Venezuela: Political Conditions and U.S. Policy, 2003-2009
Released: 2009-07-28T00:00:00

Summary:
Under the populist rule of President Hugo Chávez, first elected in 1998 and reelected to a six-year term in December 2006, Venezuela has undergone enormous political changes, with a new constitution and unicameral legislature, and a new name for the country, the Bolivarian Republic of Venezuela. U.S. officials and human rights organizations have expressed concerns about the deterioration of democratic institutions and threats to freedom of expression under President Chávez, who has survived several attempts to remove him from power. The government benefitted from the rise in world oil prices, which sparked an economic boom and allowed Chávez to increase expenditures on social programs associated with his populist agenda.
After he was reelected, Chávez announced new measures to move the country toward socialism, but his May 2007 closure of a popular Venezuelan television station (RCTV) that was critical of the government sparked protests, and his proposed constitutional amendment package was defeated by a close margin in a December 2007 national referendum. State and local elections held in November 2008 were a mixed picture of support for the government, with the opposition winning several key contests. In February 2009, Venezuelans approved a controversial constitutional referendum that abolished term limits and allows Chávez to run for re-election in 2012 and beyond. In 2009, the government has increased efforts to suppress the political opposition, including elected officials, and is continuing to threaten media critical of the government.
The United States traditionally has had close relations with Venezuela, the fourth major supplier of foreign oil to the United States, but there has been friction with the Chávez government. U.S. officials have expressed concerns about human rights, Venezuela's military arms purchases, its relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin American countries. Declining cooperation on anti-drug and anti-terrorism efforts has also been a concern. In September 2008, bilateral relations worsened when President Chávez expelled the U.S. Ambassador to Venezuela, and the United States responded in kind. Under the Obama Administration, Venezuela and the United States reached an agreement in late June 2009 for the return of respective ambassadors. While some observers are hopeful that the return of ambassadors will mark an improvement in relations, others emphasize continued U.S. concerns about the Venezuelan government's treatment of the news media and political opposition and about interference in the affairs of other countries in the region.
To date in the 111th Congress, the Senate approved an amendment (S.Amdt. 1536) to the Senate version of the National Defense Authorization Act for FY2010, S. 1390, that requires the Director of National Intelligence to provide a report on Venezuela's military purchases, potential support for terrorist groups, and other Venezuelan activities. In addition, several resolutions and bills related to Venezuela have been introduced: H.R. 375 would, among its provisions, place restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela; H.R. 2475 includes a provision identical to that in H.R. 375 described above that would place restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela; H.Res. 174 and H.Con.Res. 124 would express concern about anti-Semitism in Venezuela.
Note: This report provides background on political changes in Venezuela, U.S. policy, and U.S. legislative initiatives from 2003-July 2009. It will not be updated.

subsections: section_title: Major Developments
paragraphs: On July 27, 2009, the government of Sweden asked for an explanation from Venezuela of how the Revolutionary Armed Forces of Colombia (FARC) obtained Swedish-made anti-tank rocket launchers that had been sold to Venezuela in the 1980s. Venezuelan officials denied any Venezuelan government involvement with the FARC. 
On July 20, 2009, the U.S. Government Accountability Office issued a report on the status of drug trafficking through Venezuela and the status of U.S.-Venezuelan counternarcotics cooperation. The report concluded that the lack of Venezuelan counternarcotics cooperation is a significant impediment to the U.S. capacity to interdict drugs en route to the United States. According to the report, U.S. and Colombian officials assert that Venezuela has extended a lifeline to illegally armed Colombian groups by providing significant support and safe haven along the border. (See " Counternarcotics Cooperation " below.)
On June 25, 2009, the State Department announced that the United States and Venezuela agreed to return respective ambassadors. This led to U.S. Ambassador to Venezuela Patrick Duddy resuming his post in Caracas, and to the return of Venezuelan Ambassador Bernardo Alvarez to Washington.
On February 15, 2009, Venezuelans voted in a national referendum to approve a constitutional amendment abolishing term limits for elected local, state, and national officials, including for the President. The amendment was approved with almost 55% voting for it and 45% voting against it. President Chávez proclaimed that the vote was a victory for the Bolivarian Revolution, and virtually promised that he would run for re-election in 2012. (See " February 15, 2009 Term Limits Referendum " below.)
On January 30, 2009, an unidentified group of assailants vandalized a synagogue in Caracas. President Chávez and other Venezuelan officials strongly condemned the attack. Subsequently, on February 2, 2009, 16 Members of Congress spoke out against the attack in a letter to President Chávez. The Members called on Chávez "to end the bullying and harassment of the Jewish community" and "to extend the community the robust protection it deserves in light of the threats it faces." (See " Human Rights Concerns " below.)
On November 23, 2008, Venezuela held state and municipal elections across the country. Both pro-Chávez and anti-Chávez camps claimed victory. Of 22 governorships, government supporters won 17, although of the 5 states won by the opposition, 3 were country's most the populous states of Zulia, Miranda, and Carabobo. The government won also won over 80% of the more than 300 mayoral races, but the opposition won the country's largest cities of Caracas and Maracaibo. (See " November 2008 State and Local Elections " below.)
On October 3, 2008, Venezuelan military intelligence officials detained retired General Raúl Baduel, and prohibited him from leaving the country on charges of corruption during his tenure as defense minister. A former Chávez supporter, Baduel has become a staunch critic of the President. Chávez opponents maintain that the action against Baduel was intended to intimidate the opposition before the state and municipal elections scheduled for November 23.
On September 26, 2008, 41 members of the U.S. House of Representatives wrote to President Chávez expressing their outrage over the expulsion of two Human Rights Watch staff, and urging the President to embrace the recommendations of the report and strengthen the promotion of human rights, democratic institutions, and political pluralism in the country.
On September 18, 2008, Human Rights Watch issued an extensive report examining setbacks in human rights protections and practices under the Chávez government. Late in the evening, the Venezuelan government expelled two Human Rights Watch employees visiting the country, an action that was condemned by numerous human rights groups throughout Latin America. The full report, "A Decade Under Chávez, Political Intolerance and Lost Opportunities for Advancing Human Rights in Venezuela, " is available at http://hrw.org/reports/2008/venezuela0908/ .
On September 16, 2008, for the fourth year in a row, President Bush determined that Venezuela had failed demonstrably to adhere to its obligations under international narcotics control agreements, but waived sanctions to allow the continuation of U.S. foreign assistance to support civil society programs and community development programs.
On September 12, 2008, the U.S. Treasury Department froze the assets of two senior Venezuelan intelligence officials and the former interior minister for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with weapons and drug trafficking. The State Department also declared Venezuela's U.S. Ambassador Bernardo Alvarez persona non grata.
On September 11, 2008, President Chávez announced that he was expelling the U.S. Ambassador to Venezuela, Patrick Duddy, and alleged that the Venezuelan government had foiled a U.S.-backed conspiracy to assassinate him. Chávez also announced that he was recalling the Venezuelan Ambassador to the United States, Bernardo Alvarez.
On September 10, 2008, two Russian long-range bombers arrived in Venezuela for training exercises with the Venezuelan military. Days earlier, Russian and Venezuelan officials maintained that Russian naval ships would participate in joint naval exercises with Venezuela in November.
On August 5, 2008, Venezuela's Supreme Court held up the comptroller general's disqualification of 272 individuals from running for office, including a number of high-profile opposition figures such as Leopoldo López who had intended to run for mayor of Caracas.
On August 4, 2008, the Venezuelan government made public 26 presidential decrees that had been enacted on July 31 at the end of an 18-month period in which President Chávez had been given decree authority by the National Assembly. The decrees covered such areas as tourism, railways, social security, and financial institutions as well as controversial provisions that would allow the President to appoint regional leaders with broad budgetary powers, set up a civilian militia as a branch of the military, and allow the government to expropriate goods from private businesses and increase state control over food distribution.
section_title: Political Situation
subsections: section_title: Background
paragraphs: With his election as President in December 1998, Hugo Chávez began to transform Venezuela's political system. The watershed election, in which former coup leader Chávez received 56% of the vote (16% more than his closest rival), illustrated Venezuelans' rejection of the country's two traditional parties, Democratic Action (AD) and the Social Christian party (COPEI), that had dominated Venezuelan politics for much of the past 40 years. Elected to a five-year term, Chávez was the candidate of the Patriotic Pole, a left-leaning coalition of 15 parties, with Chávez's own Fifth Republic Movement (MVR) the main party in the coalition.
Most observers attribute Chávez's rise to power to Venezuelans' disillusionment with politicians whom they judge to have squandered the country's oil wealth through poor management and endemic corruption. A central theme of his campaign was constitutional reform; Chávez asserted that the system in place allowed a small elite class to dominate Congress and that revenues from the state-run oil company, Petroleos de Venezuela S.A. (PdVSA), had been wasted.
Although Venezuela had one of the most stable political systems in Latin America from 1958 until 1989, after that period numerous economic and political challenges plagued the country and the power of the two traditional parties began to erode. Former President Carlos Andres Perez, inaugurated to a five-year term in February 1989, initiated an austerity program that fueled riots and street violence in which several hundred people were killed. In 1992, two attempted military coups threatened the Perez presidency, one led by Chávez himself, who at the time was a lieutenant colonel railing against corruption and poverty. Ultimately the legislature dismissed President Perez from office in May 1993 on charges of misusing public funds, although some observers assert that the President's unpopular economic reform program was the real reason for his ouster. The election of elder statesman and former President Rafael Caldera as President in December 1993 brought a measure of political stability to the country, but the Caldera government soon faced a severe banking crisis that cost the government more than $10 billion. While the macro-economy began to improve in 1997, a rapid decline in the price of oil brought about a deep recession beginning in 1998.
Under President Chávez, Venezuela has undergone enormous political changes, with a new constitution in place and even a new name for the country, the Bolivarian Republic of Venezuela, named after the 19 th century South American liberator Simon Bolivar, whom Chávez often invokes. In 1999, Venezuelans went to the polls on three occasions—to establish a constituent assembly that would draft a new constitution, to elect the membership of the 165-member constituent assembly, and to approve the new constitution—and each time delivered victory to President Chávez. The new document revamped political institutions, eliminating the Senate and establishing a unicameral National Assembly, and expanded the presidential term of office from five to six years, with the possibility of immediate reelection for a second term. Under the new constitution, voters once again went to the polls in July 2000 for a so-called mega-election, in which the President, national legislators, and state and municipal officials were selected. President Chávez easily won election to a new six-year term, capturing about 60% of the vote while his opponent, fellow former coup leader Francisco Arias, received 38%. Chávez's Patriotic Pole coalition also captured 14 of 23 governorships and a majority of seats in the National Assembly.
From the outset, critics raised concerns about Chávez and his government. They feared that he was moving toward authoritarian rule and pointed to his domination of most government institutions. Some argue that Chávez had replaced the country's multiparty democracy with a political system that revolves around himself, in essence a cult of personality; others pointed to Chávez's open admiration of Fidel Castro and close relations with Cuba as a disturbing sign. Other observers expressed concern about the increased role of the military in the government, with Chávez appointing dozens of retired and active duty officers to key positions, as well as the mobilization of thousands of army reservists for social projects. Still other critics of Chávez believed that he was trying to politicize the educational system by making changes to school curriculums. They feared Chávez's call for his followers to form political cells in schools, hospitals, and businesses in order to support his revolution and believe that such groups, known as Bolivarian circles, could mirror Cuba's controversial neighborhood committees.
subsections: section_title: Chávez's Brief Ouster in April 2002
paragraphs: Although President Chávez remained widely popular until mid-2001, his standing eroded considerably after that, amid concerns that he was imposing a leftist agenda on the country and that his government was ineffective in improving living conditions in Venezuela. In late 2001 and early 2002, opposition to Chávez's rule grew into a broad coalition of political parties, unions, and business leaders. Trade union opposition became stronger amid the President's attempt to replace the Venezuelan Workers Confederation (CTV) with a pro-government union. President Chávez's own Fifth Republic Movement also became plagued with internal dissent.
In April 2002, massive opposition protests and pressure by the military led to the ouster of Chávez from power for a brief period. However, he ultimately was restored to power by the military. Chávez was ousted from office on April 11, 2002, after protests by hundreds of thousands of Venezuelans and the death of at least 18 people. Venezuelan military leaders expressed outrage at the massacre of unarmed civilians and blamed President Chávez and his supporters. On April 12, Pedro Carmona of the country's largest business association—the Federation of Associations and Chambers of Commerce and Industry (Fedecamaras)—proclaimed himself interim president, but Carmona quickly lost the support of the military when he took such hardline measures as dismantling the National Assembly, firing the Supreme Court, and suspending the constitution. Carmona stepped down just a day after he took office, paving the way for Chávez's return to power early in the morning of April 14. The interim government's hardline polices as well as strong support in the streets from Chávez supporters convinced military commanders to back Chávez's return. Moreover, some military factions had continued to support Chávez during his ouster.
section_title: Continued Opposition and Strike in 2002 and 2003
paragraphs: After Chávez's return to power, some 40 disparate opposition groups united in a coalition known as the Democratic Coordinator (CD) in an effort to remove Chávez from office, focusing on efforts to hold him accountable for the death of civilian protestors in April 2002 and to push for a national referendum on his presidency. The CD demanded a non-binding referendum on Chávez's rule in early February 2003, which they believed would force the President to resign, but Venezuela's Supreme Court ruled against holding such a referendum. President Chávez maintained that, according to the constitution (Article 72), a binding referendum on his rule could take place after the halfway point of his term, which would occur in August 2003.
