Francisco Rodríguez served as chief economist of the Venezuelan National Assembly in 2000–04. He is currently assistant professor of economics and Latin American studies at Wesleyan University.

Venezuela’s Revolution in Decline Beware the Wounded Tiger Francisco Rodríguez

On Sunday, March 2, Venezuelans were understood as part of a consistent strategy to treated to a spectacle that was surreal even create external enemies that will allow him by the standards of this Andean nation. to rally support around his presidency. They Speaking on his weekly television program are the expression of the political realities of Aló Presidente , Venezuelan President Hugo eroding popular support and a collapsing Chávez announced the mobilization of ten political coalition. army battalions to the Colombian border, Indeed, attempts to provoke external and threatened to send the Venezuelan air and internal enemies have by now become force to directly attack Colombian President the order of the day in . In re - Álvaro Uribe. sponse to growing food shortages, the gov - What made this announcement particu - ernment has threatened to expropriate the larly bizarre is that it occurred in reaction distribution companies that it blames for to an incident more than 500 miles from hoarding basic foodstuffs. In February, when Venezuela’s borders, involving the entry by a British court froze $12 billion in assets of ’s armed forces into Ecuadorean the Venezuelan state-owned oil company territory in pursuit of a group of leftist Petróleos de Venezuela, S.A. (PDVSA ) in re - guerrillas. Indeed, Venezuela’s reaction was sponse to a demand filed by ExxonMobil, so disproportionate that it decided to sus - Chávez threatened to cut off oil supplies to pend diplomatic relations with Colombia at the United States. (In contrast to previous the same time that —the aggrieved threats, in which Chávez had spoken of cut - country in this case —was taking the less ting off supplies in response to an imagined drastic step of calling its ambassador home U.S. intervention or invasion, in this case he for consultations. Venezuela’s strong reac - promised to carry out the threat unless the tion evidenced the increasingly public na - asset freeze was lifted.) 1 And, though recent ture of its close relationship with the Revo - opinion surveys indicate that the Venezuelan lutionary Armed Forces of Colombia (FARC ), opposition will likely emerge victorious a group which the Venezuelan government from the regional elections due to be held considers an ideological and strategic ally. later in the year, Chávez has announced that Although relations were restored one if his party loses these elections “there will week later as part of a brokered agreement be war.” 2 reached at the Rio Group Presidential Summit, it would be incorrect to interpret The Search for Foreign Enemies this incident as an isolated event. Rather, Coming shortly after the December 2 , 2007, the dispute with Colombia forms part of a referendum defeat of Chávez’s proposal to broader pattern that has emerged in the past rewrite the Constitution in order to elimi - year as characteristic of the most recent nate term limits, significantly increase exec - stage of the Bolivarian revolution. In this utive power, and pave the way for the con - pattern, Chávez’s aggressiveness must be struction of a socialist economy, these moves

© 2008 World Policy Institute 45 may appear to be the desperate attempts of whelming power of Venezuela’s petro-state a strongman losing his grip on power. On to punish dissenters and reward those loyal the other hand, it is not the first time that to the regime, thus significantly raising the Chávez has tried these tactics. Indeed, one cost of opposition . of the reasons why a strategy of provoking open confrontation is appealing to the Social Policies: Myth and Reality Venezuelan leader is that it has worked Most analyses of the turnaround in Venezue - admirably well in the past. lan public opinion in 2002–03, a period In the context of the political crisis of during which Chávez’s approval ratings sig - 2002 –03, in which the government saw its nificantly increased, attribute a significant hold on power severely threatened, it was role to changes in social policies. In particu - precisely the ability to provoke the opposi - lar, it has become commonplace to attribute tion into an open conflict that saved the day Chávez’s victory in the 2004 recall referen - for Chávez. Thus it is only logical that the dum to the ambitious and high-profile drive Venezuelan leader will now be on the look - to implement a set of new social programs out for an opportunity to redeploy this tac - called the misiones (literally, “missions”) — tic. Since Venezuela’s traditional elites are no fewer than 15 programs with emphases already too discredited and marginalized ranging from adult education ( Misión to constitute a credible threat (and new po - Robinson , Misión Ribas , and Misión Sucre ), litical groups such as the student movement healthcare ( Misión Barrio Adentro and Misión have intelligently avoided the government’s Milagro ), retraining of unemployed workers provocations), the readiest enemies available (Misión Vuelvan Caras ), and sales of subsi - would appear to be external: Colombia, the dized food staples to low -income consumers multinational oil companies, and the United (Misión Mercal ). States. Interestingly, most analyses of the mi - While Hugo Chávez is certainly siones conveniently forget that these pro - wounded by the electoral defeat in the grams came into being only during 2003, December referendum, he is no more Chávez’s fifth year in office —a year that wounded now than he was in March 2002. would have also been his last , had he not At that point, opinion surveys put his ap - promoted and won a constitutional reform proval ratings percentage in the low 30s, in 1999 that allowed him to extend his stay the country had just undergone a balance of by several years. Before 2003, all Venezuelan payments crisis that had culminated in a anti-poverty programs were coordinated by harsh devaluation, and gross domestic prod - the chronically underfunded Fondo Único uct ( GDP ) had declined by 4.4 percent . But Social (Consolidated Social Fund), and the by provoking the Venezuelan opposition overwhelming majority of them consisted of into attempting an unconstitutional capture the continuation of programs started during of power, and later into calling a national the previous administration of President strike that deepened the recession, Chávez Rafael Caldera (1994–98). was able to shift blame for the economy’s The first misiones come into being almost dismal performance onto his political oppo - at the same time as Chávez reached the mid - nents while using the conflict to rally his point of his 2000 –06 mandate following the base of supporters. Meanwhile, he bought approval of the 1999 constitutional reform. vital time to deploy a new political strategy This coincidence is not trivial: the midpoint based on two key pillars: reverting the of Chávez’s constitutional term also marked widespread perception that his government the moment from which the opposition was inefficient in attacking the problems of could collect signatures to hold a binding poverty and inequality, and using the over - recall referendum on his rule. While the

