THE BOLIVARIAN REVOLUTION ADVANCES: WHAT'S NEXT?

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SUBJECT: THE BOLIVARIAN REVOLUTION ADVANCES: WHAT'S NEXT?

REF: A. CARACAS 00079

B. 08 CARACAS 001551

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Classified By: POLITICAL COUNSELOR FRANCISCO FERNANDEZ,
REASONS 1.4 (B) AND (D)


1. (C) Summary. After winning public approval for the
elimination of term limits, President Chavez publicly
declared his intention to accelerate his Bolivarian
Revolution which will almost certainly concentrate even more
power in his hands. Chavez has not yet revealed how he
intends to do so, but all our interlocutors agree that the
process will feature efforts to maintain Chavez's political
base at the expense of the opposition. At a minimum, he will
begin to implement the 26 sweeping decree-laws promulgated in
2008 that codified key elements of the failed 2007
referendum. More extreme views speculate that Chavez will
seek a constituent assembly to rewrite the 1999 Constitution
and force early presidential elections. It is unclear,
however, the extent to which Venezuela's economic problems
will temper Chavez's ambitions. Most local analysts see
recent overtures to the opposition as political theater with
little substance. On bilateral relations, pundits see little
chance for improvement despite government rhetoric, and even
Chavistas supportive of strengthened ties do not see things
improving until at least the medium term. End Summary.


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Accelerating the Revolution
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2. (C) President Chavez framed the February 15 referendum on
eliminating term limits as a plebiscite on his presidency and
his public policies. Chavez publicly declared voters'
approval of his amendment proposal an endorsement of his
vaguely-defined "Socialism of the 21st Century" and promised
to accelerate his Bolivarian Revolution. To date, his
political agenda has concentrated more and more power in his
own hands. While there is consensus in Venezuela that Chavez
intends to do exactly that, local pundits disagree on how far
and fast the Venezuelan president will press ahead. All our
interlocutors stress that only Chavez himself will decide
what next steps to take. When Poloffs recently asked PSUV
National Assembly member Calixto Ortega what the
legislature's post-referendum priorities are going to be, he
said, "We will have to come up with an agenda first." Our
interlocutors also emphasize that Chavez must factor in the
GBRV's significantly reduced revenue inflow due to lower oil
prices.

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Baseline Radicalization
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3. (C) Most local pundits believe Chavez will start
implementing the 26 decree-laws he promulgated in mid-2008.
The 26 decree-laws mirrored a number of the proposals of the
constitutional reform package that Venezuelan voters rejected
in the December 2007 referendum. Among the measures Chavez
could put in motion is the Organic Decree on Public
Administration, which would allow him to create new
"decentralized functional and territorial" entities, as well
as appoint new regional authorities. He could also further
develop the five new regional military districts, as well as
neighborhood-based militias, or "defense committees." Such
measures would significantly undermine the authority of state
and local governments, particularly the five newly elected
opposition governors and opposition mayors. With respect to
the economy, Chavez has the authority to regulate directly
the production and prices of "essential" food, goods, and
services. He can also simply expropriate property linked to
anything deemed essential and settle on compensation later.


4. (C) Chavez is already making it difficult for opposition
governors and mayors to govern. Pro-Chavez former municipal
contract workers are occupying Caracas City Hall and other
municipal buildings. Caracas Mayor Antonio Ledezma allowed
their contracts to expire on January 1 without renewing them,
alleging that the employees had "no-show" positions or were
assigned to conduct pro-government political work.
Venezuelan Vice President Ramon Carrizales recently declared
publicly that no one is "occupying" Caracas buildings, but
rather Ledezma had "abandoned" them. Gerardo Blyde, Mayor of
the Baruta Municipality of Caracas, told the Charge February
20 that he expected the GBRV to withhold central government
funding from opposition-run states. Blyde noted that

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municipalities have the ability to raise their own tax
revenues (Baruta generates 90% of its revenue),but state
governments rely almost entirely on central government
funding.


