Venezuela: Political Conditions and U.S. Policy

Venezuela: Political Conditions and U.S.
Policy
Mark P. Sullivan
Specialist in Latin American Affairs
July 28, 2009
Congressional Research Service
7-5700
www.crs.gov
RL32488
CRS Report for Congress
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repared for Members and Committees of Congress

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Venezuela: Political Conditions and U.S. Policy

Summary
Under the populist rule of President Hugo Chávez, first elected in 1998 and reelected to a six-year
term in December 2006, Venezuela has undergone enormous political changes, with a new
constitution and unicameral legislature, and a new name for the country, the Bolivarian Republic
of Venezuela. U.S. officials and human rights organizations have expressed concerns about the
deterioration of democratic institutions and threats to freedom of expression under President
Chávez, who has survived several attempts to remove him from power. The government
benefitted from the rise in world oil prices, which sparked an economic boom and allowed
Chávez to increase expenditures on social programs associated with his populist agenda.
After he was reelected, Chávez announced new measures to move the country toward socialism,
but his May 2007 closure of a popular Venezuelan television station (RCTV) that was critical of
the government sparked protests, and his proposed constitutional amendment package was
defeated by a close margin in a December 2007 national referendum. State and local elections
held in November 2008 were a mixed picture of support for the government, with the opposition
winning several key contests. In February 2009, Venezuelans approved a controversial
constitutional referendum that abolished term limits and allows Chávez to run for re-election in
2012 and beyond. In 2009, the government has increased efforts to suppress the political
opposition, including elected officials, and is continuing to threaten media critical of the
government.
The United States traditionally has had close relations with Venezuela, the fourth major supplier
of foreign oil to the United States, but there has been friction with the Chávez government. U.S.
officials have expressed concerns about human rights, Venezuela’s military arms purchases, its
relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin
American countries. Declining cooperation on anti-drug and anti-terrorism efforts has also been a
concern. In September 2008, bilateral relations worsened when President Chávez expelled the
U.S. Ambassador to Venezuela, and the United States responded in kind. Under the Obama
Administration, Venezuela and the United States reached an agreement in late June 2009 for the
return of respective ambassadors. While some observers are hopeful that the return of
ambassadors will mark an improvement in relations, others emphasize continued U.S. concerns
about the Venezuelan government’s treatment of the news media and political opposition and
about interference in the affairs of other countries in the region.
In the 111th Congress, the Senate approved an amendment (S.Amdt. 1536) to the Senate version
of the National Defense Authorization Act for FY2010, S. 1390, that requires the Director of
National Intelligence to provide a report on Venezuela’s military purchases, potential support for
terrorist groups, and other Venezuelan activities. In addition, several resolutions and bills related
to Venezuela have been introduced: H.R. 375 would, among its provisions, place restrictions on
nuclear cooperation with countries assisting the nuclear programs of Venezuela; H.R. 2475
includes a provision identical to that in H.R. 375 described above that would place restrictions on
nuclear cooperation with countries assisting the nuclear programs of Venezuela; H.Res. 174 and
H.Con.Res. 124 would express concern about anti-Semitism in Venezuela. For additional
information, see CRS Report RS21049, Latin America: Terrorism Issues.

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Venezuela: Political Conditions and U.S. Policy

