Venezuela

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General

Wikipedia entry for Venezuela


Political Situation and Relations with the US

The current Venezuelan government, headed by Hugo Chavez, has an uneasy relationship with the Bush Administration. In April 2002, a coup against Chavez seemed successful, and Bush was quick to congratulate the new "president", Pedro Carmona Estanga, installed by the coup. However, within less than 48 hours the coup was overturned following massive popular mobilisation and Chavez re-installed as president. The Bush Administration subsequently, through the National Endowment for Democracy, supported the opposition in a recall election attempt. Hugo Chavez survived the Recall Election, held August 2004. The result, even if approved by the OAS and the Carter Center, has been largely questioned. subsequent elections have been shown to hold many problems as duly reported in European Union and OAS reports. If these do not seem to contest Chavez electoral victories it remains that the margins reported are questionable.

In October 2004 chavismo won all but 2 State Houses. In 2005 a dispute over election rule resulted in the opposition withdrawing from the legislative election. This yielded a 100% pro Chavez National Assembly. In December 2006 Chavez was reelected with a 63% vote against a 37% for Manuel Rosales, the Zulia governor.

In January 2005, during Senate Confirmation Hearings of Condoleezza Rice as Secretary of State, Rice indicated, in response to various Senators' questions, that the Bush Administration still considers Chavez a problem, despite his status as a democratically-elected leader.

The relations with the US have been deteriorating since. The return of a Democratic Congress has not changed the panorama as recent unanimous decisions condemning the RCTV closing have been taken. Democrats and Republicans alike are more and more concerned about Venezuela becoming an unreliable source of oil, not to mention an active anti US agenda promoter in South America. Even if the recent tour of Bush should have assuaged some of these fair (he was well received in Uruguay and Brazil) the concern now exists and is bi-partisan.

Reawakening of the opposition

Since his reelection in December 2006 Chavez has started a deep radicalization of his policies that was not expressly considered in his electoral programs. Besides considerable constitutional changes that woudl include indefinite reelection for the president, the Chavez administration has undertaken to assert more control over the different aspects of the country, from its economic agents to the media.

The most noteworthy measure so far has been the closing of RCTV, the oldest network in the country and an outspoken critic of the Chavez administration. Beyond any possible conspirative participation against Chavez in the past years, the fact remains that RCTV was closed without due process, simply after Chavez announced that the concession woudl not be renewed.

The result of this arbitrary decision has been a rekindling of an opposition that all considered tamed once and for all. Since May 27 a consistent student unrest and displeasure of the RCTV closing has breathed a new life in the anti Chavez movement as for the first time basic liberties are threatened outright: liberty of information does not exist anymore as ONLY pro Chavez networks have a national coverage on the air waves, opposition media having to rely on cable which only reaches at best half of the country. This in turn is a clear threat to freedom of expression as the venues to express dissent with chavismo are narrowing. As a result even the pollsters who predicted Chavez victory in December 2006 are now showing a dramatic drop in his popularity and an even stronger drop in the programs he has embraced.

Further chronic instability is to be expected.

Effects of Chavez's Economic Policy

In 2004 Venezuela had the fifth highest economic growth in the world, 16.8%, according to the CIA. Other sources state 17.3%. However this number was largely due to a rebound from the deep recession of 2002-2003.

Source: CIA World Factbook: Rank Order - GDP - real growth rate

The economic growth has continued since, at a strong pace. However it is fueled mostly by high oil prices. The sectors growing the most in Venezuela are the banking sectors, and the importation and distribution of food items and manufactured goods. Thus the economy remains fragile as it is more dependent than ever on importations to satisfy the needs for the country. As of late 2006 sporadic shortages on some food items have become the norm, with rather noted absences such as refined sugar or beef.

Inflation has remained stubborn and the government has consistently failed to achieve its reduction goals. In fact the real inflation in Venezuela is not well known as there is a strong price control system which distorts the economy and stops the Central Bank to publish the real inflation numbers. For 2007 the final inflation is expected to reach 20%, or more, which woudl place Venezuela again as the Latin American country with the highest inflation, by far. Only Argentina, with similar price controls and currency exchange controls suffers from a comparable inflation.

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