POPULISM AND FALSE EXPECTATIONS

Venezuela is blessed with natural beauty and a wealth of resources but afflicted by a paternalistic state. Once ruled by generals who supported their regimes by taxing coffee exports, the country enjoyed skyrocketing wealth after huge petroleum reserves were exploited in 1917. Succeeding leaders led impoverished citizens to believe that they would benefit from this wealth, and social welfare came to be considered a birthright.

Enlightened political parties began to develop in the 1930s, and in 1958, the country rejected military dictatorship in favor of elected rule. The first civilian president, Romulo Betancourt, tried to restrain spending and institute pro-market policies, but the populist economic policies of previous military regimes proved resistant to change.

Milking an easy source of revenue that required little public accounting, succeeding presidents took the socialist path of increasing state intervention. Rafael Caldera raised taxes on oil profits to 70 percent and expanded welfare benefits. Carlos Andrés Pérez--president during the 1973 oil boom when crude prices rose 400 percent--established food subsidies and doubled the number of government jobs. In 1975, his administration nationalized the petroleum industry1 and created more than a hundred loosely controlled state enterprises. When oil prices dropped in 1977, "wealthy" Venezuela was in need of loans to pay off a $12 billion debt.

During the 1980s, the political leaders who had pioneered Venezuela's democracy continued to outspend what oil abundance could provide and fell into disrepute. Returning to office in 1989, Carlos Andrés Pérez tried to cut deficits by imposing austerity measures recommended by the International Monetary Fund. When he raised bus fares, riots erupted in which some 200 people perished.

Meanwhile, a then unknown army lieutenant colonel named Hugo Chávez, who had been conspiring for nearly a decade to impose a leftist military regime, sensed an approaching opportunity.2 In 1992, he led a band of trusted officers to overthrow President Pérez. Although the failed attempt resulted in 17 deaths and a jail sentence for Chávez, the embattled Pérez was impeached shortly thereafter on corruption charges. The court-martialed Chávez emerged as a popular hero.

CURING POPULIST FAILURES WITH A RADICAL AGENDA

In 1998, Hugo Chávez faced no strong competition for the presidency and won because the party system had broken down. His youth appealed to a predominantly younger population, and his mixed race and humble origins endeared him to the middle class and poor who did not see themselves represented among the political and economic elites. Chávez's competitors were a former beauty queen and what appeared as spent war-horses from the Democratic Action and Social Christian parties, which many Venezuelans had come to consider as irrelevant.

Chávez appeared to many to be a redeemer with his promises to sweep away corruption and lift up Venezuela's poor majority, whose ranks had swollen from 27 percent in 1980 to about 60 percent in the 1990s.3 Rather than offering Venezuelans the true change they desired, however, Chávez presented, in more concentrated form, the paternalistic leadership and spendthrift economics that had failed the country in the past.

Specifically, like the military strongmen who preceded democracy, Chávez liked to appear in uniform, appointed trusted army officers to cabinet posts,4 and governed by barking orders. Motivated by a distrust of the Venezuelan business community and free-market policies in general, he restricted domestic enterprise while promising to expand social programs. Cloaking his agenda in patriotism, he called his program "Bolivarian" after the great 19th century South American liberator Simón Bolívar.

In his first year, Chávez dissolved the National Assembly and called for a constitutional convention that rewrote the national charter to extend his term of office from five to six years and entrust more power to the presidency. Arguing that the new constitution required a new government, he organized national elections in 2000 and was able to capitalize on his immense popularity to elect a majority of members from his Fifth Republic Movement (MVR) to the new legislature.

