ARENA, FMLN Face Off in El Salvador AS/COA Online 03/10/09

Rotating campaign ads show the faces of ARENA’s Ávila (L) and the FMLN’s Funes. (AP Photo)

Update: FMLN candidate Mauricio Funes has been elected as the next president in El Salvador after winning with approximately 51 percent of the vote, ending the 20-year rule of the ARENA party.

Salvadorans head to the polls on March 15 to elect their next president. Voters will choose between the governing Alianza Republicana Nacionalista (ARENA) party candidate Rodrigo Ávila and the opposition’s Farabundo Martí National Liberation Front (FMLN) candidate Mauricio Funes. Recent polls and international media forecast that the leftist FMLN candidate appears poised to unseat ARENA, which has held power since 1989. Ávila says that a Funes victory would bring in a government similar to that of Venezuelan President Hugo Chávez.

A poll conducted by Central America-based CID-Gallup released two weeks before the elections shows Funes leading the race by more than five percent over his opponent. But the election is not won yet; President Antonio Saca noted that the key to win the election remains in the hands of undecided voters, who make up as much as 20 percent of the electorate.

Funes, a former television journalist, has long been outspoken critic of the government. The FMLN nominated him in September of 2007. Since then he has attempted to calm critics who point to the leftist roots of his party. In an interview with the Honduran newspaper La Prensa, Funes said his political platform uses Brazilian President Luiz Inácio Lula da Silva as point of reference rather than Chávez. He also said that, as president, he would not join regional agencies such as the Bolivarian Alternative for the Americas if doing so would threaten bilateral relations with the United States.

Ávila, a former chief of the national police, closed his campaign with a massive rally at the Cuscatlán Stadium in San Salvador shouting the slogan “Country yes, Communism No.” In an interview with Univision’s Jorge Ramos, Ávila extolled the economic improvements gained under two decades of ARENA rule. He also defended his record as a police chief in the 1990s. Ramos also interviewed Funes a week earlier.

The state of the economy and security stand as priority issues in the election. El Salvador has the second-highest homicide rate in the world after Iraq, reports the Miami Herald in an article about Salvadoran gangs. The Economist Intelligence Unit predicts a marked slowdown in the country’s GDP growth through 2010 and warns that, “regardless of the final outcome in the presidential election, no party will have an outright majority in Congress, complicating policy implementation in the next four-year term.”

The National Democratic Institute prepared a report on January legislative elections as well as the March 15 presidential elections. According to their data, ARENA had outspent the FMLN through January 18, with the former accounting for 65 percent of campaign spending and the latter just 19 percent. In the January election, the FMLN won a plurality of votes in the Legislative Assembly by winning 35 out of 84 seats. However, ARENA won the mayoralty of San Salvador, ending over a decade of FMLN control of the capital.

Some have wondered what role Washington will play in this election, given past U.S. involvement in Salvadoran politics. A Boston Globe op-ed recalls the country’s 2004 election, when the Bush administration drummed up fears by implying that an FMLN victory could result in a change in migratory status for Salvadorans living in the United States. According to the U.S. State Department, Salvadorans working in the United States sent $3.8 billion in remittances in 2008, benefiting more than 22 percent of the population. As expected, in December the U.S. Citizenship and Immigration Services bureau extended the Temporary Protected Status for Salvadorans until September 2010. Still, over 200 American academics wrote to Secretary of State Hillary Clinton asking for a U.S. government statement of impartiality.

Angus Reid Global Monitor offers a timeline and background information on the election.

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Chávez Clears the Road for Reelection AS/COA Online 02/18/09

Chávez will run for his second reelection in 2012. (AP Photo)

In a decisive electoral victory on February 15, Venezuelan President Hugo Chávez won the right to run for his second reelection and possible third presidential term after voters approved an end to term limits. This is a political rebound for Chávez, who lost a proposed constitutional reform in December 2007 and important mayoralties in municipal elections last November. With this renewed mandate, he faces the daunting task to deal with rampant insecurity and corruption, rising inflation, and imminent economic adjustments to his vast social programs and fiscal expenditures.

Venezuelan electoral authorities announced that the “Yes” vote won by 54.86 percent of the “No” vote received 45.13 percent with a participation of more than 70 percent. International observers gave the referendum high marks for transparency and underlined the trustworthiness of the referendum’s official tally. But Chávez’s use of all state institutions and media at his disposal to push the amendment strained the process since the beginning. Chávez exerted pressure by emphasizing the lack of political alternatives and warning that Venezuela would crumble without his leadership, said pollster Luis Vicente León.

