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Venezuela's Chávez Wins Fourth Term

Author: Brianna Lee
Updated: October 17, 2012
This publication is now archived.

Introduction

Longtime president of Venezuela, Hugo Chávez, won another six-year term on October 7 after defeating former governor Henrique Capriles Radonski, his most formidable electoral challenge to date. Although the president, who has been in power since 1999, retains popular support, Capriles led a strong and unified opposition campaign that gained considerable momentum in the weeks leading up to the election. The president's reelection signals a continuation of many of the policies he has enacted during his tenure, including nationalizations of major industries, heavy emphasis on maintaining government-run social programs, and leading a bloc of nations opposed to U.S. influence. However, concerns linger over the conditions of his health and the trajectory of Venezuela's future should he die in office.

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What policies can be expected for Chávez's fourth term?

Chávez's win signals a continuation of many of the policies he has enacted during his tenure, including increased nationalizations of companies, expanding social programs for the poor. Chávez has pledged to tackle some of the public grievances against his presidency (ElUniversal), including inefficiency in government, and has proposed the creation of a new ministry dedicated to following up on government projects. His reelection allows neighboring countries, including Cuba and Nicaragua, to continue receiving assistance form Venezuela including loans, discounted oil, and financing for social programs (AP).

Venezuela's economy is expected to face large challenges as Chávez's fourth term gets under way. Although the country's economic growth and unemployment levels are stable, a 2012 report by Barclays Capital concluded that Venezuela under Chávez was on an "unsustainable fiscal path" (PDF). The report's authors, Alejandro Grisanti and Alejandro Arreaza, wrote that a sharp adjustment in Venezuela's economy would lie ahead if Chávez won the election, adding that "this adjustment will be very painful, given the lack of support from the Venezuelan private sector and international capital markets." Because of heavy government spending, analysts say, Venezuela is expected to undergo a currency devaluation (Bloomberg) early in Chávez's fourth term, which could spur inflation and repel investment.

Chávez also faces a severely polarized political atmosphere in Venezuela following a campaign that routinely drew on personal insults and incendiary language. Jennifer McCoy, director of the Americas Program at the Carter Center, notes that following his reelection, Chávez said that he welcomed those who voted against him to work with him, but he would not necessarily make concessions to the opposition. "He has said that before--in 2006 and in 2004," McCoy says. "That doesn't mean he's going to change his project to accommodate a different view."

However, McCoy says that the economic challenges ahead, including the expected currency devaluation, offers another opportunity for reconciliation. "I expect that in 2013, the government may have to make some difficult decisions, and in doing that, will not want to have a lot of instability and conflict in the streets," she says. "So perhaps under those conditions there will be more reaching out."

What would happen if Chávez dies while in office?

Chávez's pelvic cancer, which relapsed in early 2012, remains a wildcard in assessing Venezuela's future, even though Chávez now claims to be completely cured. Chávez named Nicolas Maduro, Venezuela's foreign minister, as his vice presidential pick on October 10, 2012. Maduro, described as a "trusted heir apparent who is well-liked by his communist allies in Cuba" (AFP), would serve as interim president if Chávez dies during the first four years of his term. New elections would then have to be called within thirty days, according to the country's constitution.

Chávez's death would present profound challenges for the future of his "socialist revolution" and would create a leadership vacuum in the regional blocs that he has influenced. CFR's Shannon O'Neil writes that in the event of Chávez's death, "it is unlikely that any one person could fill the leadership void" in regional alliances that Chávez has been instrumental in cultivating.

What is the current state of Venezuela under Chávez?

Hugo Chávez has spent much of his presidency advancing the idea of a "Bolivarian revolution," marked by an expansion of anti-poverty social programs and a largely state-managed economy, as well as a rejection of U.S. influence. Chávez has introduced adult literacy programs, skills training, and community health care for rural and poor populations, earning him strong support among the poor and working-class. Economic inequality has decreased under his presidency, and the percentage of households in poverty also dropped by 39 percent during the first ten years of his presidency (PDF), according to the Center for Economic and Policy Research.

