The honeymoon period of Chávez’s presidency ended in late 2001 with the sudden resurgence of street protests. Between the end of 2001 and the middle of 2004, Chávez not only faced poor popularity ratings in opinion polls (see chart on page 68), but also endured the most active mobilization of opposition forces in Venezuela since the 1950s. Between 2002 and early 2003, there were at least 22 massive marches in Venezuela’s largest cities. Given Chávez’s radical assertion of presidential power—quite evident since the approval of the 1999 constitution—and the economic troubles that lasted until 2003, this backlash was perhaps inevitable. However, it was more difficult to predict whether Chávez would survive it. He came close to losing power on three occasions: the massive street protests that touched off a short-lived coup in 2002, the 2002–03 general strike led by the oil sector, and the 2004 recall referendum. The policies described below allowed him to fend off these threats and remain in office.

Smash the middle. Rather than seeking reconciliation and compromise with the rising tide of protesters in 2002, Chávez responded to political conflict by growing even more antagonistic toward the opposition. The idea was to push his adversaries into increasingly extreme actions, and thus compel the general public to take sides with one of the two poles. Similarly, rather than negotiate with the oil strikers, he fired them. It was around this time that Chávez’s crudely polemical speech vis-à-vis the opposition—the use of insults, unfounded accusations, and frequent expletives—became his signature style. In Venezuela since the 1950s, and in Latin America since the transition to democracy, political discourse on the part of leaders from large political parties was typically moderate and respectful. Chávez jettisoned that approach, and to date he shows neither remorse nor the intention to change his tone.

Politicize social services. By the end of 2003, when the international boom in fuel prices began, the government had begun to convert social policy into an electoral tool. A massive spending spree was launched in a desperate effort to survive the 2004 recall referendum, which the government tried unsuccessfully to block. This was the period during which Chávez’s famous “missions” were created. Forming what is essentially a parallel welfare apparatus, the missions are social programs in health, education, and citizen mobilization aimed at key sectors of the population. The office of the presidency itself—rather than the legislature, the existing bureaucracy, or the local governments—controls the missions, and researchers have shown that many of them are used for political purposes: to bolster Chavista politicians, to secure the political loyalties of beneficiaries, and to distribute jobs and other patronage to supporters.

Mobilize “new” voters. In addition to the social spending, the state engaged in a massive voter-registration campaign of dubious legitimacy. It included nontransparent practices such as rapidly providing voting rights to Colombian immigrants. In the six months prior to the 2004 recall referendum, the electoral rolls experienced a spectacular 11.7 percent surge in registered voters.

Encourage electoral abstention by the opposition. Complementing the voter registration strategy, the Chávez government worked to create uncertainty about the electoral process among the opposition. The goal was to foster apathy, defeatism, and abstentionism, and it was achieved through a variety of means. First, Chávez deliberately eroded the objectivity of the National Electoral Council, refusing to heed calls to replace the most biased officials. Second, he created a special set of quasi-partisan “forces” (for example, the Círculos Bolivarianos, or Bolivarian Circles) to defend the administration, watch citizens in local communities, and intimidate opponents. Finally, following the 2004 referendum, the government began to deny jobs and government contracts to those whose names appeared on the petitions that led to the recall vote. In addition, approximately 800 citizens have been placed under investigation for political treason based on their participation in protests. These steps instilled not just resignation but real fear among opposition voters that the notion of a secret ballot was null and void, and that voting for the wrong candidate could be punished. In the run-up to the 2005 National Assembly elections, the irregularities became so crass that opposition leaders decided to pursue the most extreme—and in retrospect, the costliest—form of abstention: an organized boycott, grounded on the hope that the international community would force the government to postpone or annul the elections. The government, however, proceeded without opposition participation, and the result was a new legislature in which the opposition held no seats, down from 45 percent representation in the previous body.