Contents
Major Developments................................................................................................................... 1
Political Situation........................................................................................................................ 2
Background .......................................................................................................................... 2
Chávez’s Brief Ouster in April 2002................................................................................ 4
Continued Opposition and Strike in 2002 and 2003 ......................................................... 5
August 2004 Presidential Recall Referendum .................................................................. 5
December 2005 Legislative Elections.............................................................................. 7
December 2006 Presidential Election .............................................................................. 9
Political Developments in 2007........................................................................................... 11
RCTV Closure and Public Reaction .............................................................................. 11
December 2, 2007 Constitutional Reform Referendum .................................................. 13
Political Developments in 2008........................................................................................... 19
November 2008 State and Local Elections..................................................................... 20
Political Developments in 2009........................................................................................... 21
February 15, 2009 Term Limits Referendum ................................................................. 21
Continued Attacks on the Opposition ............................................................................ 22
Human Rights Concerns...................................................................................................... 24
Trafficking in Persons ................................................................................................... 26
Economic Conditions ................................................................................................................ 26
Venezuela’s Social Missions................................................................................................ 28
U.S. Policy................................................................................................................................ 30
Overview of U.S.-Venezuelan Relations .............................................................................. 30
Bush Administration Policy 2005-2008 ......................................................................... 31
Obama Administration Policy........................................................................................ 37
U.S. Funding for Democracy Projects ................................................................................. 38
Oil Issues ............................................................................................................................ 40
Counternarcotics Cooperation ............................................................................................. 42
Venezuela’s Military Purchases ........................................................................................... 44
Venezuela’s Activities in Latin America .............................................................................. 46
Chávez Role in Release of FARC Hostages ................................................................... 48
March 2008 Ecuador-Colombia Border Crisis ............................................................... 48
Terrorism Issues.................................................................................................................. 49
State Sponsors of Terrorism List.................................................................................... 50
Iran and Hezbollah........................................................................................................ 52
Venezuela’s Extradition Requests ........................................................................................ 53
Legislative Initiatives .......................................................................................................... 55
111th Congress............................................................................................................... 55
110th Congress .............................................................................................................. 56
109th Congress .............................................................................................................. 58
108th Congress .............................................................................................................. 59

Figures
Figure 1. Map of Venezuela....................................................................................................... 60
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Tables
Table 1. CNE’s December 2, 2007 Constitutional Reform Results ............................................. 16

Contacts
Author Contact Information ...................................................................................................... 60

