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Sunday, August 8, 2010

Venezuela: Bolivarian bravado FT.com

venezuela in the news this week... we'll see what comes of it...

this is the latest one from the Financial Times.
(Note: Highlights in bold and italics, MasterBlog)

Venezuela: Bolivarian bravado

By John Paul Rathbone and Benedict Mander

Published: August 5 2010 23:20 | Last updated: August 5 2010 23:20

Hugo Chávez

The giant Pepsi globe that once loomed above Plaza Venezuela in the traffic-clogged heart of Caracas had long been a landmark of the South American capital’s skyline. Now it is gone, dismantled piece by piece in June.

Much like the demolition of a statue of Christopher Columbus in the same square six years earlier, its removal was a crude symbol of President Hugo Chávez’s self-appointed role as the region’s anti-US, anti-capitalist and anti-imperialist standard-bearer.

It was also a reminder of faded hopes that relations would improve either with the US under President Barack Obama, following the mutual antagonism of the George W. Bush era; or with America’s closest ally in the region, neighbouring Colombia. If anything, Mr Chávez has raised the volume of his nationalist-Marxist rhetoric as his problems have grown both at home and abroad.

In July, when Colombian leaders again accused Venezuela of sheltering Marxist guerrillas intent on destabilising their country, and were confident enough of their case to present it to the Organization of American States, Mr Chávez promptly called it an act of US-inspired “aggression” and broke off relations with Bogotá. Havana, which receives subsidised Venezuelan oil in return for medical services, lent Caracas rhetorical support: “We strive for peace and harmony,” said President Raúl Castro. “But ... let no one have the least doubt on which side Cuba will stand.’’

Meanwhile, with the country in recession, red-hued government propaganda in multiple media hails Mr Chávez’s “Bolivarian revolution”. The president has taken to expounding how it is “bad to be rich” – though one graffito snipes back from a grimy Caracas wall: “If it’s bad to be rich, it’s worse to be poor.”

All this might otherwise be ignored as the bitter internal politics of a volatile tropical republic were it not for Venezuela’s strategic importance and fears that Mr Chávez might consolidate his grip on power at legislative elections next month.

“Elections are of great importance for Chávez. They give him legitimacy both at home and abroad – they give him an air of respectability,” says Teodoro Petkoff, a garrulous former leftist guerrilla who now edits the Caracas-based newspaper Tal Cual.

A clear victory for Mr Chávez’s United Socialist party of Venezuela at the September 26 polls would be likely to herald further radicalisation of his socialist project, ease the way for his election to a third six-year term in 2012 and thus boost worries elsewhere about regional tensions.

Watching the results most closely will be neighbours in the Andes – a regional tinderbox, given the prevalence of clashing ideologies, well-equipped troops and armed guerrilla and paramilitary groups – and Cuba, as Venezuela’s closest ideological ally.

A further geopolitical consideration stems from Venezuela’s role as transshipment point for what is said to be more than half the cocaine shipped across the Atlantic to Europe every year. The country’s trafficking situation is deteriorating, the UN warns in its latest World Drugs Report.

Also watching the election closely will be those energy importers who ogle the country’s vast crude oil reserves, the largest outside the Middle East. As those reserves are easily accessible and use proved technologies, BP’s deep-water oil spill in the Gulf of Mexico has heightened their strategic value still further. That is as true for the US, which remains Venezuela’s biggest single oil market, as for rising energy users such as China, which recently curried favour as well as securing future oil supplies with a $20bn soft loan to Caracas.

With term limits abolished following a referendum last year, Mr Chávez has frequently expressed a wish to remain in office until 2021 – the 200th anniversary of independence from Spain – to see through his revolution. Yet, after 11 years in power, the extent to which he has succeeded in instilling in voters a mindset compatible with what he calls “21st century socialism” is debatable. (For example, he has condemned a widespread fondness for whiskey and Hummers.)

The government has therefore been working to boost its chances of maintaining in September the two-thirds majority necessary to push legislation through the National Assembly.

Changes to the electoral system this year mean rural areas will return more deputies than before, hindering the metropolitan-based opposition. State-owned media can meanwhile drench the country in pro-government propaganda. (While newspapers such as Mr Petkoff’s are highly critical, private sector broadcasters have been largely cowed into submission.)

Most unsettling of all is the possibility that Mr Chávez’s party might lose the vote yet still maintain effective control. In 2008, for example, the president res­ponded to the election of an opposition candidate as Caracas mayor by inventing a more senior post and ap­pointing a candidate of his choosing.

Another possibility, much discussed in the capital, is that he could rule by decree during the 100 days between the elections and the new deputies taking up their seats, changing irrevocably the legal landscape to his liking. A recent 40 per cent pay rise ensures the army’s loyalty.

