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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject11/19/2003 2:46:21 AM
From: energyplay  Read Replies (1) of 74559
 
Venezuela: Chavez Turning Up Heat on Opposition

Stratfor Anaysis
Strategic Forecasting
Petroleumworld.com 11 16 03

Venezuelan President Hugo Chavez is warning that, if necessary, he will use violence to prevent his opponents from forcing a recall election that could force his resignation. Chavez appears to be getting substantial help from Cuban leader Fidel Castro, who might be sending thousands of Cuban security personnel to Venezuela to support Chavez's Bolivarian Revolution. Since Venezuela under Chavez has become Cuba's principal economic lifeline, the survival of Chavez's regime is vitally important to Havana.

Analysis

Venezuelan President Hugo Chavez is seeking aggressively to halt a national voter petition drive that the National Electoral Council (CNE) has scheduled from Nov. 28-Dec.1, 2003. Only 2.4 million valid voter signatures are needed to compel Chavez into a presidential recall election no later than March 2004.

All recent opinion polls show that more than 70 percent of Venezuelan voters want Chavez to resign, so opposition leaders could easily obtain well over the minimum number needed to force a recall election -- if nothing disrupts the four-day campaign to round up enough valid signatures by the end of November. Some opposition leaders claim that the petition drive will gather more than 4 million votes. However, Chavez has vowed that the petition drive will fail miserably, and he is moving aggressively on several fronts to ensure that the effort does not succeed.

For example, Chavez has created what several sources in Caracas describe separately as a "parallel state" that is spending hundreds of millions of dollars in the country's poorest slums to encourage voters to ignore the petition drive. Chavez also has been using his narrow majorities in the National Assembly, Supreme Court and CNE to erect multiple political and legal barriers to the recall process. However, Chavez also has made it very clear in the past week that if these efforts fail, he still would not step down from power.

Chavez declared over the weekend of Nov. 8 that he wants to rule Venezuela until 2021, when he would be 67 years old, and he urged the National Assembly to reform his Bolivarian Constitution to make that goal possible. Under the constitution that Chavez drafted in 1999, he could only be president until 2013. Chavez also warned that his regime has the loyal backing of the armed forces, plus a newly created military reserve and "the people" -- meaning his poor supporters. He declared in a speech that his supporters are "armed and ready to defend the Bolivarian Revolution from external and internal threats."

These aggressive statements could be dismissed as typical posturing by Chavez, who frequently threatens his opponents with violence. Over the past month, however, unnamed Venezuelan intelligence officials cooperating with some elements of the opposition have documented a very large increase in Cuban nationals arriving in Caracas, according to daily El Universal. Between Sept. 27 and Oct. 27, 2003, these unnamed officials tracked the arrival of 11,530 mainly male Cuban nationals on 76 separate flights that originated in Havana and terminated at Simon Bolivar International Airport in Maiquetia, some 25 miles from Caracas.

The El Universal report said that all of the arriving Cubans identified themselves to Venezuelan immigration officials as "health professionals or technicians," and listed the Cuban embassy in Caracas as their residence while in Venezuela. They disembarked at the airport's Ramp 4, reserved exclusively for presidential and military use, and were transported by bus in groups to Caracas and other cities throughout the country. They also brought what one source described to Stratfor as "unusually large amounts of luggage for visitors from Cuba," none of which was searched by airport customs officials.

Two sources working in official government positions at Simon Bolivar Airport confirmed to Stratfor separately on Nov. 9 that thousands of Cubans did, in fact, arrive on as many as three daily flights during the period stated by El Universal. One of these sources described the majority of the arrivals as being "mostly young men whose ages appeared be mainly in the twenties and thirties." The sources could not confirm that the Cubans identified themselves as health professionals.

Perhaps they are health professionals. Since 1999, Venezuela has been the Cuban government's economic lifeline thanks to an oil supply agreement that provides Havana with more than 50,000 barrels per day of crude oil on very soft payment terms. Cuba reportedly owes Venezuela several hundred millions of dollars relating to those oil shipments and other economic aid Chavez has been providing to Havana. In all, the agreement between the two countries is believed to be worth more than $5 billion to Havana, making it by far the largest pillar of economic support the Cuban regime has today.

