One Region
January 15, 2013

Planning beyond Hugo Chavez

Hugo Chavez, the populist leader of Venezuela, could not turn up on January 10 for his swearing-in ceremony as President for a fourth consecutive term. Quite naturally, the doubt that this has created over the governance of Venezuela has thrown the country into turmoil. It has also caused alarm among Caribbean governments that have become dependent on discounted oil and concessionary financing under the Venezuelan-financed Petro-Caribe programme.{{more}}

The question on everyone’s mind is: what will happen with Chavez’s policies domestically, regionally and internationally, and how will change affect them?

What is certain is that there will be change, whoever succeeds Chavez, who is very ill in Cuba after undergoing surgery four times for cancer.

For the time being, the Venezuelan Supreme Court has ruled that Chavez’s swearing-in ceremony can be postponed. This means that, effectively, his party remains in power, with him as the nominal president, while the government is run by the Vice President he named before his last surgery. The vice president is Foreign Minister Nicolas Maduro.

There is a huge constitutional debate in Venezuela not only about whether the Chavez government can continue without his taking the oath-of-office, but also over who should be the acting president. Lawmakers have argued that the constitution says the Speaker of the National Assembly should be in charge. The speaker is Diosdado Cabello, who is also a member of Chavez’s United Socialist Party of Venezuela and who appears to have accepted that the government continues with Maduro in charge.

Opposition party arguments, that Chavez is not in power since his last term has ended and he was not present to be sworn-in for his new term, have been scuppered by the Supreme Court ruling, which has effectively given Chavez time to recuperate. Not surprisingly, the Opposition party leaders have described the decision of the Supreme Court as a “coup”.

Technically, the National Assembly – consisting mainly of representatives of Chavez’s party – can continue to grant him leave from the country and so not violate the Constitution. The problem will arise should president Chavez succumb to his illness while he is in Cuba. At that point, the current Supreme Court ruling would become irrelevant, and, on the face of it, the speaker of the National Assembly would have to assume the office of president and elections for the presidency would have to be held.

In the meantime, undoubtedly, vice president Maduro would seek to carry out the policies that have been put in place by president Chazev. He is in the delicate position of carrying out the duties of president without being elected president. Therefore, he will proceed cautiously. Both at home and internationally, he is unlikely to take any actions that will bring heat to the government.

For as long as president Chavez lives, countries that have become reliant on the generosity of his Petro Caribe and ALBA programmes can continue to breathe easily.

A huge problem would arise for them if the opposition parties were to win a post-Chavez election. Cuba would be particularly troubled, but so too would be those countries of the Caribbean Community (CARICOM) that joined Petro Caribe or ALBA.

The reality is that Venezuela is facing its own difficult economic circumstances and revising oil assistance programmes, such as Petro Caribe, represents a certain source of additional income. While it is true that a large-scale revision is more likely if any of the opposition parties win elections, it will also become a consideration for any new leader of Chavez’s party. Lacking Chavez’s popular standing with the mass of people, who will expect to continue to receive the benefits they did under Chavez, a new leader will be less inclined to spend money in the Caribbean that he can spend at home.

Since 2004, poverty in Venezuela has been reportedly cut by half and extreme poverty by more than 70 per cent. According to Mark Weisbrot, the co-director of the Centre for Economic and Policy Research, “millions of people also got access to health care for the first time, and access to education also increased sharply, with college enrollment doubling and free tuition for many. Eligibility for public pensions tripled; and in the past two years the government has built hundreds of thousands of houses”.

Still, the Venezuelan economy is now in real difficulty. The fiscal deficit is approaching 20 per cent (the US “cliff” was 7 per cent), inflation is in the high 30’s (compared with a Latin American average of 7 per cent), debt is rising, there is a huge black market in US dollars, and the state-owned oil industry is inefficient. According to the Financial Times, Venezuela is now importing (at a higher price) two barrels of oil refined abroad for every ten barrels of crude it sells to the US.

Caribbean countries that have benefitted from Hugo Chavez’s policies in relation to Petro Caribe and ALBA have much for which to be grateful. Without the deferred payment deal under Petro Caribe, many of their economies might have ground to a halt. They have simply not earned the foreign exchange that is necessary to pay for oil to sustain their manufacturing, agricultural and tourism industries.

But, at the same time, many of them have built-up an enormous debt to Venezuela. The full extent of that debt is not clear, but such public information as is available suggests that in some countries, it represents their single largest debt. At some point Caribbean governments will have to repay that debt, whoever succeeds Hugo Chavez as president. Caribbean governments will also have to face the reality that neither Petro Caribe nor ALBA will continue delivering benefits in their present form.

Hugo Chavez deserves the prayers of the Caribbean people in this hour of his illness. He has been a remarkable friend to the region. But, the time has come for regional governments to plan for a different Venezuela – one that will be preoccupied with fixing its internal problems, whoever succeeds Mr Chavez.

(The writer is a Consultant and Visiting Fellow, London University)

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