46 WORLD POLICY JOURNAL • SPRING 2008 government did everything possible to lan human development indicators. 4 The fight the referendum petitions, it also knew rate of poverty reduction between 2003 and sooner or later that it would have to face 2007 has actually been less than what one elections, and that it needed a strategy to would expect given the country’s oil-fuelled revert its marked decline in popularity. The economic expansion. The distribution of in - misiones thus had as their primary objective, come has deteriorated ,5 and infant mortality political as much as social, to alter the im - has essentially followed the declining pre- age shared by the majority of Venezuelans — Chávez trend. Some health and human as well as many observers elsewhere —of the development indicators, such as the percent - Chávez administration as ineffectual in deal - age of underweight newborns or the share of ing with such key problems as poverty and families living in dwellings with dirt floors, inequality. display worrying increases. In sum, the The misiones were also created only “Chávez is good for the poor” hypothesis is months after the Venezuelan opposition’s inconsistent with the facts. strategic blunder of calling for an indefinite Despite these failures, the image of the national strike in December of 2002. The Chávez administration as having significant - failure of the strike left the opposition in ly redistributed oil revenues to the poor is disarray but still dominated by radical anti- ubiquitous. For example, editorialists at The government groups . At the same time, the New York Times have written that “unlike strike allowed the government to shift most of his recent predecessors, [Chávez] has blame for the country’s recession onto the made programs directed at the everyday opposition. The blame was well-deserved — problems of the poor —illiteracy, the hunger estimates of the strike’s effect suggest that for land and inferior health care —the cen - it cost the country upwards of 10 percent tral theme of his administration, and he has of GDP .3 But it also occurred in the context been able to use higher-than-expected oil of a recession already underway which, had revenues to advance social welfare.” 6 This it been left to continue on its own, would contrasts with the evaluation Venezuelans have significantly eroded Chávez’s themselves make of the government’s anti- popularity. poverty programs: a recent survey taken Therefore, in mid-2003, Chávez was by the Venezuelan polling firm Alfredo Keller able to use his victory over the strikers to y Asociados found that 77 percent of those convince voters that the opposition’s eco - polled thought that poverty levels had ei - nomic sabotage had not allowed him to ther stayed the same or had deteriorated effectively govern. When combined with his under Chávez. To understand how this gap new policy initiatives —and, luckily for between the image of the Chávez adminis - Chávez, with soaring oil prices —the gov - tration abroad and its reality at home has ernment enjoyed a political honeymoon emerged, it is useful to look at one of very much like that commonly accorded Venezuela’s flagship social programs. governments in their first years in power. It is in this context that we must interpret the Freed from Illiteracy? high approval ratings for the misiones imme - On October 28, 2005, Hugo Chávez de - diately following their creation —as the ap - clared Venezuela “Illiteracy-Free Territory” proval of new policies directed at fighting (Territorio Libre de Analfabetismo ) in a na- poverty that were just starting to be imple - tionally televised event held in the capital’s mented, rather than as an evaluation of the Teresa Carreño Theater. 7 This achievement effectiveness of long-standing policies. appeared to be a crowning success of Indeed, there is little evidence that these Misión Robinson , launched on July 1, 2003 . policies had a significant effect on Venezue - By any standard, the mobilization of

Venezuela’s Revolution in Decline 47 economic and human resources officially son on Venezuelan literacy. 9 A battery of claimed for Misión Robinson is massive: the econometric tests consistently generated government asserted that 1–2 percent of the small, statistically insignificant effects. In national labor force was employed as trainers other words, the evidence suggests that in the literacy campaign, and that 1.5 mil - most of the decline in the absolute illiteracy lion adults were taught to read and write. numbers —93,352 persons according to our Given the magnitude of these efforts, one best estimate —is due to the changing age should readily see the effects of this program structure (particularly the deaths of older, in the national data. Previous attempts to previously illiterate persons and their re - do so, however, were hampered by the lack placement by younger , literate ones) than of consistent official estimates of illiteracy to any effect of the government’s literacy rates before and after the program. program. In recent joint research with Daniel Not only was the program a failure — Ortega of Instituto de Estudio Superiores de it was an expensive one. According to Min - Administración (IESA ), a business istry of Finance data, the government in - school ,8 we have used responses to a literacy vested $50 million in Robinson .10 Even if question in the Household Surveys carried we were to attribute the whole of the de - out by the Venezuelan National Statistical cline in absolute illiteracy to the program — Institute to estimate literacy rates from probably a gross overestimate —the esti- 1975 to 2005, allowing us to study efficacy mated cost would be $536 per pupil who of the Misión Robinson program. Our results learned to read. In contrast, a recent United show no evidence of the dramatic reduction Nations Educational, Scientific and Cultural in illiteracy claimed by the government. Organization ( UNESCO ) study of 29 interna - According to our estimates, in the second tional adult literacy programs estimated semester of 2005 —just after the official the average cost per successful learner to be declaration of the eradication of illiteracy — $47 in sub-Saharan Africa, $30 in Asia, and there were still 1,014,441 illiterate $61 in . 11 The costliest pro - Venezuelans over age 15, only slightly less gram surveyed was ’s Ayuda en Acción than the estimate for the first semester of program, at $199 per successful pupil. 2003 (before Robinson began) of 1,107,793 Even under highly optimistic assumptions, persons. Because of population growth, this Robinson cost more than twice as much as small reduction in the absolute number of the Bolivian program. illiterate Venezuelans coincides with a mod - The data, in other words, paints a pic - erate drop in the illiteracy rate from 6.5 ture of a stunning failure of a flagship social percent to 5.6 percent of the over-15 program. This should not surprise those population. familiar with large-scale literacy programs. This increase in literacy during the Previous research shows that they tend to period of program implementation is be plagued by low initial enrollments, high nothing more than the continuation of a dropout rates, and rapid loss of acquired long-term trend . Between the first semester skills, with the percentage of students that of 2003 and the second semester of 2005, pass exams after taking these programs gen - literacy increased at a yearly rate of 0.38 erally less than 50 percent and occasionally percent —hardly a stellar achievement, as low as 8 percent. The poor results have given that under the prior Caldera adminis - bred skepticism , a main cause for the nearly tration, it had increased at a yearly rate of complete halt in World Bank financing of 0.48 percent . adult literacy programs since 1990. Further rigorous analysis failed to un - The results are also not surprising when cover any systematic effect of Misión Robin - one examines the details of the government’s