5. (C) Rumors are also circulating in political circles that
Chavez will soon undertake another cabinet shuffle. Chavez
routinely changes ministers in his cabinet, such that no
minister gains significant experience -- or power -- in any
particular area. Moreover, the Venezuelan president tends to
rotate longtime loyalists rather than promote new leadership
within his United Socialist Party of Venezuela (PSUV). Vice
President Ramon Carrizales and Finance Minister Ali Rodriguez
are among the senior GBRV leaders rumored to be rotated out
of the cabinet. Former tax authority (SENIAT) director
Vielma Mora may be rotating back in. Foreign Minister
Nicolas Maduro appears comfortable where he is.


6. (C) Local political analyst John Magdaleno told PolCouns
February 19 that he expected Chavez to do everything possible
to protect his popular social programs. Magdaleno predicted
that the Venezuelan president would seek to make up for lost
oil revenues by enacting a series of tax and regulatory
measures that transfer resources from middle and upper income
Venezuelans to Chavez's political base of poor Venezuelans.
He and other pundits note that Chavez may expropriate large
Venezuelan firms, such as Polar, the large food and beverage
company generally associated with the opposition. While
Chavez will have less money to spend on government
take-overs, he can expropriate Venezuelan firms on his own
terms without having to confront possible international
arbitration. Moreover, he is still the only Venezuelan
politician capable of persuading the majority of poor
Venezuelans that better times lie ahead.

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Radical Change
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7. (C) Other local analysts believe Chavez will need yet
another electoral campaign to rally his base and vilify the
opposition. Nationwide municipal council elections should be
held in August, but two pro-Chavez parties have already
suggested postponing these elections and possibly combining
them with parliamentary elections scheduled for late 2010.
They suggest Chavez will need to create a bigger electoral
battle in 2009 to distract public attention from Venezuela's
economic problems. Pollster Alfredo Keller told PolCouns
recently that he expected Chavez to convene a Constituent
Assembly to write a new constitution. Keller suggested that
Chavez would use a constitution-writing process to convoke an
early presidential election to win re-election to a third
term before Venezuela's economic problems become more severe.


8. (C) Opposition insiders fear Chavez will put even more
pressure on his critics and civil society. Local newspapers
report that the GBRV is considering revising the omnibus
broadcasting law, specifically to examine how the GBRV could
force cable networks to cover, or at least not compete with,
Chavez's frequent, mandatory nationally-televised speeches
("cadenas"). The Education Ministry is reportedly dusting
off its oft-postponed (due to public pushback) plans to
revise Venezuela's school curriculum to make it more
ideologically harmonious with the GBRV's socialist vision.
The opposition also suspects the GBRV may decide to finally
pull the trigger on long-rumored decisions to:
-- close opposition-oriented cable news station Globovision;
-- imprison opposition Maracaibo Mayor Manuel Rosales on
corruption charges;
-- pass a restrictive international NGO cooperation law; and,
-- force out the only independent National Electoral Council
rector.

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Lip Service to Political Dialogue
--------------


9. (C) In his post-referendum victory speech from the balcony
of the presidential palace, Chavez called the elimination of
term limits a victory for his supporters and the opposition.
He told international reporters just prior to the vote that
he is disposed to reach out to his critics. Former Vice
President Jose Vicente Rangel recently told the local media
that he believed the GBRV needed to take note of the fact
that over five million Venezuelans voted "No" in the
referendum and underscored the need for greater
government-opposition dialogue. Manuel Cova, leader of the

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opposition-oriented Confederation of Venezuelan Workers (CTV)
told the Charge February 20 that prior to the referendum,
Labor Minister Roberto Hernandez invited and cordially
received Cova in his office. Cova speculated that the
unexpected and Labor Ministry-publicized courtesy call was an
effort to show some GBRV moderation prior to the referendum.


