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Hugo
Chávez's Plans
Hugo Chávez
By Niko Kyriakou with Martin Markovits
Hugo
Chávez's resounding victory in well-monitored elections
earlier this month shows that the self-styled socialist's controversial
leadership and big social spending have genuinely won over Venezuela's
poor majority. But Chávez has raised eyebrows by dedicating
his victory to the Cuban revolution and declaring the beginning
of a "new society." Is this declaration, as many critics
are suggesting, code for the launch of a full-fledged communist
state, Cuban-style? Is Chávez, who hopes to pass constitutional
reforms that would do away with the country's three-term presidential
limit, taking the slow road to autocracy? Just what does the unorthodox
ruler have in store for Venezuela and the region? And, how will
Venezuela's shaky relationship with the United States evolve during
Chávez's upcoming six-year term?
Election
Wrap-Up
As expected, Hugo Chávez scored an overwhelming victory
in Venezuela's Dec. 3 presidential elections, snagging just under
63 percent of the electorate, or about 7 million votes, according
to the National Election Council.
His
only relevant challenger, Manuel Rosales, a free-market advocate
and the governor of Zulia state, won 37 percent of the votes but
failed to capture the majority in any of the country's 27 states,
even his own Zulia (although he lost there by just 1 percent).
The
election saw the smallest voter abstention in Venezuelan history.
Some 75 percent of eligible voters, or 16 million people, went
to the polls.
Few
voting irregularities were uncovered by the some 700 international
election monitors present at voting centers; including delegations
from the Organization of American States, European Union, Mercosur
and the Atlanta-based Carter Center.
"We
observed one of the most forward and technologically advanced
systems in the world. We would do well to emulate it in Germany,"
said Kornelia Moller, the spokesperson for the German monitoring
delegation and a member of the German Parliament.
Observers
reached a consensus that the elections were "free, transparent
and democratic," easing doubts about Chávez's support
for democratic elections.
Opposition
candidate Manuel Rosales had been expected to declare election
fraud in the case of his defeat, but when the election was deemed
squeaky clean, the candidate tipped his hat — marking the
first time the opposition has recognized Chávez as the
country's legitimate president.
To
sum up, Chávez has emerged from an internationally sanctified
election with a strong mandate, a relenting opposition and a grip
on the presidency through 2012. If he's been harboring secret
plans to become a dictator or unleash a communist plot, surely
now would be the time.
Final
Step to Fidel?
Following the Dec. 6 announcement of his reelection, Hugo Chávez
declared the beginning of "a new era" and the "deepening"
of his Bolivarian brand of socialism. He also said, rather ambiguously,
that come inauguration day next January, the country would enter
the "third phase" of the revolution.
There
is considerable debate between scholars — and possibly between
moderate and extremist factions of Chávez's own party —
as to what "new era" and "third phase" really
mean.
"Nobody
knows what will happen after inauguration day, that's the big
question," said Margarita Lopez, a historian and a professor
at the Central University of Caracas.
"He
(Chávez) has been very vague, especially during the campaign.
The only thing that he has been completely open about, in terms
of specific policy, is changing the constitution to end presidential
term limits," Lopez said. Chávez's controversial proposal
to slash all term limits on the presidency would give him a chance
at life-long leadership.
But
the socialist leader has dulled this apparently autocratic edge
by promising to submit any upcoming constitutional changes to
a public vote.
In
his victory speech, the incumbent repeatedly mentioned democracy,
commenting more than once that capitalist societies, unlike socialist
ones, are incapable of true democracy.
These
comments seem designed to show the world that Chávez is
not an autocrat, but a moderate who genuinely respects the democratic
process. They also stick a finger in the rhetorical eye of Chávez's
diplomatic sparring partner, the Bush administration, which has
declared itself the worldwide defender and promoter of democracy.
Chávez's
pro-democracy comments may have been directed at his campaign
opponent who, like many of his critics, suggests that the leader
is moving Venezuela toward a Cuban-style communism. During the
campaign, opposition leaders often seized on Chávez's words
and photo ops with Castro to bolster the impression that the Venezuelan
president seeks to convert the country into a communist state.
