In Enacting Decrees,
Chávez Makes
New Power Grab
President Creates
Militia, Expands
Control of Industry
By JOSÉ DE CÓRDOBA and DARCY CROWE
August 6, 2008; Page A5

CARACAS, Venezuela -- In an ambitious power grab, President Hugo Chávez has enacted a slew of presidential decrees which formalize the creation of a popular militia and further consolidate state control over key areas of the economy such as agriculture and tourism.

Mr. Chávez, one of Washington's main antagonists in Latin America, published the decrees on Friday, just at the close of a special 18-month period that allowed him to bypass Congress in making laws. But only the titles, and not the texts, of the decrees were released. On Tuesday, the government made the full texts widely available.
[Chavez]
Associated Press
Chávez speaks at a news conference at the Meiendorf Castle residence outside Moscow on July 22, 2008.

The new laws show that Mr. Chávez is back on the offensive after suffering a humiliating defeat in December in a referendum that, among other things, would have allowed him the possibility of staying in power for life. In the months after the defeat, Mr. Chávez, who was first elected president in 1998, seemed to slow down his drive for expanded powers. But a number of the new decrees were part of the referendum that was rejected by voters -- sparking accusations that Mr. Chávez is evading the will of the people.

"We are in the presence of a dictatorial government which has given a coup d'état to the constitution," said Luis Miquilena, a former interior minister and political mentor to Mr. Chávez who has since turned against him. "Here we have no constitution, no law and the president does exactly what he wants."

In the past few days, Mr. Chávez said that if anyone didn't approve of the laws, they could file a challenge with the Supreme Court. But critics of the former army officer turned president said that would be futile because six of the seven justices are sympathetic to the president.

As a sign of that loyalty, the court on Tuesday upheld an anti-corruption official's decision to ban some of Mr. Chávez's most popular opponents from running in regional elections in November because of unproven graft charges.

Comparisons to Iran

The ban, which has elicited comparisons to moves by Iran's government preventing opposition politicians from running in elections in that country, will affect as many as 200 people, including Leopoldo López, a popular opposition politician who polls say would have a good chance at becoming the mayor of Caracas, one of the most important posts in the country.

Government officials weren't available for comment on Tuesday. Mario Isea, a Chávez supporter who heads the Congress's economic development committee, said that "there was no violation of the Constitution" in the new laws, but acknowledged that some of them were analogous to the December referendum. "Of course there are going to be similarities," he said. "It's the same person who is legislating."

Among the biggest changes -- and one which was turned down in December -- was the creation of another branch of the military, a "National Bolivarian Militia," which analysts say could challenge the position and role of the traditional armed forces.

"Their object is to intimidate the armed forces and the people," Mr. Miquilena said. "Those militia are at [Mr. Chávez's] personal command."

Mr. Chávez also changed the name of the armed forces, which are supposed to be apolitical, from the National Armed Forces. They are now to be called the National Bolivarian Armed Forces, invoking the title Mr. Chávez has chosen for his self-proclaimed socialist revolution.

The move is likely to add to growing unease over Mr. Chávez by some of Venezuela's armed forces. One reason why Mr. Chávez lost the December referendum was outspoken opposition to the changes by his former defense minister Raúl Baduel, who accused the president of becoming an autocrat. In May, an active duty general, Ángel Vivas, asked Venezuelan courts to rescind an order by Mr. Chávez making the armed forces use the Cuban-style salute: "Fatherland, Socialism or Death. To Victory."

'Any Necessary Measures'

One law vastly tightens the state's control over the food industry, an area that has been a political headache for Mr. Chávez because price controls by his government have led to shortages and eroded his popularity. The new law gives Mr. Chávez power to nationalize any businesses in the food industry without the National Assembly's approval and dictate "any necessary measures" to avoid "improper price increases."

Under the new legal regime, food retailers or distributors caught violating government-imposed price controls or hoarding products will be punished with up to six years in prison.

Some analysts say the new agriculture law is aimed at Empresas Polar SA, a food and beer manufacturer and Venezuela's largest private company. The move comes days after Mr. Chávez declared he would nationalize Banco de Venezuela, the country's third-largest bank, a unit of Spain's Banco Santander. Tuesday, Mr. Chávez said a deal was "near" over how much the government would pay for the bank. Santander has said only that it is in talks with the government.

Bitter Surprise

Guillermo Bolinaga, Polar's legal director, said the new law was a bitter surprise after Mr. Chávez invited the company's president, Lorenzo Mendoza, to a much publicized event in June where he asked some of the country's business leaders to work hand in hand with the government to boost economic activity. "We didn't have even one meeting with the government to speak about this new law. It was drafted without consulting any of the important players in the food industry."

Another new law gives legal standing to socialist production units like cooperatives, also an idea rejected by voters in December. The central bank, for instance, will issue a special currency to help facilitate trade between different socialist production units, one of the laws states.

"This is the government's latest attempt to create a communal economic model that works, which is a key item in Chávez's socialist agenda," said Orlando Ochoa, a Venezuela economist. So far these projects have been a failure, with cooperatives gobbling state financing and usually operating at a loss.

Cuban Model Unpopular

Mr. Chávez waited until the last day he could pass laws by decree to adopt the measures "under the table" without garnering attention, said Luis Vicente Leon, head of Venezuelan polling firm Datanalisis. While Mr. Chávez remains fairly popular -- with a 56% approval rating -- most Venezuelans don't want him to deepen his "revolution." Polls show 86% of Venezuelans reject using Cuba as a model and 83% want the government to respect private property.

One of the few pleasant surprises for the private sector was the banking law, which was mostly unchanged and many thought would push banks to spend more on social projects and dedicate a larger portion of their loans at preferential interest rates to economic sectors the government deems strategic.

The moves seem aimed in part at upcoming regional elections in November, when opposition leaders hope to wrest control of several important states and cities across the country. Since the December referendum, Mr. Chávez's popularity has declined because of his inability to stem inflation, reverse shortages of basic foods and curb violent crime.

One decree gives the president control over a new state fund that will receive "excess resources" from the growing list of state companies boosted by a nationalization drive that has included banks, telephone companies, oil ventures and public power utilities. Mr. Chávez will decide where to spend the money, which could allow him to financially choke regional governments controlled by the opposition parties after local elections slated for November.

"Everything is related to this upcoming election, and it's hard to imagine he doesn't see this as important in his efforts to keep power," said Peter Hakim, president of the Inter-American Dialogue, a think tank in Washington D.C.