February 20, 2009 | Commentary on Latin America, Energy and Environment

Chavez on Despots' Term-Cutting Edge

Venezuelan strongman Hugo Chavez must be the envy of aspiring despots the world over today. On Sunday, he received the endorsement of the Venezuelan people for potential life tenure as president of his country by a vote of 54 percent to 45 percent. Mr. Chavez has already been a blight on the map of Latin America for the last 13 years, and he now promises to run for office again and again and again - like a malignant Energizer bunny.

Why the Venezuelan people voted for him is probably no mystery. For one thing, Mr. Chavez has been buying their votes with his version of "21st century socialism," meaning populist policies funded by oil revenue. For another, as this was the second time Venezuelans were asked to vote to eliminate presidential term limits, they may well have reasoned that the tenacious Mr. Chavez would keep asking them the same question until they got the answer right. As a consequence, they may just have resigned themselves to their fate.

For the rest of us, the referendum produces that sinking feeling that democracy once again is on the retreat after almost two decades of great advances. The axiom about the inverse relationship between proven oil reserves and good governance certainly holds demonstrably true - i.e., the more oil you have in the ground, the likelier you are to be governed by a despot.

But as easy as it is giving up on democratic reforms in regions where autocracy today is on the rise, supported by recent years' high oil prices, it is premature to do so. In countries like Venezuela, Russia or , the presence of energy wealth and high oil revenues has masked the need for economic reform and diversification, as well as covering up mismanagement, waste and inefficiency. When oil prices tumble as they are now doing, this nasty gaggle of chickens will come home to roost.

Mr. Chavez may well be looking forward to another six years in power and more, but he may get more than he bargained for. While oil revenues have kept him afloat with money to buy the favor of the Venezuelan people for two terms already, the recent drop in oil prices could eventually lead to social upheaval in Venezuela and an end to the Chavez era.

The Venezuelan economy depends more on oil revenues today than ever. Oil accounts for 92 percent of Venezuela's exports, compared to 64 percent a decade ago. Venezuela's budget, which reflects $78 billion in public spending for this year, is based on a price of oil in the range of $60 per barrel. That is certainly not a realistic figure anymore. Due to declining demand for energy due to the global economic downturn, oil today stands at just $35 per barrel. It might decline as far as $25 per barrel in the second quarter, according to the forecast of Morgan Stanley.

It sure sounds like Venezuela's poor - Mr. Chavez's power base - are in for lean times (or leaner times, more precisely), which they probably will not like very much.

Will this make Mr. Chavez less of a foreign policy problem for the United States in the future? Could be. According to the Annual Threat Assessment delivered Feb. 12 to the Senate Select Committee on Intelligence by Director of National Intelligence Dennis Blair, "Chavez is likely to face new constraints in 2009 as he attempts to expand his influence in Latin America. ... falling oil prices could further undermine his ability to buy friends."

Similar constraints will face other international troublemakers with oil - Russia and , for instance. The scenario of the Russian government running out of money, even as it embarks on an ambitious course of revanchist expansion in its neighborhood, is of course very pleasing to contemplate. So is the thought of having problems funding its nuclear program. Unfortunately, it is always the people who will suffer the funding shortages first before military programs see any shortfalls.

Despots like those running Venezuela, Russia and are always in search of external enemies to justify to their people the despots' hold on power - enemies usually identified as the United States or Israel. Still, their ability to weather declining oil revenues falls far short of that of the United States and other modern economies, a silver lining in dark economic times.

Helle Dale is director of the Douglas and Sarah Allison Center for Foreign Policy Studies at the Heritage Foundation.

About the Author

Helle C. Dale Senior Fellow for Public Diplomacy
The Margaret Thatcher Center for Freedom

First Appeared in the Washington Times