48 WORLD POLICY JOURNAL • SPRING 2008 claims. The inconsistencies that arise from Global Monitoring Repor t claims that 1 mil - even a cursory look at official statements lion people learned to read and write in about Misión Robinson are enough to gener - Venezuela between July and December ate considerable skepticism. For starters, 2003. (The source cited for this information there is the fact that the government claims is a presentation made at the UNESCO meet - to have taught 1.5 million Venezuelans how ings by the Cuban Communist Party organ - to read and write, despite the fact that the ization Juventud Rebelde .) 2001 census, carried out just two years be - Recognition and applause for the sup - fore the start of Robinson , reported only 1.08 posed Venezuelan success was of great bene - million Venezuelans over 15 were illiterate. fit to the Chávez administration. During Indeed, official census data shows that the the televised declaration of Venezuela as absolute number of Venezuelans who do not “Illiteracy-Free Territory” in October 2005, know how to read and write has never ex - congratulatory notes from Spanish Prime ceeded 1.5 million adults since 1936 —the Minister José Luis Rodríguez Zapatero year of the nation’s first census. and UNESCO General Secretary Koichiro Closer analysis reveals deeper inconsis - Matsuura were read aloud. The latter carried tencies. The Education Ministry claims that particularly strong praise: 210,353 trainers were involved in the pro - gram, while the Ministry of Planning and The achievements reached by Development reports a more conservative Misión Robinson would not have 110,703 trainers. Even the smaller figure been possible were it not for amounts to a mobilization of 0.9 percent of the political will and support at the nation’s labor force . There is no evidence the highest levels and for that, either in the employment data or in the offi - President Hugo Chávez Frías merits cial budget statistics that this many people warm congratulations.... This is an were actually hired by the Venezuelan gov - example of a national compromise ernment. Moreover, paying them the official that I hope will serve as inspiration remuneration for trainers would have cost at to others to accelerate their actions least $265 million —more than five times and free their countries, and the the total $50 million budget allocated to world in general, of the burden of Misión Robinson .12 These inconsistencies illiteracy. suggest that the government grossly exag - gerated the size of the program effort. How the government convinced so many people of its success in illiteracy eradi - Duped by Hugo? cation despite the complete absence of inde - Given the lack of solid data to back the pendently verified evidence is in itself the government’s claim —as well the implausi - subject of a potentially fascinating study. bility of the claim itself —why did so A possible explanation is the Chávez admin - many people outside and inside Venezuela istration’s intelligent strategy of actively give credence to the official story? The lobbying foreign governments and launch - eradication of illiteracy by the Chávez ing a high-profile public relations campaign administration was taken at face value not spearheaded by the Washington-based only by the mainstream media but also by Venezuela Information Office. According to many specialists. A recent article in the the U.S. Justice Department’s report on po - San Francisco Chronicle , for example, reported litical activities under the Foreign Agents that “ illiteracy, formerly at 10 percent of Registration Act, the Chávez administration the population, has been completely elimi - has spent $9 million in lobbying activities nated.” UNESCO ’s 2006 Education for All in the United States since 1999 . This does

