Venezuela A Tenuous Democracy

Stanford University ENGR 297B Prof Bruce Lusignan Venezuela: A Tenuous Democracy “From Paratrooper to Populist President” Camelia Coupal - SUID: 5043694 Ashlee Rosenthal - SUID: 5039743 March 12th, 2004 FROM PARATROOPER TO POPULIST PRESIDENT Venezuela has been a democratic country for the past 44 years Now the question is will this democracy survive today in Venezuela? Hugo Chávez, the current president of Venezuela, came to power under the premise that he would redistribute income and help the country’s poor majority However, since 1998, Venezuela’s history of relative political peace and stable democracy has been rattled The instability that Venezuela is going through has become an international concern of how much longer Chavez will remain in power This paper analyzes the current situation in Venezuela, specifically the political conflict that exists between President Chávez and the opposition It begins with a description of the country’s political, economic and social history, and how it came to elect Chávez It continues by describing Chávez himself, his military background and his political transformation, a former paratrooper and then a populist president Then the paper focuses on the most important events of his presidency, including the April 2002 coup, the two-month strike in December, and the current situation Besides the political situation, it will analyze as well the impact that the situation has on oil supply and the rest of Latin America, as well as the significance of democracy In the last decades Venezuela’s leaders have been democratically elected achieving a sense of political stability; however, there have always been rumors of political corruption During the 1980s, Venezuela was going through a crisis, mainly economical, but political and social as well The country was governed by inefficient and corrupt politicians, which created political instability In 1992, Hugo Chávez attempted an unsuccessful military coup against the presidency of Carlos Andrés Pérez trying to take advantage of the climate of instability due to the economic reforms that Pérez was trying to implement These reforms, although economically necessary for long term stabilization in the country, were unpopular The people wanted a change, and Chávez was growing very popular He made promises to eliminate the corruption and inefficiency of the past political parties and appealed to 80% of the population who were poor and mainly uneducated He promised the poor new opportunities greater equality and prosperity The people, desperate for change, believed him and he went on to win the presidential election in 1998 Now in 2004 Chávez is going through a crisis of his own, declining in popularity to the lowest levels since his election It was precisely this popularity which had made him a hero who would save the Venezuelans from the situation they were facing at the time Currently, it seems that this paratrooper turned populist president has his remaining days counted due to incompetence and demagoguery His lost opportunities to really something good for the population and his own style of corruption have become a leading issue at the moment Background In 1958, Venezuela became a democratic country consolidated mainly around two political parties, AD (Acción Democrática) and COPEI These two parties are very similar: “Each is a multiclass party, drawing a varied social base together around a central party leadership Both parties also have permanent professional leaders, both are organized across the entire nation and at all levels, and both incorporate functional groups (like unions, students, and professional associations) as wings in the party organization” (Mainwaring and Scully p.47) Upon comparison, COPEI is viewed as a more conservative party, and known as the Christian Democratic Party Additionally, Michael Coppedge explains the parties as AD being center–left and COPEI as being center–right or right Even though both parties have the same base of a political system, they are viewed as different and controversial among themselves Carlos Andrés Pérez In 1988 Carlos Andrés Pérez won the presidential elections for the second time in Venezuelan history At this time Venezuela was going through an economic crisis which had begun in 1983 with Black Friday, the first serious currency devaluation in the country While Pérez was not elected for his position on economic issues, the voters remembered his first term in office, which had been characterized by blossoming prosperity “Sophisticated voters, such as the editors of VenEconomy, could not decide six months before the election whether Pérez would be a ‘populist’ or a ‘develop mentalist’ if elected Unsophisticated voters probably expected that he would somehow return Venezuela to the boom of the 1970s” (Coppedge p.19) Pérez with his advisers created an economic shock plan The government was forced to seek assistance from the International Monetary Fund, which also meant immediate and harsh economic austerity Pérez planned to restructure the economy on neo-liberal lines; he announced a new economic plan in mid- February 1989, which included a major devaluation of the currency, extensive increases in the price of gasoline and transportation, and the elimination of subsidies for most food items (Martz 1995) This plan created more conflict and the short notice of economic austerity brought instability to the private sector The impact of the economic plan quickly resulted