Stanford EDGE 297A - Venezuela - A Country Divided- The Role of President Hugo Chaves

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Nicole Powell PowellProfessor LusignanEDGE 297A1 December 2004Venezuela—A Country Divided: The Role of President Hugo ChavezIntroduction Venezuela is a late bloomer in regard to having complete independence and in terms of running its own democratic government. Right now, the Venezuelan people are in the midst of the same debate that has historically plagued countries all over the world; the country is torn between class lines and is another classic example of the haves versus the have-nots. Caracas is the capital and the Andes region is home to two-thirds of the population. Mestizos make up 67% of the population, with 21% descending from white Europeans (primarily Spanish and Portuguese), blacks are 10%, and Amerinds are 2%. Unfortunately, the middle class has declined by as much as 25% since the mid-1980s and roughly one million people have slipped into the lower middle class or poverty (Venezuela Background). Under the stresses of economic decay, government corruption, and increasing poverty, the government structure has struggled through an increased number of political party groups, increased military involvement, and a high turnover rateof political leaders. The country's leadership has stemmed from Spanish descendants and those of the ruling class since Venezuela broke away from Spain and became an independent nation in1830. For the majority of Venezuela's history, the government has been under the control1Powell of the upper and middle class citizens. However, for the first time in its history, Venezuela is under the leadership of a president, Hugo Chavez, who is in favor of immense social reform for the poor. The current state of Venezuela is bitterly divided in an all-out class war, where most of Chavez's support comes from the poor and the opposition’s support comes from the middle and upper class (Wilpert 175). On April 11, 2002, Chavez was forced out of office by a military coup. In support of this tumultuous political tactic, along with the upper class, were the both the Venezuelan and U.S. media, and the U.S. government; examining their interests is the key to understanding why these groups are against Chavez and what hand they played in helping an undisciplined regime coordinate the coup. Furthermore, a look at the country's economic structure, its historical political leadership, Chavez's political stances, and the role of the media will help us to understand what has led Venezuela to this point of extreme division and political chaos. EconomyVenezuela is one of the top ten producers of oil in the world and has become dependent on the country's primary export product. Although Venezuela possesses a lot of power due to its oil production for the international market, the Venezuelan economy isdrastically affected by the world market's demand and price. A common theme in Venezuelan economic development has been the call to “sow the petroleum,” meaning to use the revenues and comparative advantages that petroleum brings to support 2Powell government programs and other sectors of the economy. Since oil became the nation's number one export in 1925, until international petroleum prices plummeted in 1986 (a period during most of which Venezuela was the world's leading exporter), the nation was blessed by nearly steady economic growth (Ellner 7). Any decline in global commodity prices, as in the 1990s, places the government under stress because Venezuela does not receive sufficient revenue to make progress before prices drop. The government often resorts to borrowing money to prolong or speed up progress, and in borrowing money becomes even more dependent on its exports to generate the funds to pay the country's debts (Ellner 2). Due to the instability of relying on its exports, Venezuelans have developed an unhealthy system of capitalizing on the here and now for personal progress and not waiting for the unsure future. Both the pattern of success and lack thereof, of theability of the government to provide public services is in direct correlation with the worldmarket's demand and price for Venezuela's oil.Political HistoryIn 1958, the first popularly elected president to complete his term, Romulo Betancourt, implemented a crude form of democracy that guaranteed economic distribution to all classes. From 1958 until the end of Andres Perez's first term in 1978, Venezuela's economic performance was characterized by steady growth. Oil rents provided a stable flow of income, which was distributed by the state to promote national development and to meet the extensive welfare obligations established in the 1961 3Powell constitution. The strategy of achieving modernity through the "sowing" of oil revenues was underpinned by a tradition of state intervention. This approach allowed for major improvements in social indicators after democratization in 1958. The expanded public sector generated employment, while low rates of inflation facilitated real income growth. This economic scenario created a favorable economic environment that supported the centrist parties in charge, Accion Democratica (AD) and Comite de Organizacion PoilticaElectoral Independiente (COPEI). With rent distribution holding out the possibility for all the benefit materially, class cleavages were muted and not subject to politicization, despite the efforts of the revolutionary left. Petroleum was responsible for more than halfof government revenues in every administration, reaching a high of 75% during the boom years of the mid-1970s when Perez was president and AD controlled Congress. Because petroleum exports were so central to the economy and because their profits accrued to the state, the government always took in funds equivalent to at least 20% of the national output (Crisp 157). In 1973, Venezuela significantly prospered as the Organization of Petroleum-Exporting Countries (OPEC) and turmoil in the Middle East combined to increase the oil price tenfold. These changes coincided with the nationalization of the Venezuelan oil industry in 1976, increasing central government revenues by 170 percent. A public spending increase of 96.9 % between 1973 and 1978 allowed for excellent public services and extensive job opportunities; which in turn led toa reduction in poverty (Ellner 115). 4Powell Starting in 1980, a sustained decline in oil prices and a hike in


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Stanford EDGE 297A - Venezuela - A Country Divided- The Role of President Hugo Chaves

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