CONSTITUTIONAL REFERENDUM: WINNERS AND LOSERS

C O N F I D E N T I A L SECTION 01 OF 04 CARACAS 002294

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SUBJECT: CONSTITUTIONAL REFERENDUM: WINNERS AND LOSERS

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Classified By: POLITICAL COUNSELOR ROBERT DOWNES,
REASON 1.4 (D)


1. (C) Summary. Venezuelan democracy is the big winner after
voters rejected President Chavez' proposed anti-democratic
changes to the 1999 Constitution on December 2. There are
still few real checks on Chavez' power, but Chavez will be
unable to legally impose much of his desired elements of a
socialist state under the existing constitution. The student
movement made important contributions to the "No" victory and
has helped re-energize democratic opposition to the
Venezuelan president. Participatory opposition parties and
their young leaders, the small left-wing party Podemos, and
former Defense Minister Baduel all get a boost from the "No"
win. Despite lingering criticism, the National Electoral
Council (CNE) appears to have acquitted itself reasonably
well and, despite persistent opposition skepticism, ratified
a government defeat.


2. (C) As for losers, Chavez' myth of electoral invincibility
is broken. How big a political setback Chavez' first defeat
at the polls depends in large part on how the Venezuelan
president reacts -- or overreacts -- in the coming weeks.
Chavez himself concedes that Venezuelans are not yet ready
for his ill-defined "21st Century Socialism," and he and his
inner circle apparently will need to repackage a political
and economic model that is out of step with the majority of
democratically minded and capitalistic Venezuelans. Chavez'
new single pro-government party, the PSUV, failed to mobilize
Chavez' extensive base and contributed to fractures within
Chavismo. Finger-pointing among Chavez' supporters has
already begun -- below the presidency. Vice President Jorge
Rodriguez and numerous PSUV state and local leaders are being
heavily criticized in the BRV world.
End Summary.

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Winners
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Venezuelan Democracy
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3. (C) By voting down President Chavez' sweeping, proposed
changes to the 1999 Constitution, Venezuelan voters stopped
(at least for the near term) what would have been a
devastating setback to the country's endangered democracy.
Voting took place without any major violent incidents and
only scattered irregularities. At this time, Chavez expected
to be able to run for president indefinitely, to concentrate
even more power in his hands at the expense of state and
local governments, to assume draconian emergency powers,
assume more authority to seize private property, and
personally manage the country's foreign reserves. He cannot
legally extend his time in the presidency or go as far in the
aforementioned areas without making another run at
constitutional reform. Chavez still has wide authority to
issue decree-laws in twelve broad areas under the Enabling
Law until August 2008, but not nearly as much unchecked
authority, particularly in the economic sphere, as he would
have had, had the public approved of his constitutional
package.

The Student Movement
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4. (C) University students provided the opposition with
renewed street power, much-needed credibility, and electoral
monitors who helped safeguard the "No" victory. Although the
student movement did not formally embrace the "No" campaign
fully (vice abstentionism) until late in the campaign, it
appears to have convinced voters who may otherwise have
abstained to go to the polls. According to National
Electoral Council (CNE) data, the "No" campaign did
exceptionally well in major urban areas, most of which are
home to public and/or private universities. Media savvy
student leaders Yon Goicochea, Freddy Guevara, and Stalin
Gonzalez, in particular, may one day emerge as nationally
prominent politicians. The ideologically diverse student
movement faces the medium to long-term challenge of engaging
even more in politics while still protecting their compelling
public image.

The Constructive Opposition
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5. (C) The "No" victory should vindicate the position of Un

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Nuevo Tiempo (UNT),Primero Justicia (PJ),the Christian
Democrats (COPEI) and other smaller, constructive opposition
parties who from the beginning lobbied Venezuelans to
participate in the election and vote "No." Hard-line
opposition parties like Accion Democratica (AD),Alianza
Bravo Pueblo (ABP),and the National Resistance Command (CNR)
abandoned abstentionism only very late in the campaign. If
the "Yes" camp had won, the traditional abstentionist parties
reportedly planned to try to steer the opposition toward more
radical confrontational politics. The collective opposition
did a good, even if late-in-the-campaign, job of fielding
trained electoral monitors. Nevertheless, all the opposition
parties still have a long way to go in terms of
reconstructing their bases, appealing to poor Venezuelans,
and mobilizing voters. Turnout in many opposition
strongholds was actually lighter than in the 2006
presidential election, according to CNE figures.

