by Nikolas Kozloff, NACLA News

For Venezuela's Hugo Chávez and his Bolivarian Revolution, it's both the best and worst of times. Ever since the firebrand politician came to power in 1998, Chávez has campaigned against US-style free trade economic policies throughout South America. A fierce critic of international financial institutions, Chávez resisted so-called neoliberal economic orthodoxy by nationalizing the oil, telephone and electric companies, and boosting government spending on key sectors like health and education.

Now that the financial system in the US has imploded, Chávez has reaped maximum political advantage from the crisis. The Venezuelan leader has said that the rich countries have spent billions of dollars to bail out banks while shirking their responsibilities in fighting poverty with the excuse of lack of money. The Bush administration expected to weather the crisis "by running the money printer and I strongly doubt we'll be able to resolve the crisis that way," Chávez said. The maverick South American politician, who has labeled capitalism unsustainable and even evil, declared that "the Washington consensus has collapsed."

In Caracas, Chávez exclaimed that the wider region was fortunate in that it had balked at the US proposal for a Free Trade Area of the Americas. Such an idea, he said, would have been "the greatest disaster," as failing US banks would have "swallowed up" banks in Latin America. Employing his usual penchant for biting political sarcasm, Chávez said that the International Monetary Fund shared some blame for the financial crisis and that it should "commit suicide" and be dissolved.

Bush has long served as Chávez's perennial punching bag: the Venezuelan leader has, at different times over the past eight years, called his US counterpart a genocidal maniac, a drunkard, a donkey, Mr. Danger, and even the devil. It was no surprise then that Chávez took advantage of the financial crisis to once again deride his favorite enemy. The US president, Chávez said, was a hypocrite for criticizing Venezuelan nationalizations while simultaneously buying stocks in US banks. "Bush is to the left of me now," Chávez exclaimed. Going yet further, he said that Bush was responsible for the financial meltdown and that the current occupant of 1600 Pennsylvania Avenue should be put on trial.

Seeking to reap maximum political advantage from global economic disarray, Chávez called for an economic summit of small countries in Caracas designed to deal with the financial crisis. Chávez said he would invite representatives from the Bolivarian Alternative for the Americas trade bloc (known by its Spanish acronym ALBA) and members of the Petrocaribe oil initiative to attend. ALBA, which seeks to encourage solidarity and reciprocity among left-leaning countries in Latin America and the Caribbean, is designed to counteract Bush’s corporate-friendly free trade schemes.

Chávez called the ALBA summit in opposition to a recent meeting in Washington DC attended by members of the wealthy G-20 countries. "We need to hope that this meeting will end with some positive ideas...but I doubt they will reach any decisions in Washington to solve this crisis. The hurricane that triggered this crisis came from Washington," Chávez remarked. The Venezuelan leader said that his alternative summit, to be held in "the last days of November," would be attended by Bolivian President Evo Morales and Nicaraguan leader Daniel Ortega. Other countries to be invited to the summit would include Cuba, Honduras, and the Dominican Republic.

The Geopolitical Limits of Oil
With the implosion of the global financial system, Chávez should be riding a popular geopolitical wave in South America. And yet, the Venezuelan leader has been unsuccessful at exporting his political and economic model to many of the larger and more important countries throughout the hemisphere.

True, Chávez has been able to garner friends through ALBA and his skillful use of oil diplomacy. But Bolivia, Cuba, Nicaragua, and a handful of other impoverished Central American and Caribbean nations do not constitute a formidable geopolitical bloc of countries. Much has been made of Chávez's incipient alliance with Argentina, a significant development to be sure, but the Kirchner government in Buenos Aires is hardly moving towards anti-imperialist, populist mobilization and would seem to prefer the political and social status quo.

Chávez has several problems. First of all, Venezuela itself is hardly immune from the global economic slowdown. Earlier, Chávez had said that Venezuela would survive the global credit crunch as its economy was one of most stable economies in the world. But last week, Chávez remarked, "The fall in oil prices due to the current global financial crisis may have a negative influence on the economy of Venezuela. The world is on the brink of a catastrophe, and this catastrophe will affect everyone. One cannot hide from it, it will cover everyone like an ocean wave."

