Lower oil prices curtail Chávez's global, domestic influence
Amid a bid for reelection, Venezuelan President Hugo Chávez's oil subsidy and antipoverty programs may be on the chopping block.
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The sharp drop in oil prices is imperiling those ambitions, analysts said Tuesday, a day after the Venezuelan government announced that it's suspending free heating oil to poor people in the US. Oil accounts for 93 percent of the government's export income and some 50 percent of its overall income.
"Hemispheric politics are suddenly becoming too expensive for Chávez," said Carlos Alberto Lopez, an energy consultant in Bolivia. "He will have to allocate his dwindling resources to sustaining his political position in Venezuela."
Mr. Chávez is facing a crucial political test in the near term. He's asking Venezuelan voters to lift term limits so he can seek reelection once again in 2012. The national referendum could be held as soon as Feb. 15.
Polls show that Chávez trails by 20 or so points and can't risk reversing his enormous expansion of government spending aimed at the poor, his core group of supporters.
That puts oil subsidies and other foreign assistance programs throughout Latin America and the Caribbean on the chopping block.
"We know that PDVSA doesn't have the cash," said Jorge Pinon, an Energy Fellow at the University of Miami's Center for Hemispheric Policy. "We also know that the financial markets don't have any money to loan. Those projects are not going to be carried out."
Another potential target: the Petrocaribe program under which Venezuela sells 56,000 barrels a day of oil and diesel to some 20 Caribbean and Central American countries under generous terms. The countries have to pay up front for about half of the oil, the rest is to be paid over 25 years.
The program paid dividends in 2006 when the 15-nation Caribbean Community backed Venezuela's bid for one of the 10 rotating seats on the UN Security Council, although the effort ultimately was unsuccessful.