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Venezuela is oil. Venezuela provides the United States with about 15 percent of its oil, the third largest supplier behind Saudi Arabia and Canada. The Government of Venezuela has opened up much of the hydrocarbon sector to foreign investment, promoting multi-billion dollar investment in heavy oil production, reactivation of old fields, and investment in several petrochemical joint ventures. Almost 60 foreign companies representing 14 different countries participate in one or more aspects of Venezuela's oil sector. The Venezuelan national oil company Petroleos de Venezuela, S.A. (PDVSA) and foreign oil companies have signed 33 operating contracts.

Hugo Chavez Frias, an avid admirer of Cuba's Fidel Castro, once remarked, on one of his many visits to the Cuban capital, Havana, that the two countries were sailing towards what he called "the same sea of happiness". Ever since then, the accusation that Venezuela's leftist president wants to copy Fidel Castro's communist system has been a constant of opposition speeches and rallies. Fidel Castro is a very good friend of Hugo Chavez, who he visits frequently. To Venezuela's entrenched elite, Chavez is a palurdo, a lower-class wannabe upsetting the old order.

The US initially adopted a "wait and see" posture in the aftermath of Hugo Chavez's landslide victory in Venezuela's presidential elections. But by 2002 George Friedman, chair of the intelligence organization, Stratfor, suggested that Venezuela's Hugo Chavez was next on Bush's military agenda. "You've got a team in the White House that is unafraid of world public opinion because they know it is unreliable, self-serving and hypocritical.'' he said.


Since the overthrow of Gen. Marcos Perez Jimenez in 1958 and the military's withdrawal from direct involvement in national politics, Venezuela has enjoyed an unbroken tradition of civilian democratic rule.

In 1989, the prevailing political calm was shattered when Venezuela experienced rioting in which more than 200 people were killed -- the so-called Caracazo, in response to an economic austerity program launched by then-President Carlos Andres Perez. Subsequently in February 1992, a group of army lieutenant colonels led by future President Hugo Chavez mounted an unsuccessful coup attempt, claiming that the events of 1989 showed that the political system no longer served the interests of the people.

A second, equally unsuccessful, coup attempt by other officers followed in November in 1992. Lieutenant-Colonel Hugo Chavez led the unsuccessful military coup in 1992 against the democratic government in Caracas. That effort earned him two years in prison.

Hugo Rafael Chávez Frías was born in the town of Sabaneta, State of Barinas, Venezuela, on 28 July 1954. The son of provincial schoolteachers, he is what Venezuelans call a bachaco, a man of mixed race. Accepted into the Venezuelan Military Academy in 1971, he obtained a College-level degree in Military Sciences and Arts, Engineerign Branch, Ground Specialty. Graduating as a Second Lieutenant on 05 July 1975, he began a quick ascent through the ranks of the army. In 1982, he joined other young officers in forming the "Bolivarian Revolutionary Movement," named for Simon Bolivar, the 19th century father of Venezuelan independence. The young officers were nationalists angered by the corrupt, two-party system that had dominated their country for generations.

In 1993 Congress impeached Perez on corruption charges. Deep popular dissatisfaction with the traditional political parties, income disparities, and economic difficulties were some of the major frustrations expressed by Venezuelans following Perez's impeachment.

When Chavez got out of prison in 1994, he began campaigning with his Movimiento V Republica [MVR], and Castro gave Chavez a hero's welcome when he visited Havana that year. In 1998 the Movimiento al Socialismo party announced its support for Chavez's presidential bid, and a group of leftist parties allied around his MVR won 34 percent of the seats in Congress.

