Monday, December 20, 2010

Hugo Chavez’s Latest Power Grab

by Arnold Ahlert

On Wednesday, it was announced that Venezuelan president Hugo Chavez has asked the National Assembly to grant him “special powers” to enact laws by decree for a period of one year. Of the Assembly’s 165 lawmakers, the overwhelming majority of which are pro-Chavez supporters, only 5 voted against the measure. Final approval of the initiative is expected early next week. If granted, this would be the fourth time in Chavez’s 12-year reign that he would be given permission to bypass Venezuela’s legislative body.

“The measures we have to take are deep. Almost 40 percent of the country was affected” (by heavy rains), said Vice President Elias Jaua. Those rains, which caused severe flooding and and heavy mudslides have forced over 120,000 newly-homeless Venezuelans in to public shelters. The initial decrees Chavez is aiming to impose unilaterally include laws to streamline the process of building roads and housing, and an indeterminate raise of the nation’s value-added tax, which is currently 12%. “The situation continues to be critical, and we need to tend to it with a set of laws,” said Chavez, who is also seeking powers to issue additional decrees in the country’s “socio-economic system.” According to the Associated Press, this category includes telecommunications, the banking system, information technology, the military, rural and urban land use, and a new geographical regionalization of the country. According to Chavez himself, “all of these laws will be within the framework of the constitution.”

The constitution to which Chavez is referring is the Bolivarian Constitution of 1999, which replaced the constitution enacted in 1961, which had been in effect longer than any other. Venezuela has had 26 constitutions between 1811 and 1961 . On December 15th, 1999, 71.8% of the voters approved the new constitution, although 55.6% abstained from voting. According to constitutional lawyer Tulio Álvarez, the Bolivarian Constitution of 1999 “does not set any limits on the scope and duration of any special powers granted by law to the president, and that “Article 203 says that legislators will define the scope and duration of any special powers.” He adds that the new National Assembly which convenes on January 5, 2011 could “remove/suspend any special powers granted to Chavez by the current assembly, but would require at least 99 votes to do so. However, the opposition does not have 99 votes in the new assembly.”

The three previous opportunities Chavez was granted to bypass the National Assembly occurred in 1999, 2001, and 2007. In 1999, Chavez, despite fierce opposition from congress, enacted two new tax laws and a revision of the income tax code. In 2001, he decreed 49 additional laws, including “agrarian reform measures” and a law sharply increasing taxes on foreign oil companies. The Hydrocarbons Law raised the royalty rate oil companies were paying the country from 16.6% to 30%, and increased stake given to the Venezuelan nation on any oil industry investment, to 51%, effectively nationalizing the industry. In 2007, Chavez was granted 18 months of “special powers” which he used to seize control of privately run oil fields, nationalize telecommunications, electricity and cement companies and impose still more taxes.

In 2009, Chavez was granted permission to nationalize two Venezuela coffee companies which were accused of “acting as monopolies and flouting price controls by smuggling coffee into Colombia.” Iron companies were also nationalized in 2009. “Nationalize the iron briquette sector, there is nothing to discuss,” Chavez announced on national television.

Chavez opponents blasted this latest move, with one daily newspaper editor, Teodoro Petkoff, of Tal Cual there referring to it as a “Christmas ambush” and further characterizing it as a “brutal attack … against democratic life.” Petkoff may get far less opportunity to criticize Chavez in the future: according to published reports, Mr. Chavez is seeking new laws to further regulate the Internet and Globovision, the country’s last remaining TV station vigorously opposed to the his agenda. He is also urging lawmakers to pass a law barring non-governmental organizations (read human rights groups) from securing additional funding from the United States.

Can Chavez get away with it? The Assembly of 165 lawmakers which will be seated on January 5th contains 66 opposition members. As a result, some of Mr. Chavez’s agenda may be blunted. More importantly, some laws–such as granting Mr. Chavez “special powers”–require a two-thirds majority in order to pass. This is undoubtedly why he is seeking a vote prior to the new legislature being seated. Yet given Mr. Chavez’s track record, one has to wonder if such a constitutional restraint itself may soon come under attack.