In
his final campaign speech in the oil-rich city of Maracaibo, opposition
candidate Manuel Rosales told a crowd supporters, "We're
going to choose between two paths: one side that believes in democracy
… and the other that wants to establish in Venezuela a Castro-Cuban
communist system that strips the people of freedom."
The
Venezuelan president's unabashed admiration of Fidel Castro makes
comparisons between the two leaders tempting. Chávez dedicated
his election victory to the Cuban revolution and praised Castro's
social projects for Cuba's poor. Venezuela has aided the Cuban
economy by selling them cheap oil in exchange for billions of
dollars in medical services.
Chávez
has even positioned himself as heir to Castro's role as the world's
leading radical statesman, frequently visiting the ailing leader
over the past year and modeling many of his social programs, or
missions, on Cuba's own programs.
When
taken in this context, accusations that Chávez may go communist
appear more plausible. But the comparison wears thin beyond the
shared rhetoric and close personal relationship between the two
leaders.
While
Castro has never faced an electoral process, Chávez has
won four elections with an average of 59-60 percent support. Chávez
arranged referendums on the new constitution and National Assembly,
and even allowed the opposition to hold a 2004 recall on his rule,
which he won overwhelmingly.
While
an autocrat might have crushed coup members who ousted him in
2003, Chávez reacted with notable moderation.
"He
could have executed all the coup members. In the United States,
attempting to depose a head of state is an executionable [sic]
offense," said Larry Birns, director of the Council on Hemispheric
Affairs, an independent non-profit research organization based
in Washington, D.C.
To
the contrary, Chávez permits a highly critical media (95
percent according to Birns) and an organized political opposition,
neither of which generally flourish in autocratic states.
However,
in his eight years as president, Chávez has curbed some
freedoms and centralized power. Insulting the president or another
public official is now a crime, and some journalists complain
that new laws promote self-censorship. The president's party has
a monopoly on the 167-member National Assembly, (the result of
the opposition's boycott of National Assembly elections last year),
and New York Times writer Juan Forero calls the courts "little
more than adornments." Billions of dollars of the country's
vast oil wealth flows directly from the state-run oil company
to the executive branch.
Chávez
says he respects the right to own private property but has expropriated
several privately owned buildings in Caracas and allowed the homeless
to live there as part of his Negro Hipolita mission, which provides
housing and rehabilitation for substance abusers. He has also
expropriated fallow farmlands and handed them over to the poor
for cultivation, although his government has paid market prices
or better for these properties.
Many
of the country's wealthier citizens asserted prior to Dec. 3 that
they would flee the country if Chávez were reelected. Four
days after Chávez's victory became apparent, Brian Penn,
chief spokesman for the U.S. embassy in Venezuela, said he had
seen no spike in visa applications to the United States over the
past weeks, however. Penn added that he could not answer whether
the United States would grant emigrating Venezuelans asylum as
it did for Cuban refugees fleeing Fidel Castro in the 1950's.
Chávez
Under Pressure?
Interestingly, Hugo Chávez may be under internal pressure
to advance a communist model.
"One
thing the election revealed is that there is a split going between
the Chavistas," said Lopez. On one side are "radicals
who are heavily influenced by the Cuban revolution and want a
Cuban style system," the historian said. They advocate starting
with the confiscation of private property. According to Lopez,
this communist faction is led by the energy minister and chief
of the state oil company (PDVSA), Rafael Ramirez, and the Mayor
of Caracas, Juan Barreto.
On
the other side, are a group of moderates who seek "limited
socialism and want to keep moving things the way they are presently
going," she said. "This faction includes Vice President
Jose Vicente Rangel and Justice Minister Jesse Chacon."
"They
favor expanding the missions and some changes to private property
law, but for the most part want to leave capitalism alone. There
is an economic boom going on right now and these Chavistas are
now buying cars and houses and living on the East side of Caracas
like Altamira," Lopez said.
