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Hugo Chavez and His Impact on Economics, History, and the World

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Hugo Chavez came to power in December 1998 after winning the presidential election. Buoyed by his charismatic personality and populist rhetoric style of politics, Chavez introduced progressive policies in the oil-rich country that was popular with the poor voters. For example, his concern for the poor, and insistence that land and industries must be owned by the locals endeared him to many. Chavez’s policies were similar to that of his close ally Fidel Castro of Cuba, thus the close relationship between the two leaders. Chavez administration antagonized George Bush administration, where in 2002 United States was accused of supporting a failed coup attempt to overthrow his administration. On the other hand, Chavez administration allegedly abetted corruption by the senior government officials, and consistently abused human rights. Chavez’s economic and political legacy has given rise to significant impact in Venezuela, South America and the rest of the world.

When analyzing Venezuela under Chavez, there is no doubt that his Socialist economic ideology has left a remarkable trace in his country as well as the Caribbean. Visible, the poor did well under Chavez, as compared to the previous regime that had ruled the country for more than two decades. However, there is more grey area in this economic system than meets the eye. Back in 1930s when Socialism took centre stage, a renowned economist Ludwig von Mises discredited the socialism ideology and dismissed its ability to sustain any county’s economy[1]. Eight decades later, Chavez and his socialist economic model has shown its ugly head among the Venezuelans, with signs of failure in every aspect of the economic sustainability parameters. Although the president got some of the country’s oil revenue to tickle down to the poorest of the community, a more economic look suggest a failed economic policy in terms of sustainability. Some of the positives in his regime points at the country being highlighted as the one with the fairest income distribution in the Caribbean.[2] Secondly, it is estimated that Chavez’s reign reduced poverty in Venezuela by more than 50 percent, an improvement considered critical in the perceived success of the late leader. However, there are some damning statistics that suggests that private sector, considered the core of any economy, has reduced by more than 35% since Chavez took over[3]. As the world’s fifth largest oil exporter, the country under Chavez has not used its oil power, as the country spends much more in importing refined oil from outside Venezuela than the amount they get from exporting crude oil, the deficit is glaring[4]. Since he took over, Chavez used his ideology to drive away any possible private investors, which naturally drives up economies of most oil producing countries. According to Ricardo Rojas, Chavez believed that small investors were just small capitalists that if left unchecked would grow like big capitalist to defeat his ideology[5].    

Regionally and globally, Chavez curtailed the powers of both regional and local governments. With the increasing wave of democratic transitions across Latin America, Chavez was viewed by many democratic countries such as United States and host of European nations as the villain among the Latin American nations. Using his socialist’s ideology to pull majority of the poor on his side, Chavez spearheaded the oil wealth redistribution as away of helping the poor. The redistribution did not stop within the Venezuelan borders but went up to some parts of poor European nations and north eastern states of the United States. With this strategy, he believed that Venezuelan sovereignty would be respected, a belief he imparted among his Venezuelans citizens. Venezuela, being the largest OPEC member from Latin America, Chavez used this power as the cornerstone for negotiating geopolitical and diplomatic issues in the region. In certain cases, Chavez provided oil resources on the respective countries’ preferential payment terms. However, analysts have faulted this approach of trading with the neighbours as not bringing any profit to Venezuela, considering the manner in which the country’s economy was on the slowdown. For instance, he used the oil revenue to provide medical aid to other Latin American states. This was seen when in 2007 Venezuela spent over eight million US Dollars in providing health care services to the Latin American states. When Nicaragua elected Daniel Ortega as their new president, Chavez wrote off the over US $ 30 million the poor nation owned Venezuela, and gave them a further $10 million to start off development projects that would help the poor. The formation of Petrocaribe in 2005, an agreement meant to help the signatory nations to receive oil on easy terms, Venezuela supply over 40% of oil used in the region[6]. Later in 2009, Chavez aided the formation of Bank of the South when they combined force with Brazil, Argentina and Bolivia. The aim of this regional bank was to build an independent financial institution that would carter for the interests of the Latin American countries with no political strings attached, as the case with international financial institutions like International Monetary Funds (IMF).

The relationship between United States and Venezuela under Chavez has not been a rosy one. Chavez accused the then President Bush of masterminding his domestic predicaments, with the failed attempted coup and what he referred to as neo-colonialism. He also accused Washington of fighting terror with terror, referring to the War in Afghanistan and Iraq. One of his most memorable speeches at United Nations General Assembly where he called President Bush a devil capped his tirade at Washington and its allies. Considered undemocratic by most of the western nations, Chavez was revered and loved in equal measure.

After his burial, the interim president Nicolas Maduro pledged to continue with Chavez’s policies, amid doubts that the incoming president if elected might not as aggressive as the predecessor. However, many analysts believe that Chavez’s legacy will remain engrained in Latin American nations, considering the manner in which he influenced the regional politics. However, it is also believed that United States may use the declining economy of Venezuela and the challenges that may emerge from running the countries that relied on Petrocaribe to influence the direction Latin America geopolitical and economies will take.

Chavez’s legacy has influenced many leaders in the region, including Rafael Correa of Ecuador, Morales of Bolivia and Daniel Ortega of Nicaragua, who have all adopted the poor-based economic improvement[7]. These nations have also adopted the political stand of Chavez, with more focus on independence from United States’ influence. Chavez will be fondly remembered for his focus on improvement of the poor people’s lives, despite being faulted for the fanning ignorance of the micro-economic issues of the economy. Any emerging balance of power may not be welcome in the region if it’s not pro-poor. This can be seen from the manner in which the countries in the region played allegiance to Chavez’s policy.

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