At the same time, he tried to consolidate his influence over nearly every political and social institution in the country--alienating key sectors of society and the government as he did so. Among these were:

• The armed forces. In June 2000, Chávez inaugurated a program called Plan Bolívar, which tasked the military to repair hospitals, manage vegetable markets for the poor, and supervise some public schools. Not only did many soldiers resent being employed in this way, but the program also took money for public works away from local jurisdictions, thereby reducing their authority. At the same time, the military's leadership proved scandalous. Senior officers were accused of diverting some of the funds into other budgets and even into their own pockets.5
• Labor. In 2000, Chávez attempted unsuccessfully to nationalize the Venezuelan Workers' Federation (CTV). A year later, he ran his own "official" candidate for the union presidency. Then, failing in that, he declared the union elections fraudulent. His campaign against both organized labor and private enterprise encouraged an unusual convergence of forces when the CTV joined the Federation of Chambers of Commerce and Industry (FEDECAMARAS) on December 10, 2001, for an unprecedented national strike that shut down most of Venezuela's businesses.
• Schools. To improve Venezuela's decaying education system, Chávez set out to establish "Bolivarian" model schools that offered extended schedules and meals to students in poor neighborhoods. In October 2000, he followed up with a decree allowing the minister of education to fire teachers in both public and private academies on the basis of reports submitted by roving inspectors. Chávez also signed an agreement with Fidel Castro to bring in Cuban educators to help train Venezuelan teachers and write new curricula. In March 2001, 10,000 parents and teachers gathered in Caracas and 20 other cities to protest perceived efforts to indoctrinate their children with a foreign ideology.6
• The media. Venezuela's 1999 constitution requires the press to report only "truthful information." President Chávez often disputed news accounts and ridiculed reporters for their mistakes. In October 2001, he called the news director of Globovisión an "authentic enemy of the revolution" and threatened to revoke the network's license. In January 2002, Chávez's supporters surrounded the headquarters of the newspaper El Nacional, accusing it of spreading lies and threatening to burn it down.
• The state oil company. Less than a year after Chávez had become president, his meddling in Petroleos de Venezuela (PDVSA) provoked an exodus of nearly 2,000 executives. On November 13, 2001, he announced a package of 49 "revolutionary decrees" that, among other things, hiked oil royalties and sought to discourage foreign companies from participating in local exploration. In February 2002, he attempted to replace PDVSA's president with a loyalist who favored diverting more of the company's revenues to the government to alleviate budget shortfalls and fund promised social programs. In protest, the monopoly's 40,000 workers staged a production slowdown.7

Adding salt to the wounds he inflicted on these institutions, Chávez turned the government itself into a comic opera. For example:

• Within three years, he replaced 40 cabinet ministers;8
• His political police allegedly helped hide Peru's fugitive spymaster Vladimiro Montesinos until U.S. agents discovered his whereabouts;9 and
• After meeting Pope John Paul II last October 12, the president reportedly left the Vatican comparing him to a potato in a childish play on words to journalists--"El Papa" (Father) versus "la papa" (potato). That incident caused deep embarrassment among many in predominantly Catholic Venezuela.

Overall, Chávez's popularity fell from a high of 76 percent in April 1999 to 29 percent at the end of 2001.10

GOVERNMENT TEETERING IN THE BALANCE

Increasingly, businessmen, civic leaders, journalists, and political opponents (whom Chávez called "squalids") looked for ways to ease him out of power. Even in the poor neighborhoods of Caracas, there was disillusionment. Unemployment increased because of the repressive business climate, and crime rose an estimated 80 percent thanks to a politicized and disorganized police.11 Assemblyman Leopoldo Puchi--once a Chávez supporter--warned, "If the President persists in improper conduct, the National Assembly will take action."

But what kind of action they would take was never clear. With good reason, the bar to removing a sitting president should be a high one, but the constitution that Chávez had caused to be rewritten made that process uncertain. Lawful alternatives were subject to interpretation and required the assent of a National Assembly and Supreme Court that were packed with Chávez supporters. These alternatives included:

• Declaring the president incompetent. According to Article 233 of the 1999 constitution, Venezuela's Supreme Justice Tribunal would need to designate a medical commission to certify the president's incapacity and present its findings to the National Assembly as Ecuador did in the case of President Abdala Bucarám, known as El Loco for his unpredictable behavior.12
• Impeachment. Article 233 allows the National Assembly to remove the president for abandoning or failing to carry out the duties of his office. If more than two years remain in the term of an official who has been found guilty of these charges, new elections are to be scheduled within 30 days after his removal from power.
• Recall by referendum. Article 72 of the constitution says that "all offices and judgeships by popular election are revocable" by referendum. For a high official to be recalled, that person would have to have served half of his or her term of office, and at least 20 percent of registered voters would need to sign the petition. Moreover, a minimum of 25 percent of the electorate would need to vote in the actual recall, and for it to be successful, the number of those voting for the official's removal would have to exceed the actual number who voted for him in the original election.

  Doing the math based on his reelection to office in 2000, Chávez could not be removed from office before January 2004. Some 2.3 million voters would have to sign the petition out of approximately 11.7 million total electors. More than 3.8 million would have to vote against him to exceed the number who voted for him in his last election in 2000, which was staged as a reaffirmation of his 1998 victory.13

There was no easy solution to the discontent that followed the December 10 national strike, leading to speculation in the press on how long Chávez would last. Despite the foment, public opinion polls told a different story. Although Chávez registered only a 29 percent approval rating and 48 percent of respondents thought he was mentally unbalanced, only a slim majority of 54 percent believed he should be removed before the end of his term. Just five percent favored a military coup.14

In such a situation, only a lawful removal would seem to have broad-based support and would have avoided inciting violence. In fact, support seemed to be building within the ranks of Chávez's own MVR party in the National Assembly for a motion to impeach him,15 but no one could predict what his reaction would be to a massive public protest.

During the unprecedented national strike organized by FEDECAMARAS and the CTV on April 8, Chávez defiantly ordered the private broadcasting media to air government propaganda messages that the demonstration was a failure. Television stations complied but split their broadcast images to show empty streets and businesses. When the organizers turned the strike into a massive street protest and some 150,000 people marched on the presidential palace, Chávez closed the stations to prevent those images from being seen all over the country.

When snipers--some allegedly members of Chávez's "Bolivarian Circles"--fired on unarmed marchers, dissident military commanders found the excuse they needed to force the president to resign. They assembled an improvised junta and persuaded FEDECAMARAS president and protest organizer Pedro Carmona to preside, although it is not clear that he was ever actually in charge.

Accounts vary as to what happened next, but no political party or representative of the Venezuelan Workers Union that co-organized the strike joined the effort to remove in Chávez.16 When the junta tried to dissolve the National Assembly and other elective offices, the military withdrew its support for the insurrection and brought Chávez back.

U.S. INTERESTS AT STAKE

Before the Chávez presidency, Washington had few concerns about Venezuela. It seemed prosperous. It was a reliable source of petroleum and a trade partner. Its leaders had always been friendly to the United States and sided with Washington against Cuban- and Soviet-backed subversion in the hemisphere during the Cold War. Venezuela was never the squeaky wheel that got U.S. policymakers' attention.

Oil and Trade.
When the United States became a net oil importer in the 1970s, friendly Venezuela became one of its top suppliers. Last year, 48 percent of all U.S. oil imports originated in the Western Hemisphere, and a third of those came from Venezuela.17 Just as significant, the country has huge natural gas reserves--second only to the United States in the Western Hemisphere--and provides an important market for U.S. products. In 2000, Venezuela bought $5.6 billion in goods and services from the United States, making it America's 25th largest export market.18

But President Chávez has abused this relationship. During his campaign for president, he criticized the United States for its "savage capitalism" and promised to lead Venezuela down a different path. On August 10, 2000, he became the first foreign head of state to visit Iraq's Saddam Hussein since the Gulf War.

