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Venezuela & Chávez

In Venezuela: Chávez or chaos

By Francisco José Moreno
September 13, 1999

Recent events in Venezuela must be puzzling to most Americans. President Hugo Chávez, an ex-paratrooper who spent time in jail after a failed coup attempt in 1992, swept his way into the presidency last December and now is dismantling the political system that brought him to power.

At first sight Mr. Chávez's actions appear all but democratic. After his coalition won 90 percent of the seats in the constitutional assembly last month, it sacked the congress and took control of the judiciary. The new administration seeks to reform the government by rewriting the Constitution. While his critics are crying foul and calling him a dictator, we cannot forget that Chávez inherited a profoundly corrupt system. And while his aggressive moves are not the most democratic, more than 70 percent of Venezuelans support his actions.

The key to success is for the constitutional assembly to rewrite the Constitution quickly - with more effective democratic checks and balances - and reassure the international business community.

Chávez should be given an opportunity to do this, because the alternative - given the mood of Venezuelans - is not a return to the old system, but chaos.

Venezuela has gone from riches to rags in record time. Politically it has functioned as a two-party system since 1958 with the left-of-center Acción Democrática (AD) party, and the COPEI (Christian Democratic) alternating in power. Government corruption was never a stranger to Venezuelan politics, but up to the 1980s it seemed to coexist with a commitment to public good. With oil, iron ore, aluminum, gold, diamonds, coffee, rice, and cotton in an area larger than Texas and Oklahoma combined, the country has resources to provide a decent living and education for its population of 23 million. Until the 1980s, social policies supported by both parties enabled the middle class to grow.

But things began to change rapidly during the late 1970s and early 1980s, when the parties began to cut social programs and open the economy to privatization and foreign competition. This environment caused many small businesses to fail and allowed corruption to grow exponentially.

In 1988, a watershed in the political and economic unraveling of the country occurred when Carlos Andrés Pérez, the AD candidate, was elected president for the second time. Ten years earlier, Mr. Pérez had ruled the country as a populist in the traditional Venezuelan mode of social programs cum corruption. This time he was a changed man - or a half-changed man. While retaining corruption, he parted ways with the historical dedication of his party to social programs, and became a convert to the dogma that unfettered markets are a universal recipe for national prosperity.

Meanwhile, as corrupt politicians abandoned any sense of collective responsibility and their main goal became their private enrichment, and as political differences between the two leading parties began to blur, the government effectively ceased to represent the interests of the Venezuelan people.

These dynamics were fatal to the economy. According to the United Nations, the proportion of Venezuelans living in "dire poverty" in 1986 had doubled from 1983 to 22 percent; and by 1992, an estimated 57 percent of Venezuelans could afford only one square meal a day. Today, about 80 percent of the country's population lives below the poverty line.

In 1992, two failed military coups took place. The one that came closer to succeeding was led by then-Lieutenant Colonel Chávez. Pérez survived the coups, but when he was caught with his hand in the till, he was removed from office and jailed. The system was so corrupt that even his punishment was more an act of power-grabbing and retaliation by political enemies than an act of justice.

The downward spiral of government corruption and popular anger continued under the next administration. Rafael Caldera, of the COPEI party, failed to deliver on his election promises of economic reform and sanitizing public life. The Caldera administration presided over a banking crisis five times larger than the US savings-and-loan debacle, and saw the disappearance of billions of dollars from the public employees' retirement fund.

With a political system in which Venezuelans have no effective recourse through electoral or judicial processes, dismantling the old order offers the only realistic chance of success - even with the risk of arbitrary rule. The incentives are strong for the Chávez administration to move quickly into a pluralistic system.

Since mid-1998, when it became clear he could win the election, $5 billion has left the country, and the consequent economic contraction has wiped out 600,000 jobs. The government walks a dangerous economic tightrope. It needs revenues to improve the economy, but measures to restore political order scare off investors and lenders. Chávez must walk this tightrope - because the only alternative is chaos.

The new government must implement its reforms, write its constitution, and set the basis for a new democratic system quickly. And the international business and political communities must realize Chávez is the best alternative at the moment, and they must give him a chance.

# Francisco José Moreno is president of the Center for Advanced Political Studies, in San Francisco.


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