From early December 2002 until early February 2003, the CD orchestrated a general strike that severely curtailed Venezuela's oil exports and disrupted the economy but was unsuccessful in getting President Chávez to agree to an early non-binding referendum on his rule or new elections. At various junctures, there were violent clashes between Chávez supporters and the opposition, resulting in several deaths. The Chávez government responded to the oil sector strike by firing 13,000-16,000 PdVSA employees.
section_title: August 2004 Presidential Recall Referendum
paragraphs: After months of negotiations facilitated by the Organization of American States (OAS) and the Carter Center, the government of Hugo Chávez and the opposition signed an agreement on May 29, 2003, that set forth mechanisms to help resolve the political crisis. Implementation of the accord was difficult at times and hampered by political polarization between supporters and opponents of President Chávez. Nevertheless, Venezuela's National Electoral Council (CNE) announced on June 8, 2004, that a presidential recall referendum would be held on August 15, 2004. Chávez won the referendum convincingly by a margin of 59.3% to 40.7%, according to the CNE's final official results.
subsections: section_title: Background Leading to the Referendum
paragraphs: For a recall referendum to take place, the constitution required a petition signed by 20% of registered voters (which means 2.4 million signatures out of a registry of 12.3 million). Petition signatures were collected during a four-day period beginning in late November 2003, but on March 2, 2004, the CNE ruled that there were only 1.83 million valid signatures supporting a presidential recall referendum. The CNE subsequently updated this to 1.91 million valid signatures, with almost 1.2 million signatures that could be valid if individuals confirmed their signatures in a reparo or "repair" period. This meant that about 525,000 signatures of those under review would need to be validated for a referendum to be required. The CNE's announcement that there were not yet enough valid signatures for a referendum prompted strong opposition protests, but the opposition ultimately agreed to participate in a repair period that was held May 27-31, 2004, in more than 2,600 centers around the country. About 100 observers from the OAS and the Carter Center monitored the repair period; President Carter reported that the overall process was peaceful and orderly, although he did note some initial concern about the temporary suspension of the CNE's tabulation process.
On June 3, 2004, the CNE announced that enough signatures had been secured for a recall referendum, and subsequently scheduled the referendum for August 15. The date of the referendum was significant because under the constitution, if it were held after August 19 (one year after the half-way point of Chávez's term) and Chávez lost the referendum, then Vice President Jose Vicente Rangel (a Chávez ally) would serve the remainder of the President's term until January 2007.
In order for President Chávez to be recalled, the majority of voters needed to vote "yes" and the number of votes to recall him needed to exceed the number that he received when last elected in July 2000 (3.75 million). If Chávez had been recalled, new presidential elections would have been held within 30 days. It was unclear whether President Chávez would have been allowed to run for reelection, but most observers believed that the Supreme Court would have ruled that he was eligible to run. One of the problems that plagued the opposition was that it did not have a well-organized or coherent political coalition. As a result, it could have been difficult for the opposition to present a single candidate who could have defeated Chávez in new elections, assuming that he was permitted to run.
Public opinion polls conducted in June and July 2004 by various survey firms yielded significantly different results, with some favoring the opposition and some favoring Chávez, but by early August 2004 a number of polls showed Chávez with an advantage. A June 2004 poll by Datanálisis, a Venezuelan research firm, showed that 57% of Venezuelans would vote to recall President Chávez, while another poll in June by the U.S.-based Greenberg, Quinlan, Rosner Research firm found that only 44% would vote to recall the president. Another poll by North American Opinion Research Inc. published in early July 2004 showed that 41% would vote to recall Chávez, compared to 57% favoring the president. A poll in late July by the U.S. firm of Evans/McDonough and Varianzas Opinión of Venezuela showed that 43% would vote against Chávez and 51% would vote for him. In early August, a newspaper that has been a strong opposition supporter, Ultimas Noticias , published four polls showing that Chávez would win by at least 10%. Some observers, however, maintained that many people were not being truthful in these opinion polls because of fear of retribution for answering truthfully; they maintained that these so-called "hidden voters" could determine the outcome of the referendum.
section_title: Referendum Results
paragraphs: With a turnout of about 70% of registered voters, President Chávez won the recall referendum convincingly with 5.80 million people voting "no" to reject his recall, or 59.25% of the vote, and 3.989 million people, or 40.74%, voting "yes" in favor of his recall. Observers from the OAS and the Carter Center maintained that these results were compatible with their own quick count results. The opposition claimed that massive fraud had taken place and cited their exit polls showing that 59% had voted to recall President Chávez. The Carter Center and the OAS conducted a second audit of the vote on August 19-21 and concluded that the vote results announced by the CNE reflect the will of the Venezuelan people.
On August 26, 2004, the OAS approved a resolution expressing "satisfaction with the holding of the presidential recall referendum" and calling "upon all players to respect the results." In the resolution, the OAS also welcomed the offer made by President Chávez "to foster national dialogue" and called "for a process of reconciliation ... in which differences are settled in the framework of the democratic systems and in a spirit of transparency, pluralism, and tolerance."
Various factors explain President Chávez's victory in the recall referendum. The economy, fueled by proceeds from high oil prices, turned around in 2004. The president was able to use oil proceeds to boost social spending for the poor. He made anti-poverty programs an important focus of his administration. Another factor has been the strength of the opposition. As noted above, the opposition in Venezuela has been fragmented and did not wage an effective campaign during the recall referendum. Even if it had won the referendum, it was unclear whether it would have been able to present a single candidate to challenge Chávez in a subsequent election.
After the August 2004 recall referendum, President Chávez's rule was further strengthened when his allies won a majority of gubernatorial and municipal posts in elections held in late October 2004 and municipal posts in municipal elections held in August 2005.
section_title: December 2005 Legislative Elections
paragraphs: Just days before the December 4, 2005, elections, in which all 167 seats in the National Assembly were at stake, Venezuela's five major opposition parties announced that they would boycott the election. They maintained that the National Electoral Council (CNE) was dominated by the government and accused it of making decisions in favor of parties supporting the government. The parties withdrawing from the race consisted of the country's two parties that had been historically dominant until 1998, Democratic Action (AD) and the Social Christian Party (COPEI), and three other key opposition parties: the Movement to Socialism (MAS), the center-right Justice First party (PJ), and Project Venezuela (PV).
Before the boycott, the opposition's major concern was the CNE's plan to use digital fingerprint machines. The opposition feared that the government would be able to determine how individuals had voted and that this information would be used for political retribution, just as they assert that there was discrimination against those people who signed the petition in favor of having the 2004 presidential recall referendum. On November 28, 2005, however, the CNE, in a decision brokered by the Organization of American States, announced that it would not use the controversial digital fingerprint machines. Nevertheless, a day later, opposition parties began announcing their boycott of the legislative elections. The move surprised election officials, and some reports indicate that international observers were unhappy that the opposition had reneged on a commitment to participate in the elections if the digital fingerprint machines were not used.
In the lead up to the legislative elections, some opposition groups had also objected to parties fielding candidates under two separate banners in order to increase the chances of winning additional seats. (Venezuela's electoral system utilizes a combination of proportional representation on a national party list and electoral districts where individuals who win a majority of votes are elected.) The pro-Chávez coalition had used this method to win some 77% of seats in municipal elections held in August 2005. In late October 2005, Venezuela's Supreme Court rejected an injunction against this practice that was filed by the opposition AD.
subsections: section_title: Election Results
paragraphs: Because of the opposition boycott, pro-Chávez parties won all 167 seats in the National Assembly, with 114 going to the President's Fifth Republic Movement (MVR) and the remaining 53 going to smaller pro-Chávez parties as well as to independents and representatives of some social groups that support the government. The voter participation rate was low and estimated at 25%, or 2.9 million voters out of an electorate of 14.5 million. Legislators were elected for five-year terms that began on January 5, 2006. In the previous National Assembly, which had 165 members, pro-Chávez supporters controlled 86 seats, while opposition parties controlled 79. In the lead-up to the December 2005 election, observers predicted that the opposition would struggle to win one-third of the seats in the Assembly and that the pro-Chávez parties would win a two-thirds majority control of the legislature. The opposition's boycott guaranteed that pro-Chávez supporters will completely control the legislative branch.
section_title: International Observers
paragraphs: Both the OAS and the European Union sent delegations to observe the elections. Both groups lamented the withdrawal of the opposition, but also raised questions and had criticisms regarding the conduct of the elections.
The EU observer group maintained that wide sectors of Venezuelan society do not have trust in the electoral process and in the independence of the electoral authority. It found that the electoral campaign focused almost exclusively on the issue of distrust in the electoral process and the lack of independence of the CNE. Overall, the EU concluded that the elections represented a lost opportunity and did not contribute to the reduction of the fracture in Venezuelan society. Nevertheless, the EU lauded the steps taken by the CNE to open the automated voting system to external scrutiny and to modify various aspects that were questioned by the opposition. In particular, the EU stated the CNE's decision to eliminate the digital fingerprint devices from the voting process was timely, effective, and constructive, and noted with surprise the opposition's withdrawal just four days before the election.
The OAS delegation noted that there remains a distrust of the CNE on the part of a significant segment of the population in terms of the origin and composition of the CNE and the perception that its actions lack transparency and impartiality. It suggested that a new democratic consensus be reached through dialogue that could include a discussion of the election of the CNE, the automated voting system, the electoral law, the process of issuing identification cards, a parliamentary system to ensure proportional representation of minorities, and the strengthening of the principle of separation, independence, and balance of powers. It criticized the opposition's withdrawal from the election, stating that every democracy requires an institutional opposition committed to the electoral process, so that it can loyally participate in the democratic system.
section_title: Political Significance
paragraphs: With Chávez supporters controlling the legislature, it will be far easier for the government to enact its legislative agenda and to enact constitutional changes. With opposition parties having no representation in the legislature, they will virtually have no official role in the political system. Some observers question the wisdom of the opposition's boycott of the election and contend that the decision not to participate will erode its legitimacy. According to Jose Miguel Vivanco from Human Rights Watch, which has been a critic of President Chávez, the opposition's tactics will not help them "gain any ground," and it will be difficult for "them to present themselves as victims that deserve solidarity from the international community." Other observers contend that the high abstention rate in the election could allow the opposition to question the legitimacy of the National Assembly. According to this view, the boycott helped send a message that democracy is at threat in Venezuela and could bolster international support to press the Chávez government for transparency and accountability.
section_title: December 2006 Presidential Election
paragraphs: In Venezuela's December 3, 2006, presidential election, President Chávez was resoundingly elected to another six-year term in an election that international observers judged to be satisfactory. In the lead up to the vote, polls showed Chávez with a lead of more than 20% over opposition candidate Manuel Rosales in an election with 22 candidates on the ballot. The final result showed Chávez with 62.87% and Rosales with 36.88%.
The government benefitted from the rise in world oil prices, which increased government revenues and sparked an economic boom. As a result, Chávez was able to increase government expenditures on anti-poverty and other social programs associated with the populist agenda of his Bolivarian revolution. His reelection demonstrated strong and widespread support for his social policy of redistributing the country's oil wealth. Most observers credit the government's numerous misiones or social programs as the key to the government's support and do not believe that Venezuelans' support for President Chávez is ideologically based.
For the opposition, the most significant aspect of the race was that Rosales conceded his defeat in a legitimate election. Although the political opposition remained weak and fragmented in the aftermath of the August 2004 recall referendum and their boycott of the December 2005 legislative elections, it managed to agree on a single unified presidential candidate for 2006, Manuel Rosales, who was governor of the western oil-rich state of Zulia and former mayor of Maracaibo, Venezuela's second largest city. A primary had been scheduled for August 13, 2006 to select the opposition candidate, but on August 9, eight other candidates dropped out of the presidential race in support of Rosales who was the frontrunner. Those standing down in favor of Rosales included Julio Borges of the center-right Justice First Party, and Teodoro Petkoff, a leftist newspaper editor and former planning minister.
Although Rosales trailed in the polls, most observers credit him with running a strong campaign that resonated with many Venezuelans. He ran a populist campaign that emphasized social justice and an alliance between lower income sectors and the middle class. He criticized the Chávez government for not doing enough to reduce poverty and called for a program to transfer oil revenues directly to the poor via a debit card, controversially named "Mi Negra," that would provide payments to poor families ranging from $280 to $460 monthly. He supported efforts to bolster the private sector and a strategy to increase both domestic and foreign investment. Rosales also called for efficiency and transparency in the judicial system and has pledged to crack down on soaring crime. He vowed to call new legislative elections with a system of proportional representation and supported a reduction in the presidential term of office from six to four years. He criticized President Chávez for providing so much assistance to foreign countries while there is extensive poverty in Venezuela, and he criticized the government's alliances with countries like Cuba and Iran.
Opposition supporters and other observers had complained that President Chávez had used state resources for his reelection, with government expenditures for advertising and access to television. They argued that the Chávez government had distributed Christmas bonuses for public-sector employees earlier than normal in order to gain favor in the presidential vote. Observers also asserted that the government was using political coercion to ensure support among public sector employees and pointed to a video of Venezuela's Minister of Energy and Petroleum urging PdVSA workers to support Chávez's reelection.
Both the Organization of American States and the European Union sent delegations to observe the elections and, despite various problems, judged the elections to have been held in a satisfactory manner. According to a preliminary statement by the EU, "the high turnout, peaceful nature, and general acceptance of results of the presidential elections in Venezuela open the way forward to substantial improvements in the quality and public confidence in electoral processes." The OAS congratulated "the Venezuelan people, its government, and its political parties and democratic institutions for the civic behavior that prevailed during the electoral process."
section_title: Political Developments in 2007
paragraphs: As President Chávez was inaugurated to another six-year term in January 2007, he announced a number of measures to further strengthen his power and move Venezuela toward his vision of 21 st century socialism. He called for the National Assembly to approve a new law that would enable him to pass laws by decree. Subsequently, on January 31, the Assembly approved a law giving Chávez broad powers, for a period of 18 months, to enact measures by decree in a number of economic, social, and military areas. Critics fear that the move will further undermine democratic institutions and lead to authoritarianism, while supporters maintain that the measure will help the President move ahead more quickly to enact a new economic and social model in Venezuela.