Hugo Chavez won the presidency in December 1998, after campaigning for far-reaching reform, constitutional change, and a crackdown on corruption. Chavez won by a landslide margin that left the two-party system that had previously dominated national politics in ruins. Until the 1998 elections, the Democratic Action (AD) and the Christian Democratic (COPEI) parties dominated the political environment at both the state and federal level. His programs alienated much of the upper and upper-middle class while retaining the enthusiastic support of poorer Venezuelans. His platform called for the creation of a National Constituent Assembly to write a new constitution for Venezuela. Chavez's argument that the existing political system had become isolated from the people won broad acceptance, particularly among Venezuela's poorest classes, who had seen a significant real decline in their living standards over the previous decade and a half. The National Constituent Assembly (ANC), consisting of 131 elected individuals, convened in August 1999 to begin rewriting the Constitution. In free elections, voters gave all but six seats to persons associated with Chavez's movement. Venezuelans approved the ANC's draft in a referendum on 15 December 1999.

With a new Venezuelan constitution adopted in 1999, the country renamed "the Bolivarian Republic of Venezuela." There was a new presidential election that Chavez won, and allowed him to stay in power for six more years. On 30 July 2000 Hugo Chavez won reelection with 60% of the popular vote. The national election, the fifth in 18 months, pit Chavez against his 1992 military coup d'etat comrade, Francisco Arias Cardenas. Mr. Chavez' Patriotic Pole party also won a controlling majority in the country's new unicameral legislature. Chavez' six-year term runs through 2006, but Venezuela's constitution allows for a referendum at the mid-point of his term in August 2003.

Chavez opponents say the nation's economic problems began when he took office and started implementing a leftist strategy that they say is modeled after the Cuban communist system. Mr. Chavez has openly praised Cuban President Fidel Castro and has sold oil to Cuba at preferential prices. President Chavez constantly speaks of his government as "revolutionary," though he was elected democratically.

Chavez continues to deride his opponents in public. He calls them coup-plotters, and accuses them of trying to re-establish a system of government that favors the wealthy classes. He rejects what he calls the "neo-liberal" policies of past governments, and also condemns the "capitalists" and "oligarchs" who privatized some industries. There are vast gaps between rich and poor in Venezuela. Too many in the elite are enmeshed in political corruption.

In early 2000 Hugo Chavez created a stir in Bogota upon declaring that he wished to reach an agreement with the Colombian guerrillas in order to prevent their moving into Venezuelan territory.

On 10 August 2000 Venezuelan President Hugo Chavez made the first visit by a foreign head-of-state to Iraq since the Gulf war 10 years ago. The visit was part of a tour by the Venezuelan president of major oil exporting countries prior to an OPEC summit in Caracas on 27 September 2002. The Venezuelan president met with Iraqi President Saddam Hussein, during which they criticized Western pressure on the Venezuelan leader to cancel his visit. The Iraqi news media hailed the visit as a breakthrough and a weakening of the international isolation of Iraq. The visit was part of a tour by the Venezuelan

In October 2001, the US State Department recalled Ambassador Donna Hrinak for "consultations" after Chavez criticized the US war in Afghanistan as "fighting terror with terror" and met in Tripoli with Libyan leader Moammar Gaddafi. By November 2001, communications between US officials and dissident officers had become so frequent that Ambassador Hrinak took the unusual step of asking the American military attache to cease contacts with the dissidents.

In December 2001 the first national strike against Chavez, lasting just one day. This successful strike united workers with businessmen and allowed the opposition to discover its strength as a political presence. However, Chávez did not recognize the strike and reinforced his original style, repeatedly calling the year 2002 as "the year of his revolution's consolidation".

After a period of modest economic growth in 2000 and 2001, the Venezuelan economy entered into recession in 2002. A loss of business confidence and the devaluation of the Venezuelan Bolívar started the country's economic downturn. Political conflict, particularly the nationwide strikes last December and January, further compounded the dire situation of the country's economy. As a result, Venezuela's real gross domestic product (GDP) in 2002 fell by an estimated 8.9%.

April 2002 - The Coup

In February 2002, Chavez fired retired general Guaicaipuro Lameda from his post of President of the government-owned oil company, Petroleos de Venezuela, and replaced him with a former Communist Party militant. Protesting Chavez's actions, officials and workers at the company launched a production slowdown. On 11 April 2003, the third day of the strike, about 200,000 people marched in Caracas, calling on Chavez to resign. The march began peacefully but degenerated into violence, with a group of Chavez supporters opening fire with handguns. In all, 15 people were killed. The "massacre," as Chavez opponents called it, gave the military the moral authority to break with the president.