Venezuela’s Revolution in Decline 49 not include the direct cost of a number of cantly raise the costs of participating in initiatives meant to bolster the country’s the political opposition. The centerpiece of image —in particular the Venezuelan-owned this strategy was the infamous Tascón List, oil company Citgo’s distribution of heating which contained the names and addresses of oil at a 40 percent discount to families in all Venezuelans who signed petitions to hold 18 states. a recall referendum against Chávez between Chávez’s success is less the result of de - 2002 and 2004. By publicly revealing the ception than a measure of what many Amer - identity of those who had aligned with the icans and Europeans would like to believe. opposition, the government significantly al - He has galvanized much of the international tered Venezuela’s political landscape. Left with an ideal of a popular democratic Shortly after the failure of the April revolution that has redressed deep social in - 2002 coup against Chávez, the opposition justices. The injustices do indeed exist, and regrouped around new tactics to force the rectifying them should be a fundamental president from office. Opinion surveys component of any strategy for promoting showed that, despite the failed coup, equitable growth in the region. But it is Chávez’s popularity ratings hovered just one thing to recognize injustices and anoth - above 30 percent .14 Presidential elections, er to enshrine every neo-populist as a social however, were not due until 2006. Two al - revolutionary. ternative avenues of action were open. The The predicament of ordinary Venezue - first was to exert pressure on Chávez to lans is illustrated by the story of Diego So - resign or call early elections through contin - to, a government supporter who recounts ued demonstrations and strikes. The second his experience on the pro-Chávez web site was to take advantage of a clause in the www.aporrea.org. 13 Soto observed that no Constitution allowing early elections to be one had set up Misión Robinson in his neigh - called through popular initiative. borhood and decided to do so himself in ear - The possibility of petitioning to hold ly 2006, after the eradication declaration an election was a novel feature of the 1999 had already been made. He found 13 people Constitution. An election could be triggered in his neighborhood who did not know how if a petition was signed by a pre-specified to read and write, and decided to organize a fraction of registered voters. The fraction literacy class. He recounts visiting six differ - varied according to the nature of the refer - ent government offices and speaking to ten endum: for revoking specific laws or general different government officials in order to matters of national interest , the threshold request the instructional materials for the was 10 percent of registered voters; for a “Yo Sí Puedo ” (“Yes, I Can”) classes. All the constitutional amendment, reform , or the government officials refused to help or even convening of a new Constituent Assembly, recognize that his claim was true. How it was 15 percent ; and , to recall the mandate could they, since their government no of an elected official , it was 20 percent. The longer recognizes the existence of illiteracy last of these could only be implemented af - in Venezuela ? ter the midpoint of the official’s term had elapsed. 15 The Price of Political Opposition Venezuela’s opposition groups decided The second component of the government’s to combine strategies , calling for mass strategy for beating back the opposition demonstrations and general strikes (which challenge after 2002 consisted in devising a culminated in the two-month strike of complex mechanism of punishment and re - December 2002 to January 2003 ), while ward employing the full force of the state — also petitioning for early elections. Since including access to oil revenues —to signifi - Chávez’s term in office was due to reach its

50 WORLD POLICY JOURNAL • SPRING 2008 midpoint in August 2003, the recall officials. It also established that the collec - referendum could not yet be conducted in tion of signatures had to take place in a pre- 2002 —so opposition groups decided to col - defined four-day period. The CNE fixed the lect signatures for other reforms . The first period of November 28 –December 1 , 2003, such petition called for holding a non- for the collection of signatures. Simultane - binding “consultative referendum” de- ously, President Chávez, in reprisal, ordered manding Chávez’s voluntary resignation. the collection of signatures to hold recall Opposition groups collected 1.57 million referenda for 38 opposition deputies , sched - signatures —32 percent more than the uled by the CNE for November 21 –24. 17 10 percent threshold —and submitted them On December 16, a coalition of pro- to the National Electoral Council ( Consejo government groups presented signatures Nacional Electoral , henceforth CNE ) in No - of 2,669,684 voters in support of recall vember 2002. 16 Although the signatures referenda against opposition deputies, were accepted by the CNE , whose board exceeding the 20 percent threshold in actually fixed February 2, 2003 , as the 37 of the 38 cases. 18 Three days later, date for the consultative referendum, the the Coordinadora Democrática submitted Supreme Court invalidated that decision and 3,479,120 signatures in support of the stripped the CNE of its authority to call for petition seeking a recall referendum on new elections. It also ordered the National Chávez, exceeding by more than 1 million Assembly to name a new CNE board . signatures the 20 percent threshold. But , Chastened, but unbowed, the opposition before the opposition’s petition drive had then proceeded to collect signatures for two even finished, President Chávez publicly further steps: a constitutional amendment to denounced it as a “mega fraud,” claiming reduce the presidential period to four years, that many of the signatures would be thus bringing forward the midpoint of forged, and requesting that the CNE carry Chávez’s mandate (and the possibility of a out an exhaustive review before accepting recall referendum) to August 2002 ; and a them. 19 The table was set for a showdown. recall referendum, as established in the More than two months later, the CNE Constitution, to be held in August 2003. validated 1,910,965 opposition signatures Although the opposition, organized under on the presidential recall referendum and the multi-party Coordinadora Democrática invalidated 375,241. The remaining (Democratic Coordinator) , collected 3.28 1,192,914 signatures were classified as million and 2.79 million signatures respec - “under observation.” The CNE decided that tively for the amendment and recall referen - it would not accept these names as valid dum, they decided to wait until the mid - unless they were ratified, or “repaired” by point of Chávez’s mandate —August 19, the original signers. In order to reach the 2003 —to submit them to the CNE . Six days 20 percent threshold, the opposition would later, on August 25, the Contitutional Court have to ratify 44 percent of signatures under named a new CNE board, a majority com - observation. 20 A similar standard was ap - prised of government supporters, which plied to the petitions to recall the 38 oppo - promptly proceeded to invalidate this new sition deputies: two were declared valid, set of signatures in September 2003. 29 invalid, and in the remaining seven cases The new CNE proceeded to define a set the validity would depend on the ratifica - of rules that would govern the collection of tion of signatures “under observation.” 21 signatures for recall referenda. It established The CNE scheduled a new four day that signatures had to be collected in some period (May 28 –31, 2004 ) for the ratifica - 2,700 signing booths where the identity of tion of signatures. It also allowed valid sign - the signers could be verified by council ers to withdraw their signatures if they had