Among other proposals announced by the President in January were plans to eliminate the autonomy of the central bank; to make PdVSA a majority shareholder of current Orinoco Belt oil projects with foreign companies; to change the constitution to allow the president to be reelected indefinitely instead of the current two-term limit; to launch a new drive for "Bolivarian popular education" that would deepen Venezuela's new social values; to create federations of communal councils (thousands of local communal councils were established in 2006) that could eventually replace state government institutions; and to nationalize the country's largest telecommunications company, CANTV, and electricity companies, including EdC (Electricidad de Caracas).
CANTV is partly owned by Verizon Communications, while EdC is majority-owned by the U.S.-based AES Corporation. When the nationalizations of CANTV and EdC were announced, there was considerable concern that the companies would not receive adequate compensation. In February 2007, the Venezuelan government ultimately negotiated agreements for the purchase of the majority stake of AES in EdC and for Verizon's stake in CANTV. Officials of both AES and Verizon described the agreements as fair. Foreign investors will likely be wary of investing in Venezuela giving the nationalizations and the government's increasing role in the economy.
subsections: section_title: RCTV Closure and Public Reaction
paragraphs: On December 28, 2006, President Chávez announced that his government would not renew the broadcast license for RCTV, Venezuela's oldest television station, which frequently carried programming critical of the Chávez government. Venezuelan officials maintained that the non-renewal of RCTV's license was for its actions in support of the April 2002 coup against President Chávez. Because of this, they assert that it was within the government's rights not to renew RCTV's public broadcasting license, but that RCTV could continue to broadcast on private cable or satellite stations. RCTV maintains that its broadcast license is valid until 2022, not May 27, 2007, as claimed by the Venezuelan government, and that the action by the government is part of an effort to silence public opinion.
The OAS Office of the Special Rapporteur for Freedom of Expression expressed concern in late December 2006 about Venezuela's decision and its effect on freedom of expression. OAS Secretary General José Miguel Insulza issued a statement on January 5, 2007, expressing concern that Venezuela's decision not to renew the license of Radio Caracas Television (RCTV) gave the appearance of censorship. He expressed hope that the action would be reversed by the Venezuelan government. The Inter-American Commission on Human Rights expressed concern about freedom of expression in Venezuela and called on the Venezuelan government to protect pluralism in the media.
Numerous human rights also organizations denounced Venezuela's decision not to renew RCTV's license as a violation of freedom of speech. These included the Inter-American Press Association, Reporters Without Borders, the Committee to Protect Journalists, the Instituto Prensa y Sociedad, and Human Rights Watch, which maintained that the government's decision was politically motivated and was a serious setback for freedom of expression.
Thousands of protestors marched in Caracas at events in April and May 2007 denouncing the government decision, but the government followed through with its decision and RCTV ceased its public broadcasting on May 27. The closure of RCTV prompted protests, primarily by students who oppose the government's action as a violation of freedom of their civil rights. The strength and endurance of the student-led protests appear to have taken the government by surprise. Polls reportedly show that more than 70% of Venezuelans disagree with President Chávez's decision to close RCTV. Nevertheless, the government has threatened legal action against another private television station, Globovisión, accusing it of inciting assassination attempts against President Chávez. Venezuelan Foreign Minister Nicolas Maduro has asserted that the United States is behind plans to destabilize Venezuela.
Several countries, including the United States, spoke out against Venezuela's action. The U.S. Senate approved S.Res. 211 (Lugar) on May 24, 2007 by unanimous consent expressing profound concerns regarding freedom of expression in Venezuela and the government's decision not to renew the license of RCTV. In the aftermath of RCTV's closure, the State Department issued a statement calling on Venezuela to reverse its policies that limit freedom of expression. The European Parliament adopted a resolution on May 24, 2007, expressing concern about Venezuela's action, and calling for the government to ensure equal treatment under the law for all media. On May 31, 2007, the Brazilian Senate issued a strong statement calling for President Chávez to review his decision. The Chilean Senate also supported a resolution against the closure of RCTV. At the OAS General Assembly meeting held in Panama June 3-5, 2007, several nations, such as Canada, Chile, El Salvador, Guatemala, and Peru, in addition to the United States, spoke out for freedom of the press. Ultimately, however, the OAS did not approve a resolution specifically criticizing Venezuela for its actions, but adopted a resolution reaffirming the right to freedom of expression and calling upon member states to respect and ensure respect for this right.
In July 2007, RCTV resumed broadcasting through cable and satellite, as RCTV International (a subsidiary of RCTV). Only about a third of Venezuelan households, however, have access to cable or satellite television. The government responded to the broadcaster's return to the airwaves by ordering RCTV International to register as a Venezuelan broadcaster in order to be subject to local regulations. Otherwise, it would face losing its license to broadcast via cable. Since RCTV International is based in Miami, it claims that it is not a national broadcaster and therefore exempt from registration and local regulations. The Venezuelan National Telecommunications Commission rejected this argument and threatened cable companies with fines if they continued to carry RCTV International. On August 2, 2007, the Venezuelan Supreme Court ruled that cable companies could continue to carry RCTV International without fear of government retaliation, since no clear regulation exists defining what constitutes a national broadcaster. Venezuela's telecommunications minister, Jesse Chacon, responded to the Supreme Court's decision by stating that norms that clearly define a national broadcaster would be elaborated in order to compel RCTV International to submit to government regulation.
section_title: December 2, 2007 Constitutional Reform Referendum
paragraphs: In August 2007, Venezuelan President Hugo Chávez announced his proposals for constitutional reform that would alter 33 of the 350 articles of the 1999 Venezuelan constitution, and that he claimed would move Venezuela toward a new a model of development known as "socialism in the 21 st century" embracing participatory democracy and a mixed economy. According to the Venezuelan government, the purpose of the reforms was to speed the redistribution of Venezuela's oil resources to benefit the poor; de-centralize political power to grant citizens more direct say in their affairs; and outline the legal foundation of a new, more equitable model of development and democracy. Venezuela's National Assembly debated the proposals in three rounds, and ended up adding reforms to amend 36 additional articles for a total of 69 constitutional amendments that were finalized by the Assembly on November 2, 2007.
The amendments were subject to a public referendum held on December 2, 2007, with the 69 reforms split into two parts. Block "A" consisted of amendments to 46 of the constitution's articles, including the 33 reforms proposed by Chávez and 13 proposed by the National Assembly. Block "B" consisted of amendments to 23 articles proposed solely by the National Assembly.
Among some of the proposals for constitutional changes included in Block A of the referendum were the following amendments:
to lower the voting age from 18 to 16 years of age (Article 64); to prohibit foreign financing of associations with political goals, and provide for government financing of electoral activities (Article 67); to decrease the workweek from 44 to 36 hours and the workday from 8 hours to 6 hours (Article 90); to recognize Venezuela's multi-cultural diversity and the importance of its indigenous, European, and African cultures (Article 100); to provide that the government promote and develop distinct forms of businesses and economic units of social property and social production or distribution in order to create the best conditions for the collective and cooperative construction of a socialist economy (Article 112); in addition to private property, to add several new classifications for property – public, social, collective, and mixed (Article 115); to remove the presidential two-term limit, and extend the presidential term from six to seven years (Article 230); to state that the socioeconomic system of Venezuela is founded on socialist and anti-imperialist principles, among others (Article 299); and to eliminate the independence of the Central Bank, which would include putting international reserves under the administration and direction of the President (Article 318).
Among some of the proposals for constitutional changes included in Block B of the referendum were the following amendments:
to prohibit discrimination based on health and sexual orientation (Article 21); to give the President power to suspend certain constitutional rights, such as the right of information and certain rights of due process (that are protected under the current constitution) during a declared "state of exception" (national emergency), but prohibit the suspension of the rights to life, defense, and personal integrity or the suspension of prohibitions against torture, being held incommunicado, or disappearance (Article 337); to remove the time limitation for a declared state of exception (Article 338); to increase the percentage of signatures required for citizens to initiate constitutional amendments from 15% to 20% of those on the electoral registry (Article 341).
One of the most controversial reforms would have extended the presidential term from six to seven years and abolished the presidential two-term limit by allowing indefinite reelection, a reform that would have allowed President Chávez, last elected in 2006, to run for reelection in 2012. Opponents viewed it as a means for President Chávez to remain in power indefinitely, while government officials pointed out that constitutional provisions would still require the president to be re-elected each term, with the possibility of facing a recall referendum midway in the presidential term.
Other proposed reforms that raised concerns included amendments that would have: given the state greater control over the economy; eliminated the independence of the Central Bank and put international reserves under the control of the President; given the President power to suspend certain rights (right of information and certain rights of due process) during a state of emergency that are currently protected under the existing constitution; and removed the time limits that a state of emergency could be imposed.
Various provisions that would promote a "socialist economy" and "socialist democracy" were also controversial. The reforms would have declared that the socioeconomic system was based on socialist principles, and that state should promote the active participation of citizens, restoring power to the people and creating the best conditions for the construction of a socialist democracy. The proposed reforms would have allowed for changes in the administrative division of Venezuelan territory and the structure of local government, which according to President Chávez, would represent "a new geometry of power." New federal districts with economic and political autonomy would be created and existing communal councils (thousands have been created since 2006) would be given legal status and empowered. As a result of this change, the government could channel funds and resources directly to the federal districts and communal councils, bypassing local government officials. National budget payments to the states would have increased from 20% to 25% of the budget, with 5% designated for financing the communal councils. Councils of popular power (such as communal councils, workers councils, student councils, youth councils fishermen councils etc) would have been established as a means of citizen participation. The work of the missions (the social programs begun by the Chávez government in 2003) would be set forth in the constitution as an official part of public administration created to satisfy the urgent needs of the population.
The proposed constitutional reforms also included changes to the structure of the military. The military would have been defined as a patriotic, popular, and anti-imperialist body with the objective of guaranteeing Venezuela's independence and sovereignty. The National Reserves would be transformed into the "National Bolivarian Militia," which would constitute the fifth official component of the armed forces.
subsections: section_title: Referendum Results
paragraphs: While initially it appeared that President Chávez's overall popularity and the decision to include such popular measures in the reform as decreasing the work day would help ensure passage of the referendum, its approval no longer appeared certain in the days leading up to the vote. There was growing opposition to the constitutional reforms, including by a number of student organizations, business groups, the Catholic Church, and even some past supporters of President Chávez, such as the popular former minister of defense General Raúl Baduel. Various polls in November 2007 showed that those opposing the referendum had gained momentum and were in the majority. Despite the polls, many observers still maintained that the government had the organization and resources to mobilize its supporters, and pointed out that Chávez, who still remains popular, had never lost an election.
Early in the morning of December 3, 2007, Venezuela's National Electoral Council (CNE) announced that both blocks had been rejected by a slim margin, with Block A defeated by 1.41% and Block B defeated by 2.11%. President Chávez immediately addressed the country on national television, and conceded the loss. The CNE subsequently issued an updated total of the vote on December 7, 2007 that changed the margin only slightly, with Block A defeated by 1.31% and Block B defeated by 2.02%. ( Table 1 above shows the CNE's final vote totals.)
section_title: Why the Reform Failed
paragraphs: A key to the failure of the reform effort appears to lie with the large abstention of Venezuelans that in the past supported President Chávez. About 56% of the electorate participated in the referendum vote compared to almost 75% in the December 2006 presidential election. About three million fewer voters supported the constitutional reform than voted for Chávez in 2006. President Chávez acknowledged these statistics in his concession speech pointing out the abstention of many of his supporters. In contrast, those rejecting the constitutional reform received almost 250,000 votes more than opposition candidate Manuel Rosales had in the 2006 presidential election, just a slight increase.
There are a number of factors that resulted in Chávez supporters staying home for the referendum. One of the most significant was former and current supporters of President Chávez concerned that the Chávez government is becoming too radicalized with power too concentrated in the presidency. In the National Assembly, the Podemos Party, a democratic socialist party that had been supportive of the Chávez government, called the reform amendments a "constitutional coup," and was the sole party to vote against the reforms. Its leader Ismael García and other party members were dubbed traitors for opposing the reform effort. The party, which actively participated in the "No" campaign, had originally supported the establishment of a Constituent Assembly to amend the Constitution. It is likely that the opposition of Podemos contributed to the No vote, and also resulted in Chavistas (Chávez supporters) abstaining.
Another significant defection from the Chavista camp was the ex-wife of President Chávez, Marisabel Rodriguez, who actively opposed the reform, maintaining that it would concentrate absolute power. Rodriguez has a significant political profile in Venezuela, and was a member of the Constituent Assembly that drafted the current 1999 Constitution, which she maintains was a product of legitimate and valid public debate.
Perhaps the most significant opposition from within the Chavista movement was from retired General Raúl Baduel, former commander of the Venezuelan army and former Defense Minister, who in early November 2007 labeled the reform proposal a coup d'etat intended to abolish checks on the President's expanding power. Baduel had been one of Chávez's closest advisors since he helped him return to power in April 2002, and reportedly commands respect among many Chavistas and within the Venezuelan military. Baduel asserted that the constitutional reform proposal was "nothing less than an attempt to establish a socialist state in Venezuela." He also cited the government's failure to address such severe problems as high rates of crime and violence, inflation, a housing shortage, and poor education and health care, and maintained that the current constitution gives ample room for any decent and honest government to address these challenges.
Despite a booming Venezuelan economy and a fall in poverty rates over the past several years, several significant economic problems in Venezuela contributed to the rejection of the constitutional reform. Inflation, estimated at over 20% in 2007, has been the highest in the region. Price controls on basic staples like milk, eggs, and chicken have resulted in significant product shortages and long lines as domestic production has dwindled. Venezuela's currency is also significantly overvalued, with a substantial difference between the official exchange rate and the parallel market. The economic difficulties caused Venezuelans to question the government's management of the economy, asking such questions as how a booming economy could be experiencing so many problems.