in riots and disturbances, because as Coppedge states that: few Venezuelans thought such drastic reforms were necessary In consequence, the people were decidedly against economic liberalization, which was what the shock program was trying to create In 1989, GDP contracted by 8% During this time the economic decline was at its peak and the public felt that it had nothing to with falling oil prices, declining terms of trade, rising interest rates, and low productivity, but rather because of corruption By February 1992, the remuneration of this new economic policy had not yet filtered down to the standard Venezuelan Consumers saw their purchasing power decline further, the gap between rich and poor was even larger, and the elites (businesspeople, politicians, journalists, and public officials) continue to uphold their lavish lifestyles Venezuelans began questioning where the billions of petrodollars had gone The perception of corruption in government became a dominant theme in popular press The public had become completely disillusioned with the two traditional parties “I have argued elsewhere that by the 1970s Venezuelan parties had become too strong: their internal discipline was so rigid that they lost responsiveness to the rank and file, and their obsession with penetrating and controlling other organizations in civil society blocked informal channels of popular representation between elections” (Coppedge) This political struggle and competition between both parties resulted in conflict and this is the most probable reason why Chávez was the only solution the people believed could change their situation 1992: Coup Attempts On February 4th, 1992, Chávez led a group of mid-ranking military officers in an attempt to overthrow Pérez He assured to reinstate patriotism and protect the interests of average Venezuelans To substantiate the coup, he cited Article 250 of the constitution, which he claimed “provides for the correction of violations of the Constitution specifically where…corruption is concerned” (Burgraaff and Millett 1995, p 66) The group called itself the Simón Bolívar Revolutionary Movement They appealed to military symbols and three historical figures in particular: Simón Bolívar, Simón Rodriguez (Bolívar’s mentor and teacher), and Ezequiel Zamora (a nineteenth-century general who had favored distribution of land to soldiers) Even though the coup was unsuccessful, Chávez was seen as a national hero who promised to put an end to corrupt politicians, develop the conditions of the poor and change the country to a new and better one In November of 1992 the movement attempted another coup which failed as well Caldera In the presidential elections of 1993, after Perez was removed from office because of corruption charges, Rafael Caldera won the Presidency Previously he had been president of Venezuela as a leader of COPEI; however, this time he was an independent candidate During his presidency the oil prices continued to fall and the foreign debt increased which made it harder for the state to reduce inflation Before leaving office with the country in economic shambles, Caldera pardoned and let out of jail Chávez and all the military and the civilians who had taken part in the two failed coups Chávez Following this period were the elections of 1998, where Hugo Chávez became a presidential candidate “Chávez employed populist and extreme nationalistic rhetoric, frequently lamenting the poverty and hunger that so many Venezuelans were suffering” (Coppedge p.27) He promised the people that he would be different and eliminate the elite’s power in politics and create equality for all social classes Chávez was elected by a majority of votes, with 56.2% of 3,673,685 votes (Dominguez 1999) Many suggest that he simply won because people voted for a change and could not continue under the same prototype “The unhappiness is basically because of the economy; year after year the situation was deteriorating and becoming worse” (Garcia Mendoza, p.414) In addition, it seemed as though he was against the upper class and wanted to create equality with the other social classes by lowering the overall standards The result was a lot of resentment and deterioration of the relations between the haves and have-nots He went from being a paratrooper and coup leader to the President of the country Chávez named his new organization the Movimiento Quinta República (MVR), the Fifth Republic Movement He stated Venezuela needed to create a new republic, and the new movement’s name was designed to indicate a complete break with the past (Gott 2000) As most populist leaders, Chávez’s speech was radical His most frequent subject is the division between friends and foes of “the Revolution.” You were either with the Revolution or against it; there was no middle ground Chávez’s words and actions divided society into two sections: the small elite and the masses According to Chávez, the lower area (the pueblo), represents goodness, while those on top, the elites and private enterprise, represent distortion This separation between the rich and the poor and the bad and the good permitted him not only to create a large base of support, but as well allowed him to justify actions that punished one group and contributed to the centralization of power Chávez associated the elite as an oligarchy; they became the enemy to blame for the country’s problems The pueblo (the people) were those who followed Chávez Those who opposed him were considered part of the “corrupt