WSJ article on Venezuela 6-12-2003

["Walter Lippmann" <walterlx@xxxxxxx>]

(Very significant article in the Wall Street
Journal, the premier newspaper of the US
business community. They don't like Hugo
Chavez, as this makes clear, but they are
also forced to admit that his government
is doing better than they might wish from
both an economic and a political point of
view. Read this article quite carefully.

(One item the WSJ does omit, however,
is the fact that is was a massive popular
uprising, and not "second thoughts" by the
generals who had Chavez in custody, that
was responsible for Chavez' return to the
Miraflores presidential palace. Anyone who
studied the period, and above all anyone
who saw the documentary motion picture
THE REVOLUTION WILL NOT BE TELEVISED
could clearly see this mass intervention
in the political process of Venezuela these days.

(Such mass public participation by the working
and poor people of Venezuela aren't according
to script by the WSJ, though they admit some
of this reality in various indirect ways. It's part
of a broader process of democratization of life
in Venezuela, which includes community radio
stations, Bolivarian circles, cheap government-
subsidized food stores, and both urben and
rural land reform.)

(The Venezuelan right wing has long claimed
a special, economically supportive relationship
between Venezuela under Chavez and Cuba.

(This is not true. After this article and in another
message, I'll forward the statement by the
Cuban foreign minstry from last week where
they respond to this. In simple terms, however
Cuba pays on a normal cash basis for fully 80%
of the oil it gets from Venezuela, paying regular
world market price based on the benchmark of
"West Texas Intermediate". Cuba pays in 90
days on a normal business contract.

(Then, on a sliding scale depending on the world
market price, Cuba gets a special deal, BUT IT'S
THE SAME DEAL VENEZUELA GIVES TO ALL
THE REST OF THE CARIBBEAN AND SOME
CENTRAL AMERICAN COUNTRIES AS WELL,
of no payment for three years and then a low
interest rate when payment begins. To say as
the Wall Street Journal does that Cuba's price
for Venezuelan oil is "cheap" is simply not true.)

(Anyone spending time here in Cuba can see
that the progress of the Bolivarian process is
of urgent interest here on the island where TV
coverage of Venezuela is extensive and some
of Chavez' "Alo, Presidente" programs are
shown on Cuban TV in very long editions.)

(Readers are invited to comment on this topic.)

Walter Lippmann, Moderator
CubaNews list
=================================

June 12, 2003

PAGE ONE
Some Fear Nation's Radical Stance
Could Hurt Stability in the Region

By MARC LIFSHER
Staff Reporter of THE WALL STREET JOURNAL

CARACAS, Venezuela -- Nearly every Sunday from somewhere in
this oil-rich land, President Hugo Chavez sits down at a
small table, looks into a television camera and talks. And
talks. And talks.

For four or five hours, without a break, he fields phone
calls, quizzes government ministers, dictates lessons in
history, economics and geopolitics and occasionally breaks
into folk songs of his western plains homeland. In one
memorable show last year, he repeatedly blew a soccer
referee's whistle and shouted "That's enough!" as, one by
one, he fired seven dissident executives at the state-owned
oil company.

For many residents of wealthy neighborhoods, the television
program "Hello, President," is sheer torture, the ramblings
of a Fidel Castro wannabe. But in the sprawling slums and
working-class barrios surrounding this Caribbean capital,
it's better than salsa music. "I have him on for hours on
Sunday. He's like a guest in my house," says Aurora
Querales, a 47-year-old seamstress waiting in line to buy
cut-rate black beans at a government food store. "Before
Chavez, no one respected us; no one listened to us. Now, we
may be poor, but Chavez is giving us dignity. He's giving us
hope and faith that things are going to get better."

By almost any measure, the economy of Venezuela -- the
world's fifth-largest oil exporter -- is in shambles.
Pollsters say about 60% of Mr. Chavez's countrymen oppose
him. Yet the former paratrooper and coup leader has managed
to keep his hold on power since being elected in 1998. He
has done it in part by dusting off tools of political
control that Latin America supposedly put away long ago:
demagoguery, class warfare and a clampdown by the state over
the means of production.

