Photo Jonathan Blair

Tuesday, March 12, 2013

Empty stardom: Hugo Chavez's international legacy

Hugo Chavez was a global star. A photogenic and rotund figure with a warm personality, his aggressive self-promotion and bombastic attacks against the United States have made him famous around the world. With his friend Lula from Brazil, he has given Latin America a visibility the region had not enjoyed since the Castro-Guevara duo ruled the waves in the 1960s and 1970s. A self-declared revolutionary trying to sell his ways as "socialism for the XXIst Century," Chavez has been spending much of the country's oil wealth on social programs at home, which made him immensely popular among poor Venezuelans. He has also used Venezuela's oil revenues to build a broad coalition in Latin America and the Caribbean and his diplomacy has courted any world leader willing to denounce Yankee imperialism. While alive, he really made his mark on the world. What of all this will survive him?

The Chavez "model" was about spending money: on food, education and social services. Producing that money was not really part of the picture and the whole endeavour would quickly have run empty without Venezuela's oil wealth.  Lacking investments, even the oil sector is now struggling and the rest of the economy is in shambles. The country's massive energy resources, however, could easily draw foreign interest and relaunch domestic production, sustaining further social spending. As a model for a country that does not have the same riches—and that means almost everybody on the planet—there is not much of use in Hugo Chavez'  version of socialism.

Oil was also the honey that held together his "Bolivarian Alliance of the Peoples of the Americas" (ALBA). Most of its members were small oil-dependent countries from the Caribbean and Central America and for them, Chavez death is tragic. Most severely threatened is Cuba, which was getting some 10 to 13 billion dollars a year—for a country with a GDP of about $70bn—in subsidized oil and credits from Venezuela. Haiti's annual support, worth $400million, is also at stake, as are the checks going to Nicaragua, Dominica, Surinam, and so on. The rationale for the whole program was tied to Chavez' personal pretentions to regional leadership. Devoid of his charisma and soon to confront strong pressures to keep together a fractious domestic coalition, his successors are likely to put much of this money to domestic use.  Neither Argentina, nor Bolivia or Ecuador, the next largest and richest members of ALBA, are in a position to provide glue money. Without much of a joint agenda, it is hard to see a real future for that coalition.

Aside from the predicament of ALBA's retinue of oil-dependent states, could Chavez' death mean trouble for the region and beyond? The consolidation of what is really a new regime in Venezuela will likely be messy. The country is already the most violent in South America, drug trafficking, corruption and nepotism are rife, and Chavez had done little to consolidate political institutions that would exist without him. Political uncertainty, in turn, will not help the economy. The United States, Colombia and Brazil have significant trade with Venezuela. With about 1 million barrels a day, Venezuela is the US' fourth largest source of oil. Colombia and Brazil have large trade surpluses with the country and find there a welcoming market for their manufactured exports. Instability, moreover, could perhaps trickle over the long and poorly controlled borders they share with Venezuela. In a worst-case scenario, deepening corruption and violence could lead to the emergence of a large, rich and messy narco-state at the northern tip of South America.

While the opposition, which could win the April 14 elections, or the new leadership, whose qualities were not given much space to show, could get the country back on track, these are causes for worry. Not about oil, however: if Venezuela exports much oil to the US, it imports a lot gasoline from there as its refining capabilities are meager. Dependence here is a two-way street and there is much more to lose for Caracas in this game. The risks of political instability and criminalization are much more serious and their management the real challenge for external actors. The US would be ill-advised to get too closely involved, however. Brazil and Colombia, with more at stake and, especially for Brazil, much more access and local credibility, will be best placed to lead an international effort at containing the potential ripple effects of Venezuela's difficult times, and to help along the process of de-polarization that the country will now need to go through. Canada, which has little at play in this all game, should probably content itself with a supporting role.