- - Tuesday, February 26, 2013

The recent return home from Cuba in the dead of night of cancer-stricken Venezuelan President Hugo Chavez is likely not a sign that his condition is improving. In fact, it is more likely that his doctors have decided there is nothing more they can do than to allow him to go home to die peacefully, surrounded by family.

That suits just fine senior Venezuelan officials and their Cuban minders, who need Mr. Chavez’s physical presence nearby to better stage-manage a chavista succession. They now can tell the Venezuelan people, with whom Mr. Chavez maintains a deeply emotional connection, that the “comandante” remains intimately involved in the process, “approving” all decisions.

It appears the only decision to be made at this point, however, is whether Mr. Chavez’s inner circle declares the ailing leader “incapacitated” or whether they wait out the inevitable before calling elections within 30 days, as the constitution mandates.

If they have their wits about them, they probably will move to “retire” the Venezuelan leader sooner rather than later. A few months down the road, they are likely to be facing a much less favorable political climate than they are enjoying today. That’s because Mr. Chavez has bequeathed to them a ticking economic time bomb, which is set to blow up in the faces of the very people Mr. Chavez has claimed to represent — the poor and working masses.

Much will be written in the coming weeks that Mr. Chavez’s legacy is that he transformed Latin American politics by giving a voice to the voiceless. Less will be focused on just what the cost will be to those very same people, as well as their children.

Once the emotion of the moment passes, Venezuelans will be left to pick up the pieces from Mr. Chavez’s gross mismanagement of the Venezuelan economy. To squander Venezuela’s vast oil wealth takes real effort, but Mr. Chavez and his profligate spending proved up to the task. In what has been an abject lesson in the perils of populist economics, his actual legacy will be soaring inflation, a bloated public sector, a crippled private one, electricity blackouts, shortages of basic goods and one of the highest homicide rates in the world.

The first sign of more difficult days ahead came on Feb. 8, when the government ordered a 46 percent devaluation of the country’s currency. Inflation, already running at 22 percent, is now expected to surge, prices of goods will increase, and shortages of items such as toilet paper and cornmeal (the staple of arepa cakes) and even automobiles will grow worse.

Of course, the burden of such economic dysfunction always falls on the poor and working classes, who devote a higher portion of their incomes to basic necessities. As a result of the devaluation, Venezuelans’ real income is expected to decrease by 20 percent this year, at the time when their purchasing power already has dropped to 1966 levels.

What’s more, it will only get worse. Analysts say another devaluation is almost inevitable, given that this latest one will not come close to balancing the government’s books. Rumors are also rampant that the government will soon introduce rationing measures for basic food items.

Nor is any relief likely to come from the private sector, which has been plagued by price and currency controls, expropriations, government interventions, legal uncertainty and oppressive labor laws. Indeed, under Mr. Chavez, the number of private companies has dropped from 14,000 to 9,000. While a decade ago, 8 out of 10 jobs were generated by the private sector, today that figure is 6 out of 10.

Neither does it appear that China is willing to continue to pay Venezuela’s bills. Having already lent Mr. Chavez $39 billion against future oil sales, it recently sent home Venezuelan Foreign Minister Elias Jaua empty-handed, with no indication that further loans were in the offing.

The fix is already in that the uncharismatic Nicolas Maduro will be entrusted with trying to keep chavismo alive without Mr. Chavez. Whether he and his Cuban advisers can successfully exploit Mr. Chavez’s image to confront formidable challenges on the horizon remains to be seen. One thing is certain, however: As opposition leader Henrique Capriles tweeted upon Mr. Chavez’s return to Venezuela, “Hopefully the president’s return means that Mr. Maduro and his ministers can get to work. There are thousands of problems to resolve.” Without a doubt.

Jose R. Cardenas was acting assistant administrator for Latin America at the U.S. Agency for International Development in the George W. Bush administration and is an associate with Vision Americas.

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