As expected, the political opposition also strongly criticized the proposed constitutional changes, maintaining that the reforms would be a means for President Chávez to extend his power and remain in office indefinitely, while steering Venezuela towards Cuban-style totalitarianism. Opposition leader and former presidential candidate Manuel Rosales of the Un Nuevo Tiempo (UNT) party called the proposed changes a "constitutional coup," and warned that the reform would further exacerbate shortages for basic products as the country moves toward a socialist system. An important aspect of the opposition's "No" campaign was that it concentrated on the substance of the reforms, and was not focused on Chávez himself. Such a strategy proved less threatening for Chávez supporters who could oppose the reform or abstain from voting and still support Chávez as their President through 2012.
University students, which took the lead in the demonstrations against the government's closure of Radio Caracas Television ( RCTV) in May 2007, also played a major role in defeating the constitutional reform by taking the lead in street protests. On November 7, 2007, some 80,000 thousand students marched to the Supreme Court calling on the judicial body to suspend the referendum. Students also played a major role in the final demonstration of the "No" campaign, which mobilized more than 100,000 people in Caracas on November 29, 2007. With their ability to mobilize demonstrators, students emerged as perhaps the most prominent and visible opponents of the constitutional reform effort, and some observers believe that the reform would not have been defeated had it not been for the students. Historically, students in Venezuela have often played an important role in political change, including most notably in the overthrow of dictator Marcos Pérez Jiménez in 1958. The student movement that emerged in 2007 was not discredited by the Chávez government despite attempts to portray them as spoiled children of the oligarchy.
The Catholic Church in Venezuela, which criticized the constitutional reform effort as concentrating power in the hands of the President and favoring authoritarianism, also likely had some influence on the vote. In October 2007, Venezuelan bishops issues a public statement on the reforms, maintaining that the proposition of a Socialist State was contrary to the fundamental principles of the existing constitution, and asserting that the reforms would restrict liberties and represent a step backward in progress on human rights.
Venezuelan human rights groups also actively questioned and criticized the constitutional reforms. Forum for Life, a coalition of Venezuelan nongovernmental human rights organizations, petitioned the Supreme Court in mid-November to declare the proposed reforms unconstitutional. The coalition of human rights activists believed that the reforms represented a regression in the protection of human rights recognized in the 1999 constitution. Among the various objections of the Forum were concerns about proposed reforms to Article 337, which would eliminate the right of information and essential elements of the right of due process from the list of rights that cannot be suspended during a state of emergency. The Forum also opposed the reform to Article 338, which would have removed the time limit on a state of exception or emergency.
section_title: Significance of the Constitutional Reform Defeat
paragraphs: The rejection of the constitutional reform improved public confidence in the electoral process. In the past, critics often portrayed the National Electoral Council (CNE) as dominated by the Chávez government and questioned the outcome of elections. In the aftermath of the "No" win, some opposition politicians claimed that the reform was defeated by a much larger margin. But opposition leaders, including Manuel Rosales of the UNT, agreed with the CNE's numbers, which are listed on the electoral body's website down to the level of each voting site and table. Such level of transparency should increase confidence that Venezuela can conduct free and fair elections.
Nevertheless, while many observers lauded the CNE for the conduct of the vote on election day, government critics maintain that during the electoral campaign the CNE sided with the government on many decisions, and did nothing to stop the government from using its considerable resources to fund the campaign in favor of the reform. For example, Caracas was blanketed with propaganda in favor of the reform. The CNE was also widely criticized, including by the non-governmental Venezuelan domestic election observer group Electoral Eye, for the several hour delay in releasing the vote results, which contributed to increased tension across the country until the vote was announced.
For opposition parties such as the center-left UNT and center-right Primero Justicia, the rejection of the reform demonstrated that they can oppose the Chávez government at the ballot box and win. Going forward, however, it is obvious that the margin was very slim, and that just a small shift of votes – less than 60,000 for Block A and about 85,000 for Block B – would have reversed the results. Observers assert that victory by such a close vote suggests that the opposition will need to be unified and work with other former Chávez supporters in order to attract more electoral support. 
section_title: Political Developments in 2008
paragraphs: In January 2008, President Chávez moved to unite his supporters into a single party – the United Socialist Party of Venezuela (PSUV), although several parties that had supported Chávez in the past declined to join. In January, Chávez once again floated the idea of another attempt at a constitutional reform amendment that would allow him to be re-elected again in December 2012, although he did not officially move forward with plans for a referendum on the issue until after the November 2008 state and municipal elections .
The Venezuelan government also moved forward in 2008 with nationalizations in key industries. In March, the government nationalized two food companies maintaining that the takeover would improve production and distribution and help resolve food shortages. In early April, President Chávez announced the nationalizations of the cement industry – which involves taking majority shares in Mexican, French, and Swiss companies operating in Venezuela, – and the country's largest steel maker, Sidor, an Argentine-controlled unit of the Luxembourg-based company Ternium. Venezuelan officials maintained that the cement nationalizations were justified because the companies were producing below capacity and exporting too much, while the steel company had been bogged down in a labor dispute and criticized the company for exploiting workers. Other observers criticized the nationalizations as an attack on the private sector, and as a attempt by the government to improve the President's popularity.
In early June 2008, Chávez rescinded a decree that he had made days earlier overhauling the country's intelligence polices. Human rights groups and legal scholars had strongly criticized the extensive decree, maintaining that it would force citizens to inform on one another in order to avoid prison terms and would force judges to cooperate with intelligence services.
President Chávez's popularity reportedly declined in the first quarter of 2008 with such problems as high crime rates, food shortages, and inflation contributing to the decline. Some reports in March 2008 maintained that support for his government had dropped to as low as 34%. Reports later in the year, however, showed that Chávez, with popular support of about 50%, had regained some of the support that he had lost earlier in the year.
In early August 2008, the Venezuelan government issued 26 presidential decrees that had been enacted on July 31 at the end of an 18-month period in which President Chávez had been given decree authority by the National Assembly. The decrees covered such areas as tourism, railways, social security, and financial institutions as well as controversial provisions that would allow the President to appoint regional leaders with broad budgetary powers, set up a civilian militia as a branch of the military, and allow the government to expropriate goods from private businesses and increase state control over food distribution.
subsections: section_title: November 2008 State and Local Elections
paragraphs: State and municipal elections were held on November 23, 2008, with 22 of 23 state governorships at stake and 328 mayoralties. The results of the elections were mixed, with both sides able to claim victory. Pro-Chávez candidates won 17 of the 22 governor's races, while the opposition won governorships in three of the country's most populous state, Zulia, Miranda and Carabobo, as well as the sates of Nueva Esparta and Táchira. At the municipal level, pro-Chávez candidates won over 80% of the more than 300 mayoral races, while the opposition won the balance. Among the opposition's municipal successes were races for the metropolitan mayor of Caracas, four out of the five smaller municipalities that make up Caracas (including the poor municipality of Sucre), and the county's second largest city, Maracaibo. 
Leading up to the November elections, President Chávez's PSUV held primary elections around the country on June 1, 2008 to select candidates, although the process was criticized for a lack of transparency. The vote also sparked protests in several states, with some PSUV members maintaining that the candidacies were pre-determined. 
The opposition initially had difficulty in agreeing on a single slate of candidates so as not to split the opposition vote, but by the end of September 2008 had agreed on a unified candidate for most governor races. The opposition includes newer parties such as Justice First, Project Venezuela, and A New Era (Un Nuevo Tiempo, UNT); leftist parties that defected from the Chavista coalition such as the Movement toward Socialism (MAS) and Podemos; and the traditional political parties from the past such as Democratic Action (AD) and the Social Christian Party (COPEI).
One of the major problems for the opposition was that the Venezuelan government's comptroller general disqualified 272 individuals (down from almost 400 originally disqualified) from running for office, purportedly for cases involving the misuse of government funds. There were several challenges to Venezuela's Supreme Court that the comptroller general's action violated the Constitution, but on August 5, 2008, Venezuela's Supreme Court upheld up the disqualifications. The Venezuelan government maintained that the majority of those disqualified were from the ranks of the its own supporters, although the list included several high-profile opposition candidates. Among those excluded was Leopoldo López, the popular mayor of Chacao, who was seeking to run for mayor of Caracas. 
In the lead-up to the election, the Chávez government made a number of radical moves that appeared to be designed, at least in part, to have an effect on the elections. As noted above, Chávez expelled the U.S. Ambassador and asserted that the United States was backing a coup and assassination plot against him among Venezuelan military officers. His government also expelled two members of Human Rights Watch, and moved to strengthen Venezuela's military relations with Russia. Problems such as high crime, inflation, and food shortages were viewed as factors that eroded the government's electoral support in some key races. The next key political test at the polls will be in 2010 when the National Assembly is up for election.
section_title: Political Developments in 2009
subsections: section_title: February 15, 2009 Term Limits Referendum
paragraphs: In the aftermath of the state and municipal elections in November 2008, President Chávez announced that he would move ahead with plans to seek changes to the constitution that would lift the two-term limit for the office of the presidency. This would allow him to run for re-election in 2012 and beyond. The National Assembly voted on January 14, 2009 to hold a referendum on the constitutional amendment, expanding it further so that the abolition of term limits would apply to all elected government officials. As a result, the proposed amendment pertained to the President, all state and municipal officials, and deputies to the National Assembly. The referendum was scheduled for February 15, 2009, and various polls indicated that the vote would be close. In December 2008, it appeared that the opposition had the lead, but polls from late January 2009 showed that the President gained ground and that support for the referendum has a small lead.
Ultimately, with a participation rate of 70%, the constitutional reform was approved on February 15, with almost 55% voting for it and 45% voting against it. President Chávez proclaimed that the vote was a victory for the Bolivarian Revolution, and virtually promised that he would run for re-election in 2012.
The amendment was controversial given the defeat of the government's constitutional reform package in December 2007, which included an amendment that would have removed the presidential two-term limit and extended the presidential term from six to seven years. Venezuela's opposition maintained that President Chávez's effort to amend the constitution was illegal because the constitution itself, which in Article 345 prohibits a constitutional reform that was rejected from being presented again to the National Assembly in the same constitutional period. According to this view, since the next National Assembly will not be elected until late 2010 and take office in early 2011, such an amendment should not have been considered until then. 
Similar to the campaign against the government's December 2007 constitutional reform package, student groups played a leading role in the opposition to the abolishment of term limits. During the referendum campaign, Venezuelan security forces used tear gas, plastic bullets, and water cannons to disburse several student protests nationwide, including one in Caracas on January 20, 2009, with more than 2,000 students, although a massive student demonstration was allowed to take place in Caracas on January 23. Opposition parties again united against the referendum, including the democratic socialist Podemos party that had once supported President Chávez. Some Catholic Church officials in Venezuela also have criticized the amendment proposal, maintaining that unlimited re-election has never been successful in Venezuela and that the proposal was already rejected by the electorate in December 2007.
During the campaign, President Chávez argued that the constitutional change would only allow him to run again, but would not mean that he would be re-elected or remain in power indefinitely. He maintained that he does not want to be "President for life," but would like to remain in power until 2019 in order to ensure that his revolutionary project continues. Chávez campaigned vigorously for the amendment, and spent hours on state-run television in support of it, while the "yes" campaign has also used a salsa song promoting the amendment that plays in metro stations in Caracas. The President's support among many poor Venezuelans, who have benefited from increased social spending and programs was an important factor in the vote. 
One reason that President Chávez moved quickly with the referendum was the economic problems facing Venezuela because of the global financial crisis and the freefall in the price of oil. With declining government revenue, his government faced the possibility of losing support if the economic situation deteriorated further, especially if government was forced to cut back on domestic spending. Such a future scenario could have made it more difficult for an amendment on terms limits to be approved. Moreover, the current National Assembly is almost completely dominated by Chávez supporters because the opposition boycotted the 2005 legislative elections. Assuming that the opposition would participate in the next legislative elections in 2010, the next National Assembly would likely include an invigorated opposition that could make it more difficult for the government to advance a constitutional amendment to abolish term limits.
section_title: Continued Attacks on the Opposition
paragraphs: In 2009, the Chávez government has taken significant actions against opposition leaders holding elected state and local government positions, and has moved to concentrate power of the executive branch over state and local governments. The government has taken significant power away from opposition governors in five states and key municipalities, including Caracas and Maracaibo. In March 2009, President Chávez ordered the Navy to seize seaports in states with opposition governors, including Maracaibo in the state of Zulia and Puerto Cabello in the state of Carabobo. In April 2009, Manuel Rosales, who had been elected mayor of Maracaibo in November 2008, took refuge in Peru in order to escape a trial on corruption charges that many observers contend is part of a campaign of political persecution against the opposition. Rosales had previously served as governor of Zulia state and ran against Chávez for president in 2006. The elected mayor of metropolitan Caracas, Antonio Ledezma, has been stripped of much of his power, with most of his budget and powers transferred to the central government. His role as mayor has been superseded by an official appointed by President Chávez. In protest, Ledezma undertook a six-day hunger strike in July 2009 to call international attention to what is happening to elected opposition leaders in Venezuela.
In addition to the elected opposition, the Chávez government has moved to silence other opponents. In early April 2009, a former Defense Minister in the Chávez government who subsequently became a strong critic of President Chávez during the 2007 constitutional reform campaign was arrested on charges of corruption and remains imprisoned. The Chávez government also has sought to increase its control of the military by ousting military officers who might be considered disloyal to the government. Nongovernmental organizations in Venezuela have expressed concern about potential legislation that would tighten control over groups that receive assistance from abroad, and fear that the government will prevent groups critical of the government from receiving outside assistance. Critics of the government assert that the judiciary and criminal justice system is being used as a political tool against political opponents, including the case of prominent business leader Eligio Cedeño who has been imprisoned since 2007 in pretrial detention.