The downturn in world oil prices stands to adversely affect both Chávez's ambitious domestic and foreign policy agenda. As long as oil prices were soaring, Chávez was free to dole out petrodollars with abandon both at home and abroad. In Venezuela, the government built health clinics and schools. Simultaneously, Chávez sent cheap oil to Cuba and bankrolled his newfound allies in Argentina who were hard pressed to pay off the country's debt.

Now that oil prices have fallen, the question is how Chávez will react to the new economic milieu. Energy sales account for 95% of the country's export revenue and half of the government budget. Prices for Venezuela's crude have fallen by almost 60% since July, to as low as $53 per barrel. That leaves Chávez dangerously short, since Venezuela needs $95 per barrel to finance operations and pay for imports, including food.

With dwindling funds to carry out his Bolivarian Revolution, Chávez won't have excess cash to throw around in the wider region. Venezuela is a medium-sized country with just 27 million people. For the past five years or so, Chávez has had disproportionate geopolitical influence in South America, Central America, and the Caribbean because of the high price of oil, but a question mark now hangs over this extended influence.

The Obama Factor
On the surface at least, the election of Barack Obama in the United States stands to benefit Venezuela. For years, the Bush administration, as well as the right-wing media, has heaped scorn and derision on Chávez. As a result, many US citizens think that Venezuela is a military and political threat to the United States.

Obama on the other hand famously stated that he would meet with what he called "rogue" nations like Venezuela without preconditions. If Chávez was able to pull off a meeting with Obama it would represent a public relations coup for the Venezuelan leader and help to rehabilitate his image in the eyes of the US public. In the process, however, Chávez would lose a lot of his rhetorical edge. Chávez was able to rise to world attention as a result of his hard-hitting critiques of the Bush administration and imperialist excesses around the world. Now that Bush stepping down, Chávez will not have his usual whipping boy to throw around.

An Obama White House will undercut Chávez's support in a number of ways. To begin with, Obama starts off with an enormous amount of goodwill in South America simply by dint of his racial origins. Millions of Afro-Latin Americans will be interested in the rich historic symbolism of a black man taking over the reins of power in the White House. Chávez has long championed the rights of oppressed Afro-Venezuelans and Indians, and has even touted his own mixed racial heritage. But with an Obama administration in place, Chávez no longer has a lock on the racial narrative.

Secondly, if Obama starts to withdraw troops from Iraq it will make the United States look like less of an imperialist aggressor to many throughout the Third World. If Obama follows that up by hammering out South American free trade agreements with some concessions to labor and environmental rights, he may succeed slightly in rehabilitating the United States in the public eye. Of course, Obama will be hamstrung given that the United States is hardly in an ideal position to counter Chávez's geopolitical ambitions. With the economy in crisis, Washington is not in a position to dole out economic assistance to poverty-stricken South American countries.

Then again, time may not be on Chávez's side. South Americans have not been exposed to the same level of blatant and direct US military intervention as Central America and Mexico. To be sure, few people on the streets of Buenos Aires will have kind words to say about the International Monetary Fund and the US free trade agenda. But to many, the United States is rather abstract. To the extent that average people do become involved in politics, they may be more concerned with getting rid of corruption and confronting local elites than countering hegemonic US interests. If Chávez continues to employ his usual strident, anti-imperialist rhetoric he may find that it does not resonate as much as before.

Chávez has another problem, and it has to do with his aggressive military posturing.
At different times, the Venezuelan leader has tried to stir up a military alliance among sympathetic South American governments to confront Washington. But even with the Bush administration in power, Chávez failed in his efforts. The Venezuelan leader recently called for joint naval maneuvers in the Caribbean with another petro-power, Russia, in order to challenge the renewed presence of the Pentagon's Fourth Fleet. But here Chávez is not on the same page as other South American countries that are more interested in securing economic advantages from the United States rather confronting Obama with military posturing.