oligarchy, the privileged, those linked to interests banished by the revolution” (Blanco 2002, p 362) The ideology of Chavismo (Chávez’s movement) is focused a lot on Simón Bolívar, the liberator of Venezuela; he even changed the name of the country from Venezuela to República Bolivariana de Venezuela (Bolivarian Republic of Venezuela) During the beginning of his term, there was excellent economic income due to the high price of oil at the time and this lasted for over two years There was a low external debt, but a high internal debt In his third year, oil prices fell and there was more dependence on income from the taxes on oil Also the bolívar (local currency) continued to deteriorate in value and was constantly devalued Chávez, having enormous income for his budget during the beginning of his term, did nothing of what he promised; instead he traveled the world in his first year as President more than any other President has done in the history of Venezuela In fact, he spent enormous amounts of money on events that did nothing to help the poor who had elected him nor did he invest into any projects which could help to bring the country out of its economic crisis Moisés Naim, the minister of Industry and Commerce in Venezuela between 1989 and 1990 during the Presidency of Carlos Andrés Pérez and a world renowned economist, states that the wealth that the oil creates of which the State is the owner, makes the inhabitants grow up believing that they are rich, when in reality they are actually growing poorer As well, he states that this contradiction creates frustration and resentment The people rationalize that if the oil is everyone’s and they not receive anything from it then somebody is depriving them, and this is because of corruption This is the context of Hugo Chávez, who will go into history as one who misused an enormous political fortune This common misconception that Venezuela is rich because of its oil is especially held by the lower class population Hugo Chávez emerged in the midst of a population that was ready to break with the past It was ready for Chávez, someone who promised a deep structural change that would allow the wealth from petroleum to benefit the majority Venezuela is a rich country in resources, however, the government has never managed it well enough to control the economy nor develop other sources of income Chávez centralized power through a sequence of elections/referendums after the 1998 presidential election Once he was elected he declared a referendum for a constituent assembly to be held in April 1999 The referendum would “replace Venezuela’s constitution, eviscerate the powers of the legislature and the judiciary, and place governing authority under a ‘Constituent Assembly” (Zakaria 2003, p 96) The proposed new constitution “increased the president’s term by one year, allowed him to succeed himself, eliminated one chamber of the legislature, reduced civilian control of the military, expanded the government’s role in the economy, and allowed the assembly to fire judges” (Zakaria 2003, p 96) Devastatingly, 88% of the voters approved the convocation of the assembly, and 82% accepted that the body defines the limits of its own powers, as Chávez proposed In the July election, Chávez’s Polo Patriótico alliance won almost all of the 131 seats of the National Assembly (Ellner 2001) Chávez’s popularity has gone down since elections He has not done anything that he promised the people, but rather has put the country in much worse condition than before He has abused his socialist rhetoric to the point of offending the United States and befriended known despots around the world His unusual brotherly bonding with Fidel Castro has also been a major eye sore for the United States His international credibility is low as a leader and his ties to terrorist organizations are questionable The state of the national institutions are in crisis and there is currently political conflict with the main industry of the country PDVSA (Petróleos de Venezuela), whose workers are protesting because of firing workers based on merit and replacing them with Chávez’s political allies In addition to this, in the Government National Assembly many have resigned; FEDECAMARAS (The Nacional Chamber of Commerce known as Federación de Cámaras de Comercio y Producción) and CTV (The National Labor Union known as Confederación de Trabajadores de Venezuela) have united against Chávez along with the Church Religion in this South American country is very important to its population and Chávez has been relentless in his insults towards the clergy and other members of the church Many Universities are also against him, like the Universidad Simón Bolívar, and the UCV (Universidad Central de Venezuela) 10 social policies From 1960 to 1973, Venezuela’s per capita output increased by twentyfive percent Venezuela hit its peak in oil production in the 1970’s The government began to create new “state-owned enterprises” and “decentralized agencies.” For example, The Venezuelan Investment Fund (Fondo de Inversiones de Venezuela – FIV) was established and was “responsible for allocating huge oil revenues to other government entities.” FIV was at the center of the new institutions that were being created by the government because it controlled the amount of assets from oil they were allotted By 1976 the oil industry was fully controlled by the government This was due to the “nationalization of assets of the foreign oil firms.”10 Foreign firms were