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Analysis: Oil rally helps Chavez's re-election chances
April 18, 2011 / 4:00 PM / 6 years ago

Analysis: Oil rally helps Chavez's re-election chances

<p>Venezuela's President Hugo Chavez smiles during a ceremony to commemorate the ninth anniversary of his return to power after a brief coup, in Caracas April 13, 2011. REUTERS/Jorge Silva</p>

CARACAS (Reuters) - Hundred dollar oil, a brighter economic outlook and growing popularity after a tough couple of years are just a few reasons Venezuela’s President Hugo Chavez has to be cheerful as he plans a re-election bid.

Add to that list bickering among opposition parties and the bombing of Libya by Western nations, and the socialist stalwart has plenty to help counter popularity-sapping problems such as high inflation and shoddy public services.

Any number of factors could yet upset Chavez’s plan to do away with capitalism in South America’s biggest oil exporter, but for now the former soldier looks like the favorite ahead of a December 2012 election that would give him a new six-year term.

With typical bombast, Chavez predicts his next election victory would be greater than even his last, when he won more than 60 percent of the vote.

“We are going to wipe them out like never before,” Chavez told cheering supporters gathered in the rain outside his presidential palace in downtown Caracas last Wednesday, marking nine years since he survived a coup attempt against him.

The election is likely to be much closer than that, but Chavez has the upper hand at the moment -- the fractious opposition will not choose a candidate until February next year, while the incumbent has already begun his campaign with what is likely to be a long spending spree.

Citing his hands-on performance during floods late last year, most polls put Chavez’s ratings above 50 percent, up several points since a long recession drove his popularity down to its lowest point for years in 2010.

Despite that, his ratings have tended toward gradual decline since peaks of about 70 percent a few years ago,

“Today Chavez has an advantage, he is the candidate and he has got money,” said Luis Vicente Leon, of pollster Datanalisis. “But the Chavez heading to the 2012 election is infinitely weaker than in any other electoral process in the past.”


When Libyan leader Muammar Gaddafi’s forces began shooting protesters in February, Venezuela’s opposition seized on Chavez’s warm friendship with Gaddafi in the hope of damaging his image.

That may still happen, but for now it is Chavez who is reaping the benefits as his coffers fill from higher oil income, in part caused by the Libya crisis, and as his regular denunciation of the West’s attacks as “imperial aggression” weakens his pro-U.S. opponents.

“Every day more, the bourgeoise here is pawn of the empire, our adversary,” Chavez said recently. “Ask one of them what they think of the bombardment of Libya, the invasion of Afghanistan. They are the spokesmen of the empire.”

A former coup-leader like Gaddafi, Chavez won power at the ballot box in 1998 and has a strong record in elections, especially when he channels billions of dollars in oil revenue into projects for the poor, stimulating consumption.

The economy officially returned to growth at the end of last year. Oil prices are up a third since December and Chavez was optimistic enough recently to double to 4 percent the government’s maximum forecast for 2011 economic growth.

“Oil prices should keep strengthening and stabilizing at a fair level,” he said, citing violence in Libya and growth in China as the main drivers. “This year, aggregate demand has increased 33 percent. And this will keep going up,” he added, saying public spending was behind the rise.

Private economists have also raised their growth forecasts for Venezuela this year, although many think the private sector is too damaged by years of nationalizations to invest enough for the economy to expand as fast as its neighbors.


Despite his recent run of good news, Chavez has a lot to watch out for. He has already been in power 12 years and many voters are fed up with one of the world’s highest murder rates, unfinished public works and widespread power blackouts.

The surge in oil prices could be short-lived. Last week, Goldman Sachs said the price had overtaken fundamentals and was set for a fall.

Power cuts in recent weeks are a sharp reminder Chavez’s management has been at best patchy.

The president is promising to construct half a million homes in the next three years, but the plan could backfire. By its own admission, his government’s homebuilding record is dismal and few believe this year will be different.

Attempts to stem high inflation have led to a growing scarcity of products such as milk and cooking oil in recent months. More severe shortages of such products were a factor in Chavez’s one clear electoral defeat in a 2007 referendum.

”It’s still not at the critical levels of 2007, but it’s not a good tendency,“ said pollster Leon, who tracks shortages. ”For me this is the big risk for President Chavez.

Editing by Daniel Wallis and Kieran Murray

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