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Volume 57 / Social Sciences

GOVERNMENT AND POLITICS: VENEZUELA


RENE SALGADO, Independent Consultant, Gaithersburg, Maryland


THE LAST FEW YEARS of Venezuela's political life have been marked by a changing political mood and increasing economic challenges. Rafael Caldera, Venezuela's president from 1969-73 under a center-right Christian Democratic party platform, took the oath of office again on February 1994. This time, with support from an improvised grouping called “Convergencia” and supplemental support from the old-left Movimiento al Socialismo (MAS), he promised a government of austerity and integrity.

Caldera has faced an unprecedented situation in the national Congress. Venezuela´s stable two-party system has severely eroded. Its historical protagonists, AD and COPEI, no longer dominate the political process; some of their most prominent leaders have fallen in disrepute. Caldera´s congressional support has been led by his Convergencia-MAS block, but it controls only some 25 percent of the seats and the president can not necessarily expect an enduring coalition with any of the rival congressional delegations. In spite of this, Caldera has enjoyed the support of congressional parties. A representative of Convergencia assumed the presidency of the Senate, and AD and COPEI acquiesced to the passage of most of the legislation requested by the president.

During his early months in office, Caldera reversed some liberalization policies enacted by his predecessor, Carlos A. Pérez. He also revived some practices of State-directed capitalism, giving the government broad authority to control prices and foreign exchange transactions. While Pérez faced a complex political situation, further complicated by coup attempts and formidable opposition by the political class, Caldera had to deal with adverse economic conditions, including high inflation and a severe banking crisis. During the short economic boom in the early 1990s, banks expanded while lax supervision allowed lenders to run wild. Many bank insiders benefitted from soft loans. The boom ended in the second half of 1993 and the economic situation deteriorated rapidly. In January 1994, less than a month before Rafael Caldera's inauguration, the second largest bank in Venezuela, Banco Latino, failed and was taken over by the government.

As of October 1994, the government had seized more than ten failed banks. This accounted for more than one-half of the banking assets in the country. The government guaranteed some $6.1 billion to depositors, which represented roughly 75 percent of the annual budget and a distressing 13 percent of the gross domestic product. In addition, about $3 billion of foreign reserves were lost in the first half of 1994. Additional bank failures continued through the year and on into 1995. Partly in response to the rapidly deteriorating situation, the government imposed blanket foreign exchange controls, with the exchange rate fixed at Bs. 170 to the dollar. Price controls were also placed on about 100 items.

Economic conditions became almost unsustainable during the first two years of Caldera's government. The government, however, only altered its policy course after the December 1995 state and local elections had taken place. Recognition that previous reforms had led to a severe political crisis may have prompted Caldera to choose a more conservative approach.

During the first quarter of 1996, the government significantly shifted its interventionist policy, and started to prepare a major stabilization program in consultation with the International Monetary Fund (IMF). The authorities increased domestic fuel prices, liberalized interest rates, unified the exchange rate system under a temporary float, abolished controls on current and capital transactions, eliminated price controls (except for medicines), and started strengthening the social safety net. The policy shift paved the way for a 12-month standby agreement with the IMF and its subsequent loan of approximately $1.4 billion with an additional $2 to $3 billion in loans coming from other multilateral institutions.

Privatization also gained support among policymakers. Although there are as yet no plans to reverse the nationalization of the oil industry, the government is eager for foreign investment, especially for exploration. Starting in 1997, the government announced plans for further privatization of the telecommunication monopoly, the sale of electric and metal sectors, including several aluminum companies, and the auction of the country’s banking system.

The current trends in Venezuela's political life are to some extent reflected in the recent political science and political sociology literature. Thus, while discussions of elections, political actors and processes, parties and social participation continue to have prominence, there is growing interest in presidential politics, governmental transparency, decentralization and regulatory policies. In spite of this, much remains to be done to achieve a better understanding of these policy areas as well as the processes and impacts of Caldera´s recent economic and political policy shift.

Using documentary analysis and survey research, Cáceres provides a useful treatment of electoral processes from 1959-93, including electoral reforms (item bi 95023267). Other treatments offering useful insights include: Marcotulio y Velandría on congressional electoral campaigns (item bi 95023280), Codetta on the evolution of political preferences during the 1960s, 1970s, and 1980s (item bi 95023285), and Hernández on substantive aspects of the personalized proportional representation system introduced in 1993 (item bi 96014985). Castillo Lara has written a useful collection of articles on behavioral and legal aspects of electoral and party politics at the national and local levels (item bi 95023297), while the W. Wilson Center offers an analysis of the December 1995 state and local elections, and their impact on the political balance of power and the stability of the political system (item bi 97003661).

