Venezuela’s House of Cards

Venezuelan president Hugo Chávez’s mysterious four-week disappearance and treatment for cancer in Cuba may or may not result in a momentous political event. Nonetheless, it underlines the faulty logic of surrendering too much control to one man.

A former army officer elected president in 1998, Chávez brought back elements of Venezuela’s past era of military rule and mixed them with ideology borrowed from Latin America’s hard left. In 1999, he rewrote Venezuela’s constitution and amended it several times to promote his stay in power and to consolidate control over all branches of government.

In doing so, he gained access to the revenue stream of the state oil company, Petroleos de Venezuela, and put it into an off-books account. He promised to use its income to help the poor, clean up corruption, and limit U.S. influence in Latin America.

To prevent rivals from surfacing who might derail such a project, he periodically shuffled his cabinet and ranks of senior officials to keep them off balance. Distrustful of countrymen, he invited Cuban security advisers to his inner circle, while others reportedly have served as eyes and ears in military units around the country.

To keep political opponents at bay, he enacted a code penalizing disrespect for the president with jail sentences from half a year to 30 months. During the 2008 elections, his controller general disqualified 368 Venezuelan politicians from seeking public office—almost all were Chávez opponents and few were formally charged with any crime.

So, in 13 years, what has all this concentration of power achieved?

Venezuela’s state oil company is mismanaged and lacks field maintenance to the point that its output is about a third less than when Chávez came into office. And more than a third of that is shipped to Cuba and other allied countries in exchange for bartered services or sold at discounted prices. 

Closer to home, Chávez’s property seizures reportedly may total as high as $27 billion and have idled much of Venezuela’s productive sector. The government’s steady takeover of food production and supermarket chains has resulted in food shortages.

Years of neglected investment in electricity grids and generating systems have led to power blackouts.

Meanwhile, lax law enforcement against traditional crime has turned this oil-rich state into the hemisphere’s busiest drug trafficking hub—with one of the world’s highest murder rates.

Despite generous social programs, poverty seems to be no better than it was before, although the government claims to have reduced the number of poor by half. Yet there has been no serious outside review of data provided by the National Institute of Statistics since 2004. Meanwhile, Venezuela reportedly lacks 2 million housing units for a population of 29 million.

None of this seems to bother Chávez supporters who now wonder what they would do without their authoritarian leader should his health decline further. Perhaps his older brother Adán Chávez, now governor of Barinas state, could step in—as Raúl Castro did for Fidel. Yet, whoever follows may well find the cupboards bare.

In that case, there would be no question about what to do next—call in the auditors to find out where all the money went.

Stephen Johnson is director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2011 by the Center for Strategic and International Studies. All rights reserved.