In
her view, Chávez's own position is a mystery. She describes
the leader as hanging back, waiting to make his move. But there
are some signs that Chávez may be aligned with the moderates.
Earlier
this year the mayor of Caracas, Juan Barreto, threatened to seize
the city's Country Club golf course, located in Chacao, the richest
neighborhood in Caracas. Barreto said the course took up space
that could be used for much-needed housing, and entered into a
debate with the mayor of Chacao, who refused to allow the course
to be confiscated. Differing from his earlier seizures of private
property, Chávez stepped in and publicly reprimanded Barreto,
insisting he drop his case.
Capitalism
Flourishes, Not Communism
Ironically, many of Chávez's supporters would probably
oppose not just a departure from democracy but also a crack down
on the free market. The reason for this is that the popularity
of Chávez is in some ways connected to the consumer fervor
taking hold of the country.
Spurred
on by great spikes in oil prices, Venezuela has become Latin America's
fastest growing economy. Oil was at $11 a barrel when Chávez
first came to power in 1998; it currently stands around $56. This
boom has driven gross domestic product up 10.2 percent in the
last quarter alone. Oil accounts for half of all the country's
tax revenues and 80 percent of export revenues, according to Germany's
Spiegel magazine.
Astoundingly,
the Central Bank reports that consumption has risen 32 percent
above 2005 levels, and there is seven times more money on the
streets than there are goods and services available in the market,
according to the country's polling company, Dataanalisis.
In
the third quarter of 2006, $8.6 billion worth of imports entered
Venezuela, equal to the average annual figure for the last decade,
according to the country's retail association.
The
Venezuelan economic forecasting firm, Ecoanalytic, predicts a
40 percent increase in car sales in 2007, a 36 percent rise in
the purchasing of telecommunications goods (Internet, cell phones,
fixed lines and computers), a 32 percent increase in commercial
sales and a 29 percent increase in construction (already up 32
percent in 2006).
Increased
spending has not just come from the rich. In a country of 27 million,
government figures show a drop in the number of Venezuelans living
in poverty from 44 percent in 1998 to 34 percent this quarter.
Monetary
liquidity, according to the Central Bank, stands at 110 trillion
bolivars ($52 billion), equivalent to one-third of Venezuela's
gross domestic product. With all this free-flowing cash, how many
of Chávez's poor supporters and well-paid government employees
would really support an economic lockdown?
Race
Against Time
Rather than shift toward a communist state, Chávez may
be racing against time to create a stable regional trade block
in which a capitalist economy can thrive alongside his Bolivarian
socialist model. One point in particular indicates this possibility.
"Today,
the country is singularly dependent on a volatile resource: oil.
Traditionally, oil is a cyclical commodity; that's why he is anxious
to push forward integration," said Miami Herald columnist
Fred Rosen. "If oil [price] goes down, this may be Chávez's
soft underbelly," he said.
According
to Rosen, Chávez's regional integration plan, modeled after
the European Union and currently embodied by the Mercosur trade
block, is designed not only to support independence from the United
States but also to diversify the economy.
"Chávez's
idea to lead regional integration will allow South America to
diversify its economy to rely not only on oil and natural gas
but a diverse set of industries," Rosen said.
While
oil prices may be more stable than in the past, especially considering
the voracious energy appetites of growing powers like India and
China, price volatility could be motivating Chávez to speed-up
regional integration.
Recent
Moves
Seeking to nurture this integration, the Venezuelan president's
first action following the news of his victory was to depart on
a continental tour of various regional center-left governments,
which now include Cuba, Brazil, Argentina, Bolivia, Chile, Uruguay,
Nicaragua and Ecuador.
Arriving
in Brazil the day after his official victory, Chávez told
reporters that the main topic on his agenda would be boosting
Latin American integration by giving Brazil and the rest of South
America easy access to Venezuela's vast oil reserves.