Venezuela’s Revolution in Decline 51 changed their minds. The end result was significant incentive for anti-Chávez groups that the opposition passed the 20 percent to pressure potential signers under their in - threshold by 105,556 valid signatures and fluence, in particular the employees of firms the referendum was scheduled for August owned by government opponents or public 15 , 2004. 22 This turned out to be a propi - employees of local governments under oppo - tious time for the government to hold elec - sition control. tions. As an increase in oil prices fueled a Accusations of pressure on petition sign - rapid recovery from the national strike, ers began to surface almost as soon as the Chávez’s popularity bounced back. In the first petitions were introduced. In January final official tally, Chávez was supported by 2003, the pro-government legislator Luis 59.1 percent of those voting (5.8 million), Tascón accused the opposition of forging the with 40.6 percent (4.0 million) voting in signatures for its consultative referendum favor of his recall. Although the opposition petition and announced that he would claimed fraud, the Organization of Ameri - publish the list of signers on his website .24 can States and Carter Center observers Transparency was the ostensible reason: vouched for the legitimacy of the vote. 23 citizens could thus check if their signature had been somehow forged by the opposi - The Tascón and Maisanta Lists tion. Opposition leaders, in contrast, coun - The possibility of revoking an elected offi - tered that the list was being used to force cial’s mandate by petition was a novel fea - public officials to choose between being ture of Venezuelan politics. Its closest pred - fired or alleging that their signature had ecessor, a provision of the 1997 electoral been forged. 25 suffrage law that allowed 10 percent of reg - How exactly Tascón obtained the list istered voters to call a referendum on mat - of signers is unclear. Tascón claimed that ters of national interest, had never been in - the list had arrived in an envelope that had voked. Although uncommon, this right of a been sent anonymously to his office. 26 The recall is not unique to Venezuela —several president of the CNE later launched an U.S. states and the Canadian province of investigation on whether the list had been British Columbia also allow recall referenda stolen from the council databases. 27 Such an for regional officials. inquest, however, required the collaboration One feature of the Venezuelan system is of investigators under control of the presi - that it requires widespread participation in dency or Attorney General Isaías Rodríguez, any recall drive. By contrast, California’s a former Chávez vice-president. It was never electoral law —invoked in Governor Gray concluded. Davis’s 2003 recall election—allows a refer - The Tascón website was subsequently endum to be initiated by 12 percent of votes updated with the list of signers of the cast in the previous election (equivalent to November-December 2003 CNE -supervised 6.1 percent of registered voters in 2003) and signature collection. In September 2004, gives petitioners 160 days to collect signa - shortly after the opposition presented a new tures. The much higher Venezuelan thresh - set of signatures to the CNE , Tascón claimed old —20 percent of registered voters in only to have received letters from more than four days —meant that recall organizers 2,000 persons whose names had been falsely could not rely only on hard-core supporters; listed in this new set of signatures .28 Vice- they had to appeal to broad sectors of the President José Vicente Rangel asked the population, including groups of citizens— attorney general to open a judicial investi- such as public sector employees —vulnerable gation against Súmate , the pro-opposition to government pressure. With such a huge group in charge of supervising the collection number of signatures required, there was of signatures. 29

52 WORLD POLICY JOURNAL • SPRING 2008 The electronic database of signatures that one way to avoid being fired was to was later collected into an program called retract the signature. San Miguel’s recorded Maisanta (also known as Batalla de Santa conversation with her superior included Inés 1.10), an application that allowed users their discussion of a co-worker whose firing to search the CNE database for information had been ordered but was reversed when he on indicators of the political preferences of a claimed that another person had used his given registered voter, including whether he identity card in his place and then promised or she signed either the recall referendum not to participate in the signature ratifica - petition against Chávez, or that against op - tion process. position deputies. The program covered all voters in the electoral registry as of March Identifying the Cost 2004, totaling 12,394,109 records. Boot - Despite the abundance of anecdotal evidence legged versions of the database were sold by that the Tascón list had been used to screen street vendors in Caracas, and were often applicants for government jobs and con - made available on several web sites. 30 tracts, confirming its use was extremely Accusations that the Maisanta and difficult. Indeed, many government sympa - Tascón databases were used to screen job ap - thizers have claimed that the use of this plicants were widespread by early 2005. 31 list was not systematic, that it did not con - On April 15, 2005, President Chávez ac - stitute government policy, and that the knowledged that the list had been used to existing anecdotes are reflective of only screen applicants, and called for an end to exceptional cases. In research with Edward the practice. In a televised cabinet meeting Miguel and Chang-Tai Hsieh of University to which he invited opposition mayors, he of California-Berkeley and of declared : “ There are still places that use IESA ,34 we have been able to track the evolu - Tascón ’s List to determine who gets a job tion in the incomes of Venezuelans who and who doesn’t .... That’s over. Bury signed the recall referendum petition versus Tascón’s List. Surely it had an important those who signed the pro-government peti - role at one time, but not now. ”32 tion or who opted not to subscribe to either Perhaps the most carefully documented petition. case is that of three contract workers of the We were able to do this by cross- National Borders Council, an office of the referencing the Venezuelan National Statis - vice-presidency, who alleged that they were tical Institute’s Households Survey and fired for signing the recall referendum peti - Industrial Survey to the Maisanta list. In the tion. One worker, Rocío San Miguel, taped case of the Households Survey, which col - two phone conversations with superiors lects data on the employment status and in - who indicated that she and her colleagues comes of a representative sample of more were being fired for having signed the recall than 150,000 Venezuelans twice a year, an petition. San Miguel and her co-workers accurate assessment was possible because brought the case before a Venezuelan court, both databases contain information on an which ruled that the government had the individual’s parish, exact birthdate, and gen - right to rescind any job contract, regardless der, thus allowing us to uniquely identify of the cause. After their appeal was turned through Maisanta the political leanings of down by the Venezuelan Supreme Court on 64 percent of registered Venezuelan voters. procedural grounds, the plaintiffs took the In the case of the Industrial Survey , which case to the Inter-American Commission on collects data on the production decisions Human Rights. 33 of a sample of representative businesses A common element in many of these an - and industries, we are able to identify the ecdotal accounts is that superiors indicated political leaning of the board members of