Having survived the backlash of 2001–04, the Chávez administration entered a period of political calm that lasted until mid-2007. It did not use this time to improve the government’s technical competence. In fact, on a number of indicators, the signs of serious deterioration were unmistakable. The regime’s bureaucratic chaos is reflected in the instability of the cabinet. Between 1999 and 2008, Chávez has had 6 vice presidents, 6 foreign ministers, 9 interior ministers, 12 secretaries of the presidency, 7 finance ministers, 9 ministers of industry and commerce, 6 ministers of health, and 7 ministers of infrastructure. High turnover rates typically suggest an excessively personality-driven administration, weak institutions, and a lack of coherent public policies. The area in which the bureaucratic decay is most evident is also, paradoxically, the sector that is most vital to the government: oil. Production levels today are lower than in the 1990s, but employment levels at the state oil firm, Petróleos de Venezuela SA (PDVSA), have never been higher. There has also been visible corrosion in urban services, policing, education, public works, and health facilities. In 2007, shortages of key consumer goods began to surface as well. Despite these signs of inept governance, Chávez has managed to remain popular, albeit less so than in 2005–06. His relative success is attributable to the following practices:

Massive procyclical spending. Taking advantage of a formidable oil-price boom, the government embarked on one of the most lavish examples of procyclical spending in Latin American history, with little money saved or reinvested in the oil sector or in capital improvements. A significant portion of this spending went to social programs; according to some estimates, funding of such programs increased by 314 percent in per capita terms. Money was also channeled to the military, business subsidies, agricultural subsidies, and the publicsector payroll. Indeed, because of the massive sums directed to these areas and to the unimpoverished segments of society, social spending under Chávez was no higher than under his predecessors when taken as a proportion of total government expenditures. This fiscal stimulus generated economic growth rates of 8 to 9 percent between 2004 and 2007. Government contracts were plentiful and large, and in 2007, nationalizations of private enterprises were also expanded. The prodigious growth in state spending won the political support of four key groups: those who receive social benefits (low-income residents, among others); those who enjoy some formal association with the state (including government employees, whose ranks have increased by approximately 50 percent since 1999); the rent-seeking private sector; and the military. Public-sector workers are a particularly valuable asset to the regime, especially during election periods, as promotions and job tenure seem to be conditioned on progovernment political participation and voting. State employees helped to secure Chávez’s victory in the 2009 referendum to lift term limits.

Extrabudgetary slush funds. In addition to the huge budgetary expenditures, Chavismo (until 2008) was characterized by record-breaking outlays of surplus funds without any real accountability or legislative approval. Under Venezuelan law, government revenues that exceed the amount anticipated in the legislatively approved budget must be deposited into a special “stabilization” fund. Chávez took advantage of this provision by submitting budget bills that deliberately underestimated the projected price of oil and then ignoring the rules governing the stabilization fund. For the 2008 budget, for instance, the government made revenue projections based on an oil price of $35 per barrel, far below the actual figure. For three weeks in 2008, Venezuelan oil was selling for at least $116, some 233 percent higher than the budgeted price. This systematic lowballing has generated an average revenue surplus of 20 percent every year since 2002 (see graph on page 72). Chávez has essentially been free to use these vast sums without supervision.

Militarization of government, politicization of the military. In terms of appointments and spending, the Chávez administration has become the most militaristic Latin American regime in decades. Since its inception, it has relied on military figures to run key government programs and institutions. By 2008, eight of the 24 governorships and nine of the roughly 30 cabinet positions were controlled by active or retired officers. Chávez’s approach to the military follows a traditional formula of purging and splurging. The government used the 2001–04 period of discontent to identify and remove dissenting leaders. To the rest, it offered generous rewards. Military spending under Chávez has increased sevenfold, and the country has dramatically stepped up the pace of its weapons purchases. Between 2005 and 2007, the state spent an extraordinary $4.4 billion on arms imports, the financial equivalent of building 300 new “Bolivarian” schools, 19 superhospitals, 34 medical schools, and two sports stadiums. This boom in military acquisitions has occurred in the absence of any significant military threat, either foreign or domestic. For Chávez, the military is not a neutral protector of the constitution but rather a guardian of socialism against imperialists and oligarchs.