Venezuelan Election: A Critical Milestone
On top of these problems, Venezuela's once-discredited opposition has recently been gaining ground politically. Having won reelection in 2006 to a six-year term, Chávez hoped to build on his ballot box success by promoting a constitutional referendum. Though Chávez and his followers had already enacted a new constitution in 1999, the president claimed that the document was in need of an overhaul so as to pave the way for a new socialist state.

Chávez sought to reduce the work week from 44 to 36 hours; to provide social security to informal sector workers such as housewives, street vendors and maids; to shift political power to grassroots communal councils; to bar discrimination on the basis of sexual orientation or health; to extend formal recognition to Afro-Venezuelan people; to require gender parity for all public offices; to formalize the right to adequate housing and a free public education; to protect the full rights of prisoners, and to create new types of property managed by cooperatives and communities.

The progressive provisions would have done much to challenge entrenched interests in Venezuela and encourage the growth of a more egalitarian and democratic society based on social, gender, racial, and economic equality. Unfortunately, Chávez sabotaged any hope of success by simultaneously seeking to enhance his own personal power. Under the constitutional reform, Chávez could declare a state of emergency, and the government would have the right to detain individuals without charge and to close down media outlets. Chávez's own term would be extended from six to seven years, and he would be allowed the right to run indefinitely for president.

On Election Day the opposition failed to increase its voter share but was able to eke out a tiny margin of victory when some of the Chávez faithful grew disenchanted and failed to turn out to vote. Perhaps, if Chávez had merely backed the progressive provisions within the referendum and not tried to increase his own power, the vote would have tipped the other way. But by backing the retrograde measures, Chávez gave much-needed ammunition to the opposition.

Failure to pass the constitutional referendum surely represented a severe setback for Chávez and the Bolivarian Revolution, but did not necessarily represent a total rout. Unfortunately, the Venezuelan President played right into the hands of the opposition again by backing an unpopular intelligence law. Following an outcry from human rights groups, Chávez repealed the decree less than a fortnight after its introduction.

Within this uncertain political milieu, Venezuela approaches regional elections on Nov. 23. Venezuelans will cast ballots to determine 22 governors, 328 mayors, and two metropolitan mayors—every significant office besides the presidency and the National Assembly. In the last regional elections held four years ago, Chávez supporters secured 21 state governments and about 300 city governments. However, opinion polls and analysts are predicting a slightly different political map this time. Indeed, some suggest that the opposition will be much more competitive in many states.

For Chávez, the political stakes are high: the Venezuelan leader wants a huge electoral mandate so that he might call for another constitutional referendum that would extend his presidential term after 2012. But if the opposition makes electoral gains, Chávez's long-term aspirations could be significantly complicated. At campaign rallies, Chávez has made the election into a referendum on his own rule. He recently declared, "What's at stake here is the future of the revolution, of socialism, of Venezuela, of the government and the future of Hugo Chávez himself."

If Chávez is able to eke out a victory if he manages to minimize his losses—a big "if"— then he could try to extend his rule and use the financial crisis as means to advance his geopolitical agenda and alternative economic arrangements such as ALBA. If the global slowdown worsens, perhaps poor countries will be more amenable to Chávez's overtures. Even with a win, however, Chávez will confront significant challenges such as the fall in world oil prices and a new Obama administration that stands to negate the Venezuelan leader's anti-imperialism.

On the other hand, an electoral victory for the opposition would constitute the second straight reversal for Chávez in under a year and lead many in Venezuela and the region to wonder whether the Bolivarian Revolution has real staying power.

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Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left (Palgrave-Macmillan, 2008).

This story first appeared Nov. 21 on NACLA News.

See also:

THE NEXT CUBAN MISSILE CRISIS?
The Russo-Venezuelan Military Alliance & Cold War Deja Vu
by Nikolas Kozloff, NACLA News
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Reprinted by World War 4 Report, Dec. 1, 2008
Reprinting permissible with attribution