The opposition accepted their defeat with temperance and asked Chávez to turn his attention to the domestic agenda. Caracas’ Major Antonio Ledezma said that hopefully politicians “have turned that page of the political agenda” and that people “voted yes to solutions for garbage disposal, insecurity, inflation, and anarchy that overshadows governability.” In an interview with the Los Angeles Times, Tal Cual Editor Teodoro Petkoff stressed important inroads made by winning 10 percent of the vote in this referendum in comparison to Chávez’s 2006 reelection victory margin of 64 percent. “And I don’t have the slightest doubt that the deterioration of Chavez’s support will continue through the next presidential election in 2012,” Petkoff adds.

Meanwhile, economists sound the alarm about the dangers laying ahead for the government due to falling revenue from oil exports and inflation. “I would say that Venezuela can count on a sizeable cushion of reserves and foreign exchange liquid assets to help it ride the current economic down cycle. But not for very long. By all accounts, Venezuela is destroying assets much more quickly than it’s been building them, given today’s oil prices,” says Eurasia Group’s Patrick Esteruelas in an AS/COA interview. The Financial Times reports that Chávez announced in his victory speech that he will redouble efforts to face the crisis; he was followed by his Finance Minister Ali Rodriguez, who cautiously referred to a stimulus package to control inflation but said that they are waiting to see at what level crude prices settle at to better determine their revenues for this year.

International leaders greeted Chávez’s victory at the polls positively. Colombian President Álvaro Uribe congratulated Chávez for his “democratic victory” in an effort to strengthen bruised bilateral relations. Spain’s government also praised the electoral outcome in Venezuela and urged for continued dialogue to bridge differences between the political parties, El Nacional reports. Even the U.S. government acknowledged the “civic spirit” displayed by Venezuelans and cautiously hailed Chávez’s accomplishment.

At a February 9 AS/COA panel discussion on the Venezuelan referendum, Barclays Capital Senior Economist for the Andes Alejandro Grisanti said that, even with a victory for Chávez on Sunday, he still must deal with harsh economic realities that could further harm his approval ratings when running for an hypothetical third term in 2012.

Read AS/COA extensive coverage on Venezuela’s electoral process and its oil-based economy.

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Chávez Tests Popularity AS/COA Online 02/12/09

Venezuelans decide about term limits for elected officials on February 15. (AP Photo)

As Venezuelan electoral workers set up voting stations and bottles of indelible ink for the February 15 referendum, the battle between the “Yes” and “No” sides heats up. On Sunday, Venezuelans head to the polls to decide whether President Hugo Chávez and all elected officials can run for reelection indefinitely. The referendum serves as a test of Chávez’s popularity at a time when inflation and crime rates have soared while falling oil prices threaten subsidies on food, fuel, and medical care. These social programs have thus far been the backbone of a strong chavista movement. But the opposition has made inroads as the economic cracks begin to show.

Yet the Venezuelan government remains confident on that regard, with Chávez claiming his country’s economy to be so strong that “[n]ot even a hair has been touched” by the global financial crisis. Despite his optimism, restructuring efforts are already underway. Citgo—a U.S.-based subsidiary of Petróleos de Venezuela S.A (PDVSA)—announced that it will cut its workforce of 3,762 by two percent, or approximately 75 employees. Additionally, PDVSA’s exploration and operational budget will be reduced between 30 to 40 percent in 2009, El Universal reports.

A new report by the Center for Economic and Policy Research offers up the country’s economic accomplishments in the areas of poverty reduction and GDP growth. But several experts and analysts take a less glowing view. “Venezuela is destroying assets much more quickly than it’s been building them, given today’s oil prices,” said Eurasia Group’s Patrick Esteruelas in an interview with AS/COA Online. Caracas-based Banco Mercantil recently predict that Venezuela’s economy will freeze and public financing could climb from $6.3 billion from last year up to $31.4 billion in 2009, reports Bloomberg.