Venezuela’s Revolution in Decline 53 453 corporations that account for a third of ernment was able to punish its opponents Venezuelan manufacturing production. through both the labor market (which We found that Venezuelans who sub - would affect low and middle income indi - scribed to the opposition’s recall referendum viduals) and through the management of petition experienced a decline of 3.9 percent taxes and foreign exchange (which affected in their incomes relative to non-signers. wealthy individuals likely to be on the This decline occurred because they were boards of private sector firms), when it came less likely to work in the public sector and to rewarding its supporters , the large gains more likely to end up in the lower-paying did not seem to trickle down to lower-in - informal sector, which is made up of legally come government supporters. 35 unregistered firms. Interestingly, individuals In sum, Venezuelans who joined the who subscribed the pro-Chávez petitions did opposition paid a substantial economic not benefit in the labor market, with the cost —while higher-income individuals evolution in their incomes after 2003 being who sided with Chávez appeared to have statistically indistinguishable from those of reaped significant benefits. Not surprisingly, non-signers. Venezuela’s opposition withered after 2004, The results are more marked in the case and many Venezuelans voiced concerns that of private sector corporations . According to their freedom to participate in the political our estimates, a firm whose board members process had become severely circumscribed. subscribed to the recall petition against For example, a 2006 pre-election Associated Chávez experienced an increase of 33 per - Press survey showed that 57 percent of cent in taxes assessed . Anecdotal evidence Venezuelans feared that people would face suggests that the main mechanism was the reprisals depending on how they voted in use of selective tax audits targeted at oppo - the presidential elections, while only 42 sition firms. A corporation of average size percent believed that their votes would be whose board members signed the anti- kept secret. 36 Skepticism about the integrity Chávez petition was assessed $76,340 more of the electoral process led to high absten - in taxes than one whose board members re - tion levels among opposition supporters, mained neutral. allowing Chávez to coast to a comfortable We also found evidence that the govern - victory in the 2006 election. However, a ment was able to channel resources directly steady deterioration of economic conditions to pro-government corporations through the during 2007 —including the emergence of manipulation of foreign exchange alloca - chronic food shortages and the popular tions. Since 2003, purchases of foreign ex - anger over the government’s revocation of change in Venezuela must be approved by the public spectrum license of the nation’s the government Comisión de Administración de oldest private television station , Radio Divisas (Commission on the Administration Caracas Televisión ( RCTV ), reenergized the of Foreign Exchange). This gives the gov - opposition to mount a successful challenge ernment the power to determine what firms to the government’s attempt to again have access to foreign currency necessary to rewrite the Constitution in the December buy imported inputs and capital goods. 2007 referendum. Pro-government firms received an average of 55 percent more foreign exchange than A Strategy of Conflict firms that remained neutral; pro-opposition Chávez’s political strategy in response to firms, in contrast, received 51 percent less the 2002 crisis of governability was three- foreign exchange than neutral firms. Thus , pronged. He needed, first, to manufacture there exists an interesting asymmetry in our an enemy that could be blamed for the na - results: while we find evidence that the gov - tion’s economic crisis. Venezuelan economic

54 WORLD POLICY JOURNAL • SPRING 2008 elites played into the government’s game: Venezuela’s economy. Regional elections had they let the economic crisis run its scheduled for the end of this year, as well as course, it would have become more difficult vital parliamentary elections in 2010, pose for Chávez to avoid the blame for the significant risks to Chávez’s hold on power 2002–03 recession. Second, he needed a (which will end in 2012 so long as the pres - public relations strategy that would allow ent Constitution remains in place). him to claim that his government was In order to replay his 2003 strategy, genuinely helping the poor. Despite their Chávez will need a new enemy. While he lack of tangible achievements, the misiones could try to provoke domestic political played that role. Third, he needed an effec - forces into that role, much of the Venezue - tive mechanism to ensure that those who lan opposition seems aware of the high costs decided to oppose him internally would face that they paid by buying into the strategy a significant economic cost. The blacklisting of confrontation in 2002 –03. Chávez has of millions of persons who signed the recall also had to contend with the emergence of referendum petition raised the price of po - a new student movement which captured litical opposition and allowed chavismo (the public attention during last year’s protests term commonly used to denote the political against the closing of RCTV , and which has forces backing Hugo Chávez ) to consolidate added new energy to the Venezuelan opposi - itself as the dominant political force in the tion. Furthermore, while Chávez has at - nation. tempted to present the student leaders as Chávez is now in a predicament that is the children of privileged elites, opinion remarkably similar to that which he faced surveys have repeatedly shown very high six years ago. In early 2008, all opinion levels of support for this movement, which surveys pointed to a significant deterioration by hewing to non-violent confrontation has in the government’s popularity. According clearly distinguished itself from traditional to the Venezuelan survey firm Datos , the opposition groups. percentage of those who claimed to either Chávez’s more likely option is to pro - moderately or strongly support the govern - mote an external enemy. This explains the ment fell to 34 percent, its lowest level president’s growing willingness to seek con - since the third quarter of 2003. Large frontation with Colombia and the United majorities now blame Chávez for most of States. The benefit of an open armed con - the nation’s problems, ranging from crime frontation for Chávez is that it would allow and corruption to unemployment and food him more easily to avoid blame for worsen - scarcities. 37 ing economic conditions. The risk, of This pattern of public opinion com- course, is that Venezuela could lose the monly emerges during economic slow - conflict, leading to a collapse of the regime. downs, and indeed some indicators suggest To a certain extent, the most favorable de - that Venezuela may well be entering a velopment for Chávez would be a drawn- downturn this year: according to the Central out stalemate in the style of the Iran-Iraq Bank, real wages declined by 5.1 percent war in the 1980s, which would give him during the first three months of 2008 , and the excuse to suspend elections and quell Venezuela’s annualized inflation reached internal dissent. 29.3 percent, its highest value since 2003. An alternative, somewhat less risky , The fact that this deterioration in economic move for Chávez , would be to provoke the conditions occurs despite a ten-fold increase United States into imposing economic sanc - in oil prices illustrates the extent to which tions on Venezuela. These sanctions may the government’s economic policies have already be in motion: U.S. Representatives failed to address the key distortions in Connie Mack (R-FL ) and Ileana Ros-Lehtinen