Two months later, he announced an alliance with Fidel Castro in Cuba, striking a deal to supply 53,000 barrels of oil a day to the island, reportedly in exchange for the services of Cuban doctors, teachers, sports trainers, and intelligence personnel.19 He also used Venezuela's position as a founding member of the Organization of Petroleum Exporting Countries (OPEC) to cut production to sustain high oil prices. As a result, the Bush Administration came into office with an eye toward boosting imports from more stable allies such as Mexico (although it would be difficult to make up for the 13 percent of total imports that Venezuela provides).20

Stability in the Hemisphere.
Within the Andean and Caribbean neighborhoods, Chávez became a geopolitical gadfly. He refused to allow overflights of U.S. aircraft tracking drug smugglers. He opposed U.S. efforts to help neighboring Colombia curb drug trafficking and strengthen state authority in rural areas plagued by Marxist rebels. In addition, he reportedly established fraternal ties with the largest group of rebels, the Revolutionary Armed Forces of Colombia (FARC), calling them "Bolivarian" after his adopted hero.

Videos and documents revealed by dissident members of the Venezuelan armed forces suggested that some members of his government promised the FARC guerrillas supplies and refuge in exchange for not recruiting in Venezuela.21 A Venezuelan army intelligence report claimed that six fronts, comprising some 740 combatants, had established camps in such border states as Zulia and Táchira for rest and resupply.22

In 2000, Chávez reportedly visited Felipe Quispe, the head of the Bolivian coca growers union, shortly before his organization caused a disturbance killing 11 persons and wounding 120. He allegedly gave money to Ecuadoran coup plotter Colonel Lucio Gutierrez after his release from jail.23 When Venezuelan troops were sent to El Salvador last year to help with earthquake relief, they were nearly declared persona non grata after reportedly proselytizing local villagers to support El Salvador's leftist Farabundo Martí National Liberation front party, with which Chávez was friendly.24

Chávez even boasted of creating a rival center of power to balance U.S. influence in the hemisphere, claiming that "We, Cuba and Venezuela...are called upon to be a spearhead, and summon other nations and governments."25 Supposedly to that end, Chávez has pursued a friendship with aging Cuban dictator Fidel Castro, cultivating an image as his heir in leading the Latin American left.

The Foro de São Paulo, a Brazilian-based organization representing some 39 socialist parties from 16 countries in the hemisphere, regards Chávez highly and shares much of his agenda.26 Both the Foro and Chávez oppose U.S. counterdrug efforts in Colombia and want to thwart the Free Trade Area of the Americas. Chávez has even touted a "Bolivarian Alternative for the Americas," or ALBA, which plays off the Spanish acronym for the FTAA: ALCA (Area de Libre Comercio de las Américas).

REBUILDING A BROKEN DEMOCRACY

Venezuela's democracy was destined for crisis from the time it was conceived as a caretaker state. Over time, it came to be managed by a custodial political class that neglected to encourage broad public participation or share much authority with local jurisdictions. Because rule of law was never firmly established, personal connections came to trump the notions of fair play and reliance on impartial institutions. The election of a charismatic despot was the regrettable climax of a succession of insular, paternalistic governments.

Because Venezuelans seemed to tolerate these deficiencies, U.S. policymakers never felt compelled to address them. When they became the source of conflict within the country in the 1990s, U.S. programs to support democratic institutions were already being redirected from Latin America to Eastern Europe and the former Soviet Union. With the election of Hugo Chávez to the presidency, reform messages from the United States would have met a cold reception had they been communicated; but Clinton Administration officials refrained from open criticism to avoid antagonizing Chávez, who could easily have been tempted to point to America as the source of Venezuela's ills.27

Now his ouster and return make any U.S. attempts to influence the situation even more difficult. Powerful figures for and against Chávez have shown their distrust of democratic institutions and constitutional rules. Chávez himself is beholden to those who brought him back--his new vice president, José Vicente Rangel; trusted members of his cabinet; a few loyal generals; leaders of his Bolivarian Circles; and his Cuban advisers. Because of its intrusion into politics, the military has been disgraced and further fragmented, while the business community has likewise been discredited because of its participation in the short-lived junta.