The Chávez government has also continued to threaten opposition media with closure. Similar to its closure of RCTV in 2007, the government has been targeting the operation of Globovision, a cable television news station that is often critical of the government. The government has accused the station of inciting panic in its coverage of an earthquake in early May 2009. This was followed up by May 21 raids on the home and car dealership owned by Guillermo Zuloaga, the main owner of Globovision, over a business deal unrelated to the television station. Prosecutors are charging that Zuloaga was storing new cars at his home with plans to sell them for excessive profit. Zuloaga maintains that the case is an attempt to harass him and asserts that he has done nothing illegal. On July 22, a local court notified Zuloaga that he could not leave the country, while days earlier a judge in the case reportedly was fired after she complained about pressure to prohibit Zuloaga from leaving the country. 
In July 2009, the Chávez government announced that administrative proceedings would be opened against 240 radio stations (reportedly more than a third of all stations) to revoke their licenses because they failed to updated their registration papers. Press rights groups such as the Committee to Protect Journalists maintain that the action is another attempt by the Venezuelan government to expand pro-government media, control the flow of information, and suppress dissent.
section_title: Human Rights Concerns
paragraphs: Human rights organizations and U.S. officials have expressed concerns for several years about the deterioration of democratic institutions and threats to freedom of speech and press in Venezuela under the Chávez government. The State Department's February 2009 human rights report stated that Venezuela's human rights situation continued to be characterized by "politicization of the judiciary," and "official harassment of the media and of the political opposition."
Nevertheless, according to a 2008 poll by Latinobarómetro, 49% of Venezuelans expressed satisfaction with how democracy in their country was working, a greater percentage than in most Latin American countries and second only to Uruguay. The 2008 figure, however, showed a 10% drop from a similar poll 2007 that showed that 59% of Venezuelans expressed satisfaction with their democracy. 
In March 2007, the Inter-American Commission on Human Rights (IACHR) issued a statement expressing concern about the human rights situation in Venezuela and appealing to the government to allow an IACHR representative to visit the country. The Commission stated that in the last years it "has observed a gradual deterioration of the constitutional order that has compromised the full enjoyment of human rights" and expressed concern about freedom of expression in the country. In its 2007 annual report, the Inter-American Commission on Human Rights highlights the difficulties that human rights defenders face in Venezuela, including attacks and threats on their life, and other obstacles such as public discrediting by state officials.
Some observers are concerned that Chávez is using his political strength to push toward authoritarian rule. Human Rights Watch maintains that the Chávez government dealt a severe blow to judicial independence by packing the Supreme Court with his supporters under a new law that expanded the court from 20 to 32 justices. Since 2004, according to Human Rights Watch, the packed Court has fired hundreds of provisional judges and granted to permanent judgeships to about 1,000 others. The Chávez government enacted a broadcast media law in December 2004 that could allow the government to restrict news coverage that is critical of the government, while in March 2005 it amended Venezuela's criminal code to broaden laws that punish "disrespect for government authorities." The IACHR and human rights groups such as the Committee to Protect Journalists, Reporters Without Borders, and the Inter-American Press Association maintain that these measures have restricted freedom of expression, with newspapers and broadcasters practicing self-censorship. (Also see "RCTV Closure and Public Reaction" above.)
In September 2008, Human Rights Watch issued an extensive report examining setbacks in human rights protections and practices under the Chávez government. The report states that under President Chávez, the Venezuelan government has: tolerated, encouraged, and engaged in wide-ranging acts of discrimination against political opponents and critics; undermined freedom of expression through a variety of measures aimed at reshaping media content and control; sought to remake the country's labor movement in ways that violate basic principles of freedom of association; and undermined its own ability to address the country's long-standing human rights problems through its adversarial approach to local rights advocates and civil society organizations. The report makes recommendations for the Venezuelan government to take actions in each of these areas in order to promote a more inclusive democracy.
In an immediate response to the release of the Human Rights Watch report, the Venezuelan government expelled two staff members of the human rights organization visiting the country on September 18, 2008, an action that was condemned by numerous human rights groups throughout Latin America. On September 26, 2008, 41 members of the U.S. House of Representatives wrote to President Chávez expressing their outrage over the expulsion of the Human Rights Watch staff, and urging the President to embrace the recommendations of the report and strengthen the promotion of human rights, democratic institutions, and political pluralism in the country.
In late November 2008, the Washington-based Due Process of Law Foundation issued a report criticizing the imprisonment of eight police officials accused of murder in April 2002 during a massive opposition demonstration that led to the temporary ouster of President Chávez. The report alleged violation of the police officials' due process and raised concerns about the independence of the judges in the case.
In the lead-up to the November 23, 2008 state and municipal elections, human rights groups called attention to attacks against media and journalists who have been critical of the Chávez government. These have included the shooting of a journalist in Ciudad Bolívar on September 27, and a tear-gas attack at Globovisión television headquarters in Caracas on September 22. As noted above, Venezuelan security forces used force to break up several student protests around the country in the lead up to the February 15, 2009 referendum on abolishing term limits.
On January 30, 2009, an unidentified group vandalized a synagogue in Caracas. President Chávez and other Venezuelan officials strongly condemned the attack. According to last year's State Department human rights report on Venezuela from March 2008, there has been a rise in anti-Semitic vandalism, caricatures, intimidations, and physical attacks Jewish institutions. In December 2007, Jewish leaders in Venezuela and abroad condemned an armed policy raid, in search of weapons, on a Jewish center in Caracas. An earlier armed police raid on the center's school occurred in 2004, but in neither case were weapons found. The New York-based Anti-Defamation League issued a statement condemning the January 2009 attack on the synagogue and maintained that "it is directly related to the atmosphere of anti-Jewish intimidation promoted by President Chávez and his government apparatus." 
On February 2, 2009, 16 Members of Congress, including Chairman of the House Foreign Affairs Subcommittee on the Western Hemisphere Eliot Engel spoke out against the attack in a letter to President Chávez. They stated in the letter that they believed that the attack was "a direct result of the dangerous environment of fear and intimidation against the Jewish community which your government has fostered." The letter also expressed concern about the Chávez government's expulsion of the Israeli Ambassador in early January 2009, and its close relationship with Iran, which calls for the destruction of the state of Israel. The Members also called on Chávez "to end the bullying and harassment of the Jewish community" and "to extend the community the robust protection it deserves in light of the threats it faces." In the 111 th Congress, two resolutions have been introduced that would express concern about anti-Semitism in Venezuela: H.Res. 174 (Hastings), introduced February 13, 2009, and H.Con.Res. 124 (Mack), introduced May 12, 2009. 
As noted above, the Chávez government has taken additional measures in 2009 to stifle political opponents, including elected state and local government officials, other political opponents, and media outlets such as Globovision that have been critical of the government. (See " Continued Attacks on the Opposition " above.)
subsections: section_title: Trafficking in Persons
paragraphs: Venezuela had been on the State Department's Tier 3 list for trafficking in persons from 2004 through 2007, which meant that the government was categorized as one that has failed to make significant efforts to bring itself into compliance with the minimum standards for the elimination of trafficking in persons. In the State Department's 2008 and 2009 Trafficking in Persons (TIP) Reports, however, Venezuela was upgraded to the Tier 2 Watch List category because the government was judged to be making significant efforts to combat trafficking in persons. It has not upgraded further to the Tier 2 list because the government has not shown evidence of progress in convicting and sentencing trafficking offenders and providing adequate assistance to victims. 
According to the June 2009 TIP report, Venezuela is a source, transit, and destination country for men, women, and children trafficked for sexual exploitation and forced labor. The report made several recommendations for the Venezuelan government to improve its anti-trafficking efforts. These include recommendation to amend existing law to prohibit and adequately punish all forms of trafficking in persons, particularly the internal trafficking of men and boys; intensify efforts to investigate and prosecute trafficking offenses and convict and punish offenders; investigate reports of trafficking complicity by public officials; provide greater services and assistance to trafficking victims; improve data collection for trafficking crimes; and consider designating a coordinator to lead the government's anti-trafficking efforts. (Also see CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean , by [author name scrubbed].)
section_title: Economic Conditions
paragraphs: Venezuela's major economic sector is petroleum, which accounts for one-third of its gross domestic product and 80% of exports. The country is classified by the World Bank as an upper middle income developing country because of its relatively high per capita income of $7,320 (2007).
Despite the country's oil wealth, economic conditions in the country deteriorated in the 1990s. The percentage of Venezuelans living in poverty (income of less than $2 a day) increased from 32.2% to 48.5% of the population between 1991 and 2000, while the percentage of the population in extreme poverty (income of less than $1 a day) increased from 11.8% in 1990 to 23.5% in 2000. In 2002-2003, the country's political instability and polarization between the government and the opposition contributed to a poor investment climate, capital flight, and declines in GDP. The national strike orchestrated by the opposition from late 2002 to early 2003 contributed to a contraction of the national economy by almost 9% in 2002 and 7.7% in 2003.
From 2004 to 2007, fueled by the windfall in international oil prices, the economy rebounded, with a growth rate over 18% in 2004, over 10% in 2005 and 2006, and 8.4% in 2007. Strong economic growth allowed the Chávez government to move ahead with economic goals that fit into his "Bolivarian revolution." These include the expansion of a state-led development model, land reform, renegotiation of contracts with large foreign investors (especially in the petroleum sector), the restructuring of operations at the state oil company, and diversification of trade and investment partners. The government has nationalized a number of enterprises, including telecommunications, electricity, and food companies, and in 2008 announced the nationalization of cement companies, the country's largest steel company, sugar plantations, a dairy products company, and a cattle estate.
Beginning in 2003, the government began implementing an array of social programs and services known as missions. As a result of the booming economy and increased social spending, poverty rates in Venezuela have declined, from 48.6% in 2002 to 28.5% in 2007, with extreme poverty falling from 22.2% to 8.5% over the same period.
Despite the country's economic growth and progress in reducing poverty, Venezuela's economy has experienced significant problems over the past several years, such as shortages of basic food staples and high levels of inflation that have eroded purchasing power. In 2007, the average inflation rate was almost 19% while in 2008 the average rose to just over 30%, the highest in Latin America. In January 2008, the government introduced a new currency, the bolívar fuerte (strong bolivar), that eliminated three zeroes from the bolívar and was intended in part to stem high inflation rates, but inflation has continued to increase monthly. Shortages of basic staples such as milk, sugar, and eggs worsened in 2007 as a result of price controls that stifled local production. In response, the government has raised price caps on basic food items, and nationalized a large dairy company and a food distribution company that were incorporated into a subsidiary of the Venezuelan oil company, PdVSA. The policies have reportedly worked to help ease shortages for some staples, but not all. In mid-2009, shortages of many basic staples were still being reported.
The global financial crisis and the associated drop in the price of oil are having significant effects on the Venezuelan economy. In October 2008, the Venezuelan government announced that it would be making budget cuts, including the reduction of high salaries for some officials. High economic growth already began to slow in 2008, with a growth rate of 4.8%, and the economy is forecast to contract by 4.2% in 2009. While inflation has slowed somewhat, the forecast for 2009 is for an average of 28%. Given the severe economic downturn, it is likely that the Venezuelan government may have to cut back on its assistance programs abroad and to start reining in domestic spending in Venezuela. For now, the government remains defiant that it can ride out the economic crisis and has turned to using some of its substantial foreign reserves to maintain social spending. As a result, foreign reserves are forecast to fall from an estimated $42 billion at the end of 2008 to about $25 billion by the end of 2009.
subsections: section_title: Venezuela's Social Missions88
paragraphs: As noted above, Venezuela is using windfall oil profits to boost social spending and programs to fight poverty. Beginning in 2003, the Chávez government began implementing an array of social programs and services known as misiones, or missions.
The popularity of the missions was instrumental to President Chávez's reelection in December 2006 and has been a major factor in the President's support among the poor. A key characteristic of the missions is that they are generally deinstitutionalized, functioning primarily through a parallel system that is not a part of the bureaucratic apparatus of the state. The missions have been funded through the government's central budget and allocations by PdVSA. Some observers contend that the work of the missions should be integrated into existing ministries and institutions of the Venezuelan government in order to improve administration and oversight.
There are currently some 20 social missions in Venezuela, covering a wide array of services in the fields of education, health, nutrition, the environment, sports, culture, housing, and targeted programs for indigenous rights and services for street children and adolescents.
In the education field, the Misión Robinson constitutes a national literacy campaign, with the government reporting that over 1.5 million Venezuelans have learned to read and write since the program began in 2003. The Misión Robinson 2 focuses on adults in need of primary school education, particularly those who have just learned how to read and write through the Misión Robinson . According to government figures, between 2003 and 2006, over 1.2 million people were enrolled in the mission's primary school education program. The Misión Ribas provides adult Venezuelans who never finished high school the opportunity to obtain a secondary education. The Misión Sucre has established state-run university villages in order to provide opportunities to attend university to those who were previously excluded from the higher educational system. These universities are especially geared to those students who completed their secondary education through the Misión Ribas .
In the health field, the Misión Barrio Adentro (Inside the Neighborhood Mission) consists of free health care clinics in historically marginalized areas throughout the country that are staffed primarily by Cuban medical personnel. The medical personnel live in the barrios and make home visits to those who are too ill to visit the community health clinics. The government intends to gradually replace many of the Cuban doctors with Venezuelan doctors. Although there were more than 20,000 Cuban medical personnel serving in Venezuela supporting the mission, over the past year thousands reportedly have left, leaving about 15,000; as a result, a number of the clinics reportedly have closed. A July 2006 report published by the Pan American Health Organization showed that the mission has had a positive impact on the health of Venezuela's poor. The report maintains that there has been a reduction in child mortality from diarrhea and pneumonia since the mission began operating and that medical consultations performed by the mission in 2004 and 2005 saved over 18,000 lives. A related health mission, the Misión Milagro (Miracle Mission), provides free eye care clinics and eye surgery.
In the area of nutrition, Misión Mercal attempts to ensure that poor Venezuelans obtain staple foodstuffs. The key component of the mission is the state-run Mercal supermarket and grocery store chain, where prices are subsidized by the government up to 40% less expensive than elsewhere. This mission also includes soup kitchens that provide daily free meals and a service by which foodstuffs and meals are delivered to the homes of those living in extreme poverty. The government claims that the mission has been successful by pointing to the fact that over 47% of Venezuelans shop at Mercal and that over nine and a half million people have benefitted from the Mercal Mission in some way.
