DAVID GREENE, HOST:

This is MORNING EDITION from NPR News. I'm David Greene.

STEVE INSKEEP, HOST:

And I'm Steve Inskeep in Caracas, Venezuela.

MORNING EDITION is reporting from this country this week as Venezuelans prepare for a presidential election, selecting a replacement this weekend for Hugo Chavez, who died earlier this year.

Caracas is in a beautiful mountain valley, but it's not such a beautiful city. The high rises look a little run-down, a little polluted, and I'm standing on a mountainside in a neighborhood of improvised homes, concrete-block houses, corrugated metal roofs, and yet despite its poverty, this neighborhood called 23 January was a center of support for Hugo Chavez for all of his 14 years in power. He still has many supporters now.

To understand why, we've been talking with residents here, including Maria Tibisay Colmenares, who welcomed us into her tiny mountainside home, which is also a tiny store.

(SOUNDBITE OF CRINKLING OF DORITOS BAG)

INSKEEP: We're going to dwell on her story a bit because the details say so much about this vital, oil-rich and turbulent Latin American republic. The details start with the food Colmenares sells off the few shelves in a corner.

(SOUNDBITE OF CRINKLING BAG)

MARIA TIBISAY COLMENARES: (Spanish spoken)

INSKEEP: So you have Doritos here, you actually have two different kinds of Doritos here. (Spanish spoken)

COLMENARES: (Spanish spoken)

INSKEEP: Spicy and regular, she says. She's also got some Oreos, which seem to have been made very tiny for the extremely downscale market. Along with the American brand names, she also has chupetas, or lollipops.

Kids buy them?

COLMENARES: (Spanish spoken)

INSKEEP: She says grown-ups also buy them to suck on while watching television. Often in recent years, that would mean the grown-ups would be watching the late President Hugo Chavez, who regularly seized the airwaves.

Maria Colmenares didn't really need the TV to follow Chavez. She could see his presidential palace from her balcony, and she remembers when he first tried to seize power in 1992.

COLMENARES: (Spanish spoken)

INSKEEP: I am a survivor of the coup, she says. Then-Lieutenant Colonel Chavez tried and failed to take power, and during the battle nearby, the army machine-gunned houses on this hillside.

Bullets struck Maria Colmenares' house as she crouched with her daughter inside. Six years later, the man she loyally calls the Comandante won power through an election, promising help for the poor. And in some ways Chavez delivered.

COLMENARES: (Spanish spoken)

INSKEEP: We all have property documents now, she says of her neighborhood. And most of us have title to the land, she adds - a vital change. This was an informal neighborhood, of the kind you find across Latin America, where people built on the hillsides but never formally possessed the land.

The houses on this hillside were built with no streets anywhere near, but the Chavez government poured concrete on the narrow alleyways between them.

So this was repaved right outside the door, this little alleyway?

COLMENARES: Si.

INSKEEP: Not only that, the government paid to improve the bathrooms of many homes, and provided many houses with new roofs - corrugated metal like the old ones, but red.

Let's have a look outside.

(SOUNDBITE OF CAR HORNS)

INSKEEP: She points out new red roofs.

(Spanish spoken)

COLMENARES: (Spanish spoken)

INSKEEP: But this is the point where the oddness of the Hugo Chavez regime begins to reveal itself. Colmenares didn't actually need a new roof.

Did the old roof leak?

COLMENARES: No, no, no. (Spanish spoken)

INSKEEP: No, she says, it was fine, but the government had a big idea. As Colmenares understood it, this area would become a tourist district and a new train would take people to the city of the red roofs, as it would be called. That idea came seven years ago.

But still no train.

COLMENARES: No. (Spanish spoken)

INSKEEP: Like a number of grand ideas under Hugo Chavez, the project never finished. More troubling for Maria Colmenares are growing shortages of goods. She's had to narrow the food selection in her store. Inflation drives up the prices she pays for what she does stock. And she can't pass on all the costs to her customers.

