Victorious Chavez is Most Vulnerable

Last Sunday, February 15, through the use and abuse of all of the resources of the State: money, media and transportation facilities, Venezuelan President Hugo Chavez won a referendum that will allow him to run for president indefinitely, in clear violation of the letter and spirit of the Venezuelan Constitution. Almost half of Venezuelans voted against this pretension that would, if unchecked, change the nature of the Venezuelan political system, from a democracy to a socialist state.

But at the moment of this electoral victory, Chavez faces the most dangerous challenges to his regime since he arrived in power ten years ago. These challenges are both political and economic.

The political challenge is clear. The number of votes Chavez has been obtaining has declined since the 2004 elections, when he received over 7 million. Sunday he obtained 6 million votes. Meanwhile, the opposition has been getting an increasing percentage of the electorate, and last Sunday reached its highest total yet, at over 5 million.

The opposition now controls the main urban centers of the country, including the capital, Caracas. And the referendum giving Chavez the possibility of indefinite re-election seems to have hardened the resolve of the opposition, rather than demoralizing them.

The idea has taken root among Chavez’s adversaries that half the country, precisely the half that generates the most wealth, cannot be forced to live in a socialist dictatorship by the other half. They are more determined than ever to fight Chavez every inch of the way, led by a very enthusiastic and well-organized university student movement, supported by the Catholic church and civil society organizations, in addition to organized political parties.
The financial situation of the country, the other challenge to Chavez, is deteriorating rapidly. The price of oil, the only significant Venezuelan export, has gone down from $120 per barrel in July 2008 to about $34 per barrel this week. The Venezuelan national budget calls for total expenditures of over $90 billion, based on an average oil production of 3.6 million barrels per day, exports of 2.9 million barrels per day and an average price of $60 per barrel. These assumptions are science fiction. Production stands at only 2.4 million barrels per day, exports at some 1.7 million barrels per day and the average price for 2009 will be, in the best of cases, closer to $50 per barrel.

To make things worse, only 1.2 million barrels per day can be called “commercial” exports, since Chavez is giving away to Cuba, Central America and the Caribbean states about half a million barrels per day at highly subsidized prices. What this means is that the Chavez government will face a fiscal deficit of about $30 billion this year. He can do one or all of three things: to devalue the currency, producing even more inflation; to cut down on his handouts to ideological friend Castro et al, or, to reduce social spending. Any one of these three alternatives will be highly damaging to the stability of his regime.

The struggle between Venezuelan defenders of democracy and followers of a Hugo Chavez’s Cuba-type of society will intensify. All indications suggest that Chavez is weakening, even as he wins some battles. And he seems to be heading for a political implosion.

While this struggle goes on the country has essentially lost ten years and will probably lose more. Normal activities have been put on the back burner while politics dominates most peoples’ thoughts. Industrial activity is dramatically down; agriculture is stagnant, private investment paralyzed and the normal day-to-day life of Venezuelans dominated by fear and violence.

This is the biggest crime Hugo Chavez has committed against the Venezuelan people.