Venezuela’s Revolution in Decline 55 (R-FL ) are calling to include Venezuela in the lowed that a team that suffered an injury or list of state sponsors of terrorism because loss would always react by playing more of its support for Colombia’s FARC guerillas. aggressively, thus becoming extremely The probability of such an event appears to difficult to subdue. Motta could just as well have increased after the recent revelation of have been talking about Latin American computer files documenting the extent of politics. Those who discount Chávez because the financial, logistical , and political sup - of his loss in last December’s referendum port given by the Venezuelan government ignore the fact that his incentive to fight to FARC . Adding Venezuela to the state aggressively comes precisely from the fact sponsors of terrorism list would significantly that the cost of giving up power is so raise the costs of U .S. firms operating in high. His lack of respect for international Venezuela and could serve as a basis for diplomacy as well as his antagonization of Congress to impose restrictions on purchases most of Venezuelan civil society do not of oil from Venezuela—similar to those bode well: Chávez is unlikely to peacefully currently in force for and Iran. How - coexist with the Venezuelan opposition if ever, U.S. lawmakers may balk before im - he leaves power. He thus is betting on an posing full-fledged sanctions , especially in all-or-nothing strategy. The international an election year , as these could cause higher community has the responsibility of doing gasoline prices. all within its reach to protect Venezuelans A third option would be for Chávez to and their neighbors from the wounded manufacture an incident that would allow tiger’s last stand. • him to suspend oil shipments to the United States. Such an incident could take the form Notes of a “discovery” of a U.S.-backed coup at - 1. On March 18th, a London judge lifted the as - tempt or assassination plot. 38 While many set freeze arguing that the court did not have juris - analysts have discounted this possibility be - diction over PDVSA’s assets. See Tom Bergin “Court cause of its high cost to Venezuela, which lifts Exxon freeze on Venezuelan assets,” Reuters, exports nearly two-thirds of its oil to the March 19, 2008. United States, it is important to bear in 2. Daniel Wilkinson, “Chávez’s Fix,” The Nation , mind that Chávez’s calculation is political , March 10, 2008, pp. 31–41. not economic. In 2003, the paralysis of the 3. “Informe sobre el impacto de la huelga gener - Venezuelan oil industry caused huge eco - al sobre las perspectivas económicas y fiscales del nomic losses to the government. It also 2003,” (Caracas: Oficina de Asesoría Económica y Fi - served to strengthen Chávez politically by nanciera de la Asamblea Nacional). allowing him to dodge the blame for the en - 4. Francisco Rodríguez, “An Empty Revolution: suing recession and to fire thousands of op - The Unfulfilled Promises of Hugo Chávez,” Foreign position supporters in key positions within Affairs , March/April 2008, pp. 49–62. the oil industry . History is filled with cases 5. Venezuela’s Central Bank calculates that the of authoritarian governments that have seen share of the lowest quintile in total income reflected their hold on power tighten in the context in its Family Expenditures Survey declined from of a declining economy. When a regime’s 6.3 percent to 4.1 percent between 1997 and 2005. survival is at stake, political considerations The World Bank also calculates a decline using the trump economic ones. alternative Households Survey, from 4.1 percent to 3.7 percent, during the 1998–2005 period. In con - Beware the Wounded Tiger trast, the Venezuelan Statistical Institute claims that Dick Motta, a longtime coach in the U.S. this share in the Households Survey actually in - National Basketball Association, was famous creased from 4.1 percent to 4.6 percent during the for his “wounded tiger theory,” which al - same period; its results appear to be due to a set of

