Chávez Rides Again - Michael Albertus

Venezuelan president Hugo Chávez pulled off an electoral coup on Sunday, besting his energetic opponent Henrique Capriles with 55 percent of the vote (compared to 44 percent for Capriles). The victory was yet another notch in the belt for Chávez. He has won an impressive four presidential elections, survived a recall referendum, and built a powerful new political party that has come to dominate the parliament and a majority of Venezuelan states. His re-election will mean that he will have spent twenty years in office by the time his new term ends.

With the renewal of his mandate in the Palacio de Miraflores, Chávez is promising a deepening of his self-styled "twenty-first century socialism." The most immediate result is likely to be an even greater role of the state in the economy. The nationalization of key sectors of the economy is sure to continue, particularly in the agricultural, industrial, and utility sectors. Chávez's re-election also presages the expansion of a wide range of social programs targeted at poorer Venezuelans. This comes as welcome news for Chávez's supporters -- a record eight million of whom flocked to the polls on October 7 -- and some laud it as evidence of democratic progress.

Since his first election in 1998, Chávez has tapped the vast resources of Venezuela's state-owned oil company Petróleos de Venezuela, S.A. (PDVSA) to finance a series of social "missions" through one of the largest social funds administered in Latin America. It is the distribution of billions of dollars via these funds that has been a hallmark of Chávez's presidency, and which has created a powerful personal connection between him and many of the country's poor. The social missions have helped millions of Venezuelans in poverty by providing low-cost health care and education, subsidized food, housing, jobs, and access to land. These programs have won Chávez loyalty and popular support among recipients, and will remain a centerpiece of his administration.

Yet the policies that Chávez has pursued to achieve these transformative changes have come at a steadily rising cost -- and the bill is sure to come due at some point. The sequential nationalizations and confiscations of private companies and property have reduced foreign investment in key sectors and increased public debt. They have also stoked inflationary pressures and contributed to the black market for foreign currency. Uncertainty over property rights in rural areas, along with increased land squatting and expropriations as part of the expanding land reform program, has squeezed the already anemic agricultural sector. And despite production regulations and price controls for staples, food prices are soaring. This hits hardest many of the same poor that ardently support Chávez.

To strengthen his hand in implementing reform, Chávez has a history of pushing through controversial political changes -- changes that will surely influence political competition in the future. His detractors charge him with eviscerating a system of checks and balances by stacking the courts in his favor, eliminating the upper house of Congress via a constitutional change, and weakening freedom of the press through harassment and the revocation of operating licenses. And both sides speak of ventajismo, the advantages of incumbency Chávez gains simply by controlling the national airwaves, the bureaucracy, and a glut of public funds for social programs not subject to congressional oversight.