Newly elected opposition lawmaker, Julio Borges, is convinced the legislation goes against the will of the voters. “As elected deputies, we’re asking for a meeting between the new assembly and the old one, so that people are respected–the voters and the constitution,” he said. Such a meeting appears unlikely. Mr. Chavez has announced his intention to seek a vote on the matter as early as Friday, which his critics contend is a move designed get what he wants while most Venezuelans are preoccupied with the Christmas holiday season.

Hugo Chavez was elected president on December 6, 1998 with 56.4% of the popular vote. His rise to power from revolutionary to the highest office in the country can be traced to Venezuela’s economic rise and fall, all of which centers around their principal commodity: oil. According to Venezuela’s Information Office, oil accounts for 75% of their exports, 50% of the government’s fiscal income and 25% of their GDP. Venezuela is a member of the Organization of the Petroleum Exporting Countries (OPEC) which, at its most recent meeting in Quito, Ecuador on December 13, voted to keep production in check as a means of ensuring continued high prices. Venezuela, along with their ally, Iran, took a hard-line stance at the meeting insisting that oil should be allowed to go beyond its current $80-$90-per barrel level, but Saudi Arabia blunted the demand for further production cuts.

It is no secret why Chavez sought the price increases: despite his efforts, Venezuela’s economy is in dismal shape. Their currency has been devalued up to 50% and they have the highest inflation rate in South America, which reached 27% in 2009, and now stands at 35%. Last February, Mr. Chavez enacted a 60-day energy state of emergency due to a drought, forcing businesses there to reduce their consumption of electricity by 20%, or be shut down. Foreign debt has increased by more than 250%, and though its economy is recovering somewhat, the International Monetary Fund (IMF) announced that “Venezuela will be the only country in the region whose GDP shrinks in 2010″ by 1.3%, which they attributed to “severe supply bottlenecks” and a “weak policy framework.” In addition, Barclays Capital, after meetings with Finance Ministry and central bank officials in Caracas, announced that Venezuela may once again “formally devalue its currency ‘at least’ 15% in early 2011.”

Chavez remains undeterred. He claimed the country has “the luxury of shrinking 5%” even as it remains able to raise salaries and pay for public works. “This is the inverse of capitalism,” he said last August. “There’s no crisis here.”
Actions speak louder than words. Cables contained in the Wikileaks release indicate Venezuela is courting many of the same oil conglomerates whose appetite for making investments there were soured by Chvez’s nationalization of the industry. “President Chávez, for his part, is acutely aware of the impact the country’s general economic trajectory has had on his popularity,” said one of the cables. Yet Chavez maintains his facade stating that the national oil company, PDVSA is “thriving” and more than capable of sustaining the “21 century socialism” which is the centerpiece of Hugo Chavez’s vision.

How far will Chavez go to implement that vision? This latest move follows a 2009 referendum allowing Chavez to run for a third term in 2012, which superseded a similar attempt that failed in 2007. And though the new national Assembly is still heavily weighted in his favor, it contains more opposition members than the previous one.
The real irony here is Chavez’s ostensible motivation for becoming de facto dictator of his nation: he feels such action in the only realistic response to a national “crisis.”

Perhaps one can be forgiven for noticing that such an idea, as in “never let a crisis go to waste,” hardly constitutes original thinking on the part of Hugo Chavez. Yet the differences between Venezuela and the United States remain stark. It is virtually beyond dispute that similar “solutions” for our own problems were thoroughly repudiated by voters on November 2nd. Unfortunately, it looks the Venezuela will continue to learn the hard lesson that would-be socialists across the globe have been forced to endure: life becomes infinitely more difficult when government “runs out of other people’s money to spend.”

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Arnold Ahlert is a contributing columnist to the conservative website

Copyright - Original materials copyright (c) by the authors.

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