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Major Developments
On July 27, 2009, the government of Sweden asked for an explanation from Venezuela of how the
Revolutionary Armed Forces of Colombia (FARC) obtained Swedish-made anti-tank rocket
launchers that had been sold to Venezuela in the 1980s. Venezuelan officials denied any
Venezuelan government involvement with the FARC.
On July 20, 2009, the U.S. Government Accountability Office issued a report on the status of
drug trafficking through Venezuela and the status of U.S.-Venezuelan counternarcotics
cooperation. The report concluded that the lack of Venezuelan counternarcotics cooperation is a
significant impediment to the U.S. capacity to interdict drugs en route to the United States.
According to the report, U.S. and Colombian officials assert that Venezuela has extended a
lifeline to illegally armed Colombian groups by providing significant support and safe haven
along the border. (See “Counternarcotics Cooperation” below.)
On June 25, 2009, the State Department announced that the United States and Venezuela agreed
to return respective ambassadors. This led to U.S. Ambassador to Venezuela Patrick Duddy
resuming his post in Caracas, and to the return of Venezuelan Ambassador Bernardo Alvarez to
Washington.
On February 15, 2009, Venezuelans voted in a national referendum to approve a constitutional
amendment abolishing term limits for elected local, state, and national officials, including for the
President. The amendment was approved with almost 55% voting for it and 45% voting against it.
President Chávez proclaimed that the vote was a victory for the Bolivarian Revolution, and
virtually promised that he would run for re-election in 2012. (See “February 15, 2009 Term
Limits Referendum” below.)
On January 30, 2009, an unidentified group of assailants vandalized a synagogue in Caracas.
President Chávez and other Venezuelan officials strongly condemned the attack. Subsequently, on
February 2, 2009, 16 Members of Congress spoke out against the attack in a letter to President
Chávez. The Members called on Chávez “to end the bullying and harassment of the Jewish
community” and “to extend the community the robust protection it deserves in light of the threats
it faces.” (See “Human Rights Concerns” below.)
On November 23, 2008, Venezuela held state and municipal elections across the country. Both
pro-Chávez and anti-Chávez camps claimed victory. Of 22 governorships, government supporters
won 17, although of the 5 states won by the opposition, 3 were country’s most the populous states
of Zulia, Miranda, and Carabobo. The government won also won over 80% of the more than 300
mayoral races, but the opposition won the country’s largest cities of Caracas and Maracaibo. (See
“November 2008 State and Local Elections” below.)
On October 3, 2008, Venezuelan military intelligence officials detained retired General Raúl
Baduel, and prohibited him from leaving the country on charges of corruption during his tenure as
defense minister. A former Chávez supporter, Baduel has become a staunch critic of the President.
Chávez opponents maintain that the action against Baduel was intended to intimidate the
opposition before the state and municipal elections scheduled for November 23.
On September 26, 2008, 41 members of the U.S. House of Representatives wrote to President
Chávez expressing their outrage over the expulsion of two Human Rights Watch staff, and urging
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the President to embrace the recommendations of the report and strengthen the promotion of
human rights, democratic institutions, and political pluralism in the country.
On September 18, 2008, Human Rights Watch issued an extensive report examining setbacks in
human rights protections and practices under the Chávez government. Late in the evening, the
Venezuelan government expelled two Human Rights Watch employees visiting the country, an
action that was condemned by numerous human rights groups throughout Latin America. The full
report, “A Decade Under Chávez, Political Intolerance and Lost Opportunities for Advancing
Human Rights in Venezuela, ” is available at http://hrw.org/reports/2008/venezuela0908/.
On September 16, 2008, for the fourth year in a row, President Bush determined that Venezuela
had failed demonstrably to adhere to its obligations under international narcotics control
agreements, but waived sanctions to allow the continuation of U.S. foreign assistance to support
civil society programs and community development programs.
On September 12, 2008, the U.S. Treasury Department froze the assets of two senior Venezuelan
intelligence officials and the former interior minister for allegedly helping the Revolutionary
Armed Forces of Colombia (FARC) with weapons and drug trafficking. The State Department
also declared Venezuela’s U.S. Ambassador Bernardo Alvarez persona non grata.
On September 11, 2008, President Chávez announced that he was expelling the U.S. Ambassador
to Venezuela, Patrick Duddy, and alleged that the Venezuelan government had foiled a U.S.-
backed conspiracy to assassinate him. Chávez also announced that he was recalling the
Venezuelan Ambassador to the United States, Bernardo Alvarez.
On September 10, 2008, two Russian long-range bombers arrived in Venezuela for training
exercises with the Venezuelan military. Days earlier, Russian and Venezuelan officials maintained
that Russian naval ships would participate in joint naval exercises with Venezuela in November.
On August 5, 2008, Venezuela’s Supreme Court held up the comptroller general’s disqualification
of 272 individuals from running for office, including a number of high-profile opposition figures
such as Leopoldo López who had intended to run for mayor of Caracas.
On August 4, 2008, the Venezuelan government made public 26 presidential decrees that had
been enacted on July 31 at the end of an 18-month period in which President Chávez had been
given decree authority by the National Assembly. The decrees covered such areas as tourism,
railways, social security, and financial institutions as well as controversial provisions that would
allow the President to appoint regional leaders with broad budgetary powers, set up a civilian
militia as a branch of the military, and allow the government to expropriate goods from private
businesses and increase state control over food distribution.
Political Situation
Background
With his election as President in December 1998, Hugo Chávez began to transform Venezuela’s
political system. The watershed election, in which former coup leader Chávez received 56% of
the vote (16% more than his closest rival), illustrated Venezuelans’ rejection of the country’s two
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traditional parties, Democratic Action (AD) and the Social Christian party (COPEI), that had
dominated Venezuelan politics for much of the past 40 years. Elected to a five-year term, Chávez
was the candidate of the Patriotic Pole, a left-leaning coalition of 15 parties, with Chávez’s own
Fifth Republic Movement (MVR) the main party in the coalition.
Most observers attribute Chávez’s rise to
Chavez Biography
power to Venezuelans’ disillusionment with
Hugo Chávez Frias was born on July 28, 1954, in a smal
politicians whom they judge to have
farming town in the western Venezuelan state of Barinas.
squandered the country’s oil wealth through
The son of school teachers, Chávez was a 1975 graduate of
Venezuela’s Military Academy. He reached the rank of
poor management and endemic corruption.
lieutenant colonel by 1990. In February 1992, Chávez led an
A central theme of his campaign was
unsuccessful attempt to overthrow the elected government
constitutional reform; Chávez asserted that
of President Carlos Andres Perez. He was imprisoned for
the system in place allowed a small elite
two years for the coup attempt before being pardoned.
While in the military, Chávez founded the nationalistic and
class to dominate Congress and that
left-leaning Bolivarian Revolutionary Movement, which was
revenues from the state-run oil company,
later transformed into the Fifth Republic Movement in the
Petroleos de Venezuela S.A. (PdVSA), had
1998 elections when Chávez was first elected president.
been wasted.