“Chávez will not leave power voluntarily,” says Diego Arria, a leading opposition figure and former governor of Caracas. “This is a president whose motto is: ‘fatherland, socialism or death’. When they say death they mean us, not themselves.”

Such drastic outcomes may never come to pass. Despite the recession, crumbling public services, a series of damaging scandals and rampant violent crime, Mr Chávez still commands the support of about two in every five Venezuelans – roughly the same ap­proval rating as Mr Obama in the US.

In large part, this is due to his emotional bond with the poor, who in 2008 made up 28 per cent of the population, according to the UN. “Even with hunger and unemployment, I’m sticking with Chávez,” runs one refrain popular in the capital’s slums.

Gregory Wilpert, editor of pro-Chávez website Venezuelanalysis.com, emphasises that many have benefited from the government-run social programmes. “The process of devolving local governance to communities via the communal councils and other forms of participation also gives many people a real feeling of being a part of the political process,” he adds. Critics say such councils usurp the power of elected municipal governments.

. . .

Either way, to gain a decisive victory, Mr Chávez will need to win over undecided voters – the ni-nis, or neither-nors – who account for about one in three of the electorate, according to polls.

In 2006, when he was re-elected at the peak of both his popularity and the oil price boom, that problem was partly solved by throwing money around. The trouble for “chavistas” today is that there is less to spend. This year, for example, while the rest of the region is expected to grow by 5.2 per cent, Venezuela’s economy is forecast to shrink by 3 per cent, the UN Economic Commission for Latin America estimates. Inflation, meanwhile, is running at about 30 per cent.

Paradoxically, because oil prices are hovering around $80 a barrel, a healthy level historically, government finances are not in perilous shape. Rather, the main cause of the continuing recession is mismanagement – the biggest rock on which Mr Chávez’s revolution has floundered.

PDVSA, the state-owned oil company that is the dynamo of the economy, has been leached to fund social projects with cash that otherwise would have been used for much-needed investment. The non-oil economy has been hobbled too.

Capital flight has been propelled by the nationalisation drive Mr Chávez has launched in a range of sectors, including energy, finance and telecommunications. Attempts to prevent such flight have made matters worse. The rationing of foreign exchange has made importing harder, fuelling scarcity, inflation and a flourishing black market – dollars sell for about four times the cheapest official rate.

The multinationals that once made the country their regional base, attracted by its relative stability and large internal market, have upped sticks. A web of regulations has tightened around those private companies that have remained – most publicly at Polar, the food and beverage company that is an emblem of Venezuelan popular culture, which Mr Chávez has threatened to nationalise against union wishes. Private investment has slumped amid the deteriorating business climate. As for nationalised companies, the state has been unable to pick up the slack.

Since nationalisation in 2008, production in the cement sector has fallen 20 per cent, and in the steel sector by as much as 80 per cent, according to Caracas-based consultancy Ecoanalítica. Most embarrassing of all were the 100,000 tonnes of food found recently rotting in the warehouses of state-run food distribution network PDVAL. Mr Chávez blamed “US-backed fascist oligarchs”.

The opposition has failed to capitalise on such problems. One reason is that much of the electorate remains distrustful following early at­tempts to unseat the president including a botched coup in 2002 and a national strike that paralysed the economy.

. A final factor is that many of its candidates are drawn from two discredited parties, Democratic Action and the Social Christians, which once dominated the country’s politics.

Dissidents from Mr Chávez’s party and former personal allies pose a potential threat. But some of the most prominent opponents have been hounded out of the country or imprisoned. General Raúl Baduel, a former close friend who called the president a “traitor” has been controversially jailed for corruption.

. . .

All this has devalued Mr Chávez’s reputation abroad. He still enjoys occasional celebrity support, from Argentine footballer Diego Maradona and Hollywood film producer Oliver Stone, for example. Oil also ensures Caracas secures the odd multibillion-dollar deal – most notably an arms agreement with Moscow, after the US stopped selling weapons to Venezuela in 2006. Caracas and Havana remain locked in a symbiotic embrace. But the president’s vision retains little credence with the region’s leftwing, and many of the area’s leaders and diplomats are embarrassed by his virulent rhetoric and off-colour jokes.

Mr Chávez has thus failed to bring closer to reality the Latin American union he espouses in evocations of his 19th century independence hero, Simón Bolívar. Sometimes, as when he closed the frontier with Colombia, he has worked against it.

Yet his command of Venezuela – its economy, army and institutions, including the judiciary – has never been stronger. There is therefore every chance that Mr Chávez, whose political style tends towards confrontation rather than negotiation, will endure. ¡Venceremos! – “we will conquer” – as the former tank commander is fond of saying.

venezuela


see related post from the same FT piece:


FT.com / Comment / Analysis - Venezuela: Bolivarian bravado

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