On 11 April 2002 the head of Venezuela's National Guard said the military had taken control of the country from President Hugo Chavez. In a televised address, Gen. Alberto Camacho Kairuz said the Chavez administration had "abandoned its functions" and the armed forces chief of staff, Gen. Bernabe Carrero Cubero, said that military leaders had asked the president to resign and call for new elections. The country's richest business leaders, its largest labor confederation, its top military men and its most influential media had joined forces against Chavez.

Chavez returned to power on 14 April 2002 following the collapse of the coup leadership in the face of an emotional outpouring from supporters in slums and towns across the country. President Chëvez's comeback left Washington looking rather stupid. The national security adviser, Condoleezza Rice, didn't help that impression when she cautioned the restored president to "respect constitutional processes."

The Inter-American Democratic Charter is an Organization of American States' agreement to condemn and investigate the overthrow of any democratically elected OAS member government and, if necessary, suspend the offender's membership. The charter was approved by the 34 OAS member nations in Lima, Peru, on 11 September 2001. Washington's lack of commitment to democracy in the region had been made clear by the response to the Chavez coup attempt. Over the past decade, previous Administrations had reacted promptly in similar situations in Paraguay, Ecuador, Peru and Guatemala -- publicly calling for an adherence to the rule of law. This time around, the US reaction was muted, first accepting Chavez´s ouster, then embracing the coup leaders, and finally accepting the lead of the OAS to condemn the coup. In previous crises, the US rallied other countries around the hemisphere.

In the months before the coup, the US Embassy in Caracas had sought to distance itself from coup rumors. US Ambassador Donna Hrinak, took the unusual step of asking the American military attache to cease contacts with the dissidents. But Washington's signals to Chavez's opponents had been open, and at the highest levels. On 05 February 2002 testimony before the Senate Foreign Relations Committee, Secretary of State Colin Powell expressed concern "with some of the actions of Venezuelan President Chavez and his understanding of what a democratic system is all about." Similar remarks were made that same day by CIA director George Tenet. The opposition felt it had the green light from Washington to remove Chavez from power.

There were published reports that suggested that the US military provided intelligence or other assistance to the Venezuelan military as it conducted this coup. There were reports that Navy vessels carrying out exercises off Venezuela's Caribbean coast engaged in strategic communications jamming during the days of the coup. Immediately after the ouster, White House spokesman Ari Fleischer suggested that the administration was pleased that Mr. Chávez was gone. "The government suppressed what was a peaceful demonstration of the people," Mr. Fleischer said, which "led very quickly to a combustible situation in which Chávez resigned."

Within hours of the coup, Otto Reich, the assistant secretary for Western Hemisphere affairs, summoned a number of Latin-American ambassadors to his office and told them that Chavez had resigned and he urged them to support the new government. Reich reportedly phoned Venezuelan coup leader Pedro Carmona the day he took over as interim president, pleading with Carmona not to dissolve the National Assembly, which He said would be "a stupid thing to do," and would provoke an outcry. Subsequent reports suggest that this phone call was made by the US ambassador.

Otto Juan Reich, the State Department's assistant secretary for Western Hemisphere affairs, and Rogelio Pardo-Maurer, Reich's counterpart at the Defense Department, met with Venezuelan leaders of the coup during preceeding months. Pardo-Maurer was an aide to the head of the Contras when they were waging their US-backed war against the elected leftwing Sandinista government in Nicaragua. Reich was a key player in the Iran-Contra scandal. In the mid-1980s ran the State Department's Office of Public Diplomacy for Latin America and the Caribbean. Since Reich is a hard-line anti-Castro Cuban immigrant with a long history of covert activity, speculation spread that that he - along with other veteran cold warriors - helped stage-manage the Venezuelan coup.

