After the November 23 regional elections reduced the chance for a new constitutional reform, Venezuelan President, Hugo Chávez, is looking to Plan B, with his eye on the possibility of running for another term.

 

He requested the PSUV (United Socialist Party of Venezuela) to begin the necessary actions to amend the constitution that would allow him to run for unlimited reelection.  As constitutional reform is a slow process, the government strategy is to make the initiative viable by means of a constitutional amendment.

 

The argument being used by Chávez and his allies is that the future of the revolution is at stake. That is why the continuation of the current project is necessary. For this reason, the PSUV wants to make the changes possible through the National Assembly.

 

As Chávez has almost full support from the 167 members of the legislative power, it would be easier to win over the 30% of congress necessary to alter the constitution than to collect the signatures of 15% of the citizens registered in the electoral census, that is, 2,553,160 people.

 

The PSUV expects the discussion about the first amendment to take place in December, with the second to follow in January. The referendum will take place in February.

 

As the government has no alternative candidates to Hugo Chávez in facing the opposition, which showed a strong capacity for unity in the regional election, the PSUV will be relying on the constitutional change that would allow Chávez to run for another term.

 

If the government wins the referendum, the opposition will have a hard time constructing a name that carries the same political weight as that of the president.  They could only hope that the economic crisis makes the government impracticable. If, however, he is beaten, the possibility of losing the important quota of his constituency initiated in 2007 will become much clearer. 

The biggest mystery is getting to know what the relationship will be like between Barack Obama and the president of Venezuela, Hugo Chávez, who stated his preference for the Democrat during Obama’s campaign.  Different to Republicans, who have a confrontational stance in relation to the Venezuelan Head of State, Obama talks of sending a message of democratic values to Caracas, not through interventionism, but through means of cooperation.

 

Democrats believe that the mistakes made by the George W. Bush in the region gave ground to anti-democratic views expressed by Hugo Chávez in Venezuela. 

The president of Conindustria, the Venezuelan Industry Confederation, Eduardo Gómez Sigala, has said that the 15% inflation target set out by the government for 2009 is not compatible with the nation’s reality. In an interview with a local newspaper, he said that inflation will reach 35% by the end of the year. Therefore, it would be very difficult for the projected reduction to occur next year.

 

Sigala revealed that, based on the institution’s projections, Venezuela will keep relying on imports. He also questioned Finance Minister Ali Rodríguez Araque, who has projected a 6% economic growth for 2009.

 

He said that the manufacturing industry accumulates only a 3% expansion, whereas in 2007 it reached 7.5%. He also revealed that business people are convinced that the economic situation will get even more complicated and difficult by next year. According to him, growth will not be achieved unless domestic production is increased in all industries.

 

Respect to private ownership is also seen as fundamental by business people for the nation to recover. “While there is talk of investments, the government is questioning ownership rights”, said Sigala.

As the political success of the so-called “21^st century socialism” is associated to the expansion of oil exports in the latest years, international oil price drops may bring trouble to Venezuelan President Hugo Chávez. According to Financial Times, a question for those following Venezuelan politics is with which intensity oil price drops may jeopardize the nationalization-based economic model implemented in the nation.

 

Petroleum, which accounts for 95% of the country’s export income, finances half the State expenses. Thus, Chávez relies on such funds to keep his social programmes running and make up for the lack of private investment. Consequently, the Venezuelan Chief of State’s popularity depends on these programmes. According to think tank Ivad, Chávez approval rates have improved after an increase in expenses last month.

 

Financial Times quotes a presidential source as saying that basic social expenses (food, health, education) will not be reduced. If necessary, medium and long-term projects (less politically sensitive) will be diminished. 

Three engineers of the State Electric Power Company were arrested for “unjustifiable favoritism to sabotage” in the blackout which hit Venezuela last week, informed the prosecutor-general Luisa Ortega. According to sources, at press conference she said that an extensive investigation showed the responsibility of three officials from Edelca (Electrificación del Caroní). Adán Ramos, Honny Vasquez and Rodolfo Ortega, accused of “crimes of interruption of services and goods, favoring negligence to sabotage or damage,” were determined to be held at the Command of the National Guard.

Local entrepreneurs anticipate that local politics, specially in the economic area, will hurt because of the dismaying external scenario. Forecasts indicate that the financial crisis will reduce the influx of foreign currency from oil sales as a result of declining oil prices in international markets. This is likely to worsen Venezuela’s fiscal deficit.

 

In addition, local entrepreneurs anticipate a throttling supply of food in the domestic market. As if such scenario was not enough, data compiled by the Venezuelan Central Bank (BCV) show an annual inflation already at 21.8%.