However, there are positive elements in this drama. The international community, represented by the Organization of American States (OAS), has vigorously affirmed the institutions of democracy. Moreover, Venezuela's increasingly independent National Assembly did not participate in the overthrow and voted to conduct its own investigation into the events that precipitated it. The Supreme Court, dominated by justices loyal to former Interior Minister Luis Miquilena, who split with Chávez in January 2002, may also act more independently.

In the midst of these circumstances, Venezuelans must now begin to reform their government. Because it is in America's interest to encourage a stable, democratic Venezuela, Washington should assist this effort where feasible. Further trouble there would mean the continued decline of an important market for U.S. products, an increase in out-migration of people and capital to stable neighbors such as the United States, and the possible revival of Chávez's strident anti-democratic influence in Latin America--all financed with oil profits. Should bankruptcy tip Argentina's government to the left, or should instability befall any of the region's other fragile democracies, South America could become openly hostile to the United States and its cherished values of public decision-making and open markets.

In the absence of outside scrutiny and support, Venezuela's democratic politicians and civic leaders could be overwhelmed by a regime populated by radical loyalists, leading to continued or worse upheaval.28 Without encouragement to pursue a reform agenda, both loyalists and the opposition may lose an opportunity to turn an emerging dictatorship into a society of free choice. Without a clear demand from the United States to end support for subversive groups such as the Colombian FARC guerrillas, Venezuela could become an active party in Colombia's conflict, provoking an international crisis. Elsewhere in the region, if the United States lacks a clear strategy to support the consolidation of democracy and the expansion of free trade, it could find itself in the company of fewer allies.

To address these issues, the Bush Administration should:

• Help safeguard an open environment for Venezuelan democrats, media, and civil society. The Administration can do this by promoting outside scrutiny to limit actions by Venezuela's executive branch that would restrict civil liberties, by helping Venezuela's weakened parties to rebuild their foundations, and by increasing contact with Venezuelan civic leaders.

  Most immediately, the Administration should encourage the OAS and other international watchdog groups--such as human rights monitors, press fraternities, business councils, labor organizations, and educational groups--to conduct independent assessments in Venezuela. Observation by these groups would send a message to the Chávez administration that it is expected to adhere to internationally recognized limits and standards. In addition to holding Chávez's overall performance to the standards of its new Democratic Charter (approved on September 11, 2001), the OAS should explore whether Chávez's creation of armed partisan mobs supported by government funds, such as the Bolivarian Circles, represents a specific breach in the democratic order.

  The Bush Administration should ensure that the Washington-based National Endowment for Democracy, International Republican Institute, and National Democratic Institute have the resources needed to help Venezuela's political parties develop as responsible policy and leadership incubators. Their outreach should include the dominant MVR group, which Chávez established, as well as new parties, including Primero Justicia and the traditional Democratic Action and Social Christian organizations. Each of these should be persuaded to expand their membership beyond elites to embrace all economic classes and racial groups and encourage these people to seek leadership positions. Coalition building and conflict resolution should be principal topics of discussion.

  Finally, U.S. Congressmen and prominent officials from other democratic governments in the region should make it a point to visit members of the National Assembly as well as leaders of local governments and civic organizations to encourage their work and boost morale.

• Encourage Venezuela to pursue a reform agenda by advancing the idea that Venezuela's majority poor can benefit more from reforms that will establish a level playing field through rule of law and by creating a climate in which small businesses can prosper. Whether Chávez stays or eventually is impeached, those in charge will need encouragement to correct much of what has gone wrong; in addition to Chávez's actions, past traditions of centralized authority, corrupt administration, state intervention, and populist economics all have played a part in bringing about the present crisis.

  To promote progress on reforms, the State Department's Public Diplomacy bureau should offer international visitor exchanges and organize seminars for speakers on such topics as the balance of powers, judicial reform, community policing, the role of property rights in promoting growth, and how curbing government intervention can bolster small business. Even though Venezuela would not qualify for U.S. development assistance because of its oil wealth, grants should be made available to help support pro-democracy, free-market, non-governmental organizations that can advocate such reforms.