taken out of the picture and the Venezuelan government was able to take over control of oil revenues A Corrupt Government It is inadequate to assume that Venezuela’s transition to democracy in 1958 eliminated of all of the problems that were present in the previous system of government It is important that a democracy is set up with proper institutions to ensure that problems such as corruption and the abuse of executive power are minimized Emerging democracies are constantly faced with problems of corruption and abuse of power, yet through manipulating institutional variables such as horizontal accountability these problems can begin to be reversed Elections by themselves are too weak to guarantee an honest, representative government Corruption thrives in secrecy therefore it is important http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 10 http://www.mapzones.com/world/south_america/venezuela/economyindex.php# 17 that agents of horizontal accountability are used to draw attention to unlawful acts that take place in government It is important that when individuals enter the realm of politics that they say goodbye to their private life The best way to combat corruption and abuse of power is through complete transparency Venezuela is consistently ranked as one of the most corrupt countries in the world according to Transparency International It is also one of the least economically free countries in the world Since the 1980s the political leaders have constantly attempted to resist reform “About two-thirds of Venezuelans now live in poverty – twice the number of the early 1990s… The relationship between corruption and the lack of economic freedom in Venezuela is not coincidental” (Vásquez) Because the government in Venezuela has such control over the economy there is much more opportunity for personal gain through the abuse of power It is important to have economic regulatory institutions such as security and exchange Markets have a tendency to get perverted and it is important to have a system of regulation that requires transparency so that confidence can be generated in markets Fluctuations in the World Market for Oil (1980’s to present) The one thing the Venezuelan government did not have control over was the international price of oil The international price of oil is constantly changing, and it has a huge effect on Venezuela’s economy High oil prices lead to Venezuela’s high per capita income, however the prices are subject to change During the Luis Herrera Campins administration, from 1979 to 1984, the price of oil fell dramatically Interest rates also went up causing large amounts of national debt in Venezuela The oil sector could no 18 longer support the other sectors of the economy nor could it support the “array of government subsidies, price controls, exchange-rate losses, and the operations of more than 400 public institutions.”11 Venezuela had relied so heavily on oil to maintain the other aspects of economic and political life that without it the country began to shutdown Jaime Lusinchi, the president from 1984 to 1989, made attempts to instigate economic growth through many different reforms These included: “devaluations of the currency, a multi-tier exchange-rate system, greater import protection, increased attention to agriculture and food self-sufficiency, and generous use of producer and consumer subsidies.”12 Once the government was unable to rely on oil revenues to back the other aspects of the economy, it had to focus on other methods to support these sectors Lusinchi’s reforms, in 1983, lead to economic growth Venezuela went from negatives growth rates in 1980 to 1981, to economic growth from 1985 to 1988 In 1989, however, “the economy could no longer support the high rates of subsidies and the increasing foreign debt burden.” 13 More policy reforms were made by the second Pérez administration in 1989 These reforms, however, led to large amounts of rioting and social uproar in February 1989 This was the worst violence Venezuela had seen since its transition to democracy in 1958 Pérez was attempting to lessen the government’s role in the economy He had a vision of a more free market with greater foreign investment “The most fundamental of the 1989 adjustments was the massive devaluation of the bolívar from its highly overvalued rate to a market rate.”14 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 13 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 14 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 11 12 19 Other major reforms took place within the Central Bank of Venezuela (Banco Central de Venezuela – BCV) The BCV made many changes to its policies in an attempt to improve the bank’s control over the allocation of money “The most important policy change was the government’s decision to allow the interest rate to fluctuate with market rates.”15 This policy change created a situation in which people had incentives to save and invest their money, making it easier to preserve capital “In 1990, however, the Venezuelan Supreme Court declared that the BCV was legally responsible for setting interest rates.”16 It is ironic that Pérez would push for such reforms because he oversaw the expansion of the government in the 1970’s One would think that he would continue to urge the government to play an increased role in controlling the economy Pérez’ backing of reforms that reduce the role of the government shows how the fluctuations in the world market for oil has had a major effect on the political situation in Venezuela In 1998 Venezuela’s economy went through another recession due to a decrease in the price of oil, high interest rates and a downfall in export earnings “The recession continued into 1999 with oil prices forecast to stay relatively low, but rising.” 