Venezuela: The Current Balance

Summary

Venezuelan President Hugo Chavez so far has held steady against a two-week strike protesting his rule. The president has benefited from a fractured opposition and the loyalty of top military commanders. The results of an opposition march in coming days may prove critical, especially if gas and food supplies run out.

Analysis

Venezuela is now more than two weeks into a general strike aimed at unseating President Hugo Chavez. Though there are many signs that Chavez is running out of options, the campaign against him has been under way for months, and he has proved rather adept at riding out the storm. Moreover, the fractious opposition repeatedly has proved equally adept at snatching defeat from the jaws of victory. Stratfor therefore pauses to assess the current conflict in Venezuela from both perspectives.

Weighing heavily against Chavez is the fact the Venezuelan economy has largely shut down. The strike remains in force and has spread from Caracas to other manufacturing and industrial cities, including Maracaibo, Valencia, Puerto La Cruz-Barcelona and Puerto Ordaz. Key state-owned producers of steel, iron, aluminum, ferroalloys and other industrial commodities are reportedly shut down, and their last export shipments are stalled in port due to port workers' participation in the strike.

Much of state oil producer Petroleos de Venezuela (PDVSA) is shut down, with about 2.3 million barrels per day of crude and refined products off the market. Industry sources claim that 70 percent of Venezuela will be out of gasoline completely within a day, except for what people have in the tanks of their vehicles.

If true, this could be a critical moment for the regime, since military sources report that the armed forces have no gasoline reserves of their own. Venezuelan defense planners never foresaw the possibility that the world's fifth-largest oil exporter would run out of gasoline, which is why they did not establish large military fuel-storage facilities. Sources also report that attempts by government supporters to restart the oil industry have damaged key refinery equipment, which could delay a resumption in gasoline supply even were the strike to end today.

Chavez has said he is tapping the Venezuelan Central Bank's foreign exchange reserves in order to import milk, rice and other basic foodstuffs. But without oil revenues, $15 billion in reserves cannot last long. And with the country's commercial ports almost completely shut down and most bulk carriers refusing to break the blockade, Chavez is reportedly resorting to military aircraft to fly food into the country.

The opposition Democratic Coordinator (CD) has thus far avoided traps set by the Chavez government or major blunders of its own. Opposition representatives have not walked out of negotiations mediated by Organization of American States Secretary-General Cesar Gaviria, and they have refrained from making intemperate and confrontational statements.

The opposition has also avoided general violence, though in the past few days there have been clashes in normally placid middle-class neighborhoods as opposition members attempted to drive out Chavez supporters. Some 1.5 million people attended an opposition march in Caracas on Dec. 14, and leaders expect more than two million people at a march planned for Dec. 19 or 20.

Finally, the Venezuelan military remains divided, though that division has resulted in inertia rather than infighting. Top generals with a vested interest in the Chavez regime continue to back him, while lower-ranking officers are reportedly aligned with the opposition. Sources among those backing the opposition have made it clear that they are unwilling to move against the government unless Chavez acts first in a clearly bloody and unconstitutional manner that could justify a coup.

Countering all this are several factors in Chavez's favor, the most important of which is that the political opposition has no apparent leadership or cohesion. Without this -- and with the debacle of last April's abortive coup still fresh in their minds -- none of the various opposition factions are willing to move decisively against the government. They have done well to hold the strike together, but their best strategy appears to be to wait Chavez out. It is a simple war of attrition, and it remains unclear which way the bulk of the population will jump when and if food and gasoline finally run out.

Chavez does not appear to be panicking, nor are there any obvious fractures within his innermost circle. The top military command remains loyal to him, and he still appears to control key infantry and armored units. Chavez also has maintained enough control over his armed Bolivarian Circles that violence has been limited, though the threat remains high. The group remains an asset rather than a political liability.