His ability to use these tools so effectively says a lot
about the degree of ideological uncertainty gripping Latin
America these days. Despite more than a decade of
Washington-blessed economic policies -- privatization,
deregulation, a flood of foreign capital -- the poor feel
neglected and left behind. Politicians all over the
continent are scrambling to figure out a way to capitalize
on that.




Washington, which initially dismissed Mr. Chavez as a
harmless big talker, now fears Venezuela's increasingly
radical stance could hurt regional stability and hobble U.S.
initiatives ranging from free trade to the war on drugs.
Some U.S. officials say Venezuela has become Washington's
biggest Latin American headache after the old standby, Cuba.
About 14% of U.S. oil comes from Venezuela, and the nation
is considered a key supplier because it is so close. It
takes about five days for the U.S. to import oil from
Venezuela, compared with about five weeks from the Middle
East.

Mr. Chavez, 48, pops up at regional summit meetings to
complain international leaders are doing little to improve
the plight of the masses in Latin America, who survive on
less than $2 a day. About once a month, he boards the $75
million Airbus jet he had the government purchase after he
was elected in 1998 to visit neighboring countries, where he
charms the antiglobalization set, local activists and
old-line leftists. He regularly criticizes Washington's
multibillion-dollar efforts to help Colombia in its
decades-long battle against guerrillas and drug traffickers.

Mr. Chavez didn't grant a request to be interviewed for this
article.

His opponents are in disarray. After a bungled military coup
in April 2002 and a crippling, though unsuccessful, national
strike in December and January, they're back to square one.
The Organization of American States recently brokered a
loose agreement that might pave the way for a vote this year
on whether the president should serve out his current term,
which ends in 2007. But the opposition first has to gather
2.5 million signatures, a process that Mr. Chavez could
thwart through his control of the congress and the courts.

"He'll do everything he can to get around the referendum or
not heed its results," predicts Riordan Roett, director of
Latin American studies at Johns Hopkins University.

Mr. Chavez's worst sin, some critics contend, is his close
relationship with communist Cuba's dictator Fidel Castro.
Venezuela is now Cuba's largest trading partner, providing
53,000 barrels a day of cheap oil to the energy-starved
nation. In turn, Cuba dispatches hundreds of experts to help
Venezuelans operate medical clinics, raise organic
vegetables and import food. Chavez opponents claim Cubans
also assist Venezuelan security and intelligence agencies.
The Venezuelan government denies that.

Mr. Chavez disavows communist leanings. "Fidel Castro, my
friend and brother, is a communist, but Venezuela's project
is not communist," Mr. Chavez said on Sunday's television
address, in which he also called himself "ugly" and "a
little uncouth." Since becoming president, Mr. Chavez, a
baseball lover, has played in a friendly game against a
Cuban team led by Mr. Castro. In a recent address, Mr.
Chavez, a southpaw pitcher, spoke out in support of Chicago
Cubs slugger Sammy Sosa, who was ejected from a game for
using a corked bat.

Analysts who have spent more than a decade tracking Mr.
Chavez's rise to power say they doubt he wants to impose the
Cuban system wholesale on independent-minded Venezuelans.
The president, they say, has spent years concocting a
mishmash of ideologies. His thinking is influenced by his
romantic view of the continent's guerrilla revolutionaries
of the 1960s and his sense of a personal connection with
Simon Bolivar, the father of Venezuela and "liberator" in
South America's 19th-century fight for independence from
Spain.

One former U.S. official who met with Mr. Chavez three times
in 2000 says each time the president was holding a copy of
Bolivar's sword and asked visitors if they could "feel" the
presence of Bolivar in the room. In 1999, he spearheaded a
movement that officially changed the country's name to the
"Bolivarian Republic of Venezuela."

Mr. Chavez, who spent 20 years in the army before entering
politics, wants to build a strong "civic military" alliance
that puts soldiers in the forefront of government
initiatives, running medical clinics, schools and even food
markets. He favors small businesses over large ones. But he
also favors investments from foreign companies over domestic
entrepreneurs -- largely on the theory that the foreigners
won't meddle so much in politics. The model, if one exists,
may be China, where an authoritarian government dominates
the economy in cooperation with politically passive
businessmen.

