President Hugo Chávez now reigns as the undisputed political king of Venezuela after winning a national referendum Sunday that could allow him to serve as the elected president of this oil-rich nation for life.
Opposition leaders had high hopes after they defeated Chávez’s first attempt to scrap term limits in December 2007 and then held him to a draw in November’s regional elections. They conceded defeat in the latest referendum, however, and were left to complain Monday that Chávez had abused his power by using state money and government workers to win 54 percent of the vote to abolish term limits.
From the balcony of the presidential palace Sunday night, Chávez claimed a mandate to continue transforming Venezuela into a 21st-century socialist state, as thousands of supporters below roared their approval. He declared that he’d be a candidate in the 2012 elections, eliciting more roars.
Before Chávez can focus on seeking another six-year term in 2012 and perhaps others beyond, however, he faces a coming crisis that could imperil his ambitious plans. The global economic crisis and the 75 percent drop in oil prices are expected this year to halve Venezuela’s oil income, the country’s economic lifeblood.
Along with his charisma, Chávez’s continued popularity has depended on showering billions of dollars in oil income on his poor supporters in the form of free medical care, apartments and schooling for adults, and subsidized prices for food. Not surprisingly, he didn’t rein in the spending in the weeks leading up to the referendum, despite the plummeting oil revenues.
Economic analysts, however, think that Venezuela’s bill is coming due — if not late this year, then early next year — unless Chávez reduces spending and devalues the bolivar, the country’s currency.
Either way, predicted Pedro Palma, a Caracas-based economist, this year Chávez will have to confront the twin evil of stagflation: inflation and stagnant economic growth. After the economy grew by 4.9 percent in 2008, Palma thinks that it will shrink by 1.7 percent in 2009, while inflation will rise from 31 percent to 45 percent.
In a sign of the impending problems, Petroleos de Venezuela S.A. — the state oil company, better known as PDVSA — is running up tens of millions of dollars in unpaid bills to contractors.
Chávez seems to have two choices: He can maintain spending, betting that Venezuela has sufficient foreign reserves — thought to be about $30 billion — to cover his needs until oil prices rise again or he can begin to impose unpopular austerity measures.
Saul Cabrera, a Caracas-based pollster, predicted that the president will keep his foot on the spending accelerator.
”He’ll blame the economic elite for the country’s problems,” Cabrera said.
In the past, Chávez also has blamed problems on the United States, but that appears to be more difficult with the change of administrations in Washington. While poor Venezuelans reviled President George W. Bush and the Iraq invasion, they express delight that a dark-skinned man now occupies the White House.
Apparently in recognition of this, Chávez said Saturday that he was open to speaking with President Barack Obama to try to mend tattered relations between Venezuela and the United States.
The onrushing economic problems could produce an especially hard landing for Chávez supporters because he has yet to prepare them for what’s to come. Among a dozen supporters who were interviewed Sunday, not one seemed aware that the economy is headed for a nose dive.
Source: miamiherald.com
