It's unlikely that ailing Venezuelan President Hugo Chavez will return to power after missing his Thursday inauguration because of ongoing cancer treatment in Cuba. That leaves Vice President Nicolas Maduro in de facto power of a country that has moved further away from Washington and closer to rogue regimes like Syria and Iran. In the likely event that Chavez dies, or is already dead, opposition leaders may incite demonstrations that have the potential to turn violent once the veil of despotism over the Venezuelan people is lifted. A divided post-Chavez political climate in Caracas could open the door for better ties with the Western world, however, given Maduro's experience as a foreign diplomat and savvy negotiator. But for an economy dependent in a poorly-managed oil sector, the best way to preserve the Chavez legacy may be without the man himself.
The Venezuelan Supreme Court ruled that the presidential term is a matter of continuity, allowing the cancer-stricken Chavez to continue through his 4th term in office, which he secured in October by narrowly beating rival Justice First party candidate Henrique Capriles. The 58-year-old Chavez said he'd leave power in the hands of Maduro, his vice president and foreign minister. During Maduro's tenure as foreign minister, Caracas has moved closer to anti-western regimes like Gadhafi's Libya, the dictatorship in Belarus and the fading Syrian regime of Bashar Assad. Long gone are the times when Caracas supported U.S. doctrine in Latin America, though even some Venezuelan leaders who've since moved to the opposition say Maduro's role as a diplomat would make him at least tepid toward Washington should power remain in his hands.
Related Article: Venezuela's Oil Industry is Likely to Benefit from Chavez's Death
U.S. Rep. Ileana Ros-Lehtinen, R-Fla., a staunch critic of Latin American despots, said the country's Supreme Court is filled with "cronies" and who support the Chavez doctrine embraced by the "gangsters" in Caracas. The 14-year period of resistance to Washington's position in Latin America, however, can't continue as it had without Chavez at the helm. Venezuela is divided deeply along political lines. And for the first time in Venezuelan history, an inauguration passed without the president, leaving the future as opaque as the government itself.
The economic legacy of Chavez, meanwhile, may be in his failure to administer some of the largest oil reserves in the world to his country's favor. Oil production since 2001 has declined by more than 20 percent and exports have dropped by almost half of their 1997 levels, the year before Chavez took power. Oil, however, accounts for more than 90 percent of the country's earnings from exports, makes up half of its budget revenues and accounts for 30 percent of its gross domestic product. This, coupled with oil industry woes, means any chance of financing the social programs that made Chavez a hero to some is unlikely to last.
Related Article: Can Hugo Chavez's New Term of Government Start without Him?
In a quirk of fate, his legacy may best be preserved at this stage in the nation's history by allowing the Chavez era to fade away. Should global crude oil markets react strongly to his death, or formal transfer of power to Maduro, it's likely to subside as did last year's price spikes related to Iran. Chavez eradicated any opposition from the state-owned Petroleos de Venezuela, though that did little to bring in more revenue for a heavily-subsidized economy. A failing economic system is likely to continue no matter who takes control.
The Miraflores palace Thursday was noted not only for the absence of Chavez, but also for the pomp and circumstance that carried on without him. Capriles, the October presidential challenger, said there are no plans for major contention beyond sorting out the winners and losers in the post-Chavez climate. While Maduro has at times referred to Western powers as "petty," he may be the best hope – or at least most likely hope - not only for an international community hungry for Venezuela's oil, but for a state system that depends on the durability of the state's machismo, if not its Chavismo.
By. Daniel J. Graeber of Oilprice.com