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Analysis: Blow to Oil-Fueled Socialism

Council on Foreign Relations

December 3, 2007
Author: Stephanie Hanson

Venezuela’s December 2 referendum on constitutional reforms followed street protests (CSMonitor) by thousands of Venezuelan university students. They proved to be a galvanizing force in the surprise defeat of the referendum, which would have broadly expanded President Hugo Chavez’s powers (TIME). The Venezuelan government, awash in oil revenues, has shared the windfall—from the upper-middle class down to the poor in Caracas’ barrios. Yet shortages of basic foodstuffs like milk and eggs have increased skepticism about economic reforms and eroded some of Chavez’s support among poor Venezuelans (LAT). Chavez accepted the poll’s result in a speech on December 3, adding that he would “continue in the struggle to build socialism.”

He will now have to contend with an emboldened opposition (NYT). Experts say the vote, Chavez’s first electoral defeat in nine years, could further polarize Venezuela’s already divided population. The referendum failed by a razor-thin margin of two percentage points, according to the Electoral Commission. Speaking on a panel at the Council of the Americas on November 30, Michael Penfold, an associate professor at the Instituto de Estudios Superiores de Administracion in Venezuela, said the country is headed toward a “governability crisis.” Andy Webb-Vidal, a journalist and political-risk analyst, suggested at the same panel that Chavez will continue to do as he pleases, given the enabling law passed earlier this year that allows him to rule by decree.

The president and his followers still control most of the government, including the National Assembly, the state-owned oil company, and the courts. The proposed constitutional changes would have further centralized Chavez’s power (Economist), allowing him to be reelected indefinitely, giving him more leeway for declaring states of emergency, and mandating the creation of regions led by vice presidents picked by Chavez.

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