Some observers have praised the missions for constituting an integrated package of poverty-reduction measures that address the various conditions associated with poverty, representing a holistic approach to poverty-reduction. The missions are viewed by some as a potentially more effective alternative to simple cash transfers, which have been the primary basis for poverty-alleviation programs in Latin America. Some critics of the missions, however, maintain that they focus on alleviating the harsh conditions associated with poverty rather than addressing the structural roots of the problem. They maintain that the missions are paternalistic and create a dependency on the state among the poor, without providing solutions to lift people out of poverty permanently. Some critics question the sustainability of the missions since they are funded primarily from oil revenues. They argue that the missions will likely disappear or be cut back significantly if oil revenue declined.
section_title: U.S. Policy
subsections: section_title: Overview of U.S.-Venezuelan Relations
paragraphs: The United States traditionally has had close relations with Venezuela, the fourth major supplier of foreign oil to the United States, but there has been significant friction with the Chávez government. Tensions in relations turned especially sour in the aftermath of President Chávez's brief ouster from power in April 2002. Venezuela alleged U.S. involvement in the ouster, while U.S. officials repeatedly rejected charges that the United States was involved.
Over the past several years, U.S. officials have expressed concerns about human rights, Venezuela's military arms purchases (largely from Russia), its relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin American countries. Declining Venezuelan cooperation on antidrug and antiterrorism efforts also has been a U.S. concern. Since 2006, the Department of State has prohibited the sale of defense articles and services to Venezuela because of lack of cooperation on antiterrorism efforts. In the aftermath of Colombia's March 1, 2008 bombing of a FARC camp in Ecuador that killed the terrorist group's second in command, captured laptops contained files potentially linking the Venezuelan government with efforts to support the FARC. In a turn of events, on June 8, 2008, President Chávez publicly urged the FARC to end its armed struggle, and release all hostages.
While strong political rhetoric from both U.S. and Venezuelan officials in the 2002 to 2006 period contributed to elevated tensions in U.S. relations, the tenor of U.S. political rhetoric appears to have changed since the second half of 2006. When Chávez spoke disparagingly of President Bush at the United Nations in September 2006, U.S. officials refrained from responding to those personal attacks. Likewise, when President Chávez led an anti-American rally in Argentina in March 2007 during President Bush's visit to Brazil and Uruguay, President Bush ignored the taunts and U.S. officials emphasized that they wanted to focus on a positive agenda of U.S. engagement with Latin America.
In 2008, U.S. policy toward Venezuela appeared to be to refrain from getting into any unneeded conflicts or spats with President Chávez, and instead to focus on a positive U.S. agenda for the hemisphere. Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon stated in July 17, 2008 congressional testimony that "we remain committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship." Shannon pointed out in his testimony that Venezuela "for the first time in many years, expressed a willingness to explore improved relations with the United States," including counter-drug cooperation, and that "we have told Venezuela that we would like to explore this diplomatic opening."
By September 2008, however, U.S. relations with Venezuela took a significant turn for the worse when Venezuela expelled U.S. Ambassador Patrick Duddy and the U.S. responded in kind with Venezuelan Ambassador Bernardo Alvarez. Also in September, U.S. officials criticized Venezuela's efforts against drug trafficking, and President Bush determined, for the fourth year in a row, that Venezuela had failed demonstrably to adhere to its obligations under international narcotics control agreements. U.S. Treasury Department officials also froze the assets of two high-ranking Venezuelan government officials and the former interior minister for allegedly helping the FARC with weapons and drug trafficking.
Under the Obama Administration, Venezuela and the United States announced an agreement on June 25, 2009, for the return of respective ambassadors. While some observers are hopeful that the return of ambassadors will mark an improvement in relations, others emphasize continued U.S. concerns about the Venezuelan government's treatment of the news media and political opposition and about interference in the affairs of other countries in the region. (See " Obama Administration Policy " below.)
subsections: section_title: Bush Administration Policy 2005-2008
subsections: section_title: Tensions Increase in 2005
paragraphs: Administration officials voiced increasing concern about President Chávez in 2005, and tensions increased in U.S.-Venezuelan relations, with elevated rhetoric on both sides. In both March and September 2005, State Department officials testified to Congress that President Chávez's "efforts to concentrate power at home, his suspect relationship with destabilizing forces in the region, and his plans for arms purchases are causes of major concern." They asserted that the United States "will support democratic elements in Venezuela so they can fill the political space to which they are entitled." Then Secretary of Defense Donald Rumsfeld expressed concerns in March about Venezuela's plan to buy 10 military helicopters and 100,000 AK-47 rifles from Russia and questioned why Venezuela needs the weapons. U.S. officials have also expressed concerns about Venezuela's plans to buy patrol boats and military transport aircraft from Spain as well as a decision by Venezuela in April 2005 to cancel a U.S.-Venezuelan bilateral military exchange program.
On May 31, 2005, President Bush met with Maria Corina Machado, the founder of Súmate, a Venezuelan civic group that was involved in the signature drive for the August 2004 recall referendum. The meeting exacerbated the already tense U.S.-Venezuelan bilateral relations. Machado is facing charges in Venezuela for conspiring against the government by accepting U.S. funding from the National Endowment for Democracy for Súmate's activities leading up to the recall referendum. U.S. officials and some Members of Congress have strongly defended the NED's activities in Venezuela and have criticized the Venezuelan government's efforts to intimidate the leaders of Súmate. (See " U.S. Funding for Democracy Projects " below.)
In early August 2005, Venezuela suspended its cooperation with the U.S. Drug Enforcement Administration (DEA) because it alleged that DEA agents were spying on Venezuela. U.S. officials asserted that the accusations were "baseless and outrageous" but also indicated that the United States would like to improve U.S. relations with Venezuela and reverse the negative trend in relations over the past few months.
While traveling in South America in August 2005, then Secretary of State Donald Rumsfeld asserted that "there certainly is evidence that both Cuba and Venezuela have been involved in the situation in Bolivia in unhelpful ways." Some Members of Congress, such as Senator Arlen Specter, reportedly called for the Secretary to tone down his rhetoric. Specter met with President Chávez and Venezuelan ministers in mid-August 2005 to discuss cooperation on drug interdiction. Subsequently, on September 15, 2005, President Bush designated Venezuela as a country that has "failed demonstrably during the previous 12 months to adhere to their obligations under international counternarcotics agreements." At the same time, the President waived economic sanctions that would have curtailed U.S. assistance for democracy programs in Venezuela. (Also see " Counternarcotics Cooperation " below.)
On August 22, 2005, the comments of TV evangelist Pat Robertson that the United States should "assassinate" Chávez evoked a strong response from Venezuelan officials and from many U.S. policymakers. The State Department responded by labeling Robertson's comments as "inappropriate." (For further information on the U.S. prohibition against assassination, see CRS Report RS21037, Assassination Ban and E.O. 12333: A Brief Summary , by [author name scrubbed] (pdf).)
In testifying to Congress on November 17, 2005, the new Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon asserted that there is "a growing hemispheric and international consensus that democracy in Venezuela is in grave peril." He stated that the United States was working multilaterally and bilaterally with Latin American and European nations to support Venezuelan civil society, speak out against abuses of democracy, and hold Venezuela accountable to its commitments under the Inter-American Democratic Charter. He described U.S. funding for democracy projects in Venezuela as "working to preserve political and civic space for increasingly at-risk groups." Reflecting an escalation of the Venezuelan President's harsh rhetoric, Chávez responded to Shannon's comments by calling President Bush a "crazy, genocidal killer."
U.S. reaction to the Venezuelan elections on December 5, 2005, was restrained, with a State Department spokesman indicating that United States would wait until the OAS and EU observers make their reports. Nevertheless, the State Department did point to the high voter abstention rate in the election and maintained that it reflected "a broad lack of confidence in the impartiality and transparency of the electoral process." (There was a 75% abstention rate in the December legislative election, compared to an abstention rate of 44% in the last legislative election in July 2000, which occurred at the same time that voters elected a president and state and local officials. )
section_title: Relations in 2006
paragraphs: U.S.-Venezuelan relations continued to be tense in 2006, with several incidents and rhetoric exacerbating the poor state of relations. On February 2, 2006, then Secretary of Defense Donald Rumsfeld compared President Chávez to Adolf Hitler in terms of someone who was elected legally and then consolidated power. Chávez responded by referring to President Bush as Hitler and as a madman, with plans to invade Venezuela. On February 2, 2006, President Chávez announced that his government would expel a U.S. naval attache for spying, which U.S. officials strongly denied. In response, the United States expelled a Venezuelan diplomat based in Washington.
Administration testimony before Congress in February 2006 highlighted U.S. concern about Venezuela's foreign relations. In February 16, 2006 congressional testimony, Secretary of State Condoleezza Rice stated that one of the biggest problems for the United States in Latin America was Venezuela, which she characterized as "attempting to influence its neighbors away from democratic processes." Secretary Rice also expressed concerns about Venezuela's relationship with Cuba, describing it as "a particular danger to the region," and also referred to both countries as Iran's "sidekicks" in reference to those countries' votes in the International Atomic Energy Agency against reporting Iran to the U.N. Security Council over its uranium enrichment program. Also in February 2006 congressional testimony, Director of National Intelligence John Negroponte expressed concern that President Chávez "is seeking closer economic, military, and diplomatic ties with Iran and North Korea."
In April 2006, the State Department issued its annual Country Reports on Terrorism , which asserted that "Venezuela virtually ceased its cooperation in the global war on terror, tolerating terrorists in its territory and seeking closer relations with Cuba and Iran, both state sponsors of terrorism." This was followed up in mid-May 2006, with a State Department announcement that, pursuant to Section 40A of the Arms Export Control Act, it was prohibiting the sale or license of defense articles and services to Venezuela because of its lack of cooperation on antiterrorism efforts. The State Department asserted that the determination was based on Venezuela's near lack of antiterrorism cooperation over the last year, citing its support for Iraqi insurgents and Iran's development of nuclear capabilities, the country's status as a safe haven for Colombian and Basque terrorist groups, and its effort to derail hemispheric efforts to advance counter-terrorism policies in the OAS. In July 13, 2006, congressional testimony, the State Department's Principal Deputy Coordinator for Counterterrorism, Frank Urbancic, asserted that Venezuelan travel and identification documents are easy to obtain for persons not entitled to them, including non-Venezuelans, and maintained that the United States was detaining increasing numbers of third-country aliens at its borders carrying falsified or fraudulently issued Venezuelan documents.
On August 18, 2006, U.S. Director of National Intelligence John Negroponte announced the establishment of the position of Mission Manager for Cuba and Venezuela responsible for integrating collection and analysis on the two countries across the Intelligence Community. Venezuelan officials responded that they would reconsider signing an anti-drug cooperation agreement negotiated between the two countries. Press reports in June and July had indicated that the two countries were on the verge of signing such an agreement.
In speaking before the U.N. General Assembly on September 20, 2006, President Chávez strongly criticized U.S. foreign policy and spoke pejoratively of President Bush. President Chávez repeatedly referred to President Bush as the "Devil" and asserted that "the hegemonic pretension of U.S. imperialism ... puts at risk the very survival of the human species."
In response to President Chávez's comments, Secretary of State Condoleezza Rice maintained his remarks "were not becoming of a head of state," while then U.S. Ambassador to the United Nations John Bolton said that the Administration would "not address this sort of comic-strip approach to international affairs." State Department spokesman Tony Casey said that he would "leave it to the Venezuelan people to determine whether President Chávez represented them and presented them in a way they would have liked to have seen." President Chávez's remarks at the U.N. were not the first time that the Venezuelan president has spoken disparagingly of President Bush or other U.S. officials or criticized U.S. policy. He routinely refers to President Bush as a "donkey," "Mr. Danger," or other pejorative terms. U.S. officials appear largely to have refrained from responding to such personal charges or criticisms leveled by President Chávez and instead have focused on the negative aspects of his policies, such as the status of democracy and human rights under his government, the extent of Venezuela's military purchases, or President Chávez's efforts to influence political events in other Latin American countries. Several Members of Congress criticized President Chávez for his anti-American rhetoric and introduced resolutions condemning his statements, including S.Res. 607 approved by the Senate on December 6, 2006.
In response to President Chávez's reelection on December 3, 2006, State Department officials initially emphasized that the United States was looking forward to working with the Venezuelan government on issues of mutual concern. Subsequently, Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon stated that the election was positive in that there was a clear winner and that the opposition accepted the results.
section_title: Relations in 2007
paragraphs: U.S. officials continued to speak out about threats to democracy in Venezuela, its military buildup, and other concerns in 2007. In January 11, 2007, testimony before the Senate Select Committee on Intelligence, then Director of National Intelligence John Negroponte stated that President Chávez "is among the most stridently anti-American leaders anywhere in the world, and will continue to try to undercut U.S. influence in Venezuela, in the rest of Latin America, and elsewhere internationally." Negroponte also expressed concern that the Venezuelan leader's military purchases and moves toward developing his own weapons production capability are increasingly worrisome to his neighbors and could fuel an arms race in the region.
In February 7, 2007, testimony before the House Foreign Affairs Committee, Secretary of State Condoleezza Rice stated that she believes "there's an assault on democracy in Venezuela" and that "the president of Venezuela is really destroying his own country economically, politically." Venezuelan Foreign Minister Nicolas Maduro responded by saying that "no U.S. official has the morality to qualify Venezuelan democracy or the democratic leadership of President Chávez."
President Chávez continued his tough rhetoric against the United States and President Bush. During the U.S. President's visit to Latin America in March 2007, Chávez led a rally in Argentina in which he denounced President Bush and U.S. policy in Latin America. U.S. officials maintained that they do not want to get into a rhetorical contest with Chávez, but want to focus on a positive agenda of U.S. engagement in Latin America. Many observers contend that President Bush's March trip to the region was at least in part an attempt to counter the growing influence of President Chávez in Latin America.
