- The Washington Times - Tuesday, August 1, 2000

Venezuelan President Hugo Chavez now begins the second stage of his "social revolution" with his re-election to a fresh six-year term, during which he will focus on the country's moribund economy, Alfredo Toro Hardy, Venezuela's ambassador, said yesterday.

"We had to change the political and institutional situation as a precondition for economic reform and growth," said Mr. Toro Hardy, speaking to editors and reporters at The Washington Times a day after the election.

"We needed a political storm to get rid of the vested interests… . We have reached to point of closing the first stage and entering the second stage, and now the priority will be the economy," Mr. Toro Hardy said.

Mr. Chavez, billed as the hemisphere's second leftist leader after Cuba's Fidel Castro, with whom he has close ties, offered an olive branch to investors asking for their help in building a prosperous nation.

"Let us launch a new revolutionary economic model for Venezuela," said Mr. Chavez, who has advocated a "third way" between "savage capitalism" and "unrealistic communism," said Mr. Chavez, celebrating his victory over former ally Francisco Arias.

Mr. Chavez, 46, won re-election to a six-year term with 56 percent of the vote and a 20-point margin of victory over Mr. Arias, a former governor of the oil-rich Zulia state.

Mr. Chavez was first elected president in December 1998. During his first 18 months in office he successfully campaigned to change the constitution in an effort to end the corruption of the "rancid oligarchs."

Meanwhile, Venezuela's economy has suffered. Despite an estimated $300 billion in oil revenues in the last 25 years, there is little to show for it. The standard of living is in decline, social services are disappearing and an estimated 300,000 people have lost their jobs since the beginning of the year.

Venezuela is in recession, with the economy contracting 7 percent last year despite a quadrupling of the price of oil, the basis of Venezuela's economy.

The rich are afraid of Mr. Chavez and his hostile rhetoric, and according to recent reports, about $8 billion has left Venezuela in the last 18 months seeking safe haven in foreign banks. Mr. Toro Hardy said that number is exaggerated, with the true figure between $2 billion and $3 billion.

And with 80 percent of Venezuela's population mired in poverty, he has alienated much of the country's middle and upper classes with his calls for social revolution and his close association with Mr. Castro.

He has sought ties with China and plans to visit Iraq, Iran and Libya during a tour of Organization of the Petroleum Exporting Countries (OPEC) members this month.

Mr. Toro Hardy, said that Venezuela is both a "South American and Caribbean nation," and Mr. Chavez sees his role as facilitating better economic and political relations within that sphere. He said that U.S. media have made too much about Venezuela's relationship with Cuba.

"President Chavez has been demonized by many people," said Mr. Toro Hardy. "He also has good relations with the Dominican Republic and he has been to Brazil six times. Why doesn't anyone write about that?"

Mr. Toro Hardy said Venezuela's national oil company is looking into investing in Cuban oil fields at Cienfuegos, a project that was begun in an earlier administration. He said the final decision would be made not as a way to support Cuba's bankrupt socialist economy, but a "business decision."

The State Department yesterday, in congratulating Venezuela on its elections process, said it was not concerned about Mr. Chavez's friendship with Mr. Castro.

"I don't think I have any particular worries here," said Phillip Reeker, State Department spokesman.

Analysts believe that if Mr. Chavez fails to turn the economy around, Venezuelans could lose patience. And Mr. Chavez's new constitution gives them a way out: Three years into his new six-year term, Venezuelan voters now have a constitutional right to revoke his mandate through a referendum.

Others predict an even faster denouement. Several former military officials say officers upset over Mr. Chavez's perceived attempts to politicize the armed forces and militarize civilian society are conspiring to overthrow him.

• This article is based in part on wire service reports.

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