, in a break from its past, is directly financing some of his large-scale social projects instead of channeling its profits through the official government budget.

Economists say the oil companys direct contribution to the social programs has topped $1 billion since early 2003, when Chávez fired nearly half of PDVSA's workers who had led a crippling national strike designed to force him from power.

PDVSA would not confirm the $1 billion figure, but a spokesman said the company ''supports'' social programs, among them, medical and infrastructure projects, which the company calls ``missions.''

Since the strike, PDVSA has shared its downtown Caracas headquarters with the countrys Ministry of Energy and Mines, underscoring the blurring of the line between the government and the once relatively independent oil company.

Chávezs move on the central bank, which he launched late last year with a demand for $1 billion and had apparently put aside until last week, has also been derided by critics who say it is another example of his undermining of the countrys independent institutions.

``This is not just a money grab, this is a power grab, said Orlando Ochoa, a professor of economics at the Catholic University in Caracas. ``It gives you power if you can use money to help people who can vote for you. His main goal is to stay in power . . . This is short-term happiness to get votes and medium-term economic disaster.''

AUTONOMOUS STATUS

Ironically, the central banks autonomous status is protected by a 1999 constitution that Chávez backed strongly. In his speech Sunday, he used soccer language to describe that protection as a mistake, a ``self-goal.

One of the banks directors, Armando León, reaffirmed the banks autonomy on Monday, and instead suggested that Chávez replenish a national rainy-day fund that his government has already depleted, from $7 billion to $700 million since 2001.

The government is supposed to deposit money into the fund when oil prices are high and withdraw when they are low, so swings in oil prices dont drastically affect Venezuelas national budget.

But although oil prices are now high, Chávezs government has suspended deposits into that fund, partly to make up for revenue lost because of last years strike at PDVSA.

Meanwhile, some of the presidents supporters in Congress, who hold a slim majority, this week said they will draft laws allowing Chávez access to the central banks reserves.

``The economy has suffered because of the way the opposition took immense amounts of dollars out of the country and destroyed capitalism during the strikes, said Juan Barreto, a Chávez ally in Congress. ``To recuperate, the economy needs investment, particularly in the agricultural sector. It will allow us to compete in other markets and compete in the world.''

Several economists say the presidents proposal regarding the central bank would be devastating for the economy, arguing that it will undermine foreign investor confidence and cause inflation to soar.

''Im convinced that several members of his Cabinet know this is very dangerous, that this is playing with fire,'' said Pedro Palma, a professor of economics at Venezuelas IESA business school.