 

This gloomy scenario has already caused grief in the local industry. In a recent survey launched by the Venezuelan Chemical and Petrochemical Industry Association (Asoquim), respondents stated that the industry’s production plunged by 40%.

 

The 100 companies comprising Asoquim evaluated that restricted access to foreign money, administrative bureaucracy and legal uncertainty all have negative implications on production.

 

With regard to export forecasts for the second semester, 50% of the respondents believe that exports will decrease, 27.3% said that exports will improve and 22.7% stated that export performance will remain the same. A vigilant observer of this new international environment, president Hugo Chávez has called the financial system a target and locked on it.

 

According to the Venezuelan leader, the International Monetary Fund (IMF) is to be blamed for the crisis. For that reason, says Chávez, the IMF should “dissolve itself”. 

To President Hugo Chávez, the US financial crisis is also the result of a lack of ethics and of “unjust law”. His words came during the 3rd Summit of Presidents of Judicial Branches of the Union of South American Nations, taking place on the Margarita Island, off the Venezuelan coast.

 

Due to his stance since the beginning of the global financial crisis, Chávez will use the current scenario to extend his anti-American rhetoric and domestically strengthen the idea that capitalism “is a system in crisis”.

 

Based on that, he will try to reunite his allies around the “21^st century socialism” thesis. Since Chávez’s project relies on structures rather than conjunctures, the longer the crisis sustains, the better for him. That way, he can resume the discourse that fell into disrepute after his defeat in last-year referendum.

 

However, he may experience trouble if there is a sharp fall in international oil prices. Even with domestic unity, such a scenario can bring even more alarming economic developments.

In the last three years, the Venezuelan government has spent more than $6.7 billion to buy weapons from countries such as Russia, Belarus, China and Spain. In Latin America, Venezuela is the main buyer of Russian weapons. In 2005 alone, 12 contracts were signed to buy weapons from Moscow.

 

Venezuela is the main customer of Russian weapons in Latin America. Since 2005, it has signed 12 contracts to purchase weapons from Moscow, estimated at $4.4 billion. In the latest years, Chávez bought 24 Sukhoi-30 MK2 fighter-bombers, 50 different helicopters and 100,000 Kalashnikov AK-103 rifles.

 

And there is more to the relationship between the two nations. This week, Chávez confirmed that Russia will help Venezuela develop a nuclear energy programme. The agreement may elevate US worries about the ever closer collaboration between the two nations.

 

According to Chávez, Venezuela will receive assistance to build an atomic reactor. He claims that the US and the European Union have no right to prohibit developing countries from seeking nuclear technology.

 

In a clear attempt to challenge the US, Hugo Chávez is also defending Iran’s uranium enrichment programme. Thus, the Venezuelan Chief of State is flirting with nations that, like him, are regarded as US enemies. This is important for Venezuela not to become isolated, and for nations such as Russia and Iran on their continents. 

The political presence of the French in Latin America is increasing considerably in the past years. Besides acting strongly in Brazil, where the French tries to sell jet fighters, submarines and helicopters (though possibly only the submarines and helicopters will be successful), they are now increasing the approximation with Venezuela.

 

Last week, the Minister of Foreign Affairs of both countries (Bernard Kouchner for France and Nicolas Maduro for Venezuela) signed ten cooperation treaties. The focus areas are, as expected, energy, technology, military, industrial, telecommunications and combating narcotics.

 

As part of the deal, the French will invest in the oil, gas and infrastructure sectors. As announced weeks before the visit, nuclear technology will be shared between the two nations. 

Chavez arrived in Moscow for a series of meetings intended at strengthening the Energy ties of his country and Russia. According to local sources, the military cooperation between the countries will intensify in the next months. Russia will also offer Venezuela plans to develop nuclear energy.

 

The Energy cooperation began with a contract signed between the Venezuelan government and Gazprom.

 

The Venezuela – Russia cooperation has distinct objectives for each country. Chavez wants to be the “new Cuba”, while Russia sees the approximation in a more pragmatic way. Nevertheless, Russian activities in South American are not new.

 

Foz do Iguacu, a Brazilian city in the triple frontier (Brazil, Paraguay and Argentina) a centre of piracy and smuggling, is the city in South American with the largest quantity of special agents from several countries, including Russia. Rumours about FSB agents in the area are not new.

 
Welcome! Latin America is becoming consistently more important for the world. As the region becomes more stable, the world sees Latin America as a potential business area. In order to understand te potential Latin America has to offer, the world must understand the unique dynamics that the local politics function. This blog already exists in Portuguese since 2005 and is widely read. I believe it can be an important instrument to understand this amazing region. Suggestions, criticisms and opinions are welcome. + learn more

RSS feeds

Podcasts

Popular categories

Keywords

collaborators