Chavez Revolution May Be in Retreat; Hugo Chavez Was Riding High in 1999. but Economic and Civil Strife, as Well as Questionable Political Moves, Have His Presidency Teetering on the Brink of Collapse. (World: Venezuela)
Whalen, Christopher, Insight on the News
With several thousand people chanting "Freedom! Freedom!" a previously unknown Venezuelan airforce colonel called on President Hugo Chavez to resign and make way for a new, democratic government in Venezuela. The scene, reminiscent of the protests that brought Chavez to power, saw Col. Pedro Soto lead a crowd to the president's residence.
Soto, who quickly was discharged from the military for his trouble, made blistering public attacks on Chavez, proclaiming him a tyrant who was using the presidency for personal aggrandizement while bankrupting the country. Other senior Venezuelan air-force and naval officers have since called on Chavez to resign. But, so far, no army officers have yet broken ranks.
These bizarre, almost comical, developments come as little surprise to people who have followed Venezuela under Chavez. His approval ratings were 80 percent when he took office in February 1999, but Chavez's support has dropped to just 30 percent today. Opinion polls suggest two-thirds of Venezuelans blame Chavez's rhetoric for their own economic problems. While there is some doubt as to whether he will stay in power through the end of his term in 2006, his ability to effect radical change in Venezuela is greatly reduced.
Chavez's weakening political support is ultimately a result of incoherent economic policies and a weak economy. On Feb. 13, Venezuela's currency plunged 20 percent when Chavez suddenly abandoned exchange controls, ostensibly to stem capital flight and restore investor confidence, causing a collapse in the value of the bolivar. Venezuela had spent more than $3 billion via currency-market intervention to prop up the bolivar since November 2001. Business groups wanted the currency devalued to make exports more competitive, reports Fabiola Sanchez of the Associated Press in Caracas. The International Monetary Fund and Wall Street applauded the move, but Venezuelans, 80 percent of whom live in poverty, were unimpressed.
"The economic policies that helped to maintain the overvalued bolivar during the past three years reduced the competitiveness of Venezuelan producers, driving many local manufacturers out of business," says Walter Molano of BCP Securities, who adds that the official unemployment rate is 15 percent. Venezuelans import an enormous array of products, thus the inflationary pressures from the devaluation could be strong. "Unfortunately, President Chavez has a new set of problems on his hands if the inflation rate increases sharply and real wages decline," says Molano, who reckons that the bolivar was 40 percent overvalued prior to the Feb. 13 devaluation. He expects the currency to stabilize below 1,000 per dollar.
Upon taking office, Chavez declared a new "Bolivarian revolution" and installed a National Assembly and Supreme Court controlled by his cronies. But now even these supporters are turning on this avowed protege of Cuban dictator Fidel Castro as the economy continues to slide.
Indeed, the most vociferous opponents of Chavez are coming from the left. Gabriel Puerta Aponte of the publication Bandera Roja (Red Banner) observes: "This process [begun by Chavez] bears no resemblance to an authentic revolution. He has only presented some changes in the political hegemony and the structure of the corrupt system, but this is not a revolution. There is no possibility of having a dialog with this regime. Chavez is a threat to public order and civil society."
The very sectors that supported Chavez's rise to power increasingly are unhappy with his threats of land seizures, expropriation of private businesses and banks and attacks on the Catholic Church. But above all it is Chavez's inability to provide employment and reduce corruption that has gained him the wrath of most Venezuelans. Public discontent grows each day with the center-right opposition, the business community and an increasing number of military officers publicly calling for strikes and other public protests.
The first sign of problems was the announcement in January that octogenarian Luis Miquilena, one of Venezuela's most influential politicians, would step down as interior and justice minister. Having used Miquilena to gain credibility with Venezuela's established left-wing parties, Chavez discarded the advocate of moderation and democracy in favor of Venezuelan navy Capt. Ramon Rodriguez Chacin, a hardened Marxist who is Chavez's personal liaison to Colombia's narcoguerrillas.
The early February decision by Chavez to replace Gen. Guaicaipuro Lameda as president of the state oil company, Petroleos de Venezuela (PDV), marks yet another sign of the deterioration in the country's political scene. Lameda received high marks for his management of PDV; that is, the military man allowed the professionals inside the company to run the oil monopoly without political interference. Venezuela produces 2.5 million barrels of oil a day and has the largest oil reserves in the Western Hemisphere.