"He has very general ideas of a socialist type of economy
and society that are full of ignorance about how things
really work," says Gerver Torres, an economic consultant in
Washington and former Venezuelan privatization minister. "He
wants a strong state that is very militarized ... that is
very anti-United States in its heart, but does business with
the North Americans out of necessity."

Mr. Chavez grew up in the sparsely populated western plains
of this nation of 24 million people. One of six sons, he
lived with his parents, lower-middle-class teachers, and his
grandmother. He often talks warmly of his grandmother, who
regaled him with stories of his countrymen who fought in the
bloody civil wars of the 19th century and rose against an
early-20th-century dictatorship. In high school, he studied
with a militant Communist teacher.

While at the Venezuelan military academy in the early 1970s,
he was contacted by an underground Communist group, the
Venezuelan Revolutionary Party. The group's leader,
guerrilla Douglas Bravo, had been building a secret network
of collaborators inside the armed forces as part of a
nascent civic-military alliance. That concept has since
proved to be the cornerstone of President Chavez's vision
for his country.

"We believe that the military should play an active role in
social battles, and Chavez became one of the young officers
who were politically restless," recalls Mr. Bravo, 70. The
president has since broken with Mr. Bravo, who now questions
Mr. Chavez's revolutionary credentials, saying his oil
policies are too friendly to the U.S.

Mr. Chavez served in various army units before moving to the
capital, Caracas, in 1980 to teach sports and history at the
military academy. In 1982, he and other junior officers
formed a secret group, the "Bolivarian Revolutionary
Movement 200," or MBR-200, swearing an oath under the same
ancient tree where Bolivar once camped. They vowed to change
a society they considered corrupt because of power-sharing
between the country's two main political parties.

As Mr. Chavez and his key conspirators rose through the
ranks, Venezuela's oil boom turned sour in the 1980s. The
country's population soared, fueled by immigration, while
petroleum revenue plateaued and per capita incomes
plummeted.

The young officers of the MBR-200 made their move against
the government in the early hours of Feb. 4, 1992. Though
other commanders seized their objectives in the interior of
the country, Lt. Col. Chavez, leading a regiment of
paratroopers, failed to capture the Presidential Palace. He
hunkered down in a military museum across the street. After
withering fire, he surrendered.

But instead of being seen as a failure, it was then that Mr.
Chavez's political career began. It turned out to be the
first of many times the political and economic elite of
Venezuela didn't take the Chavez phenomenon seriously. "He
was seen as someone who is not a great danger," says Tarek
William Saab, a top legislator in Mr. Chavez's Fifth
Republic Movement political party.

The obscure military officer was allowed to make a short
televised statement, asking his comrades to lay down their
arms, because "for now," the objectives of the coup hadn't
been met. That brief appearance turned the young,
charismatic Mr. Chavez into a star -- which grew brighter
during his subsequent two years in prison.

"They thought they'd give him his 15 minutes of fame,"
recalls Mr. Saab. "But, instead, he became a turning point
for contemporary Venezuelan history."

Mr. Chavez's popularity and ambitions increased while he was
in prison. Once pardoned, he opted to gain power via the
electoral route. The charismatic candidate campaigned on an
anticorruption, people-power platform. He appealed to poor
and working-class Venezuelans because he shared their modest
circumstances and their ethnic ancestry, a mixture of white,
black and Indian. Many middle-class and even upper-class
people also backed Mr. Chavez, agreeing the ruling class had
plundered the resource-rich nation. Mr. Chavez was elected
president in 1998 with a solid 56% of the vote.

He immediately began tearing down old political structures
and replacing them with his self-styled "participatory
democracy." He commissioned a new constitution, which voters
endorsed in 1999. In 2000, Mr. Chavez, with 59% of the vote,
was elected to a new six-year term. The same election also
gave him a solid majority in the new single-house National
Assembly and control of a majority of key state governors
and mayors. The new legislature named Supreme Court justices
who, for the most part, ruled favorably toward the new
regime.

The economy, after dropping a precipitous 6.1% during his
first year in office, began to improve, boosted by strong
international oil prices and jumps in government spending.
Foreign investment flowed into the oil and
telecommunications sectors. Because of the strong local
currency, inflation dropped from 30% in 1998 to a manageable
12% in 2000 and 2001, increasing the buying power of Mr.
Chavez's poor supporters.

