In Search of Hugo Chávez

Michael Shifter

From Foreign Affairs, May/June 2006

Summary:  The debate over Hugo Chávez has been dominated by opposing caricatures -- a polarization that has thwarted a sound policy response. The Venezuelan president has an autocratic streak, no viable development model, and unsettling oil-funded aspirations to hemispheric leadership. But Washington and its allies should ''confront'' him indirectly: by proving they have better ideas.

MICHAEL SHIFTER is Vice President for Policy at the Inter-American Dialogue and Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service.

Available data of these measures' effect are mixed and not altogether reliable. According to the Venezuelan government's National Institute of Statistics, poverty rose from 43 to 54 percent during Chávez's first four years in office. The government blames this increase on the opposition's strikes and other efforts to destabilize the economy. A 2005 report of the UN Economic Commission for Latin America and the Caribbean notes that poverty has started to decline in Venezuela, as the economy has registered impressive growth, fueled by consumption, in the past two years (18 percent in 2004, 9 percent in 2005). The government has also just changed its methodology for measuring poverty to reflect improvements in nonincome criteria such as access to health services and education, which, it argued, were not reflected in past figures. The dozen or so community-based misiones, a Chávez innovation, have resulted in better basic services in poor communities. Literacy programs have been afforded high priority and have made some progress.

Regardless of whether the conditions of Venezuela's poor have marginally improved or marginally worsened under Chávez, his "Bolivarian Revolution" is hardly a sustainable model for Venezuela's or the region's predicament. Its approach is fundamentally clientelistic, perpetuating dependence on state patronage rather than promoting broad-based development. Random land-reform measures and occasional confiscations of private property have had less of an economic than a political and symbolic rationale. Crime, a dominant concern for Venezuelans, has gotten worse.

The Chávez government's actual performance is all the more disappointing given the spectacular rise in oil prices. Although Chávez's support cannot be attributed solely to the price of oil -- which was at only $12 a barrel when he was first elected -- the increase to over $60 a barrel has given him an opportunity to spend the windfall on building a stronger and more diverse economic base. Ironically, this dependence on a single commodity is in striking continuity with previous governments -- yet another example of Venezuela's "oil curse" undermining sustainable policy.

Chávez regards Venezuela's state-owned enterprise PDVSA as the foundation of his grandiose political project. Although often criticized for not investing sufficiently in research and development, Chávez has been astute in dealing with private foreign investors. He has sought more favorable terms (such as higher taxes and royalties), confident that most companies would accede, however grudgingly. So far, with the exception of ExxonMobil on some contracts, he has been right.

WORLD ON A STRING

From the outset, it has been clear that Venezuela, with a population of 26 million, is too small a stage for Chávez's ambitions. Chávez has taken full advantage of a confluence of favorable factors -- lots of money, Latin America's political disarray, U.S. disengagement from the region, widespread hostility to the Bush administration -- to construct alliances throughout the Western Hemisphere and beyond. He has skillfully managed to establish himself as a global and regional leader, using oil money and brash anti-Americanism to attempt to construct a counterweight to U.S. power.

Chávez's close friendship with Castro has been integral to this project. In exchange for Cuban teachers and doctors, Chávez furnishes the financially strapped island some 90,000 barrels of oil a day. Castro probably also provides Chávez with strategic advice, along with some military support and intelligence. More and more, Cuba and Venezuela are important referents for each other. When Venezuelans mention "the embassy," they now mean the Cuban, not the U.S., embassy in Caracas.

Chávez's aggressive oil diplomacy has also enhanced his influence. Last year, he inaugurated Petrocaribe, under which Venezuela will provide 198,000 barrels of oil a day to 13 Caribbean nations with "soft" financing for up to 40 percent of the bill. Chávez has also given high priority to the countries of the continent's southern cone, especially Argentina and Brazil, which are central to his plan to launch Petrosur, another regional energy initiative that he has pledged to largely bankroll. He has bought $2.8 billion in Argentine bonds and $25 million in Ecuadorian bonds and has substantially underwritten Telesur, a Latin American alternative to CNN.

At the Summit of the Americas in Mar del Plata, Argentina, in November 2005, Chávez joined with the summit's host, President Néstor Kirchner, and leaders from the other members of the Mercosur trading group (Brazil, Paraguay, and Uruguay) to block the U.S.-led proposal to restart talks on the Free Trade Area of the Americas (FTAA). In its place, Chávez put forth the vaguely defined Bolivarian Alternative for the Americas. Chávez has also taken steps toward making Venezuela a member of Mercosur, with the aim of boosting the trading bloc's political role in hemispheric relations.

Of course, it is easy to overstate this influence. Most Latin American governments are hardly marching in lockstep with the Venezuelan president and are resisting joining a hostile, anti-U.S. bloc. As Chávez was vowing to "bury" the FTAA, Bush was traveling to Brasilia to meet with Brazilian President Luiz Inácio Lula da Silva, who struck a more accommodating posture on hemispheric free trade. In the recent race for the presidency of the Inter-American Development Bank, even beneficiaries of Petrocaribe refused to back Chávez's candidate, who ended up withdrawing.