On 16 April 2002 Victoria Clarke ASD (PA) was asked for the record whether or not the US military provided any intelligence and other support to the Venezuelan military when they were conducting the coup against President Hugo Chavez? Clarke reponded that "We wouldn't talk about any intel. matters, but I can say emphatically that we had somebody from our policy shop who met recently with the chief of staff, who made it very, very clear that the U.S. intent was to support democracy, human rights, that we in no way would support any coups or unconstitutional activity." The meeting took place between the assistant secretary of Defense for Western Hemisphere Affairs, Roger Pardo-Maurer and General Lucas Romero Rincon, chief of the Venezuelan high military command, on 18 December of 2001.

The United States suggested that Chavez's increasingly autocratic governing style was largely responsible for provoking the popular discontent that resulted in his brief ouster. Regional leaders criticized the Bush Administration when Mr. Fleischer blamed President Chavez for provoking the coup that briefly drove him from power after his supporters fired on protesters. When President Chavez returned to office two days later, Mr. Fleischer said the Bush Administration repeatedly told opposition leaders that they would not support a coup. Asked her reaction to the brief ouster, National Security Advisor Condoleezza Rice said "I hope that Hugo Chavez takes the message that his people sent him that his own policies are not working for the Venezuelan people... "

A senior State Department official emphatically denied that the United States in any way supported a coup to oust Venezuelan President Hugo Chavez. "Let me now say, categorically: the United States did not participate in, inspire, encourage, foment, wink at, nod at, close its eyes to, or in any way leave the impression that it would support a coup of any kind in Venezuela," said Ambassador Lino Gutierrez, Principal Deputy Assistant Secretary of State for the Western Hemisphere. "In all our meetings with Venezuelans in the government and opposition in recent months, in Washington and in Venezuela, we underlined this fundamental principle of our policy." Discussing the U.S. response to the upheaval last week in Venezuela at a session at the North-South Center in Washington 17 April 2002, Gutierrez said, "We oppose military coups in any democratic country."

December 2002 - General Strike

The Venezuelan opposition began a general strike against President Hugo Chavez on 02 December 2002. The aim was to intensify street protests in an attempt to force the president to bring forward elections. The opposition decided - to the surprise of many observers - to continue extending its strike day-by-day. In mid-December, the strikers shut down a large portion of the country's oil industry, drastically reducing the production of Venezuelan oil and its delivery to internal and external markets. President Chávez declared the strikers' demands unconstitutional and enlisted the help of the military to maintain production. By mid-December government efforts to free the country's oil industry from the clutches the national strike had provoked protests from petroleum workers and Venezuela's merchant marines. President Chavez fired 16,000 of the striking workers and has replaced them with workers loyal to his government.

On 13 December 2002 The White House said that it wanted Venezuelan President Hugo Chavez to call early elections to end the political crisis that has paralyzed the country's vital oil industry. White House spokesman Ari Fleischer said the United States was convinced that early elections are the only peaceful and politically-viable way out of Venezuela's political crisis. "The United States believes that this is the best course to preserve peace in Venezuela, a society that has been wracked on an increasingly-daily basis with violence. And the president believes that the solution to issues that could potentially involve violence is to defuse the violence and focus on democracy."

Diplomats from the United States, Brazil, Chile, Mexico, Spain, and Portugal, the so-called "friends of Venezuela," pressed for a solution, based on proposals set forth by former US President Jimmy Carter on 21 January 2003. Under the Carter plan, there would either be a recall referendum in August 2003, or a change to the constitution that would allow for early elections.

By February 2003, after nearly two-months, the opposition strike in Venezuela began showing signs of weakening, but the divide between those who oppose and those who support President Hugo Chavez remained wide. The general strike that shut down almost all commerce in Venezuela since 02 December 2002 was starting to come undone. Little by little, merchants are opening their doors, or expanding hours of operation, if they were already open. Owners of shopping centers, theaters and other popular destinations say they expect to open soon.