However, Chávez opponents say he has ignored pressing issues during his tenure, pointing to high levels of crime and one of the world's highest murder rates (BBC), as well as crumbling infrastructure (AP). Human rights advocates also note that he has consolidated executive power, stifled political opponents, and exerted substantial control over institutions like the media and the courts. According to a July 2012 Human Rights Watch report, "the accumulation of power in the executive, the removal of institutional safeguards, and the erosion of human rights guarantees have given the Chávez government free rein to intimidate, censor, and prosecute Venezuelans who criticize the president or thwart his political agenda."

Chávez's presidency has greatly expanded the state's role in economic management. He nationalized companies (Reuters) in major industries, including telecommunications, energy, steel, finance, gold mining, and oil. Chávez has also implemented price controls over some commodities in an attempt to make them more accessible to the poor. However, the policy has been criticized as being responsible for regular shortages in basic necessities (NYT). Venezuela's economic conditions have hindered private investment; the World Economic Forum ranked Venezuela 126 out of 144 countries in its Global Competitiveness Report for 2012-2013, citing policy instability, currency and labor regulations, and inflation as factors for its low ranking.

The Venezuelan economy also is highly dependent on its oil sector, which comprises 95 percent of its total export revenue and 40 percent of the government's budget revenue. Chávez has greatly expanded the purview of the state-run oil company Petroleos de Venezuela, S.A. (PDVSA) beyond its oil operations, using much of its revenues to provide funding and management for the country's social programs. Critics contend that the company is rife with mismanagement and that low levels of investment into oil production operations have caused production to fall. The oil industry has also been a central part of Venezuela's foreign policy, bolstering relationships between the country and its Latin American neighbors, as well as with countries like China and Russia. The United States is Venezuela's biggest importer of crude oil, allowing the two countries to retain strong economic ties while diplomatic relations remain fraught.

Chávez is a vocal critic of capitalism and has openly decried U.S. economic and political and influence over Latin America. He has accused the United States of an imperialist foreign policy on several occasions, particularly over its role in the war in Iraq. As a result, Chávez has made attempts to "bring about change in the international structure, to have more of a multipolar world, and to have more power to the south, not so dominant either by the United States or by the northern countries," says the Carter Center's Jennifer McCoy. Chávez assumes an important leadership role among leftist countries in the region, including Bolivia, Ecuador, and Nicaragua. He has rejected regional bodies and agreements that he deemed too dominated by U.S. influence, including the Free Trade Area of the Americas (FTAA) and the Organization of American States (OAS), in favor of creating alternative regional blocs such as the Bolivarian Alliance for the Americas (ALBA) and the newly created Community of Latin American and Caribbean States (CELAC).

He also has formed ties with states that also hold tense relations with the United States. Chávez has provided defense and technical assistance to countries like Iran and Syria that have faced economic sanctions from the United States and Western nations, and he has also bolstered economic cooperation with China and Russia. Through such relationships, Venezuela has gained strategic trade partnerships as well as political allies for Chávez in deflecting U.S. policies on the international stage.

What role will the opposition play after Chávez's reelection?

After the electoral loss of Henrique Capriles, the next immediate focus for the unified opposition Coalition for Democratic Unity (MUD) lies in regional elections on December 16, 2012, in which state governors and legislators will be voted into office. Capriles is running for reelection in the state of Miranda against former vice president Elias Jaua. MUD and Chávez's United Socialist Party of Venezuela (PSUV) have both put forward twenty-three candidates for the elections.

McCoy says the opposition has an opportunity to have a strong showing in these regional races, despite their electoral loss in the presidential race. "It's likely people will vote governors based on their evaluation of performance rather than the emotional tie to Chávez," she says. "So even though Chávez won twenty-one of twenty-three states [in the presidential election], that does not necessarily determine the outcome of the next elections."

Further Reading

This Associated Press report details Hugo Chávez's record in managing the revenues of Venezuela's oil industry, speaking with critics who say he has wasted the windfall.

This article for NTN24 provides a primer on Chávez's social programs and "incomplete revolution."

This July 2012 report from Barclays argues that Venezuela's economy is on an "unsustainable fiscal path" under Chávez's policies.

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