Several discussions and analyses of political actors and political democracy are particularly useful. Giordani offers an empirically based treatment of the evolution of the party ideology and fundamental tenets of Movimiento al Socialismo (item bi 95023292). Yepes Salas provides a useful overview of Causa R party's evolution, platform, and organization, also empirically based (item bi 95023295). Molina, Pereira, and Vaivads analyze the role of political parties in the context of the 1990s political crisis, suggesting that party democratization is the key for democratic maintenance (item bi 96000949). A work coauthored by members of Movimiento al Socialismo critiques emerging party trends, notably, neoliberalism and alliances with other parties for electoral gain (item bi 95023282) . Last, but not least, Ellner´s discussion on Venezuelan trade unionism, offers an excellent analysis of the relationships between trade unions, political parties, and State policy vis-à-vis unions, and contains a wealth of information on their internal structures, financial interests, and long-term strategy (item bi 97003622).

Recent studies on civil-military relations take a historical turn. Arceneaux discusses the relationships between the transmission of military doctrine and institutional fragmentation in the context of the early 1960s unsuccessful military coups (item bi 96024891). Meanwhile, Krispin thoroughly examines the motivation, planning, execution, and outcomes of the 1945 and 1948 coups (item bi 97003650).

Examples of interesting discussions of broad historical or contemporary political trends are Ellner’s well-researched critique of the portraits of governments (1908-58) painted by political parties and revisionist historians on the period 1908-58 (item bi 96024891), and Urbaneja’s dense analysis of Venezuela's 19th-century liberalism and 20th-century positivist and democratic programs (item bi 95023266). In a useful collection of articles, Blanco addresses issues pertaining to Venezuela's contemporary sociopolitical life (item bi 95023271), while Serbin et al. focuses on current economic policies and emergent political actors (item bi 95023269).

The issue of transparency in government is gaining importance. La Roche comments on governmental corruption in such areas as management of customs and procurement (item bi 95023272). Capriles Mendez suggests several policy-oriented mechanisms to curve corruption and/or prevent inappropriate interference of vested interests in the policy process (item bi 95024945). Pantin and Rodriguez Valdez offer journalistic accounts of the links between money, finance, and political power in the context of the1994 bankruptcy of Banco Latino (items bi 95023287 and bi 95023286). A contrasting view of anti-corruption efforts is expressed by Miranda who praises attempts of Venezuelan authorities to eradicate money-laundering and drug-trafficking (item bi 97003641). Olavarría, on the other hand, argues that corruption in the banking system resulted from banking deregulation policies supported by former President Pérez (item bi 97003642).

Presidential politics has started to attract the attention of political writers. Escalante, a press secretary during the Perez and Velásquez presidencies, offers insider information on presidential politics (item bi 95023279). Lovera de Sola and Morón provide brief historical accounts of heads of government during the 19th and 20th centuries (items bi 95023277 and bi 95023293), while Quirós Corradi’s collection of articles contains favorable opinions about Carlos A Pérez and his policies (item bi 97003628). Finally, Ordóñez has written a hilarious book about power and everyday life in the Palacio de Miraflores, Venezuela's presidential residence (item bi 97003649).

On decentralization policies there is, as indicated above, growing interest and the issue is studied from different perspectives. Montaro looks at some actual and potential impacts of decentralization on the relationships between political parties and elected state governors and legislators (item bi 96023352). In a useful collection of articles, Revel-Mouroz examines Venezuela's regionalization and decentralization, including a discussion of Zulia's on regionalism and the importance of state universities in regional development (item bi 95023268). Chalbaud, Gabriela supplies an interesting historical overview of the country's centralist-federalist tendencies, current decentralization law and practices, and the successful governance experiences of several municipal governments (item bi 95023283). In a collection of essays, Marquez focuses on issues pertaining to decentralization, public administration reform, and policies on internal poverty problems(item bi 97003637). Finally, an interesting policy-oriented discussion of social policy is provided by the Comisión para la Reforma del Estado (item bi 95023275).


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