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From left to right, Argentina’s President Cristina Fernandez, Uruguayan president Jose Mujica and her Bolivian president Evo Morales stand next to the coffin of late Venezuelan President Hugo Chavez during a wake at the military academy in Caracas on March 6, 2013. (REUTERS)
From left to right, Argentina’s President Cristina Fernandez, Uruguayan president Jose Mujica and her Bolivian president Evo Morales stand next to the coffin of late Venezuelan President Hugo Chavez during a wake at the military academy in Caracas on March 6, 2013. (REUTERS)

Jean Daudelin

In Latin America, little use for the Chavez brand of socialism Add to ...

Hugo Chavez was a global star. A photogenic and rotund figure with a warm personality, his aggressive self-promotion and bombastic attacks against the United States have made him famous around the world. A self-declared revolutionary trying to sell his ways as “socialism for the 21st century,” Mr. Chavez spent much of the country’s oil wealth on social programs at home, making himself immensely popular among poor Venezuelans.

He used Venezuel’s oil revenues to build a broad coalition in Latin America and the Caribbean, and his diplomacy courted any world leader willing to denounce Yankee imperialism. While alive, he made his mark on the world. What of all this will survive him?

The Chavez “model” was all about spending money: on food, education and social services. Producing that money was not really part of the picture, and the whole endeavour would have quickly run empty without Venezuela’s oil wealth. Lacking investments, even the oil sector is now struggling and the rest of the economy is in shambles. The country’s massive energy resources, however, could easily draw foreign interest and relaunch domestic production, sustaining further social spending.

As a model for a country that does not have the same riches – and that means just about everyone on the planet – there is not much of use in Mr. Chavez’s version of socialism.

Oil was also the honey that held together his “Bolivarian Alliance for the Peoples of the Americas” (ALBA). Most of its members are small oil-dependent countries from the Caribbean and Central America and, for them, Mr. Chavez’s death is tragic. Most severely threatened is Cuba, which was getting some $10- to $13-billion a year – for a country with a GDP of about $70-billion – in subsidized oil and credits from Venezuela. Haiti’s annual support, worth $400-million, is also at stake, as are the cheques going to Nicaragua, Dominica, Surinam, and so on. The rationale for the whole program was tied to Mr. Chavez’s personal pretentions for regional leadership. Devoid of his charisma, and soon to confront strong pressures to keep together a fractious domestic coalition, his successors are likely to put much of this money to domestic use.

Aside from the predicament of ALBA’s retinue of oil-dependent states, could Mr. Chavez’s death mean trouble for the region and beyond? The consolidation of what is really a new regime in Venezuela will likely be messy. The country is already the most violent in South America. Drug trafficking, corruption and nepotism are rife, and Mr. Chavez did little to consolidate political institutions that would exist without him. Political uncertainty, in turn, will not help the economy. The United States, Colombia and Brazil have significant trade with Venezuela. With about one million barrels a day, Venezuela is the U.S.’s fourth-largest source of oil. On the other hand, Venezuela also imports a lot of gasoline from the U.S. because of weak refining capabilities. Colombia and Brazil have large trade surpluses with Venezuela and both countries have gotten comfortable to a welcoming market for their manufactured exports. But, dependence is a two-way street and Caracas has much more to lose in this game. Instability, moreover, could trickle over the long and poorly controlled borders they share with Venezuela. In a worst-case scenario, deepening corruption and violence could lead to the emergence of a large, rich and messy narco-state at the northern tip of South America.

The new leadership could demonstrate qualities that were not given much space under Mr. Chavez, or the opposition - winning the election - could prove pragmatic and get the country back on track. The risks of political instability and criminalization are serious and their management is the real challenge for external actors. The U.S. would be ill-advised to get too closely involved. Columbia and particularly Brazil will be best placed to lead an international effort at containing the potential ripple effects of Venezuela’s difficult times, and to assist with the de-polarization that the country will now need to go through. Canada, which has little at play for now, but would have much to gain from a stable and “open for business” Venezuela, should probably content itself with a supporting role.

Jean Daudelin is a Latin American specialist at Carleton University’s Norman Paterson School of International Affairs.

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