The death of Venezuelan caudillo Hugo Chávez is likely to result in a clash of opposing forces that will either solidify his authoritarian legacy or restore the democratic traditions embedded in the country’s Constitution. Whatever happens, the next 30 days will prove crucial for Venezuela's future.
During his 14 years in power, Chávez used his flamboyant oratory, his internal security apparatus and the enormous wealth of the country’s state-run oil industry (PDVSA) to solidify his control over all of Venezuela’s institutions, including the legislature, the judiciary and the armed forces. Tapping into widespread social unrest and poverty, Chávez’s ascension into power was almost inevitable given the country’s history of corrupt politicians who amassed huge fortunes from the country’s oil wealth; all at the expense of modernizing the economy and raising standards of living.
The country’s vast oil wealth has struggled to cushion the incredible mismanagement that has defined his administration since winning his first election in 1998.
- Raúl Mas
Once in power, Chávez poured petrodollars from PDVSA into government-run social programs. Unfortunately, he also continued the wretched tradition of using oil wealth to consolidate power and reward a new generation of political and economic elites loyal only to him. In short, the more things changed, the more they remained the same. Even the government-sponsored social programs became instruments of graft and corruption, seriously eroding their effectiveness.
Chávez’s admiration and close relationship with the Castro brothers brought Cuban-style socialism and Cuban-style control to an increasingly fragile Venezuelan democracy. Fidel and Raúl were more than happy to assist their new admirer with lessons from their own dictatorial playbook.
In return, Chávez rewarded them with generous subsidies of cheap Venezuelan oil which has kept afloat a precarious Cuban economy, as well as two octogenarian dictators still reeling from the collapse of the Soviet Union.
Not unpredictably, Chávez’s embrace of socialist authoritarian rule came at a very high price. The country’s vast oil wealth has struggled to cushion the incredible mismanagement that has defined his administration since winning his first election in 1998.
Venezuela has suffered through inflation approaching 20 percent and last month the official exchange rate saw a devaluation of 32 percent. While the International Monetary Fund has estimated Venezuela’s deficit to be 7.4 percent of GDP, other reputable sources place the figure closer to 15 to 20 percent.
Violence has skyrocketed and unemployment/underemployment remains stubbornly high. Venezuelans are addicted to foreign imports and shortages in even basic foodstuffs are commonplace. The country remains as dependent on oil as ever (representing 90 percent of hard currency inflows) and despite a fivefold increase in oil revenues, the industry itself is sorely in need of foreign capital and expertise. Those resources are unlikely to come given the country’s expropriation of ExxonMobil and ConocoPhillips holdings in 2007. In short, the economic outlook is bleak.
It is in this cauldron of economic and social instability that the country’s future will take shape. Chávez’s handpicked successor is Vice President Nicolas Maduro, a former bus driver and union leader turned fervent Chavista who is hoping to inherit his patron’s mantle.
Unfortunately for Mr. Maduro, Venezuela is still governed by a Constitution. It is not yet a dictatorship where rulers can simply appoint a hand-picked successor. Therefore, according to the Constitution, the Speaker of the National Assembly must take over and elections held within 30 days.
The challenge for Venezuela is this: will the oligarchs and beneficiaries of Chávez’s largesse allow their favored status to be threatened? Can Mr. Maduro hold on to their allegiance? Will Maduro himself submit to the risk of losing an election against Henrique Capriles, a popular and experienced challenger? Can Chavismo and the so-called Bolivarian Revolution survive without its chief architect and founder?
These are the critical questions that Venezuelans will face in the next couple of weeks. The future of Venezuelan democracy is, without exaggeration, at stake. The world will be watching.
As for Hugo Chávez, history will record him as a notable figure. Unfortunately, he will also be remembered as a narcissistic authoritarian whose delusions of revolutionary grandeur brought ridicule, stagnation and suffering to a country richly blessed with natural and human resources. Instead of emulating the success of Norway, Chávez chose instead to follow the failure of Cuba. He will be judged harshly for that — and rightly so.
Raúl Mas Canosa is a financial adviser and a frequent commentator on radio, television and digital media. He can be reached at email@example.com