The strike cost Venezuela more than $4 billion, and the economy was expected to show a 25-percent contraction this year as a result. The nation's currency, the Bolivar, lost nearly 30-percent of its value. Oil production in this, the world's fifth-largest producer, fell as low as 200,000 barrels-a-day in January 2003. By the end of January, the government managed to move production back up to about 1,000,000 barrels-a-day, but that was still only about a third of what used to be produced.

Since January 2003, President Chávez has expanded his administration's control over the economy by banning foreign-currency trading and imposing price controls on a number of products. Chávez has also been pressuring the Venezuela's central bank to reduce interest rates, and has indicated that he would like to restructure external debt under more favorable terms.

2002-2003 - Continued Conflict

In late March 2003, Venezuela's military bombed and strafed an outpost in the far western part of the country. Its target: a Colombian paramilitary group pursuing Colombian rebels across the border into Venezuela. It was yet another indication of Colombia's civil strife spreading to other countries. Colombia reacted angrily at what it considered a foreign intervention in its own affairs. Venezuela responded it was protecting its territory, but in fact, is thought to be sympathetic to the leftist guerrillas who regard Venezuelan President Hugo Chavez as an ideological ally. most of the attention was on Venezuela because of the reported sympathies between Venezuelan President Hugo Chavez and some of the Colombian guerilla groups, the two largest groups the ELN and the FARC in particular.

Although the general work stoppage ended on February 3, 2003 in non-oil sectors, there has been no resolution of the strike in Venezuela's oil sector, now in its sixth month. As of May 2003, Venezuelan crude oil production is widely believed -- by striking workers and independent analysts -- to be around 2.6 million barrels per day.

Venezuela has been supplying Cuba with 53,000 barrels of oil a day at reduced prices in exchange for the services of Cuban doctors, paramedics, teachers, workers, and other technicians who participate in internationalist missions. Cuba's petroleum debt with Venezuela's State Oil Company, PDVSA, rose to $266 million by May 2003. The Castro regime has fallen behind on payments to PDVSA repeatedly since Fidel Castro and Hugo Chavez signed a trade agreement in October 2002. PDVSA supplies approximately 35% of the island's oil under generous financing terms that amount to a 25% price subsidy over 5 years.

The opposition umbrella group, known as the Democratic Coordinator, long insisted the country could not endure the controversial leadership of populist President Hugo Chavez until August 2003, when his current six-year term reached the three-year mark. They accused the president, among other things, of seeking to impose an authoritarian regime, of repeatedly violating the constitution and of destroying the economy. Despite staging a devastating, two-month long strike and business stoppage, which paralyzed the country's vital oil industry, in a bid to force the president to resign or hold an early vote, the opposition was eventually forced to give in.

After months of talks among Venezuelan government, the opposition, and diplomatic representation led by the "Group of Friends," which includes Brazil, Chile, Mexico, Portugal, Spain and the United States, the Organization of American States (OAS) and the Carter Center, relevant parties were unable to reach an agreement to stage a referendum in 2003.

2003 - Cuba Connection

The claim that Hugo Chavez wants to copy Fidel Castro, repeatedly denied by the government, received fresh impetus in July 2003. The catalyst was the launch of a nationwide literacy campaign designed in Cuba. There have also been renewed allegations that Cuban doctors and sports instructors, as well as teachers, sent in the hundreds by Fidel Castro, are part of an indoctrination scheme aimed at introducing communism by stealth.

Chavez made a deal with Cuba's Fidel Castro, though many of the deal's provisions - like bartering Venezuelan goods for Cuban doctor and other professional services - were questionable in the norms of international trade. Details of the deal were suppressed from traditional Venezuelan media, but those details did leak out via the Web.

The poor barrios of Caracas are the scene of a new pilot program aimed at improving health care for the poor. Cubans described as "volunteers" have moved into private homes, where they offer free consultations and medication, often in open competition with clinics run by the metropolitan authorities. Caracas health officials say their budget has been cut by over 50-percent, with the result that their already over-burdened clinics are facing collapse. They suggest that this may be part of a plan to shift resources to the Cuban cooperation project. Adding to the controversy are accusations that the Cubans are neither qualified to practice medicine nor familiar with modern pharmacology or treatment methods. There have been claims by Venezuelan doctors of serious malpractice that allegedly placed patients' lives in danger.

