Hugo Chavez and the 'U-Turn'

So there I was in my previous post - "Good News, Bad News; from the Havana-Caracas Axis" -trying to paint Hugo Chavez into a less than agreeable corner. Well this weekend the news coming out of Caracas is that Chavez has made significant, positive U-turns on two contentious policy issues.

First off he has called upon FARC to end their struggle and release all their hostages. Quite a turn around from a few months ago when he was trying to get the rest of the international community to see FARC, not as terrorist organisation but as a legitimate army. This, of course, did little to help Venezuelan – Colombian relations.

Mr Chavez, whom Colombia has accused of financing the Farc, said they were "out of step" and their war was "history". In his weekly television and radio programme on Sunday, Mr Chavez urged the Farc's new leader, Alfonso Cano, to "let all these people go". "There are old folk, women, sick people, soldiers who have been prisoners in the mountain for 10 years," he added. The Venezuelan president said ending the rebellion could lead to a peace process between the rebels and the Colombian government. "The guerrilla war is history," he said. "At this moment in Latin America, an armed guerrilla movement is out of place." ('End Struggle, Chavez urges FARC', BBC News 09/06/2008)

Secondly Chavez has agreed to change the so-called ‘spy law’ that had proven so controversial.

He acknowledged "errors" in the newly enacted Law on Intelligence and Counterintelligence and will fix them to assure it fully complies with Venezuela's Constitution. He gave examples and cited Article 16 that cites the possibility of prison terms for persons not cooperating with intelligence services. It's a "mistake," said Chavez and "not a small (one)." The new intelligence services won't oblige anyone to inform on others. Doing so is "overstepping," and "I assume responsibility" for the error and will fix it. He continued: "Where we make mistakes, we must accept this and not defend the indefensible....I guarantee to the country, in Venezuela (this law will assault) no one! And no one will be obliged to say more than they want to say....(We) will never attack the freedom of Venezuelans, independently of their political positions. Liberty....is one of the slogans of our socialism." ("Chavez Revising, Not Revoking Venezuela's New Intelligence Law" - Baltimore Chronicle & Sentinel 09/06/2008)

This is all very well, but what I think is most worrying about Chavez’s running of Venezuela has more to do with his mismanagement of the Venezuelan economy. An economy which should be booming given the state of record-high oil prices. He may wish to redistribute wealth and create as much social justice as he want, but this is no good without the sound management of an economy that ist as inflation-hit and unattractive to investment as is the case right now.

With the country's most recent statistics showing consumer price rises of 29.1% in the 12 months to the end of March - the highest rate of increase in Latin America - now might not be the best time for inflation-busting pay deals. But on 1 May, Mr Chavez gave public sector workers an across-the-board salary increase of 30%. [...] GDP grew at a rate of 10.3% in both 2005 and 2006, but this slowed to 8.4% in 2007, while the respected survey organisation Consensus Economics forecasts that it will grow by just 5.6% in 2008. [...] Instead of investing in PDVSA to increase production, the government has used the firm as a cash cow, milking its funds to finance social programmes. [...] There is strong evidence that Mr Chavez's nationalisation programme, which has also extended to electricity, telecoms and the cement industry, is frightening off foreign investors. None of this appears to be doing ordinary Venezuelans any good. The lack of investment has left industry unable to keep up with growing consumer demand, while price controls imposed by Mr Chavez on about 400 basic goods have led to food shortages. ("Chavez in pre-election cash spree" BBC News 26/05/2008)

As the age-old saying goes, "it's about the economy stupid!" So whilst we can argue back and forth about his democratic credentials, his ability to do the right thing with regard to terrorist groups in neighbouring countries, his ability to maximize Venezuelan growth as a means to enhance sustainable development is what really mattes. And on that front he does seem to be someway off the mark for now.

For more on the issues I've mentioned, check out this piece in the International Herald Tribune, "Timely reversals show Chávez's political instincts"