Source: Current Leaders of Nations, Gale Group. May 20,
Although Venezuela had one of the most
2004.
stable political systems in Latin America
from 1958 until 1989, after that period
numerous economic and political challenges plagued the country and the power of the two
traditional parties began to erode. Former President Carlos Andres Perez, inaugurated to a five-
year term in February 1989, initiated an austerity program that fueled riots and street violence in
which several hundred people were killed. In 1992, two attempted military coups threatened the
Perez presidency, one led by Chávez himself, who at the time was a lieutenant colonel railing
against corruption and poverty. Ultimately the legislature dismissed President Perez from office in
May 1993 on charges of misusing public funds, although some observers assert that the
President’s unpopular economic reform program was the real reason for his ouster.1 The election
of elder statesman and former President Rafael Caldera as President in December 1993 brought a
measure of political stability to the country, but the Caldera government soon faced a severe
banking crisis that cost the government more than $10 billion. While the macro-economy began
to improve in 1997, a rapid decline in the price of oil brought about a deep recession beginning in
1998.
Under President Chávez, Venezuela has undergone enormous political changes, with a new
constitution in place and even a new name for the country, the Bolivarian Republic of Venezuela,
named after the 19th century South American liberator Simon Bolivar, whom Chávez often
invokes. In 1999, Venezuelans went to the polls on three occasions—to establish a constituent
assembly that would draft a new constitution, to elect the membership of the 165-member
constituent assembly, and to approve the new constitution—and each time delivered victory to
President Chávez. The new document revamped political institutions, eliminating the Senate and
establishing a unicameral National Assembly, and expanded the presidential term of office from
five to six years, with the possibility of immediate reelection for a second term. Under the new
constitution, voters once again went to the polls in July 2000 for a so-called mega-election, in
which the President, national legislators, and state and municipal officials were selected.
President Chávez easily won election to a new six-year term, capturing about 60% of the vote

