CARACAS, Venezuela — Venezuela faces political infighting and the risk of unrest after the death of Hugo Chávez, whose personal brand of socialism left the region’s biggest oil exporter polarized and among the world’s most violent countries.
Chávez bolstered his popularity among Venezuela’s 9 million poor by subsidizing food and housing, expanding education and health care, and halving poverty. As government control of the economy spread, Chávez’s critics blamed the nationalization of more than 1,000 companies or their assets, currency controls and price caps for discouraging investment, creating food shortages and fueling inflation.
The former paratrooper’s death after 14 years in office opens a void, even after the cancer-stricken leader in December urged supporters to elect Vice President Nicolas Maduro to succeed him if he couldn’t fulfill a term that began Jan. 10.
“He dominated politics so thoroughly that it is impossible to forecast what comes next,” said Peter Hakim, former president of the Inter-American Dialogue in Washington, D.C. “He was the commanding political presence, virtually the only governing authority in the country.”
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Since Chávez, who was 58, was first elected in 1998, he set himself at the center of all state decisions, big and small. On his weekly television program he might call for the nationalization of a company, announce a change in the currency, order troop movements or praise the virtues of home gardening. He could harangue ministers, discuss foreign policy and slap hands with union workers in monologues that lasted as long as six hours.
“Wave of oil wealth”
“Chávez fed off and expanded the corporatist myth that prosperity can result from loyalty to one man,” said Stephen Johnson, director of the Americas Program at the Center for Strategic and International Studies in Washington, D.C. “He rode the wave of oil wealth, repeating the old saying that ‘Venezuela is rich, you can be too.’ ”
Since Chávez announced he had cancer in June 2011, investors have speculated that his departure could pave the way for the opposition to win power and introduce more market-friendly policies.
Venezuela’s dollar bonds returned 46 percent last year, the best of any emerging market after the Ivory Coast, according to JPMorgan Chase’s EMBI Global index.
The cost to insure $10 million of Venezuelan debt against default for five years tumbled to $468,461 on March 5 from $1,082,996 on Oct. 6 before Chávez’s re-election and return to Cuba for cancer surgery, according to data compiled by Bloomberg.
Venezuela’s foreign minister said Tuesday that Maduro will serve as interim president and that elections will be called within 30 days, as required by Venezuela’s constitution.
Foreign Minister Elias Jaua also told the Telesur network that Maduro, who has led Venezuela since Chávez missed his Jan. 10 inauguration, would be the candidate of the governing Socialist party.
Maduro, a 50-year-old former bus driver and union leader who served as Chávez’s foreign minister for more than six years, will face an opposition weakened after regional elections in December in which they lost five of eight governorships.
Miranda state Gov. Henrique Capriles Radonski, who lost his presidential bid to Chávez by more than 10 percentage points in October, may be the strongest candidate against Maduro. If elected president, Capriles would have to work with a national assembly dominated by Chávez’s PSUV party, a central bank devoid of autonomy, a judiciary filled with Chávez allies and a politicized military establishment.
Should the opposition gain power, Venezuela, which holds the world’s largest technically recoverable crude reserves, may see an influx of foreign investment into the oil industry, said Bret Rosen, a Latin America strategist at Standard Chartered Bank in New York. Investors, who struggle to repatriate dividends under Chávez’s currency controls, will be more cautious about committing to other sectors until it is clear the new government plans to dismantle those policies, he said.
The United States will probably have better relations with Venezuela regardless of who leads the South American country, U.S. Assistant Secretary of State Roberta Jacobson said in a Dec. 11 interview.
Effect on Cuba
Chávez’s death may hurt the economies of Cuba and other allied countries. The son of poor schoolteachers, Chávez often spoke of fulfilling the dream of his hero, South American liberator Simon Bolivar, of uniting the region.
Beneficiaries of programs such as Petrocaribe, which allows countries to acquire Venezuelan crude with long-term financing, may lose out, said Giovanna de Michele, a professor in international relations at the Universidad Central de Venezuela.
The Petrocaribe program, which allows its 18 member countries to take out 20-year loans with an interest rate of 1 percent to 2 percent, has sent oil shipments worth more than $14 billion since 2005, Oil Minister Rafael Ramirez said last year.
Chávez’s relationship with former Cuban President Fidel Castro, whom he described as a father figure, helped Cuba win a supply of cheap oil after the communist island lost its benefactor after the collapse of the Soviet Union. Venezuela delivers 97,000 barrels of oil a day to Cuba, which the government repays by sending doctors to work in community clinics in Venezuela.
Regardless of whether Chávez’s party remains in power, the influence he exerted over Venezuela will continue through supporters in the judiciary, Congress and the armed forces. While the style of government would change if the opposition takes over, Chávez’s focus on social issues will live on, said Gregory Weeks, a professor of Latin American studies at the University of North Carolina in Charlotte.
“It took years for the opposition to realize that a lot of what Chávez did, Venezuelans liked,” he said. “The emphasis of the state’s role in the economy is something that will be long-lasting.”