The Economist offers a look at the political debate occurring among Venezuelans over the benefits of public services involving healthcare and subsidized food products against a backdrop of rampant crime and ballooning inflation. The lead-up to the vote has involved heavy polarization between the “Yes” and the “No” camps and even some violent outbreaks. On February 7, roughly one million people demonstrated in Caracas in support of the No vote and against an end to presidential term limits. Opposition leader Leopoldo López has urged voters to cast their ballots and repeat the December 2007 defeat of Chávez’s new constitution.

Chávez voiced his disapproval of the march but recognized that his followers should not downplay its importance and has gone as far as to condemn the actions of some supporters. A group of his most fervent followers, known as “La Piedrita,” staged teargas attacks on the Vatican diplomatic mission and the home of RCTV Director Marcel Garnier. They also went to so far as to make death threats against opposition leaders. Chávez responded to these actions with a hardened stance, labeling them terrorists and calling for the arrest of its leader Valentín Santana. Spanish newspaper El Pais published an interview with Santana in which he attempts to explain why his group declared some opposition leaders military targets. Additionally, the Venezuelan police arrested 11 suspects—including seven police agents—after a synagogue was attacked and ransacked by vandals on February 1.

At a February 9 AS/COA panel discussion on the Venezuelan referendum, Barclays Capital Senior Economist for the Andes Alejandro Grisanti said that, even if Chávez accomplishes a victory for Chávez on Sunday, he still must deal with harsh economic realities that could further harm his approval ratings when running for an hypothetical third term in 2011.

Sunday’s referendum may serve as Chávez’s last stand. Agencia EFE reports that Chávez vowed to recognize the electoral results, even in the case of defeat. The Venezuelan National Assembly announced that, should the “No” vote win out, the reelection proposal would no come up for another vote.

The Winter 2009 issue of Americas Quarterly features interviews with three candidates barred from running in the November 2008 legislative elections in Venezuela.

Read AS/COA interviews with Venezuelan opposition leader Leopoldo López and student activist Yon Goicoechea.

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Bolivia, Venezuela Vote Again AS/COA Online 01/21/09

Bolivians vote January 25 in a constitutional referendum. (AP Photo)

Voters in Bolivia are weighing in on their political futures as they take their turns in referenda once again. On January 25, Bolivians headed to the ballot box to vote in favor of a long-delayed constitutional referendum promised during President Evo Morales’ 2005 campaign. On February 15, voters in neighboring Venezuela participate in their own referendum on whether their president can seek indefinite reelection powers.
On Sunday, Bolivians approved the new constitution by as much as 60 percent, boosting Evo Morales’ mandate. The Cochabamba-based Democracy Center outlines top issues dealt with in the 411 articles of the new constitution, from reelection to land reform. The document would allow Morales to seek reelection once, opens the door to government takeover of unused tracts of land, limits the amount of land that could be purchased, and sets up risk-sharing arrangements for private oil firms, and guarantee access to social security.

Despite the strong showing in support of the constitution during Sunday’s election, four departments in the lowlands appeared to have rejected the document. The prelude to Bolivia’s Sunday vote reflected the deep divide among the country’s citizens in terms of how the country should move forward. In 2008, autonomy votes in those four departments sparked violent protests. A recall vote in August reaffirmed Morales’ legitimacy. An October compromise between government supporters and opposition leaders—accompanied by multiple changes to the draft of the constitution—paved the way for Sunday’s referendum.

In his blog Pronto, Bolivian political scientist Miguel Centellas warns about the political fractures running through Bolivia and notes that, even though Morales won the recall vote by a wider margin than he won the presidential election, his support dropped in eastern and southern departments. “As the date of the referendum approaches, new political divisions are emerging,” writes Centellas. Leaders of Bolivia’s evangelical movement, previously supportive of Morales, have come down on the side of “no” on the constitution, citing opposition to provisions they say encourage abortion and homosexuality. Furthermore, indigenous political leaders once aligned with Morales’ party Movimiento al Socialismo and former President Carlos Meza joined the voices against the document. Morales has accused his detractors of failing to offer viable political alternatives to his proposal.

Meanwhile, in Venezuela, the electorate voted and rejected a new constitution in 2007, dealing a blow to Chávez’s ambitions to mark Venezuela’s Magna Carta with his agenda. Venezuelans will soon decide whether to allow Chávez to run for reelection indefinitely. Keeping in line with constitutional law, Chávez’s Partido Socialista Unido collected more than 5.5 million signatures to hold the referendum. Facing the economic impact of declining oil prices, Chávez decided to push for the referendum as soon as possible, while his popularity continues to run high. The Los Angeles Times reports that, despite Chavez’s high approval ratings, polls show the president in danger of facing defeat next month. As the February 15 vote approaches, protesters against the vote have taken to the streets. On Tuesday, marchers clashed with police, who—under Chavez’s orders—used tear gas and water cannons to disrupt the marches.