As noted above, in the aftermath of the closing of the Venezuelan government's closing of RCTV in late May 2007, the State Department issued a statement calling on Venezuela to reverse its policies that limit freedom of expression. Secretary of State Condoleezza Rice raised the issue on June 4, 2007, at the OAS General Assembly Meeting in Panama, and called on the OAS to address the issue. Ultimately, the OAS did not specifically criticize Venezuela for its action, but adopted a resolution calling upon members states to respect freedom of expression.
In the aftermath of the rejection of President Chávez's proposed constitutional changes in December 2007, President Bush said that the "Venezuelan people rejected one-man rule," and "voted for democracy." Under Secretary of State for Political Affairs Nicholas Burns said that the vote was a "victory for the people of Venezuela."
section_title: Relations in 2008
paragraphs: In testimony before the Senate Select Committee on Intelligence on February 5, 2008, Director of National Intelligence Michael McConnell maintained that the defeat of the constitutional referendum in December 2007 may slow President Chávez's movement toward authoritarian rule and implementation of socialism in Venezuela, although McConnell stated that Chávez would not abandon his goal of sweeping change in Venezuela. McConnell testified that Chávez will continue to attempt to unite Latin America under his leadership behind an anti-U.S. and radical leftist agenda, but that his leadership ambitions are likely to encounter growing opposition as time passes. McConnell also noted Venezuela's increasing relations with Iran, expressed concerns about more than $3 billion in arms purchases from Russia over the past two years, and noted growing anxiety among Venezuela's neighbors because of this arms build-up.
On February 10, 2008, President Chávez once again threatened to stop oil exports to the United States, this time if ExxonMobil was successful in freezing billions in Venezuela oil assets in a dispute over compensation for its Orinoco oil investments. State Department officials played down the threat, pointing out that Chávez has made the same threat in the past, but has never cut oil.
In light of information found on documents from laptops captured by Colombian forces during a March 1, 2008 raid on a camp of the FARC in Ecuador, some observers, including some Members of Congress, called on the Bush Administration to designate Venezuela as a state sponsor of acts of international terrorism. The Bush Administration began an inquiry on the matter of designating Venezuela as a state sponsor. According to press reports, the computer files appeared to link the Venezuelan government with efforts to secure arms for the FARC, and Colombian officials maintained that the documents for the computers showed that the Venezuelan government may have channeled some $300 million to the FARC. President Hugo Chávez and other Venezuelan officials strongly deny the accusations.
In June and July 2008, President Chávez reversed policy directions in several areas. In early June, he called for the FARC to disarm, and in early July, in a meeting with U.S. Ambassador to Venezuela Patrick Duddy, he called for cooperation with the United States on drug trafficking and other issues. This was noted by Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon in congressional testimony on July 17, 2008 before the House Western Hemisphere Subcommittee. Shannon stated that Venezuela "for the first time in many years, expressed a willingness to explore improved relations with the United States," including counter-drug cooperation, and maintained that "we have told Venezuela that we would like to explore this diplomatic opening."
By September 2008, however, U.S. relations with Venezuela took a significant turn for the worse when Venezuela expelled U.S. Ambassador Patrick Duddy, and alleged that the Venezuelan government had foiled a U.S.-backed conspiracy to assassinate him. In expelling the U.S. Ambassador, Chávez expressed solidarity with Bolivia, which had just expelled the U.S. Ambassador to Bolivia who had met with opposition leaders in that country. At the time that Chávez announced the expulsion of Ambassador Duddy, he also announced that he was recalling the Venezuelan Ambassador to the United States, Bernardo Alvarez. On September 12, the United States declared Ambassador Alvarez persona non grata. President Chávez announced that he would receive a new U.S. Ambassador as soon as the United States has a new Administration. Also on September 12, the U.S. Treasury Department froze the assets of two senior Venezuelan intelligence officials and the former interior minister for allegedly helping the FARC with weapons and drug trafficking. Just days later, on September 16, 2008, President Bush determined, for the fourth consecutive year, that Venezuela had failed demonstrably to adhere to its obligations under international narcotics control agreements.
section_title: Obama Administration Policy
paragraphs: During the U.S. presidential campaign, Barack Obama maintained that his Administration would use principled bilateral diplomacy to engage with such adversaries in the region as Venezuela under populist President Hugo Chávez.
In response to written questions during her confirmation hearing for Secretary of State before the Senate Foreign Relations Committee in mid-January 2009, Senator Hillary Clinton characterized President Chávez as a "democratically elected leader who does not govern democratically." She maintained that while the United States should be concerned about Chávez's actions and posture, "we should not exaggerate the threat he poses." Clinton asserted that the United States "should have a positive agenda for the hemisphere in response to the fear-mongering propagated by Chávez and [Bolivian President] Evo Morales." She maintained that the Administration believes that bilateral cooperation with Venezuela on a range of issues (like counterterrorism, counternarcotics, energy, and commerce) would be in the mutual interests of Venezuela and the United States. Clinton maintained that "it remains to be seen whether there is any tangible sign that Venezuela actually wants an improved relationship with the United States."
A week before his inauguration, President Obama maintained in an interview that President Chávez "has been a force that has impeded progress in the region," and expressed concern about reports that Venezuela is assisting the FARC. President Chávez strongly criticized Obama for his comments, but subsequently stated that he would like to restore bilateral relations to the same level as during the Clinton Administration. Chávez suggested that a new period of constructive relations based on respect might be possible, but that it would depend on the attitude of the President and Secretary of State.
At the fifth Summit of the Americas held in Trinidad and Tobago in mid-April 2009, President Obama met President Chávez along with other hemispheric leaders. Chávez maintained that he would be open to the U.S. Ambassador returning to Caracas. Two months later, on June 25, 2009, the State Department announced that the United States and Venezuela had exchanged diplomatic notes and agreed to return respective ambassadors. This led to U.S. Ambassador to Venezuela Patrick Duddy resuming his post in Caracas, and to the return of Venezuelan Ambassador Bernardo Alvarez to Washington.
The return of respective ambassadors has raised some hopes of an improvement in bilateral relations. In an interview with Globovision in early July 2009, Secretary of State Clinton maintained that there needs to be a dialogue between the United States and Venezuela on a range of issues, and maintained that there are ways for countries that do not agree on many issues to have a conversation. At the same time, with regard to the political situation in Venezuela, Clinton maintained that she hoped to see over the next months a "recognition that you can be a very strong leader and have very strong opinions without trying to take on too much power and trying to silence all your critics." State Department officials have expressed continued concerns about the intimidation of the news media in Venezuela, and steps taken by the government to restrict political participation and debate. The State Department has also expressed concern about President Chávez's interference with respect to relations with other countries in the region, including Colombia, and most recently Honduras.
section_title: U.S. Funding for Democracy Projects
paragraphs: The United States has funded democracy-related projects in Venezuela for a number of years through a variety of programs funded by the State Department, the U.S. Agency for International Development (USAID), and the National Endowment for Democracy (NED).
USAID, through its Office of Transition Initiatives, has funded democracy projects in Venezuela since 2002, with the goals of strengthening democratic institutions, promoting space for dialogue, and encouraging citizens' participation in democratic processes. Transitions Initiatives (TI) funding in recent years was $5 million in FY2005, $3.7 million in FY2006, $3 million in FY2007, $3.6 million in FY2008, and an estimated $2 million in FY2009. According to USAID, the funding supports projects implemented by five U.S. organizations: Development Alternatives Inc, which focuses on dialogue, public debate, citizen participation and leadership training; the International Republican Institute and the National Democratic Institute, which offer technical assistance for political parties; Freedom House, which provides technical support to human rights groups; and the Pan-American Development Foundation, which provides support to civil society.
The State Department has supported democracy projects in Venezuela largely through Economic Support Funds (ESF), but also recently through Development Assistance (DA) funding. In recent years, the following amounts have been provided: in FY2004, $1.497 million in ESF; in FY2005, $2.4 million in ESF; in FY2007, $1.6 million in ESF; and in FY2008, $6.5 million in DA and almost $3 million in ESF. For FY2009, an estimated $5 million in ESF will be provided for democracy projects, while the FY2010 request is for $6 million in ESF. 
NED has funded democracy projects in Venezuela since 1992, but the level of funding has increased under the Chávez government. In FY2003, NED funded 15 Venezuela projects with $1.05 million. In FY2004, it funded 13 projects with about $874,000. In FY2005, NED funded 16 democracy projects with $902,000. For FY2006, the FY2006 Foreign Operations appropriations measure ( P.L. 109-102 ) provided $2 million in Democracy Funds for NED for democracy programs in Venezuela; with the assistance, NED funded 18 democracy projects in Venezuela and 5 regional democracy projects that included components in Venezuela. For FY2007, NED funded 17 projects with over $800,000 in funding. For FY2008, NED funded 18 projects with over $1 million in total funding.
The Venezuelan government and some other critics have criticized NED's funding of opposition groups. They maintain that the NED has funded groups headed by people involved in the overthrow of Chávez in April 2002 as well as a group, Súmate, involved in the signature collecting process for the 2004 recall referendum campaign. Critics argue that Súmate led the signature drive for the recall referendum, and question whether the NED should have funded such a group.
U.S. officials and some Members of Congress strongly defended the NED's activities in Venezuela and have criticized the Venezuelan government's efforts to intimidate the leaders of Súmate by charging them with conspiring against the government. The State Department asserts that the charges are without merit, and constitute an attempt "to intimidate members of civil society for exercising their democratic rights."
According to the NED, its program in Venezuela "focuses on promoting citizen participation in the political process, civil and political rights, freedom of expression and professional journalism, and conflict mediation." The NED asserts that all of the Venezuelan programs that it funds operate on a non-partisan basis. It maintains that Súmate, which received a grant of $53,400 in September 2003, mobilized a citizen campaign to monitor the signature collection process and that the money was used "in developing materials to educate citizens about the constitutional referendum process and to encourage citizens to participate." NED officials also assert that they did not fund the Democratic Coordinator for the development of its July 2004 consensus platform. The NED points out that it did fund a consensus building project in 2002 for one of the NED's core institutions, the Center for International Private Enterprise (CIPE). For the project, CIPE partnered with a Venezuelan group, the Center for the Dissemination of Economic Information (CEDICE) to work with several Venezuelan nongovernmental organizations and the business sector for the development of a broad-based consensus. In early September 2005, the board of the NED approved a new $107,000 grant to Súmate for a program to train thousands of people on their electoral rights.
As a result of the controversy, the conference report to the FY2005 Consolidated Appropriations Act (Division B of P.L. 108-447 , H.Rept. 108-792 ) required a comprehensive report on NED's activities in Venezuela since FY2001, and reaffirmed NED's duty to ensure that all sponsored activities adhere to core NED principles. The reporting requirement had first been included in the report to the House version of the FY2005 Commerce, Justice, and State Appropriations bill ( H.R. 4754 , H.Rept. 108-576 ).
section_title: Oil Issues
paragraphs: Since Venezuela is a major supplier of foreign oil to the United States (the fourth major foreign supplier in 2007, after Canada, Mexico, and Saudi Arabia), providing about 11.5% of U.S. crude oil imports, a key U.S. interest has been ensuring the continued flow of oil exports. Some 68% of Venezuela's oil exports are destined for the United States, highlighting the dependency of Venezuela on the U.S. market, and oil exports account for the overwhelming majority of Venezuela's exports to the United States. In 2007, Venezuela's total exports destined for the United States amounted to $39.9 billion, with oil products accounting for almost 96% of the total. The December 2002 strike orchestrated by the opposition reduced Venezuela's oil exports, but by May 2003, Venezuelan officials maintained that overall oil production returned to the pre-strike level. Venezuela's state-run oil company, PdVSA, owns CITGO, which operates three crude oil refineries and a network of some 14,000 retail gasoline stations in the United States.
The Chávez government benefitted from the rise in world oil prices, which increased government revenues and sparked an economic boom. As a result, Chávez was able to increase government expenditures on anti-poverty and other social programs associated with his populist agenda. In April 2008, the government approved a measure that taxes foreign oil companies 50% when crude oil is $70 a barrel, and 60% when oil exceeds $100 a barrel. The rapid decline in the price of oil since 2008 has reduced government revenue considerably. 
Under President Chávez, the Venezuelan government moved ahead with asserting greater control over the country's oil reserves. By March 2006, it had completed the conversion of its 32 operating agreements with foreign oil companies to joint ventures, with the Venezuelan government now holding a majority share of between 60-80% in the ventures. In 2007, the government completed the conversion of four strategic associations involving extra-heavy oil Orinoco River Basin projects. Six foreign companies had been involved in the projects—U.S.-based ConocoPhillips, Chevron, and ExxonMobil, Norway's Statoil-Hydro, Britain's BP, and France's Total.
In the conversion to Venezuelan government majority ownership, Chevron and BP maintained their previous investments, Total and Statoil-Hydro reduced their holdings, while ConocoPhillips and ExxonMobil chose to leave the projects. However, Statoil-Hydro, Total, and Italy's Eni subsequently signed agreements that could result in additional investments in the Orinoco Belt projects. Other state-owned oil companies, such as Iran's Petropars, the China National Petroleum Corporation, Cuba's Cupet, as well as Russian companies such as Gazprom, TNK-BP, and Lukoil have also signed agreements for exploration in the Orinoco region.
According to some critics, majority state ownership in the oil sector has reportedly slowed the rate of foreign investment. Production also has reportedly not been able to recover from the firing of some 18,000 PdVSA employees in early 2003 and from continued underinvestment in maintenance and repairs. PdVSA announced in early April 2008 that it would raise output to 3.5 million barrels a day (mbd), up from 3.15 mbd in 2007, but other sources, including the International Energy Agency, put 2007 production at far less, just 2.4 million mbd. Some oil analysts also question whether PdVSA is prepared to take over operation of the heavy oil fields in the Orinoco.
