Municipal Elections Test Chávez Popularity AS/COA Online 11/21/08

Election workers set up voting machines for Venezuela’s Sunday vote. (AP Images)

Venezuelan President Hugo Chávez hailed the results of Sunday’s municipal elections as a signal that voters “ratified the building of the historic project of Bolivarian socialism.” Indeed, his Partido Socialista Unido de Venezuela (PSUV) won 17 of the 22 governorships up for grabs on November 24, when Venezuelans turned out in droves to vote. Venezuela’s electoral agency reported that more than 11,000 electronic voting machines were deployed and 130 high-level international observers from 52 countries oversaw the process to ensure transparency.

Chávez is expected to use the PSUV’s victories as a means to strengthen his mandate and reform the constitution. But the opposition made important gains as well, winning crucial governorships along with the mayoralty of Caracas, arguably the second most important political seat in the county. As Teodoro Petkoff noted in Tal Cual, the opposition made important strides by winning states that accounted for a little more than half of the Venezuelan population but also represented the country’s most important economic, cultural, and political centers.

In addition to choosing 22 of 23 governorships, elections included races for 328 mayoralties and hundreds of legislative offices. With such a large number of contested seats elections up for grabs, the elections measured Chávez’s popularity in a polarized society. The Christian Science Monitor examines how the country finds itself governed by a socialist government that controls vital economic resources but also maintains a capitalistic society that embraces stylish and upscale living.

These heavily contested elections link back to Chávez’ narrow defeat in a December 2007 vote on his proposed constitutional reforms. At the time, the opposition drew strength from newly organized student movement, which counted activist Yon Goicoechea among its leaders, and helped deal a blow to Chávez’ intentions to modify the constitution and engrave in it his so called “socialism of the 21st century.” Still, after the vote, Chávez tightened control over the economy, nationalizing cement, iron, and dairies industries as well as the Banco de Venezuela. He also took steps to circumvent defeat, passing 26 laws that mirrored most of the previously rejected constitutional reforms by using special legislative powers granted by Congress before they expired in July.

Months before Sunday’s municipal elections, the government dealt a blow to the opposition that strengthened Chávez’s hand: The electoral council barred nearly 300 mostly opposition candidates from running for office based on corruption allegations rather than charges. Leopoldo López, the popular mayor of the Chacao municipality of Caracas and a frontrunner in the race for Caracas mayoralty, was among the candidates disqualified. Yet he has remained a prominent figure in this campaign cycle, emphasizing that the opposition movement is “an alternative” rather than “anti-chavista.” Read an exclusive AS/COA interview with López about his alternative political platform.

Among the chief issues Venezuela’s fiscal soundness and growing crime rates. In particular, the upswing in violent crime, which has doubled over the past decade, stood as the top concern for voters. The homicide rate now stands at 48 murders per 100,000 inhabitants (compared to 5.6 per 100,000 in the United States) the Washington Post reports. Shortages of basic food staples like milk and beef harmed Chávez’ popularity rates in the past; since then, the government worked to guarantee sufficient food supply with mixed results.

Yet some argue that Venezuela’s financial outlook is not as grim as has been depicted. Oxford Analytica forecasts that there will be no short-term default in the Venezuelan economy and says that, despite the dropping oil prices, the government should have enough cash to move forward with its high social and fiscal spending in 2009, thanks to hefty reserves and low public debt. Mark Weisbrot, co-director of the Center for Economic and Policy Research writes for ReVista, Harvard’s Latin American review magazine, that despite constant attacks against Chávez’ heavy fiscal spending by the media and foes, the poverty levels in Venezuela dropped significantly since 2003. Weisbrot points out that extreme poverty indicators went from 29.5 percent in 1997 to 9.6 in 2007.

Updated with poll results November 24, 2008.

Read the article as published at the AS/COA website.

Download a PDF file (not updated version) here.

Predicting U.S.-Brazil Ethanol Policy AS/COA Online 11/10/08

Byline shared with Carin Zissis.

An ethanol plant. Some firms have felt the crunch of rising production costs and lower prices. (AP Images)

With a new U.S. administration on the horizon, questions arise over opportunities for cooperation between Washington and Latin American countries in the field of biofuels. In particular, how will an Obama presidency affect collaboration and negotiations between the United States and Brazil in the field of ethanol?

In his latest Miami Herald column, Andres Oppenheimer suggests President-elect Barack shrink U.S. dependence on Middle Eastern oil by working with Brazil, Central America, and the Caribbean to produce sugar-based ethanol, which is both cheaper and better for the environment than the corn-based ethanol produced in the United States. During campaign season, the Obama-Biden ticket proposed working with leaders from across the hemisphere on a new “Energy Partnership for the Americas” to support of clean energy. Obama also voiced support for deepening relations with Brazil through developing markets for biofuels and promotion of “green” technology. The future president has praised Brazil, where more than 70 percent of cars are flex fuel, for providing a model for taking steps toward energy independence.

Yet Obama’s praise for the Brazilian biofuels industry may translate to supporting ethanol subsidies in the United States rather than reducing a tariff on Brazilian ethanol. Bloomberg reports that Obama will likely continue the current administration’s policies of subsidizing the industry, including tax credits.The cost of ethanol production has grown while more supplies of the fuel spell price drops. Less than a week before the November 4 election, VeraSun Energy, the biggest U.S. ethanol producer, filed for bankruptcy protection, according to the Financial Times.

In the past, Obama supported a 54 cent per gallon tariff on imports of sugar-based ethanol and voted for the Farm Bill, which maintains the tariff for two more years. The tariff has been a source of consternation for Brazil, which stands as the world’s biggest sugar-based ethanol producer. A New York Times article examines Obama’s ethanol policy on the campaign trail.

But in a May appearance on “Meet the Press,” Obama acknowledged that rising food prices could spur a policy change, saying, “[I]f it turns out that we’ve got to make changes in our ethanol policy to help people get something to eat, then that’s got to be the step we take.” Moreover, opportunities exist for cooperation with Latin American countries that would sidestep the tariff. By making use of its locations and a recently signed free-trade agreement with the United States, Peru stands poised to expand sugarcane-based ethanol production. AmericaEconomia reports that millions in investments from U.S., Brazilian, and domestic companies in northern Peru could lead to a production boost to supply the U.S. market, given that the FTA allows Peruvian products to enter the United States duty-free starting in 2009.

Meanwhile, Brazil’s ethanol industry could see short-term losses as a result of the credit crunch and related shrinking investments. Still, new deals are cropping up, such as a proposal by Archer Daniels Midland to invest $500 million over seven years in new sugar mills and boosting crop production in Brazil. Addressing a conference at the Organization of American States last month, former Brazilian Agriculture Minister and Co-Chairman of the Inter-American Ethanol Commission Roberto Rodriguez highlighted Brazil’s goal to increase the amount of sugarcane used in producing ethanol to 51 percent from the current level of 41 percent, offering growth and job opportunities.

In the Fall 2008 issue of Americas Quarterly, both Bolivian opposition leader President Jorge Quiroga and Gerdau Board Chair Jorge Gerdau Johannpeter suggest the next U.S. president should deepen ties with Brazil. Visit the new AQ website.

Read the original article published at the AS/COA website.

Download a PDF file here.