The irony could hardly be richer: Venezuelan President Hugo Chávez, the self-proclaimed "21st-century socialist" and "Bolivarian revolutionary," who has spent years nationalizing his country's oil fields and tormenting foreign energy firms, is now asking Big Oil for help. As The New York Times reported last week, Venezuelan officials "have begun soliciting bids from some of the largest Western oil companies," including Chevron and Royal Dutch/Shell. Chávez has grossly mismanaged his domestic energy industry, and the steep drop in oil prices has exacerbated the troubles facing Venezuela's national oil company, Petróleos de Venezuela (PDVSA). These factors, combined with the global economic downturn, have forced the anti-American, anti-capitalist radical to embrace the same companies that he once demonized.
Chávez's strength and influence have always been a function of his oil wealth, which he has used to fund left-wing populists throughout Latin America and launch a huge military buildup. He has purchased well over $4 billion worth of Russian arms and, according to The Washington Times, spent "more than $50 billion on neighboring nations." Now that oil prices have plunged, PDVSA is reeling, and Venezuela is mired in an economic crisis, the spending spree will have to be curtailed. Economic growth in Venezuela has slowed dramatically. The central bank says that annual inflation rose to nearly 31 percent in 2008, though some analysts believe the real figure is much higher. Either way, Venezuela now has the highest inflation rate in all of Latin America. Last Friday, Chávez announced that the government was seizing roughly 28 percent of the central bank's international reservessome $12 billionin order to deal with the economic slump.
The bad news for Venezuelans is that their president wasted an unprecedented opportunity during the oil boom and their economy is now in shambles. The good news for U.S. policymakers and democratic officials in Latin America is that Chávez will now have less ability to foment political strife abroad and undermine regional democracies. His stature has been diminished, and his popularity at home has fallen. As CIA Director Michael Hayden said last week, the massive decline in oil prices could mean "real trouble" for Chávez.
Unfortunately, the Venezuelan leader is trying to prolong his presidency indefinitely. He is pushing for a constitutional amendment that would abolish term limits for elected officials and allow him to pursue reelection to a third term in 2012. (His earlier attempt to eliminate presidential term limits was defeated by voters in a December 2007 referendum.) Venezuelans will vote on the proposed amendment next month. It represents another naked power grab by Chávez, and has sparked fierce protests. As the Associated Press has noted, Venezuelan police officers "used tear gas, plastic bullets, and a water cannon" to disperse a recent anti-Chávez demonstration by university students in Caracas.
Obviously, the United States has more than just a moral interest in the preservation of Venezuelan democracy. Oil-rich Venezuela is among the most strategically significant countries in the Western Hemisphere. It shares lengthy borders with Brazil and Colombia. Under Hugo Chávez, Venezuela has become the principal source of hemispheric instability. The Chávez regime has frustrated U.S.-led efforts to promote greater regional cooperation on trade and other issues. It has aided the leftist FARC terrorists in Colombia. It has also embraced Russia and Iran. In November, Moscow agreed to help Chávez build a nuclear reactor. Meanwhile, Tehran and Caracas have signed a series of strategic agreements, and Hezbollah, the Iranian-backed terrorist group, has established a presence in Venezuela. This past June, the U.S. Treasury Department accused the Venezuelan government of "employing and providing safe harbor to Hezbollah facilitators and fundraisers."
If Chávez succeeds in demolishing the remaining checks on his power at a time of severe economic pain, it could trigger large-scale political turmoil and violent unrest. The potential for serious bloodshed is very real, especially when you consider that Caracas has already become the murder capital of Latin America, if not the world.
The referendum vote will take place on February 15. It will be a critical moment for Venezuelan democracy. Should Chávez get his way, the consolidation of a virtual dictatorship could be unstoppable. Over the coming weeks, Venezuelan democracy activists and anti-Chávez protesters will continue to be harassed by government security forces. Western journalists and human rights groups must not let this violence and intimidation go unreported or unchallenged. As the fate of their political system hangs in the balance, Venezuelan democrats deserve the close attention and robust support of the outside world.