Since the CNE ruled in mid-October that the recall petition drive could be held at the end of November, Chavez has launched a flurry of social spending programs targeted directly at the poor --- his core base of political support. Over the past three weeks, thousands of Chavez's Venezuelan supporters have been deployed into the country's poorest slums to dispense food, health care and direct cash handouts to the poor. Since Chavez's economic aid to Cuba is vital to Castro's regime in Havana, it's possible that Castro has sent thousands of Cubans to Venezuela to help Chavez implement these spending programs ahead of the petition drive.

Stratfor does not subscribe to the conspiracy theories advanced in Caracas by both Chavez supporters and opponents, but it's possible that the increased influx of Cuban nationals involves more than simple humanitarian support. For example, at a recent forum in Havana on the Cuban government's humanitarian medical support programs, a Cuban official said that since 1998 Havana has deployed 3,801 "health professionals" to 22 countries around the world. Even allowing for Venezuela's severe public health care crisis, the reported deployment of 11,530 Cuban doctors and health technicians to Venezuela in a single month appears to be very high compared to the number Havana has sent over the past five years to nearly two dozen countries.

Moreover, dissident sources within the Venezuelan armed forces (FAN) also told Stratfor on Nov. 10 that the arrival of so many young Cuban men in the past month has alarmed military opponents of the Chavez regime. "Their physical presence in Venezuela is intimidating," the source said. "It makes the edges of the FAN very fuzzy. We don't know how far the networks of pro-Chavez military officers may extend into the armed civilian militias Chavez has created since 1999. We don't know what, if any, links there may be between the military reserves recently created by Chavez and the Cubans now in Venezuela."

Chavez has created a military reserve force already totaling at least 15,000 mainly poor members. Eventually the force will expand to 100,000, according to the Venezuelan Defense Ministry. Stratfor sources within the FAN are concerned that many of the recently arrived Cubans are not medical doctors, but military and security personnel on tap to back Chavez if violence erupts again. During the short-lived military rebellion that ousted Chavez in April 2002 and the subsequent two-month strike that crippled Petrroleos de Venezuela at the end of 2002, there were multiple reports of Cuban nationals wearing Venezuelan military and National Guard uniforms at several locations where Chavez supporters and opponents clashed in Caracas.

Another indication that violence might disrupt the petition drive is Chavez's recent accusations that the U.S. Central Intelligence Agency is plotting with opposition leaders to topple Chavez in a coup. U.S. Secretary of State Colin Powell denied those allegations recently, prompting Venezuelan Vice President Jose Vicente Rangel to dismiss Powell as a "supremely ignorant liar." Venezuelan Foreign Minister Roy Chaderton and Lt. Col. Miguel Rodriguez Torres, the head of Venezuela's political police (DISIP), also have charged that the Bush administration is involved in clandestine plotting against Chavez.

The accusations could be part of Chavez's strategy to frighten voters out of signing the recall petitions. However, it's also possible that Chavez may be preparing to disrupt the recall drive and repress his opponents -- possibly by staging acts of political violence that could include staged assassination attempts on Chavez himself. Both Rangel and the head of DISIP have warned recently that Chavez could be targeted for assassination.

The Bush administration appears to be going out of its way to avoid Chavez's thirst for a political confrontation. Powell recently said that the country's crisis is one that the Venezuelans must democratically resolve themselves. With so many bigger issues on their plates, neither the White House nor the Pentagon wants to divert resources to settle a violent political crisis.

Chavez's own experience with the Bush administration after he survived the April 2002 military rebellion may have taught him that senior officials in the U.S. government panic at the slightest hint that it could be supporting undemocratic regime changes in Latin America. As a result, Chavez may be prepared to ignore democratic processes, employing violence to cripple his opponents and stay in power. He believes that as long as Venezuelan crude oil keeps flowing to the United States the Bush administration will pretty much let him do what he wants.

Nov 10, 2003

Copyright 2003 Strategic Forecasting LLC. All rights reserved.

Editor's Note:This article appeared originally in Strategic Forecasting Inc. Nov 10, 2003 , (www.stratfor.com). Its views are not necessarily those of PETROLEUMWORLD. Petroleumworld reprint this article in the interest of our readers.

Petroleumworld.com 11 16 03
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