But Mr. Chavez's successes, including improvements in health
care and school enrollments, stalled in late 2001. The
opposition began to coalesce into an unusual alliance of the
million-member Venezuelan Workers Confederation and the
powerful national chamber of commerce.

The coalition, with backing from opposition-owned newspapers
and television stations, showed its strength with a one-day
strike that shut down much of the nation before Christmas in
2001. Antigovernment demonstrations picked up again the
following spring. Work stoppages were threatened by
executives and managers at the state oil company, Petroleos
de Venezuela SA. Mr. Chavez's referee-whistle dismissal of
the rebel oil bosses fueled more demonstrations.

The unrest reached a critical mass last April when shooters,
many still unidentified, fired at hundreds of thousands of
people marching on the presidential palace. Nineteen people
were killed and more than 100 were wounded. When Mr. Chavez
ordered the military to implement an emergency response
plan, most of his top generals rebelled and took him into
custody.

For just under 48 hours, Mr. Chavez was replaced by an
interim, unelected president, Pedro Carmona. Many opposition
leaders soon realized they'd blundered, when Mr. Carmona
announced the dissolution of the congress and the Supreme
Court. Deciding the coup had gotten out of hand, generals
who had been sitting on the fence rescued Mr. Chavez.
Elements of his old airborne regiment helicoptered to the
Caribbean island where Mr. Chavez was being held and brought
him back to the palace on Sunday, April 14. By the next day,
a chastened Mr. Chavez was back in power.

The unrest didn't stop. In December and January, dissident
oil executives shut down the nation's critical petroleum
industry, cutting off exports and creating a
never-before-experienced gasoline shortage in car-happy
Venezuela. In response, Mr. Chavez fired 18,000 rebellious
executives, managers and technicians at the state oil
company soon afterward. Replacement workers got the oil
flowing again.

Since then, Mr. Chavez has worked to consolidate his power.
With the backing of the one-third of the country that
worships him, he has denounced his enemies as "fascists and
coupsters." The government has spent hundreds of millions of
dollars importing gasoline at high international spot
prices -- in a country where 25-cent-a-gallon fuel is
considered a birthright. By February, life in this
polarized, traumatized country returned to a superficial
semblance of normalcy.

Mr. Chavez has declared an "offensive" to beat back his
foes. He has instituted price caps on food and electricity
and begun a billion-dollar food-import program to keep
grocery shelves stocked. He has imposed foreign-exchange
controls that have dried up private-sector imports and
threatens to bankrupt his enemies' businesses. "Not one more
dollar for the putschists," Mr. Chavez vowed in a televised
event in January. And he has reorganized military commands
to keep the armed forces squarely in his camp.

The country has paid a steep price for Mr. Chavez's
survival. Gross domestic product, which plunged 8.9% in
2002, fell a record 29% in the first quarter of 2003.
Unemployment is running at 19.1%, compared with 15% a year
ago. Annualized inflation rates hit 35% this month. But not
all the news is bad. The near-total ban on dollar trading,
combined with high oil prices, ensures Mr. Chavez a strong
cash flow. International currency reserves are climbing
steadily from a January low of $11.3 billion to $15.72
billion. A default on the relatively low $24 billion foreign
debt now appears unlikely.

Faced with pressure to hold a referendum on his rule, Mr.
Chavez has, in televised speeches, declared himself in a
"permanent campaign," even though he says he doesn't "walk
around worried." The opposition, he says, lacks "leadership,
plans and a cause" and operates only to unseat him from
power.

Most analysts doubt Mr. Chavez will be ousted any time soon.
The flow of petrodollars, his near mystical link to his
hardcore supporters, the opposition's disarray and the Bush
administration's interest in keeping Venezuelan oil coming
to U.S. ports could all combine to keep him in office for
years.

"He's had a plan and a resolve that is simply remarkable. A
lot of lesser people would have packed up and gone to Cuba
long ago," says Russell Crandall, a Latin Americanist at
Davidson College in North Carolina who consults with a
number of U.S. government agencies. "He knows how to
survive."
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