Hugo Chávez, President since 1999.

In Photos: Hugo Chávez, President Of Venezuela. (Photo credit: Wikipedia)



Chavez leaves behind a Venezuela that serves as a prime example of the soft-dictator’s oil curse. Chavez milked the state-owned energy company, PDVSA, to bankroll his populist policies and to subsidize foreign allies, such as Cuba. Before parting on his final trip for medical care in Cuba, Chavez named his non-charismatic Nicolas Maduro as his successor. Chavez’s Chavismo combined his personal charisma with populism backed by political repression. It is unclear whether Chavismo can survive without a charismatic leader.

Chávez was born July 28, 1954 into a working class family. He became a career military officer, and led a failed coup in 1992, for which he served two years in prison. After his release, Chavez founded  the Fifth Republic Movement and became the leader of the United Socialist Party of Venezuela in 2007. Chavez was elected president of Venezuela in 1998. He was reelected for a second term in 2000 after passage of a new constitution, and sailed to a third-term victory in October of 2012. He conducted a rigorous campaign, declaring himself cured of  cancer.

Chavez’s  anti-capitalist and anti-imperialist ideology was heavily influenced by Fidel Castro. His Chavismo leftist ideology made its  mark on the  socialist governments of Evo Morales  in Bolivia, Rafael Correa in Ecuador and Daniel Ortega in Nicaragua. Chavez at one time supported the FARC Marxist rebels operating on the Columbian border.  Had he lived, he would have served as president until at least 2018. Chavez  contributed his socialist ideology and petrodollars to the “pink tide” that spread through the leftist countries of Latin America. With Chavez’s passing, leftist politicians of  Latin America have lost a powerful patron.

Chavez’s stormy rule pitted his allies from the poor barrios against the business class. Known for his buffoonery, diatribes, and banter on television talk shows and on the campaign trail,   Chavez  knew how to neuter a formidable opposition throughout his political career. He briefly agreed to step down in April of 2012 after massive protests backed by elements of the military, although he refused to officially resign the presidency. He returned to power after counter protests by his allies. Chavez handily won a third term against  popular  Miranda province governor Henrique Capriles in October of 2012.

Chavez’s Chavismo calls for a populist and anti-imperialist form of socialism.  His agenda called for a Bolivar Revolution of nationalization of key industries in energy, steel, food products, and finance, including takeovers of foreign  assets of international companies, such as of Conoco Phillips, Statoil, Holcim, and Cargill. Chavez installed state-owned cooperatives and promoted communal councils to replace decision making by the bureaucracy. The cooperatives and communal councils provided Chavez with his formidable grassroots political machine. Even with Chavez on his deathbed, his Nationalist Socialist Party dominated the December 2012 gubernatorial elections.

Under Chavez, freedom of the press and freedom of expression plunged. Freedom House rates Venezuela’s press as “not free” and Reporters without Borders rated Venezuela among Latin America’s worst press freedom offenders. During the 2012 campaign, Chavez had virtually unlimited press time, while his opponent was restricted to three minutes of pre-recorded campaign advertising per day. Chavez’s politicized judiciary routinely sided with Chavez and his National Assembly, which has the authority to remove and appoint judges. Chavez sought to delegitimize human rights and civil society organizations by sanctioning any organization that receives foreign funding or hosts foreign visitors.

Chavez relied on the oil revenues of  PDVSA as a cash cow to fund social development projects, food subsidies, and housing projects for his base. Although Venezuela is the world's fifth largest oil exporter and has among the world’s largest proven reserves,  Chavez’s slush fund has been fraying at the corners. It is staffed by political appointees and its payroll is bloated. PDVSA’s output declined some thirty percent between 2002 and the present. Venezuela lacks the investment and technology to develop its offshore deposits, but international energy companies have been reluctant to invest in a Chavez-run Venezuela. Under Chavez, PDVSA has invested twice as much in social programs as in its energy-related businesses. PDVSA’s contributions to the state budget are not public information. Its revenues are among the lowest per barrel of production among large energy concerns because Chavez kept the domestic price of gasoline at thirteen cents a gallon and delivered  energy to Cuba, Nicaragua, and Bolivia well below market prices.

Admirers of Chavez’s Bolivar Revolution point to the marked drop in income inequality as his signal achievement. Detractors point to the declining fortunes of PDVSA, which critics call bloated and falling apart, the failure to diversify a Venezuelan economy that earns 95 percent of its revenues from energy exports, the wasteful spending on patronage projects and public works, and the need to import most of Venezuela’s food in a country with abundant agricultural resources. Inflation has averaged over 25 percent in the last two years, and shortages of basic consumer goods are rampant.

With Chavez’s passing, Venezuela must elect his successor. Although his anointed successor, Vice President, Nicolas Maduro, is likely to prevail over the newly-reelected governor Capriles in a sympathy vote, he lacks the charisma and political skills of Chavez. Unlike other near-dictators, Chavez did not annihilate opposition forces.  Maduro inherits a faltering economy beset by incurable problems. Venezuela’s business class should profit from deteriorating economic conditions and can look forward to a long term renaissance.

Chavez’s passing will be most felt in Cuba, which has lost its most visible ally and patron. Chavez propped up Cuba’s economy with cheap oil bartered in return for Cuban doctors. As  Venezuela’s oil production declines and state budget demands on oil revenues increases, Chavez’s successors will be hard pressed to maintain their Cuban subsidies.