Peter Wilson: Dark Days in Caracas

Peter WilsonVenezuelan President Hugo Chávez is pulling out all the stops to persuade voters next month to approve his plan to rewrite the constitution to allow for his unlimited re-election in 2012 when his current term expires. In doing so, Chávez is almost certainly setting up a confrontation with new U.S. President Barack Obama, and souring any possibility of bettering ties between Washington and its fourth-largest oil supplier. Chávez, who took office in 1999 after winning by a landslide, is seeking voter approval just 13 months after voters rejected a similar measure in December 2007. Chávez claims the measure is needed to guarantee the success of the country´s socialist revolution, which he is leading. Opponents portray the amendment as a naked power grab, especially as irregularities mount. After being rebuffed in 2007, Chávez isn’t taking any chances this time, and has been saturating the airwaves with almost daily national cadenas or addresses, which must be carried live by all stations.

By Peter Wilson

Venezuelan President Hugo Chávez is pulling out all the stops to persuade voters next month to approve his plan to rewrite the constitution to allow for his unlimited re-election in 2012 when his current term expires.

In doing so, Chávez is almost certainly setting up a confrontation with new U.S. President Barack Obama, and souring any possibility of bettering ties between Washington and its fourth-largest oil supplier.

Chávez, who took office in 1999 after winning by a landslide, is seeking voter approval just 13 months after voters rejected a similar measure in December 2007. Chávez claims the measure is needed to guarantee the success of the country´s socialist revolution, which he is leading. Opponents portray the amendment as a naked power grab, especially as irregularities mount.

After being rebuffed in 2007, Chávez isn’t taking any chances this time, and has been saturating the airwaves with almost daily national cadenas or addresses, which must be carried live by all stations.

Chávez has also been helped by the nominally independent national electoral agency which has abandoned all pretense of impartiality. Taking its cue from Chávez, the agency fast tracked the amendment, setting February 15 as the date of the referendum. It also said that it wouldn´t reopen the country´s voter registration lists because of time constraints, marking a break with past elections.

The agency, where four of the five members are aligned with Chávez, also extended voting hours for the first time in the country´s history before a single ballot had been cast. Polls always close at 4 p.m. but remain open if voters were in line. Now, the polls will stay open till 6 p.m. to allow voters more time to cast their ballots, agency chief Tibisay Lucena said.

Chávez has also called for the one member of the agency who has questioned the validity of the vote and the changes, to step down, accusing him of trying to sabotage the referendum. Making matters worse, Chávez has already accused Obama of “meddling” in the run-up to the vote and more ominously, ordered the country´s security forces to crack down on a growing wave of student protests.

Even with the machinations, current polls show that Chávez is facing an uphill struggle, with the measure opposed by a majority of Venezuelans. Some surveys show a 20 percentage point advantage in favor of rejection.

Chávez has reason to hold the vote as quickly as possible. The oil-dependent economy is already starting to slow as cratering oil prices have reduced government revenue. Royalties and taxes on oil sales account for more than half of government revenue, and this year’s budget is based on a target price of $60 per barrel for the country´s market basket of crude.  The price closed at $34.02  per barrel last Friday, suggesting that the government may fall billions short in its revenue targets for the year.

Problems are already mounting; inflation is greater than 30 percent (the highest on the continent), and imports of spare parts and non-essential foods are slowing as the government tries to conserve its international reserves.

The government has moved slowly to confront its growing economic problems, reluctant to take steps to antagonize voters before the referendum. The country´s foreign exchange board halved the amount of dollars being made available to Venezuelans traveling or using credit cards abroad. The government is also mulling new taxes on electronic financial transactions. Both moves target the middle class—not a Chávez bastion—and won´t stem the downturn.

With a faltering economy and the worst yet to come, Chávez may gamble on Obama´s preoccupation with the U.S. economy and Middle East, and attempt to crack down on his opponents by calling a national emergency or charging another assassination plot—especially if he loses the referendum. And if he wins the vote, the opposition will likely call fraud, especially with all the irregularities being committed by election officials.

In either case, Venezuela seems posed for increased political tensions, which may leave Obama scrambling for a response.

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Peter Wilson has lived in Venezuela since 1992. He was formerly South American team leader and Caracas bureau chief for Bloomberg News and has written about Venezuela for BusinessWeek, Time, and The Economist.

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