If the situation in Venezuela deteriorates to violence, Chavez also reportedly has Cuban and Colombian paramilitary forces at his disposal. The threat of violence alone is enough to thwart more substantive opposition from much of the population.

Economically, the government retains some room to maneuver in the form of $15 billion in foreign exchange reserves. It has begun to receive help in restarting the energy sector, with some 300 Libyan, Indian and Filipino oil industry workers already in the country. However, it will take a great deal more skilled workers to revive an industry from the well to the gas pump.

In the meantime, there are at least a few days' worth of gasoline reserves in the country. As most if not all of those are under government control, they can be meted out to priority users to last even longer. Ultimately, oil-producing Venezuela may be forced to import gasoline from its OPEC partners, since it is much easier to reopen the ports than to restart the refineries.

Since the opposition strategy is to outwait the government, Chavez' control of the remaining gasoline supplies, food imports and any international relief plays significantly in his favor. Strike fatigue appears to be growing among the populace. Moreover, support for the strike was divided from the outset. As gasoline and cooking gas shortages grow this week into a national supply crisis, public opinion could start turning against the opposition.

Finally, the United States, by intention or neglect, has opted to let events in Venezuela run their course without interference. Washington is singularly focused on building a coalition for a war on Iraq, and creating another Allende would only justify and ossify European opposition to U.S. efforts at proactive international policing. Moreover, Washington's priority in Venezuela is stable oil production. With a divided opposition and the very real possibility for long-term violent unrest in a post-Chavez Venezuela, a return to pre-strike status quo is perhaps the best option from the U.S. perspective. Chavez was an annoyance to Washington, not a threat. He kept the oil flowing.

What does this all add up to? This week appears to be critical. If the gasoline and cooking gas supplies run out and food shortages continue to deepen, an opposition march later this week could draw massive support. It also could spark a confrontation, if the march is directed at the presidential palace as planned. At that point, everyone shows their cards. Divisions in the military will be clarified, as will the resolve of Chavez, his supporters and his foes.

On the other hand, if the government is able to coordinate relief efforts, carefully directing the delivery of food staples, public opinion could swing against the strikers. Or if Chavez continues to exercise the same restraint he has demonstrated over the past two weeks, banking on the opposition's aversion to decisive action, the march could lap at the gates of the presidential palace and ebb away to no effect.

Watch the gas pumps. Then watch the march. If Chavez survives the weekend, he may well have weathered yet another storm.

Generally good Stratfor report re current Venezuela petro & political situation, but it can be easily misleading to false assumptions on two very key points...

#1 - Where they say; "Top generals with a vested interest in the Chavez regime continue to back him, while lower-ranking officers are reportedly aligned with the opposition." and "The top military command remains loyal to him, and he still appears to control key infantry and armored units."

The above would leave the reader thinking his top military are supporting him, and no doubt many of the ones who have perculated up to the top recently there are. But, they fail to enlighten the reader to the fact that Chavez top experienced officer core has recently been totally gutted. Over the last 60 days Chavez's top 30 Generals, most widely respected amongst both military and the public; including heads of Army, Navy, Air Force, National Guard, etc. have all voluntarilly left him in protest along with another 100+ officers, such as majors, colonels, etc.

They not only left, but are together publicly, openly and daily on TV condemning Chavez and became the sparkplug that has recently pulled together all these diverse opposition groups under one tent that has led to this most recent General Strike and the record-breaking large protest marches we are witnessing today.

These former officers are key players in what's gone down over the last few weeks and, most importantly, for what's coming, especially in that they have commitments of support from over 18,000 more troops still inside Chavez military awaiting orders from them. (In the meantime, they are daily feeding intel back out to their former commanding officers.) See the list/photos/comments of these brave senior military officers, publicly and openly defying Chavez, and risking it all, here...
http://www.militaresdemocraticos.com/en/oficiales.html.