The government announced that Chávez’s popular Sunday television segment Aló Presidente will not air until after the referendum. However, the president will write a new syndicated column three times a week starting January 22.

Read AS/COA interviews with Venezuelan opposition leader Leopoldo López and student activist Yon Goicoechea.

Updated on January 26, 2009.

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Venezuela’s Oil Diplomacy May Dim AS/COA Online 01/08/09

Citgo oil delivery to a low income house in Philadelphia. (AP Images)

Crude oil prices continue to fall, forcing countries such as Venezuela that rely heavily on oil exports to rethink their 2009 spending priorities. Earlier this week, the nonprofit organization Citizens Energy headed by U.S. Congressman Joseph P. Kennedy II (D-MA) announced that Citgo—the U.S.-based subsidiary owned by Venezuela—would curtail its fuel assistance program for low-income Americans. Two days later, Citgo and the government of Venezuelan President Hugo Chávez asserted that the program, which last year provided assistance to some 200,000 households in 23 states, would remain in place.

The reversal raised questions about whether Chávez’s plan to continue the program represents a costly political investment at a time when oil prices hover around the $40 per barrel mark. Venezuela’s Central Bank announced on January 8 that inflation reached 30.9 percent in 2008, the highest in more than 10 years. The Economist Intelligence Unit’s ViewsWire explains that Chávez “has his eyes more on the ballot box than on his purse strings.” The analysis argues that, as he plans to call for a national referendum that would allow him to seek unlimited reelection, he must maintain his support base among the poor through social programs.

Yet, to strengthen its balance sheet, Caracas may find that it must cut back social programs that extend beyond its border, such as fuel assistance programs. A Stratfor podcast explains that “it is practically impossible” for the Chávez government to avoid cutting social programs, with cheap oil programs facing the greater risk. The report also suggests that, before reducing popular subsidies on medicines and gasoline, Venezuela may increase sales taxes, default on government contractor’s compensation, or even halt payments on previous nationalization deals. An analysis by RGE’s EconoMonitor reports that even if average oil prices float around $50 per barrel in 2009 and spending levels mirror those of 2008, Venezuela’s fiscal budget may fall from a surplus of 0.7 percent last year to a 5.5 percent deficit in 2009. For now, they may rely on cash reserves that stand at roughly $38 billion, but risk a ratings downgrade if those reserves are depleted. “Venezuela’s government is stuck. It needs to maintain spending to ensure political support, but it may find it harder to access needed funds,” write RGE Analysts Italo Lombardi and Rachel Ziemba.

Left-leaning Upside Down World recognizes that “Venezuela has reportedly not been keeping up with current [Petrocaribe] quotas” and other initiatives like the Bolivarian Alternative of the Americas Banco del Sur, Petroamerica, and Petroandina have stalled. Through the Petrocaribe cooperation agreement, Venezuela has provided cheap oil with preferential payment terms to 16 Caribbean countries since 2005. (Although Cuba is not part of the pact, Caracas also supplies Havana with 100,000 barrels per day plus contracts to boost Cuban refining capacity.) To ease worries over Venezuela’s ability to continue supplying affordable oil, Dominican Republic President Leonel Fernández in December offered a reassurance that Petrocaribe provides elasticity on purchases and payments to the countries receiving fuel shipments and emphasized Chávez’s commitment to keep the agreement afloat. In an op-ed for the Jamaican newspaper Gleaner, University of the West Indies Lecturer Robert Buddan underlines the importance of the pact for Jamaica, saying “Petrocaribe stands out as the best example of the benefits of regional cooperation.” Former Attorney General of Grenada Lloyd Noel, writing for Caribbean Net News, recognizes how critical energy cooperation remains but concedes that “Now that the gas and oil bonanza is down to its lowest value for years, Venezuela in particular is no longer as influential in the negotiations as when it was selling crude oil at $140 per barrel as opposed to $40.”

Read a previous AS/COA analysis on how falling oil prices have taken a toll on Venezuela’s economy.

En español.

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