Prospects for a Post-Chavez Venezuela

By Stratfor

Venezuelans celebrated 200 years of independence with a military parade and a full slate of festivities in Caracas on Tuesday. President Hugo Chavez, who has publicly admitted he is being treated for cancer, managed to return to the country in time for the celebrations but appeared weak. He was unable to attend the military parade and instead began the festivities with a televised address and published regular Twitter updates throughout the day. Chavez underwent two operations while on an extended stay in Cuba. Since returning to Venezuela on July 4, Chavez has alluded to the possibility that he may return to Havana for continued treatment. Although there has been no official word on the nature of Chavez's cancer, STRATFOR sources have said that it is prostate cancer and it may have metastasized.

Chavez has a reputation in the country as a tireless worker and has insisted that he will remain in charge of the government. There is nothing to suggest that the president will be forced to step down any time soon. However, his prognosis is clearly not optimistic, and Venezuela must confront the pressing question of how to fill the void should Chavez's illness force him out of power or prove terminal.

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To understand why Chavez's popularity and political strength endure despite the serious challenges facing Venezuela, it is necessary to remember the circumstances that led to his rise to power.

Surging income from the oil-price spikes of the 1970s and early 1980s led to economic instability throughout the next two decades. Caracas moved to rapidly expand government expenditures in order to satisfy the populist demands of an underdeveloped country. This spending brought about a steep rise in corruption and spiraling inflation. Venezuela attempted to correct these imbalances through neoliberal reforms, including eliminating subsidies and raising taxes. The most damaging response to the new policies was the1989 riots - known as the "Caracazo" - which were triggered by a rise in the price of gasoline. The riots left nearly 300 people dead in Caracas.

Shortly thereafter Chavez, a young lieutenant colonel, entered the national spotlight during a failed coup attempt. Well-spoken and charismatic even in defeat, Chavez made an impression at a time when the Venezuelan political system was clearly breaking down. After Chavez was released from prison, he was able to seek leadership of the country again - this time through the elections that brought him to Miraflores in 1999. Chavez appeared at a pivotal time and was able to move on from his mistakes and seek power democratically.

As a leader, he satisfies Venezuela's need for a strong central figure capable of reining in factions competing for power. Most importantly, however, Chavez appeals on a very personal level to swaths of the population who identify with his persona and with policies that place poverty at the forefront of the national agenda.

However, a number of missteps have plagued his administration. Economic distortions and corruption adversely impact Venezuelans on a daily basis. Venezuela's ails include a severe housing shortage, soaring inflation, periodic food scarcity and a failing electrical system. Despite these challenges, Chavez's approval ratings have barely dipped below 50 percent.

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A Stratfor Intelligence Report.
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