17 This economic downturn in 1998 put a halt to Venezuela’s reform program that had been going on since the Pérez administration In an attempt to reduce inflation and the national deficit, the government reduced spending, improved tax collections, and “accelerated privatization of state-owned firms.” 18 President Hugo Chávez had recently been elected and it was believed that he was going to have a hard time dealing with all of Venezuela’s economic problems “Chávez has promised to strike a balance between reforms designed http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0037 17 http://www.photius.com 18 http://www.photius.com 15 16 20 to address the structural deformities of the economy and addressing declining living standards Chávez has sought to play down the populism that marked his political campaign for the presidency in an effort to allay investor concerns The wide range of viewpoints represented on Chávez's economic team is likely to make rapid implementation of a coherent policy difficult.”19 The recession at the beginning of 1998 was due to a downturn in international oil prices, which consequently made Chávez abide by “OPEC-led production cuts in an effort to raise world oil prices.”20 The situation was exacerbated in December 1999 when there was massive flooding and landslides in Venezuela These disasters caused approximately fifteen to twenty billion dollars in damage The government had to ask for international assistance in order to begin reconstruction Despite the slight rise in oil prices at the end of 1999 Venezuela’s economy was still doing poorly because of a variety of variables Most importantly there was not much backing behind President Chávez and his economic reform agenda In 2002, President Chávez changed his policies toward a “free floating exchange rate,”21 causing the bolívar to depreciate greatly \ OPEC – Past and Present In order to understand the world market for oil and how fluctuations in the price of oil affect Venezuela’s economy, it is important to understand why OPEC was founded and what its objectives are The Organization of Petroleum Exporting Countries was http://www.photius.com http://education.yahoo.com/reference/factbook/ve/econom.html 21 http://www.nationmaster.com/country/ve/Economy 19 20 21 created on September 10th to 14th, 1960 at the Baghdad Conference The found founding members included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela In the following years, eight other members joined OPEC: Qatar (1961, Indonesia (1962), Socialist Peoples Libyan Arab Jamahiriya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973-1992) and Gabon (1975-1994) From 1960 to 1965 the headquarters for OPEC was in Geneva, Switzerland In 1965 it was moved to Vienna, Austria OPEC has specific objects that it continually works to achieve “OPEC’s objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.”22 There is a Conference of Ministers that meets twice a year in order to determine OPEC’s policy toward achieving the above objectives The quantity of oil the can be exported to other countries is controlled by OPEC quotas, such as the San Jose Accord In the 1960’s OPEC sought to defend the rights of the five member countries in the world oil market This was extremely important for Venezuela because it determined the amount of oil that it could produce and export and therefore the amount of oil revenues that were acquired This led to a rapid expansion of Venezuela’s economy in the 1960’s OPEC kept a “low-profile” throughout this decade and began to engage in negotiations with multinational companies The “Seven Sisters” multinational companies controlled the oil market at the time By the end of the 1960’s OPEC had ten members 22 http://www.opec.org/ 22 During the 1970’s OPEC gained international influence This was mainly because the governments of the member countries, such as Venezuela, gained control over the petroleum industries and began to have a say in the international price of oil There were two major downfalls in the price of oil during the 1970’s The Arab oil embargo in 1973 and the Iranian Revolution in 1979 had important impacts on the price of oil These events were combined by the overall imbalances in the world market for oil and caused Oil prices began to rise quickly and peaked at the beginning of the 1980’s However prices dramatically dropped in the mid-1980’s until the third oil pricing crises in 1986 The OPEC member countries began to realize the importance of working together in order to achieve price stability “Prices rallied in the final years of the decade, without approaching the high levels of the early-1980s as awareness grew of the need for joint action among oil producers if market stability with reasonable prices was to be achieved in the future.”23 Because of this joint effort on behalf of the OPEC member countries to control the fluctuations in oil prices “a fourth pricing crisis was averted” at the beginning of the 1990’s Hostilities broke out in the Middle East causing a rise in oil prices The member countries worked together and increased the output of petroleum This kept the prices stable until 1998, when the economies of South-East Asia began to fail and oil prices