You try to take care of your customers.

COLMENARES: (Spanish spoken)

INSKEEP: And yet despite these increasing problems, Maria Colmenares is ready to vote this weekend - and vote for the man the late Hugo Chavez favored.

COLMENARES: (Spanish spoken)

INSKEEP: We're looking at a poster of Nicolas Maduro, Chavez's successor.

COLMENARES: (Spanish spoken)

INSKEEP: This is the man, she says. Posters showing the mustachioed face of the Comandante's chosen successor hang all over the neighborhood. Yet as we continued walked the narrow alleyways in this barrio, we began noticing signs of discontent. Some people whispered they'll vote for the opposition candidate, Enrique Capriles, who says he'd be more pragmatic and less divisive than Chavez was. But people were afraid to say that out loud. A pro-Chavez militia group controls this neighborhood. We chatted with a militia member on a motorcycle who was distributing even more Maduro posters. So what do you do?

DOUGLAS LISCANO: (Spanish spoken)

INSKEEP: Raise revolutionary consciousness, says Douglas Liscano. But this short and emotional presidential campaign is apparently no place for a thoughtful discussion of socialism. In fact, the government's slogans to stay in power sound a little threatening. Bumper stickers say a vote for the opposition means you don't love your mother. A campaign song says if you vote for the opposition, you don't have a heart. You're like a dead man.

(SOUNDBITE OF SONG)

UNIDENTIFIED MAN #1: (Singing in Spanish)

INSKEEP: OK. So that was the sound of one of the higher altitudes of Caracas, where many of the city's poor live, where their lives have improved in some ways and grown worse in others. We've come downhill now to the center city, to an upscale hotel with a view of the mountains. It was here we agreed to meet German Garcia Velutini, a man on the other side of Latin America's economic divide. Garcia Velutini is a banker, a capitalist, just the kind of person the late President Hugo Chavez denounced for years, and yet Garcia Velutini had some striking news. Thanks to the heavy spending and borrowing of the activist government, bankers have done just fine. How's business?

GERMAN GARCIA VELUTINI: Well, in the history of the Venezuelan banking system, banks have made the most extraordinary profits with this government.

INSKEEP: He says banks haven't just made extraordinary profits under this socialist-leaning government, banks have made profits from the government. At least that's true of banks that avoided being nationalized, as many businesses have been.

VELUTINI: The only reason banks have not been taken over is if you expropriate a food company or a cement company or an iron company and you broke it, which has been the case in basically 100 percent, you can import food, you can import cement, you can import iron. But in the case of bankers, you cannot import bankers.

INSKEEP: So the government has worked with the bankers it has.

VELUTINI: The government pays you 15 or 16 percent interest rates - tax-free - to lend to the very, very poor, which is crazy.

INSKEEP: So they have requirements that you lend to very, very poor people.

VELUTINI: Right. That you're going to probably lose those money but you don't mind.

INSKEEP: Because at the same time, you're loaning money to the government for fines.

VELUTINI: And they are paying you 16 percent tax-free, which is a huge differential(ph).

INSKEEP: Did you say 16 percent?

VELUTINI: Sixteen percent, yes.

INSKEEP: At a time when the United States, the government of the United States, borrows money for virtually no interest rate at all - 16 percent.

VELUTINI: Sixteen percent.

INSKEEP: Tax-free.

VELUTINI: Tax-free. So sometimes they're going to hit on us, and especially our bank, they have the eyes on us.

INSKEEP: Why especially your bank?

VELUTINI: Because (unintelligible) has been very outspoken in the, I guess, government, no?

INSKEEP: The banker German Garcia Velutini says Venezuela's government imposes new rules with impossible speed in its drive to help the poor. The government also keeps bankers in fear they might really be nationalized after all. But for some capitalists, Venezuelan-style socialism pays very well in the end. We'll continue our coverage tomorrow on MORNING EDITION as this country's election approaches.

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