1 For example, see M. Delal Baer, “Revenge of the Venezuelan Dinosaurs,” Wall Street Journal, June 18, 1993.
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while his opponent, fellow former coup leader Francisco Arias, received 38%. Chávez’s Patriotic
Pole coalition also captured 14 of 23 governorships and a majority of seats in the National
Assembly.
From the outset, critics raised concerns about Chávez and his government. They feared that he
was moving toward authoritarian rule and pointed to his domination of most government
institutions. Some argue that Chávez had replaced the country’s multiparty democracy with a
political system that revolves around himself, in essence a cult of personality; others pointed to
Chávez’s open admiration of Fidel Castro and close relations with Cuba as a disturbing sign.
Other observers expressed concern about the increased role of the military in the government,
with Chávez appointing dozens of retired and active duty officers to key positions, as well as the
mobilization of thousands of army reservists for social projects. Still other critics of Chávez
believed that he was trying to politicize the educational system by making changes to school
curriculums. They feared Chávez’s call for his followers to form political cells in schools,
hospitals, and businesses in order to support his revolution and believe that such groups, known
as Bolivarian circles, could mirror Cuba’s controversial neighborhood committees.2
Chávez’s Brief Ouster in April 2002
Although President Chávez remained widely popular until mid-2001, his standing eroded
considerably after that, amid concerns that he was imposing a leftist agenda on the country and
that his government was ineffective in improving living conditions in Venezuela. In late 2001 and
early 2002, opposition to Chávez’s rule grew into a broad coalition of political parties, unions,
and business leaders. Trade union opposition became stronger amid the President’s attempt to
replace the Venezuelan Workers Confederation (CTV) with a pro-government union. President
Chávez’s own Fifth Republic Movement also became plagued with internal dissent.
In April 2002, massive opposition protests and pressure by the military led to the ouster of
Chávez from power for a brief period. However, he ultimately was restored to power by the
military. Chávez was ousted from office on April 11, 2002, after protests by hundreds of
thousands of Venezuelans and the death of at least 18 people. Venezuelan military leaders
expressed outrage at the massacre of unarmed civilians and blamed President Chávez and his
supporters. On April 12, Pedro Carmona of the country’s largest business association—the
Federation of Associations and Chambers of Commerce and Industry (Fedecamaras)—
proclaimed himself interim president, but Carmona quickly lost the support of the military when
he took such hardline measures as dismantling the National Assembly, firing the Supreme Court,
and suspending the constitution. Carmona stepped down just a day after he took office, paving the
way for Chávez’s return to power early in the morning of April 14. The interim government’s
hardline polices as well as strong support in the streets from Chávez supporters convinced
military commanders to back Chávez’s return. Moreover, some military factions had continued to
support Chávez during his ouster.

2 For example, see William S. Prillman, “The Castro in Caracas: Venezuelan Strongman Hugo Chávez, in Fidel’s
Image,” National Review, April 3, 2003; Stephen Johnson, “Venezuela Erupting,” National Review, March 5, 2004.
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Continued Opposition and Strike in 2002 and 2003
After Chávez’s return to power, some 40 disparate opposition groups united in a coalition known
as the Democratic Coordinator (CD) in an effort to remove Chávez from office, focusing on
efforts to hold him accountable for the death of civilian protestors in April 2002 and to push for a
national referendum on his presidency. The CD demanded a non-binding referendum on Chávez’s
rule in early February 2003, which they believed would force the President to resign, but
Venezuela’s Supreme Court ruled against holding such a referendum. President Chávez
maintained that, according to the constitution (Article 72), a binding referendum on his rule could
take place after the halfway point of his term, which would occur in August 2003.
From early December 2002 until early February 2003, the CD orchestrated a general strike that
severely curtailed Venezuela’s oil exports and disrupted the economy but was unsuccessful in
getting President Chávez to agree to an early non-binding referendum on his rule or new
elections. At various junctures, there were violent clashes between Chávez supporters and the
opposition, resulting in several deaths. The Chávez government responded to the oil sector strike
by firing 13,000-16,000 PdVSA employees.
August 2004 Presidential Recall Referendum
After months of negotiations facilitated by the Organization of American States (OAS) and the
Carter Center, the government of Hugo Chávez and the opposition signed an agreement on May
29, 2003, that set forth mechanisms to help resolve the political crisis. Implementation of the
accord was difficult at times and hampered by political polarization between supporters and
opponents of President Chávez. Nevertheless, Venezuela’s National Electoral Council (CNE)
announced on June 8, 2004, that a presidential recall referendum would be held on August 15,
2004. Chávez won the referendum convincingly by a margin of 59.3% to 40.7%, according to the
CNE’s final official results.3
Background Leading to the Referendum
For a recall referendum to take place, the constitution required a petition signed by 20% of
registered voters (which means 2.4 million signatures out of a registry of 12.3 million). Petition
signatures were collected during a four-day period beginning in late November 2003, but on
March 2, 2004, the CNE ruled that there were only 1.83 million valid signatures supporting a
presidential recall referendum. The CNE subsequently updated this to 1.91 million valid
signatures, with almost 1.2 million signatures that could be valid if individuals confirmed their
signatures in a reparo or “repair” period. This meant that about 525,000 signatures of those under
review would need to be validated for a referendum to be required. The CNE’s announcement
that there were not yet enough valid signatures for a referendum prompted strong opposition
protests, but the opposition ultimately agreed to participate in a repair period that was held May
27-31, 2004, in more than 2,600 centers around the country. About 100 observers from the OAS
and the Carter Center monitored the repair period; President Carter reported that the overall