There have been similar complaints by the teachers' unions about the Cuban-designed literacy campaign. Over 70 Cuban teachers were brought in to train Venezuelans to use the audio-visual material. So far, the opposition has been unable to prove its accusations of indoctrination.


On 26 February 2004 Venezuelan Chancellor, Jesus Arnaldo Perez said "The United States must resort to the corresponding institutions to prove its innocence," referring to accusations made several organizations and by Venezuelan President, Hugo Chavez, regarding US involvement and financing in destabilizing events which were encouraged by opposition sectors against the Venezuelan government, such as the attempted coup that occurred on April 11, 2002. Perez pointed out that "not only Venezuela but the whole world is waiting for an explanation concerning these actions" and he highlighted that it is indispensable for the US government to deliver a speech regarding this issue, "the US must come out of that ambiguity and clarify that it gives support to democracy and not to opposition sectors that are trying to disregard the democratic system".

Venezuelan government representatives, Eustoquio Contreras, Calixto Ortega, Nicolas Maduro and Cilia Flores requested the US Congress to set up a commission to investigate the usage of funds granted to opposition groups by the National Fund for Democracy (NFD) to promote destabilization in the Venezuelan democratic system. The Venezuelan delegation explained that "NFD funds have been used in a biased way, they have been exclusively granted to ultra-radical opposition organizations that have not been in accordance with Venezuelan constitutional channels". They also made reference to the Education Civil Association Assembly which has received 100,000 dollars for an alleged educational reform program, and they added that the founding member and Association president was appointed Minister of Education during Pedro Carmona's attempted coup in April 2002.

On 29 February 2004 President Bush ordered US Marines into Haiti as part of an international stabilization force following the departure of President Aristide. Aristide's departure rattled President Hugo Chavez. In a Caracas speech punctuated by expletives, Chavez insulted President Bush and railed against alleged US intervention in Venezuelan politics. Chavez accused the US of involvement in a 2002 failed coup against him and said it is funding groups seeking a presidential recall vote.

On 01 March 2004 President Chavez said "If Mr. Bush is possessed with the madness of trying to blockade Venezuela, or worse for them, to invade Venezuela in response to the desperate song of his lackeys ... sadly not a drop of petroleum will come tothem from Venezuela."

On 03 June 2004 Venezuelan election officials decided to allow a recall referendum on the rule of President Hugo Chavez to go forward. The council announced that opponents of Mr. Chavez had gained the petition signatures of the 20 percent of the electorate necessary to force a recall. The council had initially rejected the recall move on grounds that a sizable portion of signatures collected were invalid. But after allowing voters to reconfirm signatures late last month, it ruled that recall supporters had gotten the required total of nearly two and a half million. After the election petition verdict, Mr. Chavez reiterated a claim the United States is behind the recall move. Under the Venezuelan constitution, there would be elections for a new president if Mr. Chavez loses a recall before 19 August 2004. But if he is defeated in a recall vote is held after that, Mr. Chavez's vice president would take over and run the country for the remainder of the his term which runs until the end of 2006, effectively extending his government's rule.

On 15 August 2004 Venezuelans voted in a referendum on whether to recall President Hugo Chavez or allow him to complete his term in office. His opponents say he is emulating the failed policies of Cuba's Communist dictatorship. They also say Mr. Chavez is a threat to Venezuelan democracy. Venezuelan authorities have launched politically motivated investigations against recall supporters, including Sumate, a Venezuelan civic organization that is promoting voter education and mobilization. The August 15th recall vote will determine President Hugo Chavez's political future and will send an important message about the future of democracy in Venezuela.

On 16 August 2004 the Venezuelan Electoral Council announced that President Hugo Chavez had won the special recall election through which opponents hoped to unseat him. With 94 percent of the vote counted, more than 58 percent of voters opposed the recall.

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