10. (C) During his February 20 speech before a civic-military
parade, Chavez reverted to excoriating the opposition, noting
that "we will never pardon traitors" in the Bolivarian
Revolution. PSUV National Assembly Deputy Calixto Ortega
told PolCouns that it was the opposition that is uninterested
in political dialogue. He noted confidently that the
referendum electoral results, if repeated in 2010, will give
the PSUV and its allies some 70 percent of the seats in the
legislature. Few opposition leaders or pundits actually
expect the GBRV to try to engage in genuine dialogue.
Instead, they expect the GBRV to try to blame Venezuela's
economic problems on the government's political opponents and
on the United States. Baruta Mayor Gerardo Blyde suggested
that by withholding funding from state governments, the GBRV
may try to pass the buck from the central government to the
states.

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Go Slow on Bilateral Relations
--------------


11. (C) While President Chavez publicly suggested that
"anytime is a good time" to meet with President Obama, the
GBRV is also stressing that it is not in a hurry to improve
bilateral relations. In fact, President Chavez told state
media February 27 that one "shouldn't have hold out big hopes
for new U.S. administration," because the United States
"continues to be imperialist." The MFA continues to harass
Embassy operations at the same time that MFA officials pledge
that they want to "turn the page" on reciprocity issues. The
GBRV continues to withhold visas from American personnel
permanently assigned to Embassy Caracas and to deny TDY visas
to USG officials. The GBRV also continues to drag its feet
on the importation of armored eight-cylinder vehicles needed
for the Embassy's motor pool, the refund of value-added
taxes, and the issuance of diplomatic credentials and license
plates (Reftels).


12. (C) PSUV National Assembly Deputy Calixto Ortega, whom
the GBRV recently dispatched to Washington to defend the
elimination of term limits, told PolCouns February 18 that
the GBRV wants a better relationship with the USG "over the
medium term." Ortega said GBRV officials were bothered by
the President's criticism of Venezuela in his January
Univision interview, but said GBRV officials welcomed a
"change in tone" in USG press comments before and after
Venezuela's February 15 referendum. He also expressed
appreciation for the "cordial" meetings he held on the Hill
and at a prominent Washington think tank. Ortega suggested
that only Chavez could authorize any significant improvement
in bilateral ties.

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Playing to the Electorate
--------------


13. (C) The past two elections have borne out that about 40
percent of the population is against Chavez, 20 percent
solidly behind him, and another 10 percent disengaged. The
remaining 30 percent, whom local pollster Alfedo Keller
labeled "transactional voters", supports whomever provides
the best direct benefits and is the key to continued
electoral success in Venezuela. At its simplest, Chavez's
message is aimed at keeping this group on his side. The
"socialism of the 21st century" will thus likely be a process
whereby those opposed to him lose benefits or pay for
programs aimed at keeping the transactional voters in check.
Social issues, such as crime or corruption, will only be
addressed by the government when they begin to directly
effect this group and their cost is considered greater than
the benefits being received.


14. (C) Bilateral relations will also be guided by similar
criteria. To date, the government's conventional wisdom has
been that an adversarial relationship with the United States
in which Chavez stands up to the "empire," and solidarity
with similarly disposed foreign leaders, seems to elicit some
level of support from his nationalist base. Moreover, this
group's relative lack of knowledge and experience with the
United States makes them more susceptible to the Government's

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invective. The arrival of a new administration in Washington
thus provides an excellent opportunity to reach out to these
voters and change the conventional wisdom. If we are unable
to do so, however, there may be little desire on the GBRV's
part for real improvement in the bilateral relationship.

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The Economy Is the Wild Card
--------------


15. (C) Local analysts debate what effect Venezuela's
economic problems due to low oil prices will have on Chavez's
ability to pursue his ambitions. One school suggests that
Chavez will have to moderate for his political survival.
Others argue that Chavez will exploit an economic crisis to
radicalize further. They also stress that Chavez reacts
negatively to criticism and will likely blame any economic
difficulties on those who oppose him, both domestically and
internationally. Local pessimists argue that with fewer
carrots to offer as a result of depleted government coffers,
Chavez is likely to resort to using more sticks, especially
against those outside his political base. While Chavez has
tempered his actions when he senses that he is endangering
himself politically, including after the 2002 interregnum and
the 2007 referendum defeat, Embassy interlocutors stress that
the instinctively authoritarian Venezuelan president never
loses sight of his principal goal -- the concentration of
power.

GENNATIEMPO