Before the bill comes
due: President Chávez
casts his ballot in
his referendum to
end term limits, held
February 15, 2009.
tral bank’s reserves, Chávez can buy time. Venezuelan
banks may be happy to finance a fiscal deficit that
independent economists reckon will hover between
7 percent and 9 percent of GDP. The president has
already warned that this will be a year of consolidation, which almost certainly means public-spending
cuts and a foreign-exchange squeeze. His bet appears
to be that the oil price will rise significantly in 2010.
If it doesn’t, Venezuela faces a downward spiral of
inflation, devaluation and poverty. Chávez’ wild
spending binge and harassment of the private sector
has mortgaged his country’s future, just as those Wall
Street bankers mortgaged their country’s future. Venezuela, too, looks distinctly sub-prime.
JUAN BARRETO/AFP/GE TTy ImAGEs
This means that Chávez’ victory in February’s
referendum on abolishing term limits is no more
than a tactical triumph. Both the referendum and
the local elections last November showed that the
electoral gap between chavismo and the opposition
has narrowed to just 9 percentage points (down from
Chávez’ 25-point margin of victory in the presidential election of 2006). A crucial election to renew the
National Assembly is due in December 2010. By then
it will be surprising if Chávez’ support has not dwindled further.
In Argentina, President Cristina Fernández de
Kirchner faces a similar watershed election originally scheduled in October but moved—for political
purposes—to June. To shore up her support, she will
spend some of the pension-fund cash the government
has now got its hands
on. Will these moves
be enough to prevent a
transfer of power within Peronism? Since the
economic collapse of
2001–02, it is the Peronist Left that has been
in power. After the election, it will almost certainly be the Peronist
Right—in the persons
of several provincial
call the shots. Fernández will govern at their pleasure until the end of her
term in 2012. If she survives until then it will be in
part because the price of Argentina’s farm commodities is likely to recover sooner than that of Venezuelan oil.
Two other Chávez allies, Evo Morales in Bolivia
and Rafael Correa in Ecuador, may be better placed.
Morales in particular has out witted his divided opponents and continues to command the loyalty of many
Bolivians of indigenous descent. But having nationalized Bolivia’s natural gas, he will not be immune
from the consequent lack of investment in his country’s main export commodity. Correa’s support may
erode more quickly. As an oil exporter, albeit a modest one, Ecuador faces some of the problems of Venezuela. That may tempt Correa to abandon the dollar
and launch a new Ecuadorean currency—a step that
would buy only short-term relief.
During the golden half-decade, Latin American presidents were generally popular. That applied equally
to populist autocrats like Chávez, democratic reformers like Brazil’s Luiz Inácio Lula da Silva and a stern
restorer of order like Colombia’s Álvaro Uribe. The left,
in sharply differing guises, was the main beneficiary
of this popularity, having come to power when the
americas quarterly 67