Analysis Brief

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Six More Years of Chavez

Prepared by: Stephanie Hanson
Updated: December 4, 2006


On Sunday, Venezuelans reelected President Hugo Chavez, whose socialist-inspired policies and anti-U.S. rhetoric have resonated with the poor (BBC). Ahead of the elections, Chavez had been raising eyebrows at home and abroad, polarizing Venezuelans in the process. Though government slogans espouse the country’s harmony, Chavez’s ubiquitous red billboards and multi-hour television and radio speeches seemed to be sowing divisions (TIME) in the country.

The once-fragmented opposition gained traction by uniting behind presidential candidate Manuel Rosales, governor of the country’s second-largest state. Winning 38 percent of the vote, Rosales polled much better than many anticipated (NYT). He criticized Chavez for wasting oil revenue on aid to Argentina and Cuba and ignoring domestic problems (WashPost). He also proposed issuing a debit card (El Universal) that would shift 20 percent of oil revenues directly to poor families. He recently drew a crowd in Caracas of several hundred thousand shouting, “Dare to change!” (AP).

The opposition’s momentum appears of little concern to Chavez, who continues to direct his rhetorical fire at the United States. At his final election rally he cried, “We are confronting the devil," (BBC), a reference to President Bush. The United States has remained quiet in the run-up to Venezuela’s elections but U.S. aid to Venezuelan organizations, some of which are critical of Chavez and the government, has irked Venezuelan officials (NYT). The government’s hammering on the United States has trickled down to the streets: A recent poll conducted by the Associated Press and Ipsos shows that half of Venezuelans think the United States is a military threat (PDF) to their country.

To counter this, a new CFR Special Report says Washington should neutralize Chavez’s anti-American rhetoric by offering to cooperate with Venezuela on issues such as border security, energy, drugs, and public health. “If Caracas rejects the overture,” the report says, “the United States would be in a stronger position to convince other countries in the region that Chavez is at fault for failing to reduce tensions.” It also suggests Washington convene a regional meeting to discuss how to contain Chavez in the event he takes actions that cause a crisis in his state or region.

While diplomacy between Washington and Caracas is fraught with problems, the economic relationship between the two countries remains strong. Venezuela exports 60 percent of its oil to the United States. Chavez has threatened to cut off oil to the United States and has made it a priority to develop new markets for Venezuela’s oil, much of which is heavy crude, but these efforts have met with limited success, as explained in this new Backgrounder. “Heavy crude oil has limited value as a policy instrument,” writes Genaro Arriagada in a new working paper from the Inter-American Dialogue. In the U.S.-Venezuela oil relationship, he writes, “the power balance may favor the United States (PDF), since refineries capable of handling heavy, acidic crude oil are more scarce than the supply of such oil.”

The high price of oil fuels Chavez’s profligate spending and is responsible for his strong support (WashPost) among the poor. Though government figures reflect a drop in poverty since Chavez took office, many analysts criticize his social programs. The former Mexican foreign minister, Jorge Castaneda, writes that the support Chavez enjoys from Venezuela’s poor is a “paradoxical condemnation” (Newsweek) of his social policies. “Like so many Latin American populists, Hugo Chavez loves the poor as they are, and wants to keep them that way.” Chavez's “Bolivarian Revolution” is not a sustainable model for the country or the region, writes Michael Shifter in Foreign Affairs. As on other issues, there are no signs Chavez is heeding his critics: The country’s new budget increases government spending (Bloomberg) on social programs to 45 percent of total expenditures, up from 36 percent in 2006.

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