________________________________________________________________________ Andean – U.S. Dialogue Forum Country Visit Venezuela November 17-18, 2010 Country Facts Venezuela • Population: 28.6 million (2010 estimate, 42nd largest in world) • Surface area: 916,445 km2 • Population density: 30 people/km • Urban population: 93 percent • UN Human Development Index (2009): 0.844 (58th in the world) • Poverty: 38 percent (2005) • Income inequality: 43.4 Gini index (2nd most unequal among Forum countries) • Official Language: Spanish (numerous unofficial indigenous languages) • Gross Domestic Product (GDP): $350.1 billion in 2009 (growth rate of -2.9%) • Industry: oil accounts for roughly 30% of GDP, 90% of export earnings, and more than half of the central government's ordinary revenues. • Trade: exports were $57.6 billion in 2009, down from $95.14 billion in 2008. Imports in 2009 totaled $38.44 billion, down from $49.48 billion in 2008. Venezuela’s main trade partners in 2008 were (top 5, largest to smallest) the U.S. (Venezuelan exports to the U.S. in 2009 were $28.1 billion and U.S. exports to Venezuela were $9.3 billion), the European Union, Colombia, China and the Netherlands Antilles. The top 5 accounted for 61 percent of external trade. Since 2008, bilateral relations with Colombia have become strained, with the result that trade between the two nations has diminished. • Environmental problems: sewage pollution of Lago de Valencia; oil and urban pollution of Lago de Maracaibo; deforestation; soil degradation; urban and industrial pollution, especially along the Caribbean coast; threat to the rainforest ecosystem from irresponsible mining operations. • President: Hugo Chávez Frías - elected to third term (six years) in 2006 • Selected regional organization memberships: o Latin American Integration Association (ALADI) o Organization of American States (OAS) o Bolivarian Alliance for the Americas (ALBA) o Union of South American States (UNASUR) o Inter-American Development Bank (IADB) o Member of MERCOSUR o Latin American Economic System (SELA) 1 o Andean Development Corporation (CAF) Brief Country Report: Venezuela Few would have imagined that the electoral victory of Hugo Chávez in 1998 would mark the beginning of one of the most interesting political cycles in South America. Notwithstanding the center-left coalition government in Chile, that year could be deemed the beginning of what some have called a “turn to the left” or progressivism in the region. The demand for radical change materialized in Venezuela in the 1990s as a result of a doubling of poverty levels and the population’s resounding rejection of the traditional political parties and leaders. It was in this context that Hugo Chávez emerged as a political figure, with a plan of a new and inclusive democracy that would be the product of constitutional reform and of the redistribution of the country’s petroleum resources to sectors of society previously excluded. In 2006, this project began to be called 21st Century Socialism. Two of the characteristics that distinguish the Venezuelan political process from other processes that are underway in the region are the way in which it is tied to the United States and the proactive way in which the Chávez government actively pursues increased autonomy and standing within the international political system with respect to the process of globalization. In this sense, the actions of President Chávez represent a progressive turn and an active foreign policy with a multi-polar focus, which has led to increased relations with various countries, among them those of Mercosur, Unasur, and other nations such as Iran, Russia, China and Cuba. Chávez’s leadership is based on a strong identification with popular sectors that also translates into a strategy of inclusion and support to them through various programs or “missions”- in health, education, nutrition, economic, etc., financed by petroleum revenue. This process which began when Chávez came to power in 1999, has resulted in the existence of two opposing political projects that have confronted each other in 14 electoral processes The opposition, which to date has not managed to articulate a coherent or realistic platform, has often adopted a radical stance, the most illustrative moments of which were the 2002 coup attempt, the 2002-2003 business strike and the abstention from the 2005 Congressional elections. In this context, it is exceedingly difficult to have dialogue between pro-government and opposition sectors. With respect to the economic picture, there are three points to highlight. First, this is a government seeking to radically change the development model (starting with the redistribution of petroleum revenue). Second, the Venezuelan economy continues to depend on petroleum exports, which has been a constant, rather than a changing variable in the Venezuelan economy. Third, the importance of Venezuelan petroleum exports in the region is an important political instrument both inside and outside of the country. Managing the Venezuelan economy has led to profound changes in the channels of marketing for food and drink. These channels, previously in the hands of the private sector, are now controlled through popular markets and individual networks of the public sector, which spearheaded their distribution, guaranteeing the supply of food products. And although it remains clear that the Venezuelan economic environment is not ideal, it is important to recognize that petroleum 2 continues to be the most important factor that allows the Venezuelan government to address these economic challenges with relative success. Relations between Venezuela and the United States are very complex. For a good number of years, the two countries had maintained a diplomatic relationship without substantial disagreements, but the inauguration of the Chávez administration brought about a dramatic change. The principal goal of Chávez’s foreign policy is to create a multi-polar world, a policy which emerged and has continued to intensify since the attempted coup d'état in 2002 (applauded at the time by the U.S. government). As a result, throughout the last decade, there have been a variety of instances that demonstrate the important differences in strategy and on issues that are part of the global and hemispheric agenda. Despite these serious differences, the bilateral relations have strategic importance for both the U.S. and Venezuela, primarily in terms of energy economic, trade and financial policy. There are distinct, but not incompatible, agendas on issues such as the fight against terrorism, drug trafficking and the authentication of resources appearing in the agendas of both countries. The challenge is to achieve inclusion of each of the respective agendas. As mentioned above, Venezuela’s conviction to conduct an active and independent foreign policy, which enables it to assume a greater role in international politics, is a characteristic of the process of change. In this context, Chávez has enacted initiatives like the Bolivarian Alternative for Latin America (ALBA) and Petrocaribe, through which he has provided technical assistance and financing to other countries in the region. Although relations between Colombia and Venezuela have passed through different stages, some of which were fairly tense, it must be noted that, with the election of Juan Manuel Santos to the Colombian presidency, the confrontation between the countries has diminished. This is indicated by Santos’ preference to resolve his differences with Venezuela through the diplomatic process and the restoration of trade relations, the payment of debts to Colombian companies, the creation of bilateral working commissions and the adoption of direct dialogue mechanisms between both countries. The arrival of President Obama to the presidency of the United States created many expectations in Venezuela that have not been fulfilled; although a sense of change to the style of President Bush is perceived. The legislative elections of September 2010 signify the best scenario for Venezuela since both those in favor of the government and the opposition are represented in the new assembly. 3 Documents and Articles Common Agenda Thematic Analyses TRADE The graphs below represent trade (imports + exports) amongst the five Andean countries and the United States in 2008. The figures presented here are a narrow snapshot of the complex and ever-changing trade relationships that exist between these six countries. Percentages shown are expressed as a fraction of each country’s total trade with the other five nations. For example, Venezuelan exports and imports were responsible for 56% of the total U.S. trade with the region in 2008 (see “United States, below). As can be observed, supposed political and ideological alliances do not automatically carry over in to trade relationships. Venezuela and the United States, arguably the most polarized relationship of the group, nevertheless have a robust trade relationship as compared with the other countries, due in large part to Venezuela’s importance as a petroleum producer.i Also, the trade relationship between the three regional members of the Bolivarian Alliance for the Peoples of Our America (ALBA, in Spanish) Venezuela, Ecuador, and Bolivia show that geographic proximity and historic business ties affect trade more than comparatively recent political alliances. Bolivia presents the best example of this pragmatism when it comes to international business relationships. Despite its political kinship