Home |
Site Index |
FAQs |
Contact |
RSS
|
Podcast
home > by publication type > daily analysis > Blow to Oil-Fueled Socialism
Email
| Author: |
|---|
Though Chavez’s reform bid failed, he still has many ardent supporters. (AP Images/Rodrigo Abd)
Venezuela’s December 2 referendum on constitutional reforms followed street protests (CSMonitor) by thousands of Venezuelan university students. They proved to be a galvanizing force in the surprise defeat of the referendum, which would have broadly expanded President Hugo Chavez’s powers (TIME). The Venezuelan government, awash in oil revenues, has shared the windfall—from the upper-middle class down to the poor in Caracas’ barrios. Yet shortages of basic foodstuffs like milk and eggs have increased skepticism about economic reforms and eroded some of Chavez’s support among poor Venezuelans (LAT). Chavez accepted the poll’s result in a speech on December 3, adding that he would “continue in the struggle to build socialism.”
He will now have to contend with an emboldened opposition (NYT). Experts say the vote, Chavez’s first electoral defeat in nine years, could further polarize Venezuela’s already divided population. The referendum failed by a razor-thin margin of two percentage points, according to the Electoral Commission. Speaking on a panel at the Council of the Americas on November 30, Michael Penfold, an associate professor at the Instituto de Estudios Superiores de Administracion in Venezuela, said the country is headed toward a “governability crisis.” Andy Webb-Vidal, a journalist and political-risk analyst, suggested at the same panel that Chavez will continue to do as he pleases, given the enabling law passed earlier this year that allows him to rule by decree.
The president and his followers still control most of the government, including the National Assembly, the state-owned oil company, and the courts. The proposed constitutional changes would have further centralized Chavez’s power (Economist), allowing him to be reelected indefinitely, giving him more leeway for declaring states of emergency, and mandating the creation of regions led by vice presidents picked by Chavez. Other amendments called for economic changes, such as allowing the president control over the central bank. A report (PDF) from the Venezuelan government outlines (in Spanish) the sixty-nine amendments in the referendum. John Walsh of the Washington Office on Latin America tells CFR.org's Bernard Gwertzman that these reforms were so far-reaching that many Venezuelans, even those who support Chavez, were “afraid of such power in one person's hands.”
Social programs to bring cheap groceries, medical care, and education to the poor have been the bulwark of Chavez’s support, but price distortions from the oil-fueled economy have hit many of these constituents hard. Inflation, officially at 16 percent but thought to be higher, is significantly raising the cost of basic foodstuffs. Journalist Alexandra Starr says Chavez has merely tapped into the Venezuelan belief that the government should help its citizens. “Cheap gas strikes at the heart of the arrangement many Venezuelans feel they have with the state: ‘national patrimony belongs to all of us, and I deserve my share of the spoils,’” she writes in The American Scholar.
Chavez’s political future will depend on the ability of Venezuela’s state-run oil company, PDVSA, to continue producing the heavy crude that fuels his socialist revolution. The president spends billions dollars of PDVSA's revenue on social programs, handouts to foreign governments such as Cuba, and defense. Though the company’s financial dealings and level of oil production are largely opaque, many analysts say oil production is down and the company is not investing enough. Venezuela was the ninth-largest global producer in 2006, according to the U.S. Energy Information Administration. Two decades ago, PDVSA was considered a top-notch oil company. Now, it “amounts to the president’s $35 billion petty-cash drawer,” writes Tina Rosenberg in the New York Times Magazine.
Weigh in on this issue by emailing CFR.org.
In Termites in the Trading System, Jagdish Bhagwati reveals how the rapid spread of preferential trade agreements endangers the world trading system.
America Between the Wars explores how the decisions and debates of the years between the fall of the Berlin Wall and the collapse of the Twin Towers shaped the events, arguments, and politics of the world we live in today.
In The Fall and Rise of the Islamic State, Noah Feldman tells the story behind the increasingly popular call for the establishment of the sharia—the law of the traditional Islamic state—in the modern Muslim world.
Complete list of CFR Books.
This report argues that the United States must lead with domestic action on climate change and proposes a U.S. negotiating strategy for a global UN climate agreement that includes commitments from all major economies, while also promoting a less formal Partnership for Climate Cooperation that would focus the world's largest emitters on implementing aggressive emissions reductions.
This Task Force report examines changes in Latin America and in U.S. influence there, while taking account of the region's enduring importance to the United States. The Task Force offers an agenda for U.S. policy toward Latin America and identifies four critical areas that should provide the basis of a new U.S. approach.
About Independent Task Forces at the Council.
After two decades of liberalization, many countries around the world are adopting new restrictions on foreign direct investment (FDI) that could retard continued progress. The authors make recommendations for correcting this protectionist drift by proposing guidelines for how countries can better regulate FDI yet still reap its economic benefits.
In this Council Special Report, the authors make a strong case that the Bush administration’s policy of diplomatic isolation of Syria is not serving U.S. interests, and offer informed history and thoughtful analysis of the country and its external behavior.
Complete list of Council Special Reports.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1-800-537-5487, fax +1-410-516-6998.
For information on other reports that are not for sale, or for general publications information, please call +1-212-434-9516 or email publications@cfr.org.
To request permission to reuse Council materials, please email publications@cfr.org or fax +1-212-434-9859.
Please include the complete information of the requested work—author, title, sections/pages to be copied or reprinted, and number of copies to be made—along with a brief description of where and how you would like to reuse the work.
You may also request permission for Council material through Copyright Clearance Center. For more information, please click on the logo below.
Copyright 2008 by the Council on Foreign Relations. All Rights Reserved.