56 WORLD POLICY JOURNAL • SPRING 2008 questionable methodological assumptions. For exam - 16. Juan Francisco Alonso, “1.574.233 firmas ple, in contrast to the World Bank, the National Sta - válidas se entregaron al CNE,” El Universal , tistical Institute excludes households with no income November 11, 2002. from this indicator. See Banco Central de Venezuela, 17. The opposition also decided to collect Encuesta Nacional de Presupuestos Familiares: signatures for the recall referenda of 35 government Principales Resultados, 2007; CEDLAS and World legislators. Bank, Socio-Economic Database for Latin America 18. Available at www.rnv.gov.ve/noticias/ 2008, available at www.depeco.econo.unlp.edu.ar/ index.php?act=ST&f=2&t=1724. These numbers cedlas/sedlac/excels/inequality_lac.zip; as well as per - are not strictly comparable since signatures against sonal communication with World Bank staff (avail - opposition deputies were not collected in all able upon request). jurisdictions and because signers could petition 6. “Hugo Chávez Wins,” The New York Times, the recall of several deputies. As a fraction of poten - August 18, 2004. tial electors, the signatures that government sympa - 7. Gobierno Bolivariano de Venezuela (2005), thizers claimed to have collected against opposition “Un logro reconocido internacionalmente.” The cere - deputies totaled 33.13 percent of eligible voters, mony was timed to coincide with the 236th anniver - while those claimed to have been collected by the sary of the birth of Simón Rodríguez, the teacher of opposition accounted for 26.13 percent of potential Venezuelan liberator Simón Bolívar, whose pseudo - voters. nym gave Misión Robinson its name. 19. Johanne Betancourt Pérez, “Chávez advierte 8. Daniel Ortega and Francisco Rodríguez, que está en marcha un megafraude,” Últimas Noticias , “Freed From Illiteracy? A Closer Look at Venezuela’s December 1, 2003. Robinson Literacy Campaign,” Economic Development 20. The original CNE announcement of March and Cultural Change , forthcoming October 2008. 2, 2007, noted 1,832,493 valid signatures and 9. Ibid, secs. III–IV. 816,017 under observation. However, those numbers 10. “Recursos Asignados a las Misiones hasta el were revised upwards on April 20. See Alejandro 2005 y su Correspondiente Ejecución,” ( Caracas: Rodríguez, “Casi dos millones de firmas de la CD a Ministerio de Finanzas, 2006). The budgeted figure reparos,” Últimas Noticias , April 21, 2005. excludes the value of donations made by Cuba within 21. The CNE also invalidated most of the signa - the context of the Cuban-Venezuelan Cooperation tures collected to support the recall petition against Agreement, through which Venezuela receives in- government deputies, determining that in only one kind transfers in exchange for favorable conditions in of the 35 cases could the threshold be met if enough oil sales. Cuban donations to the program included signatures were ratified. 1.9 million textbooks, 200,000 literacy trainer man - 22. An additional 11,412 signatures were uals, 80,000 television sets and video cassette excluded by the CNE. recorders for classroom use, 1 million literacy lesson 23. Nevertheless, there has been an intense aca - videotapes, 2 million family libraries, and 300,000 demic debate on the existence of statistical evidence pairs of eyeglasses. of fraud. 11. Literacy for Life: Education for All Global 24. Taynem Hernández, “MVR Asegura que Monitoring Report 2006 (Paris: United Nations Educa - 72 dirigentes opositores no firmaron solicitud,” tional, Scientific and Cultural Organisation). El Universal , January 15, 2003. 12. Ministerio de Finanzas, 2006. 25. “Lepage asegura que plan contra firmazo 13. Available at www.aporrea.org. se diseñó en Miraflores,” El Universal , September 5, 14. Análisis del Entorno Sociopolítico (Alfredo 2003. Keller y Asociados, May 2002). 26. Ludovico Quiñones, “Diputado Luis Tascón 15. Gobierno Bolivariano de Venezuela, denuncia fraude en firmas del consultivo,” Venpres , Constitución de la República Bolivariana de Venezuela . February 20, 2003. (Caracas: Asamblea Nacional Constituyente, 1999), 27. “Sin Indra,” El Universal, February 27, 2003. articles 71, 72 and 341–348. 29. “‘El Firmazo’: 2 mil denuncias de firmas

Venezuela’s Revolution in Decline 57 ‘chimbas’ ha recibido Luis Tascón a través de su 34. Ana Julia Jatar, Apartheid del siglo XXI: La página web,” Aporrea , September 8, 2003. informática al servicio de la discriminación política en 30. “Venezuela: sigue polémica por firmas,” Venezuela (Caracas: Súmate, 2006) pp. 160–74. BBC Mundo, September 4, 2003. 35. Edward Miguel, Chang-Tai Hsieh, Daniel 31. Confusion between the Tascón and the Ortega, and Francisco Rodríguez, “The Price of Maisanta database is common, and many Venezuelans Political Opposition: Evidence from Venezuela’s tend to refer to both of them as the same. Indeed, Maisanta ,” Wesleyan University, 2008. since the information on Tascón’s website forms a 36. See “Rise of the Boligarchs,” The Economist , subset of Maisanta , the distinction should not be August 9, 2007, for anecdotal evidence on the emer - overblown. From the point of view of our study, what gence of profitable pro-government business groups is relevant is that the list of signers was publicly in Venezuela. available. Whether this was possible due to Tascón’s 37. “ Poll Shows Chávez with strong lead ,” Associ - website, the Maisanta program, or both, is of second- ated Press, November 23, 2006. order importance. 38. Javier Conde, “La confianza en Chávez baja 32. See, for example, “Denuncian lista de 30% en todo el país,” El Nacional , March 18, discriminatoria en organismos públicos,” El 2008. Universal , August 8, 2005, and Organization of 39. The Venezuelan government already charges American States (2006), Informe de la Misión de that the United States plotted the 2002 coup at - Observación Electoral en la República Bolivariana de tempt, a charge which Washington officials deny. Venezuela: Elecciones Parlamentarias 2005 (Washington, DC: Organization of American States, 2005), p. 50. 33. Helen Murphy, “Chávez’s Blacklist of Venezuelan Opposition Intimidates Voters,” Bloomberg, April 17, 2005.

58 WORLD POLICY JOURNAL • SPRING 2008