Referendum abuse in Venezuela

From The Economist link text showing how the President has abused government funds to get the "yes" result he wanted.

The president has won a referendum to abolish term limits. But the coming economic storm may make this a hollow victory

WHEN Hugo Chávez first proposed abolishing a clause in the constitution he himself had sponsored which limits the president to two consecutive terms Venezuelans rebuffed the idea. That was in a referendum in December 2007. But Mr Chávez, who claims to be leading a socialist revolution, is not a man to take “no” for an answer. Describing the opposition victory as “shit”, he vowed to reverse it. On February 15th, after a blitzkrieg campaign involving the brazen use of state resources, the president finally got the answer he wanted. Some 55% of a high turnout of voters said “yes” to a referendum question so convoluted as to be barely intelligible. The constitution will now be amended to permit elected officials at all levels to stand for the same post as often as they like. So Mr Chávez will no longer automatically have to leave office in January 2013, after 14 years in power. But will Venezuelans want to elect him again?

Paradoxically, the opinion polls that accurately forecast the result also showed a slim majority against the indefinite re-election of the president. The explanation is that Mr Chávez once again turned the vote into a plebiscite on himself, says Luis Vicente León of Datanálisis, a leading pollster. Thanks to his rapport with many poorer Venezuelans and to oil-financed social programmes, Mr Chávez remains popular. But Mr León adds that there was “an explicit threat” in the president’s message to the electorate: “without Chávez there will be war”. In belligerent speeches, he accused his opponents of seeking violence, ordered the police to disperse student demonstrations with tear-gas and said anyone who did not vote for him was guilty of treason. That seemed to apply especially to the more than 3m Venezuelans on the government payroll. On one occasion he held up a list on television and said he would be checking who voted and who did not.

“Yes” propaganda in the streets, on public buildings and on radio and television overwhelmed the opposition’s flat and leaderless campaign. But some consolation for the opposition was that for the first time it won over 5m votes. In a presidential election in December 2006 Mr Chávez won by a margin of 25 percentage points. Both the referendum and local elections last November showed that the gap between the two sides in a politically polarised country is now just nine points.

Mr Chávez’s support may fall further along with the economy. Unless the oil price rises, Venezuela will earn only $21.6 billion from oil this year, down from $92.9 billion last year, according to VenEconomy, a business newsletter. Oil is just about the only thing the country now exports. This would represent the sharpest decline in export earnings Venezuela has ever experienced. Oil income accounts for around half of government revenues. The fiscal deficit this year may reach 9% of GDP.

“Crisis? Show me where the crisis is!” Mr Chávez scoffed recently, boasting that Venezuela was well-equipped to weather the storm. He has saved an unspecified amount of past oil revenues and the Central Bank still has reserves of $29 billion (the government snaffled $12 billion from the bank last month). But the bravado is based partly on the hope that the oil price will rise next year, and the conviction that Venezuela’s private banks will be happy to finance this year’s deficit, albeit at a price. They may well do so. According to one banker, the banks have a “gigantic appetite” for government paper because other lending is even more unattractive. The government caps interest rates, but inflation is running at over 30%.

Even so, spending cuts look inevitable. In victory Mr Chávez warned supporters that 2009 would be a year of “consolidation”. Already the wave of nationalisations that began shortly after the last presidential election has come to a halt. The state has dropped plans to buy Banco de Venezuela, a subsidiary of Spain’s Grupo Santander, for $1.2 billion, for example.

Only when things improved in 2010 would the revolution move forward, the president said. But it will survive: if anyone has to suffer, it will not be the poor but “the oligarchy,” he insisted. The government may seek a partial rapprochement, for pragmatic reasons, with private business, but seemingly not with the opposition mayors and governors elected in November, who have faced government harassment. For example, the city hall in Caracas, the capital, has been occupied for weeks by chavista squatters backed by armed police sent by the interior ministry. The government calls this a “labour dispute” and says Antonio Ledezma, the new mayor, must sort it out for himself. The opposition hopes to secure a legislative majority at a parliamentary election next year. But Mr Chávez will certainly never go down without a fight.