The second point where this report fails is where it concludes and endorses: "With a divided opposition and the very real possibility for long-term violent unrest in a post-Chavez Venezuela, a return to pre-strike status quo is perhaps the best option from the U.S. perspective. Chavez was an annoyance to Washington, not a threat. He kept the oil flowing."

Chavez, and his unbridled praise for, active alliances and support with, and openly proclaimed desire to have Venezuela become like; Cuba, Iraq, Libya, and China does not equate to a sustainable future supporter of U.S. interests, not by a long-shot. But, very dangerously, just the opposite!

This is not empty rhetoric from Chavez to be ignored, but even as this report admits above that he reportedly: "...has Cuban and Colombian paramilitary forces at his disposal." Where do you think they came from? And, should we be surprised to discover that China has made more 'investments' in Venezuela than in all of the rest of South America, including Mexico, combined!

Chavez, according to the top military that have recently left him, is an active supporter of the FARC/ELN Columbian revolutionists, that US is currently fighting, and they are supported materially in exchange for lucrative drug trade that's transported via official health dept vehicles here across Venezuela with Puerto Rico as the foreign destination.

And, Chavez donated 1 million $'s to Al Queda in Afganistan shortly after 9/11. He also publicly excused his Chavista supporters burning USA flags then by saying USA brought 9/11 upon itself.

If U.S. does nothing, or worse, supports Chavez for illusion of stable oil in the short term, this administration will eventually be seen to have facilitated another, much more dangerous, Cuba in this hemisphere!

The millions of Venezuelans, along with his top military that have deserted him, and are now in the streets protesting Chavez's cubanization of their beloved country know it all too clearly, they've been having to live through it...

Variations of that same "NO CUBA HERE!" sentiment is on a lot of those banners being carried down there right now...

We all here in the U.S.A. better get up-to-speed on this historic fight for freedom in Venezuela that'll surely impact us here, and quick, too!

Attitude-wise, we could hope here in the USA for no better allies than the Venezuelan people. According to the just published 2002 Global Attitudes Survey by the Pew Research Center in Washington; 82% have a favorable opinion of the USA, and that is amongst the highest ratings of all the 44 countries surveyed. And, in regard to supporting the US led war on terrorism, 79% favor it while only 20% oppose it!

Clearly, no country in South America holds more promise for being a strong and effective ally and supporter of the USA, perhaps none better in this entire Hemisphere, *when* Chavez is gone and remnants of his regime are fully rooted out. Also, though, there is no current government in this hemisphere that is a more "Clear & Present Danger" to the USA with the continuation and expansion of Hugo Chavez type initiatives. Unchecked, Chavez will be able to do throughout this hemisphere what Fidel has only dreamed/wished he could do!

-Shane (My recent eye-witness report from mil opposition hdqtrs here)

Dog Gone, My fear is USA, for need of stable oil sources in the short term, won't even speak out against Chavez abuses against his people and his actions and support with Castro/Hussein/Gaddafi and Columbian terrorists and drugs, etc.

They (USA) don't need to have people on the ground there doing anything that would be seen as intrusive, but they do need to be vocal about all that he's up to, loud & clear. I'm afraid they won't even do that.

USA rants & raves about terrorist nations the world over, but giving Chavez a pass now, IMO, will be later revealed as the greatest administration blunder ever when Chavez begins fulfilling his goals to infect all of the Southern Hemisphere with his Bolivarian revolution.

Think Fidel Castro with no embargo restrictions and with billions of dollars at his disposal and the 5th largest oil reserves and an unending desire to export the revolution and terrorism throughout the region, and that's what you've got right now with Chavez.

The world needs to know and the USA from the Oval office on down should be leading the charge telling all. Then let the world media, OAS and UN try and still side step their need and obligation to fully expose, villify and condemn him. They won't be able to or they will be seen as shills for the tyrants.

This is fixing to be Cuba all over again, but 1,000 times more dangerous to this hemisphere, if this valiant effort by the Venezuelan people to regain their country is ignored by the USA.

-Shane

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