The
hallmark of these energy proposals is the estimated $200 billion
"oil pipeline of the south" that would travel an 8,000-kilometer
distance from Venezuela to Argentina's Rio de la Plata. Chávez
and Brazilian President Lula da Silva are also in negotiations
to build a $25 billion Venezuelan refinery plant in the Brazilian
state of Pernambuco.
Another
topic in discussion is the creation of a continental military
force for South America. Chávez has said that true Latin
American integration cannot be complete until the armed forces
of the region are reorganized.
Foreign
Minister Nicolas Maduro, who accompanied Chávez on his
trip, said that Mercosur has entered a new phase in which it will
no longer be strictly an economic entity. "Because of the
philosophies and backgrounds of the presidents of Argentina, Paraguay,
Brazil and Venezuela, Mercosur will take a new direction that
will now encompass social and political issues," Maduro said.
U.S.
spokesman in Venezuela Brian Penn said the United States would
be willing to negotiate trade deals with the South American economic
union.
Relations
With the U.S
.
The United States purchased some 60 billion liters of oil from
Venezuela in 2006, transferring $20 billion to the country. But
Chávez may be attempting to push South America closer together
as a means of replacing the United States as a principal trading
partner in the long-term.
Chávez's
recent moves to integrate regionally include helping neighboring
nations slough their debts to the International Monetary Fund.
Venezuela provided the wherewithal for Argentina's recent repayment
of its I.M.F. debt by purchasing more than a billion dollars in
Argentine public bonds. With Argentina and Brazil paying off their
debt and Bolivia's decision not to sign a new agreement with the
multilateral lending institution, Latin American nations have
begun to break free from the restrictive I.M.F. conditions that
long prevented policies aimed at redistribution of wealth and
improving conditions for the poor.
In
yet another sign of declining U.S. clout in the region, Mercosur
countries rejected the U.S.-sponsored Free Trade Agreement of
the Americas (F.T.A.A.) at the presidential summit of the Americas
held in Mar del Plata, Argentina, in November 2005. When the United
States responded by threatening to revoke long-standing trade
preferences to the region, countries like Peru and Colombia jumped,
practically begging the United States to approve bilateral deals
before preferences expire at the year's end. But talks with Ecuador
and Uruguay have stalled, showing that heavy-handed U.S. tactics,
while still influential, no longer carry the mandate they once
did.
Today,
Washington must double paddle to maintain a strong presence in
Latin America, although it maintains powerful trade deals with
Mexico, Paraguay, Chile and across Central America.
As
Hugo Chávez attempts to lubricate the path toward regional
integration with cheap oil for the region, the United States can
only be expected to grow more and more testy with the vagabond
head of state. However, transparent elections have made it hard
for the pro-democracy touting United States to raise a rhetorical
hand against Chávez.
U.S.
Ambassador to Venezuela William Brownfield has recognized Chávez's
victory and expressed hopes about improving relations between
the two countries, and U.S. Embassy spokesman Brian Penn said
this about the future of bilateral relations with its fourth largest
oil supplier: "We realize in the big areas we are fundamentally
going to disagree. However, we do agree that there are other areas
where we can talk and have good relations, like fighting narco-trafficking,
making energy deals and fighting terrorism."
But
Chávez, showing a blatant disregard for diplomacy with
the United States, voiced pessimism about the possibility of improving
the two countries' abrasive relationship, complaining that the
powerhouse would most likely continue to put "conditions"
on any potential dialogue. It may be that by integrating with
regional states — and establishing trade with Iran, China
and other Asian powers — Chávez hopes to gradually
transfer his country's oil sales away from the United States,
which currently buys some 60 percent of Venezuela's annual export.
What
seems more certain is that as regional bonds thicken the rewards
will become more visible, providing an increasingly inviting incentive
for the rest of Latin America to turn away from the "empire"
and toward Simon Bolivar's dream of continental integration.
Niko
Kyriakou
and Martin Markovits work with the International Relations Center
(I.R.C.). Petroleumworld not necessarily share these views.
Editor's Note: This commentary was originally published by International
Relations Center (I.R.C.), on 12/24/2006. Petroleumworld reprint
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