The appointment of Central Bank Director Gaston Parra, a stalwart Chavez supporter and leftist crony with ties to Cuba, as the new head of PDV adds weight to the view that Chavez is increasingly isolated. Parra is the oil company's fourth president in little more than three years. Neither the Chavez government nor PDV officially explained Lameda's removal, but the reaction from foreign oil companies operating in Venezuela is decidedly negative. PDV workers at all levels greeted Parra with great disdain and antipathy.
Parra, 68, imposed higher royalties on foreign oil companies operating in Venezuela -- from 18 to 30 percent, the highest in the world. The Wall Street Journal reports that Lameda couldn't agree to a government program that demanded a 25 percent reduction in overall costs because it would limit the company's operational abilities. Sources tell INSIGHT that Lameda was on the outs with Chavez for months because of his refusal to turn PDV into a cash cow for socialist engineering. Yet an obvious area for immediate savings is Venezuelan sales of oil to Cuba, which is allowed to buy petroleum from PDV below the market price and then resells it to raise badly needed foreign exchange.
More ominously, the same sources with direct access to the highest levels of the Venezuelan military tell INSIGHT that the Cuban connection remains strong, directly contradicting U.S. press reports that the Cubans have soured on Chavez. Indeed, sources in the U.S. intelligence community tell INSIGHT that the Cubans have their claws deep into the chaotic Chavez regime. One senior U.S. official reveals that the entire security force protecting Chavez is made up of Cuban military personnel and that Venezuela's elite military intelligence force also has been largely penetrated by Cuba's intelligence services.
"Chavez mat survive his latest problems," says Lee Rivas, a retired U.S. Army colonel who served in Venezuela and now consults for foreign companies there, "but the days of the Bolivarian revolution are numbered." The native Caraceno says a leading contender to replace Chavez mat be Francisco Arias Cardenas, a one-time Chavez ally who now is among his fiercest critics. Foreign media outlets overlook the fact that Arias, a former army officer who opposed Chavez in the 1999 presidential elections, won 37.5 percent of the vote.
Perhaps the most significant factor working against Chavez is the professional and careful Venezuelan army, which increasingly is uncomfortable with Chavez's public diatribes and especially his use of the army for "social work." One Venezuelan military man who was trained in the United States tells INSIGHT that his colleagues in the officer corps are unhappy with Chavez's embrace of Colombian guerrillas and the close ties to Cuba's corrupt military, both of which actively deal in narcotics.
"We are playing footsie with every scumbag in the world," the officer complains. "The army is ignoring security threats on our borders while the president uses soldiers to seize private farms and build homes for the poor. Chavez has diminished respect for the army by politicizing our role in society and has created a serious problem of morale and discipline." The officer then points to the public outburst by Col. Soto as but one example of a far larger problem.
INSIGHT sources reckon that key generals who protected Chavez until now will turn on him and then negotiate with opposition groups to name a successor or hold new elections. It is not certain how or precisely when the end of the Chavez-led Bolivarian revolution will occur, but well-placed sources tell INSIGHT that the end is fast approaching. A sudden change in government could lead to another period of social violence and instability, suggesting that foreign companies and individuals in Venezuela should exercise caution in the next several months. The security situation there already is problematic even as political conditions deteriorate, thus the next couple of months in Caracas particularly and Venezuela generally could be dangerous for foreigners and natives alike.
As protests against Chavez continue to grow in intensity and frequency, observers report, the country's government is paralyzed--and this after three years of grueling recession and, most recently, a sharp currency devaluation. While Chavez seems determined to remain in power, perhaps with the assistance of his Cuban protectors, the slow downward spiral of the Venezuelan economy is a potent threat to the former Venezuelan army lieutenant colonel. In any event, U.S. political leaders, distracted by the endless war on terrorism in the Middle East, would do well to pat attention to unfolding events in Venezuela, a very real local security threat in a key nation that supplies most of America's imported oil.
CHRISTOPHER WHALEN IS A WALL STREET INVESTMENT BANKER WHO WRITES FOR Insight.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Chavez Revolution May Be in Retreat; Hugo Chavez Was Riding High in 1999. but Economic and Civil Strife, as Well as Questionable Political Moves, Have His Presidency Teetering on the Brink of Collapse. (World: Venezuela). Contributors: Whalen, Christopher - Author. Magazine title: Insight on the News. Volume: 18. Issue: 13 Publication date: April 15, 2002. Page number: 23+. © 1999 News World Communications, Inc. COPYRIGHT 2002 Gale Group.
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