Venezuela: Year in Review

Overview
This past year was another interesting one for Venezuela, and it is a country where one never knows what will happen next.

Overall, Chávez continued to advance his “Bolivarian revolution”. This effort included a number of laws passed by the National Assembly, a body that typically rubber stamps initiatives proposed by the Venezuelan president. For example, one piece of legislation weakened the independence of the private universities, with the opposition decrying it as a further move to “indoctrinate” students. Meanwhile, the government closed dozens of radio stations, and considered a law enabling members of the media to be imprisoned if their reporting went against the national interest. Another law allowed the state to expropriate land in the city for use on housing projects. These are but a few examples of the government’s efforts to expand control of the economy and society, in the name of “21st Century Socialism”.

In terms of domestic politics, a February referendum ended term limits, affirming the right of every citizen – including Hugo Chávez – to run for election indefinitely. The government also sought to gerrymander electoral districts to guarantee future success after countrywide elections for governors and mayors took place in November 2008 (and even though the United Socialist Party of Venezuela – PSUV – took the majority of positions). It appears that those who oppose Chávez are often threatened or marginalized. Two representatives of Human Rights Watch were expelled in late 2008. In April of this year Manual Rosales, who governed Zulia and ran against Chávez in 2006 presidential elections, sought asylum in Peru after the government leveled corruption charges against him. When Raul Baduel, a former Minister of Defense criticized Chávez, he was also arrested based on accusations of embezzling funds. Recent polls show a general decline in support for the Chávez administration, and this is probably tied to a number of socio-economic factors (see below).

Internationally, Chávez continued to strengthen relations with Russia, Iran, and other countries having tense relations with the United States. His general attempt to serve as a leading voice among South Americans seems stalled. For example, the Bolivarian Alliance for Latin America and the Caribbean (ALBA) expanded its membership beyond Venezuela and Cuba to include allied nations such as Ecuador and Bolivia, but now Honduras is looking to withdraw. At the same time, though Venezuela recently received Brazilian approval to join Mercosur, the South American trading block, it awaits a critical (and likely unfavorable) decision by Paraguay. During July, a spat with Colombia broke out after Venezuela’s neighbor signed an agreement enabling US access to military bases. Chávez responded by sending two divisions to the border, and closing off trade between the two countries. Tensions rose further after the government in Bogotá showed evidence that soldiers of the Revolutionary Armed Forces of Colombia (FARC) had Venezuelan arms.

Economically, some seemed to be waiting for the other shoe to fall, as Venezuela struggled to make ends meet with the global financial crisis and the plunging value of oil. The currency, the Bolivar Fuerte (“Strong Bolivar”) is pegged to the dollar at a 2.15 exchange rate, while the black-market rate bounced between two and three times that amount. Still, despite difficulty with some imports and using some creative economic measures, the administration pulled through, averting any financial collapse. At the same time, the Venezuelan administration continued its heavy spending on weapons, receiving over $3 billion in financing (note that the government had to use credit) from Russia for purchases including tanks and missiles.

Depending on who one talks to, social indicators are a sore spot or a success. The government’s missions continue to spread health, food and education services and funding to many of the poorer areas of the country, but their efficiency is questioned. Recently, Venezuela experienced widespread blackouts and Caracas rationed water, as Chávez publicly called for citizens to take 3-minute showers. Inflation is running at about 30% for the year and violence remains a serious problem, with an excessive murder rate, and an increase in kidnapping. Meanwhile, the government continues along its charted course of steering the country towards socialism. It nationalized rice and sugar factories in 2009, to add to previous government-takeovers of oil, steel and cement.

In other news Venezuela maintained its strong showing at Miss Universe, collecting its second straight title, while the soccer team was just a few points shy of qualifying for the World Cup.

Person of the Year
At this point, for better or worse, Venezuela and its charismatic president, Hugo Chávez, are tightly linked in the international mind and media. His image is displayed on publicity throughout the country, he maintains his “Alo Presidente” radio show each weekend, and he remains at the center of attention.

Most Unexpected Event
Venezuela continues to host leaders who are potential or actual adversaries of the United States. Chávez hosted Russian President Dmitry Medvedev in 2008 and in 2009 he welcomed Iran’s Mahmoud Ahmadinejad, and the Libyan leader, Moammar Qaddafi. The links between these leaders may continue to raise eyebrows, but who expected Quaddafi to go shopping on Margarita Island? (photo and story available here)

Perhaps the one of the most unexpected events was what did NOT happen at the United Nations General Assembly in September. Chávez criticized the United States, but did not make any provocative statements as he did a few years back when he compared President George Bush Jr. to the devil. (While he gave Barack Obama a book at the Summit of the Americas in April, this week at the climate change talks in Copenhagen he stated that Obama too “smelled of sulfer”.)

What to Watch for in 2010
Domestic Politics: One should continue to keep an eye on the general social sentiment, as some polls suggest that support for Chávez is slipping. National Assembly elections are scheduled for September 2010 and this will serve as an opportunity to measure the opposition’s strength. They have often split their votes among multiple candidates in the past, but may finally focus on a unified effort to unseat PSUV representatives.

International Politics: Relations with Colombian are tense, and we will see how they play out in 2010. Look to Chávez to continue his relationship-building with Iran, Libya and other foreign partners.

Economy: What will happen to the price of oil? It is far below its peak of last year, but is still sufficiently high to keep the Venezuelan government’s coffers full (as long as it spends wisely). Meanwhile, nationalization of industries gives the government broad control, but its handling of production is questionable. How will industry fair in 2010?

Society: Which way are the winds of opinion blowing in Venezuela? Chávez inspires passion – both for and against him – and the question is whether this will be maintained into 2012 when he will once again run for the presidency. Will social indicators rise or fall? Either way, the demand for foreign imports is likely to remains strong, as Venezuela’s industries struggle and its citizens continue to be addicted to fashion and image.

A few years ago it appeared that Latin America was shifting to the left, as the Venezuela president rode atop much of this wave, spreading petrodollars throughout the hemisphere. We will see in the next twelve months whether the pendulum is swinging back and if Chávez maintains his level of regional influence.