Published by Minyanville
Another week and another twist in the tale of President Hugo Chávez. On Friday, the unpredictable leader announced that he would be returning to Cuba in order to begin chemotherapy for his cancer over the weekend. “We're going to give it everything we've got,” Chávez said as he boarded his flight to Havana on Saturday. “It's not time to die. It's time to live.”
Talk of possible successors to the Bolivarian revolutionary has again sprung up. For the first time in his 12-year presidency, Chávez has delegated some power to his Vice President and Finance Minister.
However, knowing full well that he is the revolution, the socialist firebrand cannot be seen to cede too much of that governance. “Chávez still resists transferring [full] authority to his Vice President, and it remains to be seen how many important decisions will be made by others,” said Michael Shifter, president of the Inter-American Dialogue think tank in Washington.
The worry for many analysts is that in going through chemotherapy, Chávez will be unable to govern but also unable to let go of power. This will lead to more confusion for ministers used to his top-down style. They will be too scared to do anything lest they upset their boss and therefore too timid to run a government.
“Either Chávez will refuse to give up real decision-making or, if he is incapacitated, his inner circle will engage in a fierce power struggle that could become quite chaotic,” adds Shifter.
While a power struggle may be on the cards, there is not a single member of Chávez’s government that stands out as ready to take over. All lack the charisma and personality that has kept Chávez in power for so long. The “Marxist in the family,” as Chávez jokingly describes his elder brother Adán, may be the most likely candidate, worrying many who already believe Chávez’s own policies are too radical.
Investors are hoping for regime change in next year’s elections—more likely with Chávez’s illness. Traders are betting on this, although, says Benedict Mander of the Financial Times, “some of the recovery probably mirrors a general rally in emerging markets as risk appetite increases as a result of the Greek fiasco.”
In a note to investors last week, ratings agency Moody’s said:
“A Chávez victory next year would likely be accompanied by a continued deterioration of Venezuela’s credit fundamentals, limited political volatility and very strong near-term capacity to pay. An opposition victory, on the other hand, could be accompanied by a more market-oriented policy mix supported by capital inflows and enhanced investment prospects, but the political transition would be very challenging and with potentially large near-term negative credit events.”
The opposition must get itself together and pick a strong candidate for primaries in February next year.
On top of his personality, the primary factor in Chávez’s success in staying in power has been Venezuela’s huge oil wealth. Latin America holds one-fifth of the world’s oil, and thanks to heavy crude deposits in the Orinoco Belt, some 85% of this is in Venezuela.
Recently released statistics from OPEC show that Venezuela’s reserves surpassed those of Saudi Arabia last year, making it the world’s largest holder of oil reserves, with 296.5 billion barrels in 2010, up 40.4% on 2009.
With this in mind, state oil firm Petróleos de Venezuela’s (PDVSA) Nelson Martínez was keen to push plans for the Belt to the region. Two refineries, a coastal export terminal and the drilling of 10,500 wells are planned, with an invitation extended to every country in Latin America and the Caribbean—as well as private corporations—to participate.
“[By 2015,] Venezuelan oil output will be 4.5 million barrels per day, so long as that does not harm the worldwide structure of production and prices, and it will be refining 3.6 million barrels per day,” Martínez said.
The company is, however, reducing investments in Europe. It is Brazil that has really pushed discoveries in Latin America, with 45 billion barrels available in the Tupí and Jupiter oilfields off its Atlantic coast. That gives it 5% of Latin America’s reserves.
There are worries though that funds are drying up or at least being badly organized. Chávez famously donated money to the poor in New York’s Bronx when he visited in 2005. However, that money is no longer available, with no explanation, according to community groups there.
Over in Bolivia where Evo Morales—leftist and friend of Chávez—presides, government programs are taking a hit as investment from Venezuela can no longer be relied upon.
This slack commitment to foreign projects is just another sign that Chávez may be losing his touch.