collapsed once again Just as the Venezuelan government worked to pass reforms during this time in order to induce economic recovery, OPEC and some “non-OPEC producers” worked together to help generate a recovery of the international oil market 23 http://www.opec.org/ 23 By the end of the 1990’s there was “a spate of mega-mergers among the major international oil companies.”24 There was also a large increase in the technology that oil producing companies had to work with Despite these advances, however, there was still a major threat of decreases the demand for oil in the future Overall, OPEC has played a major role since the 1960’s in helping to stabilize a fluctuating market for oil This intergovernmental organization is likely to have an extensive impact in the future as well Foreign Economic Relations Venezuela puts a heavy reliance on the export of oil, making foreign trade is extremely important Therefore in order to have a firm grasp in Venezuela’s economy it is essential to understand the foreign economic relations of the country During the 1970’s Venezuela experienced “favorable terms of trade” 25 due to the increase in oil prices; however this made Venezuela depend on only one export, oil As a result of the success in the 1970’s, Venezuela adopted import patterns that were hard to sustain There was an increase in the demand for imported luxury goods no matter what status the oil market was in “The 50 percent reduction in world oil prices in 1986 underscored these structural weaknesses in the Venezuelan economy.”26 The Venezuelan import policy is described below: Import policy traditionally sought to protect local industry and agriculture from foreign competition and to substitute local production for imports The government accomplished these goals through exchange rate manipulation, the imposition of tariffs, and through import licensing restrictions 27 http://www.opec.org/ http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 26 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 27 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 24 25 24 In 1989 the government worked to change the trade policy by moving away from Venezuela’s major dependence on the oil sector With the depreciation of the bolívar, Venezuelan exports became cheaper and the imports became more expensive Therefore, Venezuela began to favor “export-oriented production over import-dependent activities.”28 In 1988, Venezuela exported half of its commodities to the United States, 6% to West Germany, 4% to Japan, 4% to Cuba, and 4% to Canada Venezuela joined Ancom in 1973 and became a member of the Latin American Free Trade Association (LAFTA) in 1982 Caracas, Venezuela became the headquarters for “Ancom’s Andean Development Corporation and the region’s Latin American Economic System (Sistema Economico Latinoamericano – SELA).” SELA’s purpose was to analyze the “economic and social policies throughout the hemisphere.” 29 Venezuela also had the goal of accepting the General Agreement on Tariffs and Trade (GATT) in the early 1990’s This, however, was not well liked by many “Venezuelan adherence to the GATT entailed several unpopular policy reforms, some of which would come at the expense of exporters.”30 Venezuela’s bilateral economic relations are described as follows: Venezuela's bilateral economic relations were characterized by technical cooperation agreements, student exchanges, or commercial accords similar to those signed by the major industrial nations Its oil wealth in the 1970s, however, did allow the country to become a major provider of bilateral and multilateral financing.31 In 1974 Venezuela gave US$7.3 billion to international development The majority of this money was used towards “multilateral sources,” including the United Nations Special Fund, the Andean Reserve Fund, the OPEC Fund, the Coffee Stabilization Fund, the http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 30 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 31 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ve0061 28 29 25 Caribbean Development Bank, and the Central American Bank for Integration Venezuela had become one of the major monetary contributors to the international system One of the most important bilateral relations to understand is between the United States and Venezuela Both countries have major incentives to keep stable, tight relations between each other The U.S has many interests in Venezuela, the most important being the continued access to oil Other interests include “promotion of U.S exports and protection of U.S investment, continuation of the economic reform program, preservation of Venezuela’s constitutional democracy, and closer counternarcotics cooperation.”32 In October 1997 President Clinton visited Venezuela to secure relations and established a “Partnership for the 21 st Century.” However, currently under President Chávez, Venezuela and the United States not have the secure or good relations that Venezuela has had in the past with the U.S Approximately half of Venezuela’s business is conducted with the U.S (half of its imports come from the U.S and half of its exports go to the U.S.) This makes the U.S Venezuela’s most important ally Venezuela is also extremely important to the U.S., especially since 1996 when Venezuela opened the petroleum sector to foreign investment This meant that there were more opportunities for trade and investment for U.S companies Consequently, there are about 500 U.S companies present in Venezuela Overall, “Venezuela is one of the top three suppliers of foreign oil to the United States.” 