The government of President Hugo Chavez has yet to regain traction after defeat in December's referendum on constitutional reform. Although Chavez promised that his administration would address popular concerns relating to crime, unemployment, housing and food shortages -- where lack of government action is seen to have cost it support in December -- it has only been in recent weeks that policy measures have been announced:
· 'Energy revolution'. Chavez has announced an 'energy revolution' backed by planned state investments of 20 billion dollars over six years, including 52 raw material processing and petrochemical projects to be financed by the National Development Fund (FONDEN), which has reserves of 35 billion dollars. The announcement was made during the inauguration of a 'model' housing project in Carabobo state. The 459 'socialist' community of houses were constructed from petroleum-based PVC plastic produced by the state-owned petrochemical firm Petrocasa; 60,000 new PVC houses have been promised for poor families in the south, generating an estimated 600,000 jobs.
· 'Barrio Adentro'. Chavez announced plans further to integrate health provision under the 'Barrio Adentro' community health initiatives. This will be funded by a planned windfall tax on oil profits, which is reportedly to be set at 50% of oil revenues above 70 dollars per barrel, and 60% above 100 dollars.
· Improved food production. The government has signed a series of technological support agreements with Brazil, Argentina and Uruguay. A 51 million-dollar cooperation agreement between Venezuela's National Agricultural Research Institute (INIA) and the Brazilian agricultural company Pesquisa Agropecuaria is to improve soya, sheep, cattle and buffalo in Venezuela. The food minister has hinted that a new phase of the government-supported food production initiative, Mission Mercal, might be launched and there is a renewed drive for self-sufficiency in food.
Pending problems. These measures are intended to address disaffection within the government's core support base among the poor and socially excluded. However, they are unlikely to generate the outputs intended. More problematically for the government, they are unlikely to propel the Chavista movement to success in November's regional and municipal elections:
· It is unlikely that these projects will deliver the welfare benefits intended in the short term -- and certainly not before the elections.
· Success is likely to be undermined by the lack of reform in other areas of government policy. For example, agricultural lobby Fedeagro has argued that price and currency controls and insecurity of land tenure will offset efforts to improve food supply.
· The Chavista movement faces broader problems outside the policy sphere, with sectarian struggles within the new ruling United Socialist Party of Venezuela (PSUV) proving debilitating ahead of the November elections. Disputes over candidate selection have widened rifts between the grassroots of the movement and the PSUV national executive, and between left and centre-left factions -- in contrast with the unprecedented level of consensus shown by the opposition in its candidate selection process.
· Although he remains broadly popular, Chavez has been personally damaged by December's defeat, with opinion polls showing that his support has fallen to around 35%. The December setback has undermined Chavez's aura of invincibility both within and outside of the Chavista movement.
A recent survey of 1,000 people by Alfredo Keller Associates showed that 37% of respondents identified themselves as Chavista, while 41% were oriented toward the opposition. Surveyed as to government progress in rectifying problems in areas such as unemployment, corruption and cost of living, 62% considered that these problems were getting worse. The decision by the Comptroller's Commission of the National Assembly to investigate allegations of corruption by two of Chavez's brothers in relation to land purchases in their home state of Barinas, where their father is state governor, is a further concern for the government. The case, launched following accusations by the former leader of the pro-Chavez Fifth Republic Movement, also reflects the growing intensity of factional and personal struggles within the PSUV.
Analysts are now increasingly shifting their attention away from the question of whether Chavez will step down in 2012, to the question of whether he will survive until then. In particular, there are doubts that Chavez would survive a second recall referendum were one to be convened next year. However, despite the urgent need to address domestic political and policy challenges, foreign affairs continue to be a significant distraction. There is a strong sense within the Chavista administration that its US counterpart is pushing for one last effort to displace Chavez before President George Bush leaves office.