Curtailed freedom of expression. Freedom of expression has continued to exist under Chávez, but there are fewer means of expression than ever, as the government has reduced the size and restricted the content of the private media. In 2007, the authorities shocked international observers by refusing to renew the operating license of RCTV, a leading private television station. The government also confiscated the company’s assets without compensation. This was the culmination of a campaign, begun in 2003, to expand the government’s share of media outlets in the country. After the RCTV shutdown, Venezuela was left with only three private television stations: Venevisión, Televén, and Globovisión. The last of those three does not have national coverage, and Venevisión carries little political coverage. In 2009, some progovernment forces began to call for Globovisión to be shut down.

The administration and its supporters use financial, legal, and extralegal pressure to weaken and tame the private media. For example, the authorities threaten to deny the outlets access to U.S. dollars—through the exchange-rate regime in effect since 2003—and to cut state spending on publicity and advertising. The government has also imposed a harsh tax code on the media and conducts frequent and arbitrary audits. Violence and intimidation aimed at reporters has been a common tactic, and a “social responsibility law” bans media from issuing information that is contrary to “national security” or disrespectful of elected officials. Certain news programs cannot air outside of prime time, under the pretext that they are not suitable for children. Furthermore, private media are obliged to broadcast 70 minutes of free government publicity each week. As of mid-2008, the president’s own television program, Aló Presidente, had been aired 311 times, with each broadcast lasting an average of 4 hours and 21 minutes (in 2006, the average was 6 hours and 22 minutes). The Sociedad Interamericana de Prensa (Inter-American Press Society) issued a March 2008 resolution to condemn the Venezuelan government for numerous actions intended to curtail freedom of the press. Meanwhile, the decline in the number, content, and operations of private media has been accompanied by an increase in state ownership of alternative media. The government has gone on a buying spree, acquiring a large number of newspapers, radio stations, and community news outlets, mostly in small cities. This has allowed it to establish virtual media monopolies outside the largest urban areas.

Impunity as a co-optation tool. Corruption in Venezuela is undoubtedly rampant, with estimates suggesting that less than 5 percent of government contracts go through any type of bidding process. Furthermore, there is little to no legal accountability for graft, as court cases that go against the leadership’s interests are virtually unheard of. However, this environment of corruption and impunity is not the product of simple greed or neglect. Instead, it seems to be a political tool deliberately used by the government to distribute patronage, cultivate supporters, and dramatically increase their stake in the administration’s political fortunes. The implicit threat is that if the opposition ever returned to power, those who have benefited from the lawlessness of the current regime would be cut off and possibly even prosecuted.

Disrespect for the rule of law as a political tool. Political connections have become the only guarantee for private property and personal security; nothing is being done to curtail crime, which has increased from the already high levels of the 1990s. By expelling the U.S. Drug Enforcement Administration and significantly cutting back on drug interdiction, the authorities have effectively given traffickers free rein to operate in Venezuelan territory. The government also encourages workers to engage in labor conflicts, work stoppages, and even vandalism at private firms. This promotion of economic and social disorder has been pursued with particular vigor in areas where the political opposition has been successful, such as the five states and key cities it captured in the 2008 regional elections. For instance, the government is denying funds and decision-making authority to the Caracas mayoralty and the state of Miranda, both controlled by the opposition. The Chavista-dominated National Assembly recently approved a law that allows the executive branch to “reverse” constitutionally mandated monetary transfers to the states. And the government has nationalized the ports in Porlamar, Maracaibo, and Puerto Cabello, located in the opposition-led states of Nueva Esparta, Zulia, and Carabobo, respectively.