33 32 33 http://www.geographyiq.com/countires/ve/Venezuela_us_relations_summary.htm http://www.geographyiq.com/countires/ve/Venezuela_us_relations_summary.htm 26 34 Petroleum has been the main source of Venezuela’s prosperity and success since its introduction into the economy in the 1920’s It also, however, has the potential to cause ongoing problems due to the fluctuations in the international oil prices Venezuela’s over-dependence on the oil sector will eventually lead to the demise of its economy In order for Venezuela to prepare for the possible downfall of the world market for oil it must have other areas in which it can gain prosperity For example, it could put more emphasis on tourism, much like Mexico has With other sectors of the economy gaining wealth for the country, the fluctuations in the international oil prices would not have such a major effect on Venezuela’s economy The social and economic circumstances in the country presented an opportunity for a populist leader, on promising economic growth and income redistribution, to emerge Chávez represents a continual hope in Latin America that a new hero will emerge and mend society’s problems Luiz Ignacio da Silva in Brazil and Lucio Gutierrez in 34 news.bbc.co.uk/ /newsid_1925000/ 1925514.stm 27 Ecuador are examples of leaders who appealed to the need of the majority of the population If Latin America’s social and economic problems continue, this phenomenon could become more widespread With high levels of support, Chávez was able to centralize power through a succession of referendums Chávez has pushed the country away from a limited government by taking away the powers of institutions As a result, Venezuela has been steered away from the stable democracy that characterized the country since 1958 How did a paratrooper become a populist president and consequently make such a mess of things The answer lies in the quest for power above all else and the use of populism as a tool to power Whether or not Chávez actually does anything to help the poor who helped to elect him has become an issue in the distant background With four years behind him in the presidency, he has had more than ample time to prove himself as a good leader However, the opposite has occurred and he has turned out to be a true example of a demagogue Demagogues spread very distinct emotional messages which elicit negative emotions, particularly fear and anger The threat to “us” from “them” and the dread that “they” will take what “we” have is the message that polarizes people rather than uniting them in a common cause Chávez, and other leaders like him including dictators such as Hitler and Pol Pot, have built their platform for action of a negative resonance He has united his followers behind a banner of resentments, fear and rage- all to his nation’s detriment As a demagogue, Chávez has cast his spell through destructive emotions killing hope and optimism as well as innovation and creative imagination The hope for his removal lies in the biological perspective that negative emotions exhaust and burn out 28 their recipient if they last too long Anger and fear may help a leader remain in power for a time, but they are short lived motivators Chávez’s time may already be counted The final outcome of Venezuela’s current situation will have important effects not only on the nation’s political scene but also for the rest of Latin America References - Alocución del Sor Presidente de la Republica Hugo Rafael Chávez Frías en el salón elíptico del Palacio Federal Legislativo Caracas, Venezuela July 5th, 1999 - Blanco, Carlos 2002 Revolución y Desilusión- La Venezuela de Hugo Chávez Madrid: Catarata 29 - Coppedge, Michael: Venezuela: Conservative Representation without Conservative Parties Working paper, June 1999 - Domínguez, Freddy 1999 Chávez: La Revolución Pacifica y Democrática Caracas: Editorial Panapo - Ellner, Steve 2001 “The Radical Potential of Chavismo in Venezuela The First Year and a Half in Power” Latin American Perspectives 120(128/5): 5-32 - Faria, Hugo: Propuestas para rehacer a Venezuela 1999 - García Mendoza, Oscar: Comentarios al Borde del Caos 1999 - Gott, Richard 2000 In The Shadow of The Libertador New York: Verso - Keller, Alfredo: Survey on the scenes of 2002 - International Monetary Fund 1999 Venezuela: Statistical Appendix October 7, 1999 Available at Accessed May, 2002 - Mainwaring Scott and Scully, Timothy R: Building Democratic Institutions 1995 - Medina, Medofilo: El Elegido 2001 - Naim, Moisés “Fwd: M.Naim Entrevista sobre Chávez [El País – Madrid].” E-mail 02/25/02 - Santodomingo, Roger: La Conspiracion 98 1999 - Vásquez, A Venezuelan Recipe for Poverty and Corruption Dec 14, 1999 - Vivas, Leonardo: Chavez 1999 - Zakaria, Fareed 2003 The Future of Freedom New York: W.W Norton and Company 30 ... to Japan, 4% to Cuba, and 4% to Canada Venezuela joined Ancom in 1973 and became a member of the Latin American Free Trade Association (LAFTA) in 1982 Caracas, Venezuela became the headquarters... similar: “Each is a multiclass party, drawing a varied social base together around a central party leadership Both parties also have permanent professional leaders, both are organized across the... Chávez: La Revolución Pacifica y Democrática Caracas: Editorial Panapo - Ellner, Steve 2001 “The Radical Potential of Chavismo in Venezuela The First Year and a Half in Power” Latin American Perspectives