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What Next for Venezuela?

Economic Woes, Political Gridlock Are Seen Likely to Linger

By Mary Beth Sheridan
Washington Post Staff Writer
Wednesday, August 18, 2004; Page A13

CARACAS, Venezuela, Aug. 17 -- President Hugo Chavez is riding high after his overwhelming victory in a recall vote this week, but analysts say his triumph may have limited impact on the deep economic and political problems threatening this major oil-producing country.

Chavez, a charismatic former army officer, emerged with greater legitimacy from the balloting, in which nearly 60 percent of voters rejected a bid by the political opposition to end the president's term two years early. Chavez also is benefiting from recent economic growth and soaring oil prices.


Venezuelan President Hugo Chavez emerged stronger, at least in the short term, from Sunday's referendum, in which nearly 60 percent voted against his removal. (Marcelo Hernandez -- AP)

_____World Opinion_____
Chavez, Poor Man's Survivor: post.com's Jefferson Morley mines foreign press for views on the recall referendum vote.
Discussion Transcript
_____Road to Recall_____
Timeline: Events in Venezuela that led to the recall referendum on President Hugo Chavez.
_____From Venezuela_____
Video: Footage From Venezuela (The Associated Press, Aug 16, 2004)
Turnout Massive In Venezuela's Vote on Chavez (The Washington Post, Aug 16, 2004)
Chavez Upbeat Before Historic Vote to Oust Him (The Washington Post, Aug 13, 2004)
Building Loyalty and a Legacy (The Washington Post, Aug 12, 2004)
More News
_____Desde Washington_____
Discreet Charm of the Status Quo: In Venezuela, citizens are caught between the benefits and perils of both change and stability.
_____From Venezuela_____
Video: Footage From Venezuela (The Associated Press, Aug 16, 2004)
Turnout Massive In Venezuela's Vote on Chavez (The Washington Post, Aug 16, 2004)
Chavez Upbeat Before Historic Vote to Oust Him (The Washington Post, Aug 13, 2004)
Building Loyalty and a Legacy (The Washington Post, Aug 12, 2004)
More News

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Although the opposition initially alleged that the recall referendum was tainted by fraud, international observers said they detected no irregularities. Venezuela's National Elections Council, however, agreed Tuesday to audit the results from 150 polling sites, said former president Jimmy Carter, who led an international observer team.

On Tuesday, the U.S. government and leaders of 10 countries in the region publicly recognized the result. "The people of Venezuela have spoken," said State Department spokesman J. Adam Ereli.

Nonetheless, the country's political gridlock appears likely to continue. And even with oil prices at record highs, analysts question whether Venezuela will be able to adopt a course leading it out of a quarter-century of economic decline.

"It's very difficult to develop a country with two clashing visions of its future," said Ana Maria Sanjuan, a social psychologist at the Central University of Venezuela.

Since he was first elected in 1998, Chavez has sought to tighten his control over key institutions and use the country's oil wealth to benefit the poor. His critics, who include much of the country's business establishment, have been unnerved by Chavez's fervent support for Cuba's Fidel Castro and what they call Chavez's authoritarian style.

The opposition has tried to oust Chavez through a variety of means, including a short-lived coup in April 2002 and a three-month general strike starting in December 2002 that temporarily crippled the oil industry.

The Bush administration is no friend of Chavez, who has launched frequent anti-American tirades. But the U.S. government is concerned about possible instability in Venezuela, the third-ranking supplier in total of crude oil and refined products to the United States, after Canada and Mexico. Oil prices on the New York Mercantile Exchange dipped after Chavez's victory was declared on Monday.

"The market has reacted positively to Venezuela for one reason: They see a little more stability. They know Chavez will likely continue," said Roger Tissot, director of the PFC Energy consulting firm in Washington.

While nervousness subsided in the energy markets, analysts questioned when Venezuela's state-owned oil company will be able to fully recover from the general strike. The government says production has returned to its previous level of 3 million barrels of oil a day, but analysts say they believe output is about a half-million barrels below that.

Petroleum is the mainstay of the Venezuelan economy, the industry that fueled the country's rapid development from 1940 to 1980. But declining per-capita oil revenue and economic and political mismanagement have contributed to a decades-long slump in this country of 25 million.

Key to economic growth is a resolution of the country's severe political turmoil. Venezuela was once considered a model in Latin America, with a two-party democracy founded in 1958 that endured while much of the region was ruled by military dictatorships.

But that system collapsed as the economic decline pushed a growing number of people into poverty and desperation. Hoping for the return of a golden era when the country was nicknamed "Saudi Venezuela," many citizens decided that traditional politicians had botched the country's development while enriching themselves.


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