STRATFOR.COM Global Intelligence Update
21 March 2000

Chavez Facing Serious Challenge in Upcoming Election

Summary

Ironically, the revolutionary politics that propelled Venezuelan
President Hugo Chavez to power are now being turned against him.
Venezuelans will go to the polls on May 28, but this time they are
questioning the honesty and convictions of the president who ran on
an anti-corruption platform two years ago. The chief beneficiary of
the public's doubt is a onetime comrade of the president, former
Lt. Col. Francisco Arias Cardenas. Arias is now poised to put an
end to this mercurial chapter in the history of one of the world's
largest oil-producing nations.

Analysis

On March 15, former Lt. Col. Francisco Arias Cardenas entered the
presidential race in Venezuela. A former comrade of President Hugo
Chavez, Arias is hoping that his own revolutionary credentials will
help him defeat the president. Arias claims that Chavez - who has
depicted himself as a populist - has become a tool of corrupt
civilian advisors, betraying his anti-corruption campaign of 1998.
The former governor of Zulia state, Arias is backed by the
Democratic Action Party (AD) and the Social Christian Party
(COPEI), as well as by former military officers.

The contrast is striking. In 1998, Chavez shocked much of the
Western hemisphere by running a campaign steeped in revolutionary
rhetoric and promises of an anti-corruption campaign. A former
paratrooper who helped lead an unsuccessful coup attempt in 1992,
Chavez played on his image of honesty and claimed to be
incorruptible. Instead, he charged the dominant political parties
with failing to invigorate a stagnant economy. Chavez was aided, as
well, by the low price of oil, which made Venezuela's oil-dependent
economy and politicians easy targets.

Two years later, the economic situation has hardly improved. The
rise in oil prices that began in spring of 1999 brought a boom in
Venezuela's oil revenues, but little trickled into the country's
economy. Natural disaster, in the form of last December's
mudslides, has brought more of the country's poor into the cities.
A resultant rise in unemployment and inflation has caused the crime
rate in the Caracas, the capital, to soar.

Both Chavez and Arias share an important set of experiences, but
have taken divergent paths. Both were military officers; each
participated in a failed 1992 coup attempt. Chavez went to jail.
Arias went on to become governor of Zulia state, an important oil-
producing region. Arias worked with foreign oil companies, the
environmental movement and Venezuela's Indian population. Chavez
carved a rhetorically revolutionary place for himself in the
country's politics and implied that he would cut ties with U.S. oil
companies. Only recently, Chavez has toyed with relations with
Cuba, refused U.S. troops the right to come ashore during flood
relief efforts and re-kindled a territorial dispute with
neighboring Guyana.

Today, the coalition that brought Chavez to power has started to
splinter. Last week, the Fatherland for All Party (PPT) and the
Movement toward Socialism (MAS) party split from Chavez, nominating
their own candidates for office. On Feb. 4, the eighth anniversary
of the aborted coup, three former co-conspirators accused him and
his advisors of corruption, publicly breaking with the president.
The three said the president had lost sight of the objectives of
the "Bolivarian Revolution" and become as corrupt as the political
elites he once campaigned against. In reality, the break was due to
the growing influence of Chavez's civilian advisors.

In order to defeat Chavez, the AD and COPEI have turned to the only
candidate who can viably challenge Chavez. AD and COPEI have
already come out in support of Arias. Caracas Mayor Antonio
Ledezma, a former member of the Democratic Action Party, has
announced that he will withdraw from the presidential race in order
to help consolidate support behind Arias.

The prospect of replacing Chavez with Arias would have strong
appeal to foreign oil companies, which have feared all along that
Chavez might nationalize their holdings.
Washington would also look favorably on his defeat; the president
has challenged U.S. influence in the region. In May 1999, Venezuela
refused to allow U.S. counter-narcotics flights over Venezuelan
territory. Arias appears less prone to upset U.S.-Venezuelan
relations.

Still, Arias faces two hurdles in winning the presidency. One, by
associating himself too closely with establishment parties, Arias
leaves himself vulnerable to the charge that he is a candidate of
Venezuela's elite. In addition, Chavez has been a popular
president. Polls conducted in late February found that Chavez held
an approval rating of 71 percent.

To oust the president, the opposition is offering up the same
formula that Chavez used to oust the establishment: campaigning
against corruption and dressing it up with revolutionary rhetoric.
The country's political establishment is fighting fire with fire.
As the race heats up and the election draws near, neither candidate
will be, according to the other, revolutionary enough.





(c) 2000, Stratfor, Inc. http://www.stratfor.com/

_______
Macdonald Stainsby
-----
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