Emerging Opposition Leaders
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6. (C) Young political leaders like Chacao Mayor Leopoldo
Lopez of UNT and Baruta Mayor Henrique Capriles Radonski of
PJ not only saved their jobs (the reform would have allowed
Chavez to make Caracas a federal city with an appointed
mayor),but also reinforced their image as young, emerging
national leaders. Both mayors, as well as the youthful COPEI
Secretary General Ignacio Planas, served as key

SIPDIS
intermediaries between opposition parties and the student
movement. The government will not make it easy for them,
however. Lopez still faces a legal prohibition on running
for elected office for several years after his mayoral term
expires in 2008 and the government is still pursuing
politically-motivated criminal charges against Capriles
related to his efforts to mediate during a protest in front
of the Cuban Embassy in April 2002 (Capriles has already been
acquitted once).

Former Defense Minister Baduel
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7. (C) Former Defense Minister Raul Isaias Baduel also
provided the "No" camp with additional credibility within
Chavismo. He articulately highlighted how Chavez' proposed
changes to the constitution would concentrate too much power
in the executive. On election night, the combined opposition
selected Baduel to be one of three principal spokespersons,
and opposition leaders believe, albeit perhaps overly
optimistically, that Baduel's lingering influence in military
circles contributed to Chavez' decision to accept electoral
defeat. During the tense hours leading up to the CNE's
announcement of preliminary results, Baduel spoke clearly and
forcefully on the need to release the results promptly. The
alleged, and still unexplained, vehicular attack on Baduel on
election day may enhance his reputation. Prior to the
referendum, conventional wisdom had it that Baduel had no
real political future. After, most observers believe Baduel
is someone to watch, perhaps initially as a gubernatorial
candidate next October.

Podemos
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8. (C) This small pro-government party proved that there can
still be political life even after falling out of Chavez'
favor. Chavez lambasted Podemos party leaders after they
declined to merge with his single pro-government party, the
United Socialist Party of Venezuela (PSUV),earlier this
year. Podemos bravely and articulately fought against the
constitutional reform in the National Assembly. According to
opposition leaders, Podemos Secretary General Ismael Garcia
injected optimism and insights into Chavismo during the short
"No" campaign. The party's rank-and-file members helped fill
opposition gaps as election monitors. Podemos still has a
long-term struggle ahead carving out a "third way" in
Venezuelan politics, and in fact, the "No" camp narrowly lost
in both states with Podemos governors. In the short term,
Podemos has surprisingly remained politically relevant.

The National Electoral Council (CNE)
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9. (C) The CNE managed to hold a relatively smooth nationwide
referendum on short notice (Chavez announced his initial
proposal on August 15, and the National Assembly passed the
reform package on November 2). Embassy observers, who
visited approximately one percent of polling stations,

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perceived that CNE officials, the selected poll workers, and
the armed forces providing security generally followed
established electoral procedures. Embassy observers reported
only scattered irregularities or technical problems. Before
the "No" victory, many Venezuelans believed the CNE would
never ratify a Chavez defeat. The CNE was still widely
criticized for delaying the release of its preliminary
results until the early morning hours on December 3. CNE
Rector Vicente Diaz told reporters December 4 that local
transmission delays caused the overall delay in announcing
results. However, in his concession speech Chavez said he
debated with himself for several hours whether to allow the
CNE to release the results or wait until 100 percent of the
returns were in, a pointed reminder that the CNE is far from
autonomous.