  With regard to Venezuela's foreign policy, the Bush Administration must make it clear that it is unacceptable to encourage subversives in neighboring countries. If reports of support for Colombia's terrorist guerrillas are true, Chávez should be held responsible for aggression against the Colombian state. For this and other reasons, it is important that the United States broaden its security assistance to Colombia and press Venezuela to deny the FARC the use of its territory to the maximum extent practical.

• Renew support for the region's democratic institutions and free trade. Elsewhere in the hemisphere, the United States should address misperceptions regarding its response to the events of April 11-13 and must make up for lost time by more actively promoting democratic practices and free trade.

  In contrast with the 19 presidents of the Rio Group member countries who repudiated Venezuela's departure from constitutional order,29 the Bush Administration initially gave a more guarded statement, implying that Chávez had provoked his own ouster and expressing hope that the Venezuelan people would restore democratic rule. Critics pointed to this difference in approach as evidence of weakness in the Administration's commitment to democracy. Secretary of State Colin Powell should have laid any doubts to rest when he told the OAS General Assembly that "Democracies do not remain democracies for long if elected leaders use undemocratic methods. And defending democracy by resorting to undemocratic means destroys democracy."30

  Even so, the Bush Administration could show its commitment in a more tangible way by speeding up U.S. efforts to support ongoing political reforms through local non-governmental organizations that advocate the consolidation of democratic practices in such places as Argentina and the conflicted Andean region. Public diplomacy and foreign broadcasting efforts directed toward these countries should focus on providing information on citizens' rights and responsibilities as well as expectations regarding the behavior of democratically elected officials.

  The Bush Administration must also make a more vigorous effort to improve commercial relations with democracies that Chávez has been courting as potential opponents of free trade. Congress should grant President Bush trade promotion authority, allowing him to conclude proposed agreements with Central American states, and the Administration should consider negotiating similar bilateral treaties with Venezuela's troubled Andean neighbors. Better trade relations with Brazil--a trade competitor of the United States and a potential Chávez ally--should also be made a priority if the proposed Free Trade Area of the Americas is to become a reality in 2005. In addition, the United States should offer the possibility of expanded trade relations to the people of Venezuela when its government adopts political and economic reforms.

CONCLUSION

Faith in dictators has characterized Latin American politics since the region's colonization half a millennium ago and has brought about more plagues than benefits. Gradually, over the past century, personal followings have given way to grassroots public participation as the region's governments have begun to respond to the will of their citizens. Venezuela's political institutions embarked on that transition but in their frailty fell hostage to an authoritarian voice from the past.

Beyond the wreckage he created in his own country through hubris and incompetence, Hugo Chávez had illusions of spreading his populist dream throughout the hemisphere to counter U.S. influence, which he has regarded as evil. Although weakened by the experience of his near ouster, Chávez is now surrounded by rescuers who share his radical vision. To the degree that this group is successful in building an alliance with resentful publics elsewhere, increased conflict, shrinking markets, and refugee migrations to countries such as the United States will be likely to follow.

Up to now, America has carefully avoided picking a fight with Chávez. Instead of remaining aloof, however, it should support Venezuela's democratic politicians, civic leaders, and ordinary citizens in their challenge to rein in a freely elected executive who is apparently intent on destroying his country's democracy.

The Bush Administration can help by promoting international scrutiny of human rights and civil liberties in Venezuela, by holding Chávez up to internationally recognized standards of democratic behavior, and by fostering a closer relationship between U.S. and Venezuelan democratic institutions. Washington should engage both Chávez and his opponents on a reform agenda and dissuade him from further subverting democratic order in neighboring states such as Colombia. Beyond Venezuela, the Administration should redouble its efforts to help democracy and free markets succeed in the hemisphere generally.

Venezuela's future should be in the hands of the Venezuelan people. No one can face this challenge for them, but democracies like the United States can and should stand with them and give strength to those laboring to build a pluralistic society and an open economy.

Stephen Johnson is Policy Analyst for Latin America in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.