3 “CNE Emitió Resultados Oficiales Del Referendo Revocatorio Presidencial,” Consejo Nacional Electoral, August 26,
2004.
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process was peaceful and orderly, although he did note some initial concern about the temporary
suspension of the CNE’s tabulation process.4
On June 3, 2004, the CNE announced that enough signatures had been secured for a recall
referendum, and subsequently scheduled the referendum for August 15. The date of the
referendum was significant because under the constitution, if it were held after August 19 (one
year after the half-way point of Chávez’s term) and Chávez lost the referendum, then Vice
President Jose Vicente Rangel (a Chávez ally) would serve the remainder of the President’s term
until January 2007.
In order for President Chávez to be recalled, the majority of voters needed to vote “yes” and the
number of votes to recall him needed to exceed the number that he received when last elected in
July 2000 (3.75 million). If Chávez had been recalled, new presidential elections would have
been held within 30 days. It was unclear whether President Chávez would have been allowed to
run for reelection, but most observers believed that the Supreme Court would have ruled that he
was eligible to run. One of the problems that plagued the opposition was that it did not have a
well-organized or coherent political coalition. As a result, it could have been difficult for the
opposition to present a single candidate who could have defeated Chávez in new elections,
assuming that he was permitted to run.
Public opinion polls conducted in June and July 2004 by various survey firms yielded
significantly different results, with some favoring the opposition and some favoring Chávez, but
by early August 2004 a number of polls showed Chávez with an advantage. A June 2004 poll by
Datanálisis, a Venezuelan research firm, showed that 57% of Venezuelans would vote to recall
President Chávez, while another poll in June by the U.S.-based Greenberg, Quinlan, Rosner
Research firm found that only 44% would vote to recall the president.5 Another poll by North
American Opinion Research Inc. published in early July 2004 showed that 41% would vote to
recall Chávez, compared to 57% favoring the president.6 A poll in late July by the U.S. firm of
Evans/McDonough and Varianzas Opinión of Venezuela showed that 43% would vote against
Chávez and 51% would vote for him.7 In early August, a newspaper that has been a strong
opposition supporter, Ultimas Noticias, published four polls showing that Chávez would win by
at least 10%.8 Some observers, however, maintained that many people were not being truthful in
these opinion polls because of fear of retribution for answering truthfully; they maintained that
these so-called “hidden voters” could determine the outcome of the referendum.9
Referendum Results
With a turnout of about 70% of registered voters, President Chávez won the recall referendum
convincingly with 5.80 million people voting “no” to reject his recall, or 59.25% of the vote, and
3.989 million people, or 40.74%, voting “yes” in favor of his recall.10 Observers from the OAS

4 “President Carter’s Trip Report on Venezuela, May 29-June 1, 2004,” The Carter Center, June 4, 2004.
5 “Battle of the Polls is Engaged,” Latin American Weekly Report, July 6, 2004.
6 “Venezuela’s Recall Referendum,” BBC Worldwide Monitoring, July 8, 2004.
7 “A Poll of Polls,” Miami Herald, August 11, 2004.
8 “Chávez on Course for Victory,” Latinnews Daily, August 9, 2004.
9Steven Dudley, “Chávez Recall Vote Confounds Pollsters,” Miami Herald, August 11, 2004.
10 “CNE Emitió Resultados Oficiales Del Referendo Revocatorio Presidencial,” Consejo Nacional Electoral, August
26, 2004.
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