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Losers
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President Chavez -- For Now
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10. (C) Chavez still retains much of his overall popularity.
The extent of the personal political damage is uncertain and
depends in large part on how Chavez reacts -- or overreacts
-- in the coming weeks. Nevertheless, the Venezuelan
president has taken a significant hit. The myth of Chavez'
electoral invincibility, the product of 11 straight victories
in national and regional elections, has been broken.
Moreover, Chavez cannot accelerate his Bolivarian revolution
to the extent he would have liked within the confines of the
unchanged 1999 Constitution. In addition, we expect Chavez
will also seek to blame his first electoral defeat on many of
his closest followers. A major government purge, however, is
only likely to exacerbate existing fissures within Chavismo.
Chavez is trying to position himself domestically and
internationally as a "true democrat," particularly in his
post-referendum speech accepting the results. Such efforts,
however, belie the overwhelmingly authoritarian
constitutional package which voters rejected and for which
most governments harbored reservations. His more recent
statements -- including calling the "No" camp's win a "sh-tty
victory" - are also likely to reduce any international points
he scored in his concession speech.

21st Century Socialism
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11. (C) The "No" camp succeeded in planting widespread doubts
and concerns about Chavez' ill-defined goal of constructing
"21st century socialism" in Venezuela during the referendum
campaign. The "No" camp did surprisingly well in many Chavez
strongholds. During the campaign, the "Yes" camp was
particularly on the defensive regarding the proposal to
weaken private property protections. In the wake of defeat,
some government ministers are already talking about the need
to make the revolution more "concrete," suggesting further
government populist spending binges are in the offing. For
many voters, the fruits of government interference in the
economy may have already been all too apparent with rolling
shortages of milk, eggs, chicken, coffee, sugar, and other
staples.

Jorge Rodriguez
--------------


12. (C) Vice President Jorge Rodriguez served as the overall
coordinator of the "Yes" campaign and there is widespread
speculation that Chavez will fire him as VP in his next
cabinet shuffle. Rodriguez was given the dubious honor of
holding a 9:00 p.m. "Yes" campaign press conference after
polls closed to announce a "tight race." At that time, both
government and opposition officials were aware that the "No"
camp was going to win the referendum, but Rodriguez could not
refer to any results absent a CNE announcement. His
crestfallen face, however, told the story. In his concession
speech, Chavez thanked the four million "Yes" voters, but
made no mention of his "Zamora Command" referendum team.

United Socialist Party of Venezuela (PSUV)
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13. (C) Chavez' new single pro-government party, still in
formation, has suffered from internal division and chronic
organizational problems. Chavez asked local PSUV
"battalions" to appoint ward captains ("batazos") to make

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sure pro-Chavez voters went to the polls. Despite party
leaders claims that the PSUV has 5.6 million members, the
PSUV failed to mobilize Chavez' base in its first electoral
contest, polling only a little more than four million votes.
Chavez' previous party, the Fifth Republic Movement (MVR),
was a much more impressive electoral machine. Given that the
reform would have concentrated more power in the central
government at the expense of state and municipal governments,
regional PSUV leaders appear to have provided only
half-hearted support for the "Yes" campaign. PSUV battalion
leaders are slated to attend a much-delayed founding party
congress in January and instead of building on a "Yes"
victory, PSUV leaders are calling on mid-tier party leaders
to reflect on the recent defeat and engage in "revolutionary
self-criticism."

Pro-Chavez Governors and Mayors
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14. (C) Given that public criticism of the president is taboo
within Chavismo, finger-pointing is increasingly focused on
state and local leaders. According to preliminary CNE
figures, the "No" camp won in eight of Venezuela's 23 states
and in Caracas. PSUV governors are present in six of those
eight states -- Anzoategui, Carabobo, Lara, Merida, Miranda,
Tachira, and Yaracuy and are being accused within Chavista
circles of failing to mobilize Chavez' extensive base.
Carabobo Governor Luis Felipe Acosta and Lara Governor Luis
Reyes Reyes have borne the brunt of much of the post
referendum scapegoating. PSUV mayors of big cities where the
"No" won, such as Juan Barreto and Freddy Bernal in Caracas
and Gian Carlo Di Martino in Maracaibo, are also rumored to
be on the hot seat.

FRENCH