Venezuela – Total Recall?

By Scott B. MacDonald

Look for political uncertainty and turmoil in Venezuela in the short-term. After months of speculation and legal wrangling, Venezuelan President Hugo Chavez said June 3 that he is prepared for a referendum on his term of office. Shortly after electoral officials said that Chavez's opponents had collected more than the 2.44 million votes required to prompt a recall vote, Chavez stated in a nationally televised speech, "I accept it. I hope that some people realize -- if they are still confused -- that Hugo Chavez is not the tyrant some say he is." The referendum is likely to be scheduled for August 8.

The public response to the announcement that the referendum was likely to go through was mixed. Pro-Chavez supporters set fire to cargo trucks, severely beat up an opposition lawmaker outside Congress and fired on the offices of Caracas’ mayor, a prominent anti-Chavez figure. Supporters of the referendum drive set off fireworks and honked horns. Venezuela remains a highly polarized society.

Chavez is calculating that the opposition will not be able to maintain any degree of unity and if the referendum goes against him, setting in motion a new election for the presidency, he should be able to win with 35% of the vote, which is what his political support has been throughout the last couple of years. With an opposition likely to produce multiple candidates, his chances of winning are good. Even with the referendum Chavez remains in relatively good shape. His current approval rating is now at 42%, while the burden will be on the opposition to make certain that enough voters get to the polls. No doubt, the authorities will seek to dissuade voters from turning out at the polls. It has already been reported that any government workers signing the opposition petition for a referendum have been fired (or are at least being threatened). In a country with high unemployment and a growing state sector, the possible loss of a job is significant.

One other factor to consider is the role of the country’s military. Although Chavez moved since the failed 2002 coup to purge elements opposed to him within the ranks, there remain a core of “institutionalists” who favor a non-political, constitutional role. They favor upholding the referendum process. In contrast, there are the new commanders who were put in place by the President, who clearly identify their fortunes with Chavez. Annual promotions take place in July and it is likely Chavez could use this to further his control over the armed forces.

The Venezuelan economy is not likely to offer Chavez any help. Although real GDP growth is expected to grow by 6% in 2004, on the back of high oil prices, this comes after an 8.9% decline in 2002 and another decline of 9.2% in 2003 reflecting the damaging impact of the strike at PDVSA, the state-owned oil company. In addition, the private sector, one of the major sources of anti-Chavez opposition, has been decimated by high inflation (up to 27.1% at year-end 2003), political instability, government controls over foreign exchange and the lack of growth. Indeed, much of the upper and middle class that has had the option to leave the country has done so. Considering the deterioration in the economy and polarization of its political life, foreign investment has not poured into the country, though some credit has to be given to the government for making all of its external debt payments.

Venezuela faces a summer of uncertainty. Will the referendum go ahead? Will the military intervene to stop it? Will Chavez seek to bloc the referendum through the courts? What happens if the President fails to win a majority in August? Can the opposition pull together and provide a more unified front, including enough support for a single candidate to run against Chavez if they win the August referendum? All of these questions are going to percolate through Venezuela in the months ahead, leaving considerable uncertainty. All the same, there remains a strong possibility that Chavez may allow the referendum to proceed with the view that he can win it, hence putting to rest any constitutionalist threat to his rule for several years. However, if opinion polls begin to go against him and the opposition appears to be better organized than in the past, we would not rule out Chavez seeking new means to bloc the referendum.

Editor: Dr. Scott B. MacDonald, Sr. Consultant

Deputy Editors: Dr. Jonathan Lemco, Director and Sr. Consultant and Robert Windorf, Senior Consultant

Associate Editor: Darin Feldman

Publisher: Keith W. Rabin, President

Web Design: Michael Feldman, Sr. Consultant

Contributing Writers to this Edition: Scott B. MacDonald, Keith W. Rabin, Robert Windorf, Sergei Blagov, Darrel Whitten and Jonathan Hopfner

To obtain your free subscription to the KWR International Advisor, please click here to register for the KWR Advisor mailing list

For information concerning advertising, please contact:

Please forward all feedback, comments and submission and reproduction requests to:

© 2003 KWR International, Inc.