Chavez’s political Heir wins while Venezuela collapses in Welfare Binge
Nicolas Maduro has won the Venezuelan election with 50.66% of the vote and will serve as president until 2019. The pre-electoral polls for the first post Chavez elections had predicted a cakewalk victory for the former president’s political and ideological heir Nicolas Maduro against the centrist Henrique Capriles in the Venezuelan election. As late as Friday, Maduro was supposed to have won with a margin of at least 10%. Maduro’s victory, however, is pyrrhic.
No candidate in a country as divided as Venezuela could stake any claim with such a minimal difference. Capriles has made huge gains and that without Chavez’s charisma Maduro will not be able to uphold the ‘revolution’ in the long run. The minimal margin suggests, in particular, that Venezuela is divided and not just across the traditional ‘poor’ vs. ‘rich’ lines. Evidently, the two candidates are close because a good number of those who had voted for Chavez in the past decided to switch to Capriles. Like Maduro, who used some questionable campaign tactics including threatening those who voted for Capriles with an ancient curse. Maduro also rode excessively on Chavez’s legacy, claiming to be the ‘son of Chavez’. Capriles proved much more pragmatic and sensible, promising to keep many of Chavez’s social welfare programs – which is possible in view of Venezuela’s oil wealth – while opening the country and especially its extractive sector to foreign investment. Capriles also said that Venezuela would stop funding programs in Cuba, the Caribbean and other parts of Latin America to focus on infrastructure and programs at home. Maduro will probably have to ease on some aspects of Chavismo in favor of some more practical policies.
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The photo-finish end to the campaign is a surprise; few expected the Capriles camp to be in a position to stake a claim for the outright victory but his camp has done just that tonight. The Maduro camp has done likewise, but there is far greater tension on that side; indeed, even if Maduro has managed to win, his position as president would be at risk of coups from other leading figures of the Chavez era – such as the president of the Assembly, Diosdado Cabello, who many consider Maduro’s chief rival and possibly from more conservative members of the armed forces. Maduro has dedicated his victory to ‘el Gigante’ (The Giant, i.e. Hugo Chavez) but the Bolivarian revolution he has promised to uphold may prove his undoing. In some ways, Venezuela’s future seems rather bleak. Maduro lacks the vision, intelligence (his campaign threats and claims suggest this is a man endowed with limited intellect) and charisma of his predecessor.
The election rather, while there is still a chance for some instability in the days ahead given the minimal margin and accusations that Maduro violated the rules, the Chavista model is falling and failing and the economy has collapsed. The Chavez years and his Bolivarian Revolution, or Chavismo, was funded by oil and involved social programs, nationalization, strict market regulation and political interventionism in other parts of Latin America. Chavez’s figure was at the center of it all and able to withstand the burden with larger than life charisma. This model has exhausted Venezuela’s resources and left the economy on the ropes. Maduro, who was citing president since Chavez underwent medical treatment legislated two currency devaluations in as many months, a clear symptom of economic exhaustion and runaway inflation. The country is at risk of economic collapse, which would lead to considerable social instability as the government itself (no longer run by Chavez) would lose all legitimacy with its voters. For all of Chavez’s talk to diversify the economy – while keeping foreign investment at bay – Venezuela is still wholly dependent on oil revenues, generating more than 90% of its foreign currency from this commodity.
The United Nations Human Development Index, measuring national progress in terms of education, health and income, has ranked Venezuela as having the second highest growth rate in Latin America. Chavez’s policy did have an effect in bringing down poverty (though oil prices also increased significantly since 1998 when Chavez took power for the first time), lifting domestic market and consumption, driving the construction and financial services sectors. While Chavez took all the praise for this program, Maduro, with his much smaller victory margin than expected, will be left to pay the bill and Venezuela has engaged in ‘binge’ welfare. Oil exploration is crucial for recovery. The government plans to double its oil production to three million barrels a day today to six million in 2019. This means that Venezuela will have to open to foreign investment. Had Capriles won, the United States and the West would have likely come back to Venezuela. Under Maduro, ‘foreign’ investment can only mean one source: China. China has already become a key player, with loans totaling about $ 40 billion and such reliance will certainly increase now. China will likely demand even more privileged access to resources to the Orinoco basin fields, among the most prolific in the world.
Maduro said that “Venezuela has the world’s most perfect system” and that three large international companies were willing to invest in the country “because Venezuela is the center of economic development in the region.” He promised to fight insecurity in the streets and concluded by assuring that the history of the Bolivarian Revolution “continues” because “the people are its guarantee.” Maduro’s voters will soon wake up to discover a hangover as they realize that the Bolivarian binge has been excessive and unsustainable.