Despite notable frictions in bilateral relations, Venezuela continues to be a major supplier of oil to the United States. Even though Venezuela opposed the U.S. war in Iraq, the Chávez government announced before the military conflict that it would be a reliable wartime supplier of oil to the United States.
On numerous occasions, however, Chávez has threatened to stop selling oil to the United States. In February 2006, he asserted that the "U.S. government should know that, if it crosses the line, it will not get Venezuelan oil." In April 2006, he warned that his government would blow up its oil fields if the United States ever were to attack. In November 2006 (amid Venezuela's presidential election campaign), President Chávez asserted that Venezuela would "not send one more drop of oil to the U.S." if the United States or its " lackeys" in Venezuela try a "new coup," fail to recognize the elections, or try to overthrow the oil industry. Many observers believe Chávez's threats have been merely part of his rhetoric that is designed to bolster his domestic political support. Venezuela's Ambassador to the United States asserted in July 2006 that oil-cutoff comments by Venezuelan officials, including President Chávez, only reflect what would be Venezuela's response against aggression initiated by the U.S. government. Once again in February 2008, President Chávez once again threatened to stop oil exports to the United States, this time if ExxonMobil was successful in freezing billions in Venezuela oil assets in a dispute over compensation for its Orinoco oil investments. State Department officials played down the threat, pointing out that Chávez has made the same threat in the past, but has never cut oil. A week later, on February 17, Chávez said that he would only stop sending oil if the United States attacked Venezuela.
Because of these comments, however, some observers have raised questions about the security of Venezuela as a major supplier of foreign oil. There are also concerns that Venezuela is looking to develop China as a replacement market, although Venezuelan officials maintain that they are only attempting to diversify Venezuela's oil markets. In June 2006, the Government Accountability Office (GAO) issued a report, requested by Senate Foreign Relations Committee Chairman Richard Lugar, on the issue of potential Venezuelan oil supply disruption. The GAO report concluded that a sudden loss of all or most Venezuelan oil from the world market could raise world prices up to $11 per barrel and decrease U.S. gross domestic product by about $23 billion. It also concluded that if Venezuela does not maintain or expand its current level of oil production, then the world oil market may become even tighter than it is now, putting pressures on both the level and volatility of energy prices.
section_title: Counternarcotics Cooperation
paragraphs: Because of Venezuela's extensive 1,370-mile border with Colombia, it is a major transit route for cocaine and heroin destined for the United States. As noted above, Venezuela suspended its cooperation with the U.S. Drug Enforcement Administration in early August 2005 because it alleged that DEA agents were spying on Venezuela. U.S. officials maintained that the charges were baseless. From 2005 to 2008, President Bush annually designated Venezuela, pursuant to international drug control certification procedures set forth in the Foreign Relations Authorization Act, FY2003 ( P.L. 107-228 ), as a country that has failed demonstrably to adhere to its obligations under international narcotics agreements, although he waived economic sanctions that would have curtailed U.S. assistance for democracy programs in Venezuela. Venezuelan officials maintain that President Bush's decision to designate Venezuela was purely political because of the overall state of U.S.-Venezuelan relations.
Press reports in June and July 2006 indicated that the United States and Venezuela were on the verge of signing an anti-drug cooperation agreement that would allow the DEA to continue working with the Venezuelan government, but approval of the agreement has still not taken place. In August 2006, Venezuelan officials said that they were reconsidering signing the agreement in response to the announcement by U.S. Director of National Intelligence John Negroponte on the establishment of a new position of Mission Manager for Cuba and Venezuela. According to the Bush Administration's September 2006 justification for determining that Venezuela had "failed demonstrably" to adhere to counternarcotics obligations, "the role and status of the DEA in Venezuela remains in limbo since the host country refuses to sign a memorandum of understanding authorizing" a DEA presence "even after successfully concluding a lengthy process of negotiation with U.S. officials." On July 26, 2006, the House approved H.Con.Res. 400 (Burton), which, among other provisions, condemned Venezuela's failures to stem the flow of narcotics through its territory and calls for, among other measures, steps to restore cooperation between Venezuela and the DEA.
In 2008, the Venezuela government appeared to be taking more action on antidrug measures. It began a program aimed at destroying clandestine airstrip used by Colombian drug traffickers and at tracking drug smuggling planes. By early September 2008, Venezuelan officials claimed to have destroyed more than 200 illegal landing strips. Venezuelan officials maintain that Venezuela has cooperated extensively with other countries in combating drug trafficking. They point to cooperation with Colombia, including the return of captured Colombian drug traffickers and a joint eradication program to target coca, poppy, and cannabis cultivation in the common Sierra de Perijá mountain area bordering the two countries. Venezuelan officials also assert that the country is setting up a radar system, purchased from China, that when in operation, will help it monitor suspected drug flights. In early July 2008, President Chávez met briefly with U.S. Ambassador Patrick Duddy and expressed a desire to reopen cooperation with the United States on drug trafficking and other issues.
U.S. officials increased their criticism of Venezuelan antidrug efforts in August and September 2008, maintaining that the country was playing a leading role in drug trafficking in the Western Hemisphere. The White House Office of National Drug Control Policy maintained that the number of drug flights leaving Venezuela increased tenfold from 21 metric tons in 2002 to 220 metric tons in 2007 and that the figure would be higher in 2008. On September 16, 2008, for the fourth year in a row, President Bush determined that Venezuela had failed demonstrably to adhere to its obligations under international narcotics control agreements, but he waived sanctions to allow the continuation of U.S. foreign assistance to support civil society programs and community development programs. According to the State Department, the amount of drugs bound for the United States and Europe continues to grow, despite Venezuelan assurances that seizures have increased. The State Department again noted Venezuela's refusal to renew counternarcotics cooperation agreements with the Untied States.
From FY2002-FY2007, Venezuela received small amounts of U.S. assistance under the Administration's Andean Counterdrug Initiative (ACI) focusing on counternarcotics cooperation and judicial reform support. Some $5 million was provided in FY2002; $2.075 million in FY2003; $5 million in FY2004; almost $3 million in FY2005; $2.229 million in FY2006; and $1 million in FY2007. Since FY2008, no counternarcotics assistance has been requested for Venezuela. 
The Department of State, in its February 2009 International Narcotics Control Strategy Report (INCSR), maintained that Venezuela is one of the preferred routes for trafficking illicit narcotics out of Colombia because of the permissive and corrupt environment in Venezuela and because of counternarcotics successes in Colombia. The majority of narcotics transiting Venezuela are destined for the United States, according to the report, but an increasing percentage has started to flow toward western Africa and then toward Europe. Venezuela's corruption problem has been compounded by the transit of drugs, as has the increased level of crime and violence throughout the country. According to the report, the annual flow of narcotics trafficking through Venezuela has increased fivefold since 2002, from 50 metric tons (mt) to an estimated 250 mt in 2007. 
Venezuela reported that 54 metric tons of cocaine were seized in 2008 (up from 28 mt in 2007), but the report maintained that the United States could not confirm these seizures or verify the destruction of the drugs. 
According to the State Department report, the government of Venezuela has almost eliminated all counternarcotics related cooperation contact with the U.S. government, including, despite repeated U.S. requests, the signing of an anti-drug agreement negotiated with Venezuela in 2005. In 2007, Venezuela ended the judicial sector's participation in several United Nations Office of Drugs and Crime (UNODC) programs funded by the U.S.-government, and maintained that it would not participate in any programs receiving U.S. funding. Venezuela has not made the U.S.-funded Container Inspection Facility (CIF) at Puerto Cabello operational, even though the facility was completed in 2006. The State Department report, did maintain however, that Venezuela generally continues to authorize the U.S. government to board Venezuelan flagged vessels on the high seas suspected of being engaged in narcotics trafficking.
Looking ahead, the State Department maintained in the report that the United States remains prepared to renew cooperation with Venezuela to fight the increasing flow of illegal drugs, and pointed to two Venezuelan steps that would be positive: (1) the signing of the outstanding bilateral anti-drug agreement negotiated in 2005 and (2) stemming the rise in drug transshipments from Colombia by working with the United States to make the CIF operational. 
On July 20, 2009, the U.S. Government Accountability Office (GAO) issued a report on the status of drug trafficking through Venezuela and the status of U.S.-Venezuelan counternarcotics cooperation. According to the report, U.S. and Colombian officials assert that Venezuela has extended a lifeline to Colombian illegally armed groups by providing significant support and safe haven along the border. U.S. officials also contended that a high level of corruption within the Venezuelan government, military, and other law enforcement and security forces contributes to the permissive environment. While the Venezuelan government maintains that counternarcotics cooperation with the United States was not necessary because it has its own programs, Venezuelan officials expressed willingness for greater technical cooperation with the United States if the Venezuelan government would allow it. The report concluded that the lack of Venezuelan counternarcotics cooperation is a significant impediment to the U.S. capacity to interdict drugs en route to the United States.
section_title: Venezuela's Military Purchases
paragraphs: For several years, U.S. officials have expressed concerns about Venezuela's purchases of military equipment. Defense Intelligence Agency (DIA) Director Lt. Gen. Michael Maples expressed concern in February 2006 congressional testimony about Venezuela's arms purchases, maintaining that Venezuela was seeking to increase their capability for their own defense and to operate elsewhere in the region.
In January 2006, the State Department indicated that the United States had denied licenses—required by the Arms Export Control Act—to transfer U.S. technology for use in 12 military transport planes that Spanish companies had contracted to sell to Venezuela. According to a State Department spokesman, the proposed sale could contribute to de-stabilization in Latin America. Spain initially responded by indicating that it would go ahead with the sale of the airplanes utilizing non-U.S. technology, but in mid-October 2006, Spain's Foreign Minister announced that such an alternative was not economically feasible and the deal was cancelled. Venezuela responded to the U.S. action by labeling it as "imperialist." The State Department official also indicated that the United States had expressed similar concerns to Brazil about military sales to Venezuela. Venezuela expressed interested in purchasing at least a dozen light-attack aircraft, manufactured by Embrarer, that contain U.S. technology. 
In May 2006, as discussed below ("Venezuela and U.S. Anti-Terrorism Sanctions"), the State Department determined (pursuant to Section 40A of the Arms Export Control Act) that Venezuela was not fully cooperating with U.S. antiterrorism efforts, an action that triggered a prohibition on the sale or license of defense articles and services to Venezuela. Since then, the State Department made the same annual determination each year, most recently in May 2009.
In January 11, 2007, testimony before the Senate Select Committee on Intelligence, then Director of National Intelligence (DNI) John Negroponte expressed concern that the President Chávez's military purchases and moves toward developing his own weapons production capability were increasingly worrisome to his neighbors, and could fuel an arms race in the region.
In February 5, 2008, testimony before the Senate Select Committee on Intelligence, then DNI Michael McConnell expressed concerns about more than $3 billion in arms purchases from Russia over the past two years, and noted growing anxiety among Venezuela's neighbors because of this arms build-up. McConnell testified at a February 27, 2008 Senate Armed Services Committee hearing that Venezuela's military build-up is probably 3 to 4 times what would be needed for external defense. With regard to rifles from Venezuela potentially ending up in the hands of the FARC, DIA Director Maples maintained at the hearing that he had not seen that, and that the likely purpose was "using asymmetric capabilities and tactics and empowering the population in some way, in a home guard sense." 
In February 12, 2009, testimony before the Senate Select Committee on Intelligence, current DNI Dennis Blair maintained that the Chávez government has made $5.3 billion in military purchases since 2005, but that Venezuela's overall military capabilities remain plagued by logistic, maintenance, and transportation shortfalls.
President Chávez has vowed to continue with his nation's military purchases, asserting that he was acquiring the minimum equipment for Venezuela to defend itself from the United States. Venezuela is buying significant amounts of military equipment from Russia. This includes contracts to buy 24 Sukhoi Su-30 fighter jets, 50 military helicopters, 100,000 Kalashnikov assault rifles, a license to build a factory to produce Kalashnikov rifles in Venezuela, and several submarines. The Venezuelan government maintains that it is buying the Russian fighter jets because the United States is refusing to sell the country spare parts for its aging fleet of F-16 fighters that it purchased in the 1980s. Some press reports indicate that future additional military purchases from Russia could include transport planes, tanks, additional submarines, and an air defense missile system. During a trip to Russia in late September 2008, Russia announced that it would loan $1 billion to Venezuela for arms purchases and military development. In May 2009, U.S. officials expressed concern that Venezuela's arms purchases were exceeding the country's needs and specifically expressed concern about Venezuela's purchase of shoulder-fired anti-aircraft missiles (SA-24 man-portable missiles) from Russia.
On July 27, 2009, the government of Sweden asked for an explanation from Venezuela of how the Colombian FARC had obtained Swedish-made anti-tank rocket launchers that had been sold to Venezuela in the 1980s. Venezuelan officials denied any Venezuelan government involvement with the FARC. In October 2008, three of the launchers were reportedly recovered from a FARC arms cache.
section_title: Venezuela's Activities in Latin America
paragraphs: As U.S.-Venezuelan relations have deteriorated over the past several years , the Chávez government has focused its relations with Latin America and its activities in the region in part as a means of countering the United States and U.S. interests and influence in the hemisphere. DNI Michael McConnell testified in February 5, 2008 testimony before the Senate Select Committee on Intelligence, Chávez will continue to attempt to unite Latin America under his leadership behind an anti-U.S. and radical leftist agenda, but noted that as time passes, Chávez's leadership ambitions are likely to encounter growing opposition.
Over the years, there have been concerns about President Chávez's attempts to export his brand of populism to other Latin America countries. He has strongly supported Bolivia's President Evo Morales, and offered assistance to help Bolivia re-write its constitution and implement radical reforms to the economy. In Peru's 2006 presidential elections, Chávez openly supported the unsuccessful presidential candidacy of a nationalist former army colonel who had led a failed military uprising in 2000. Current Peruvian President Alan Garcia, a strong U.S. ally, has expressed concern about Venezuelan activities in Peru. Venezuela also has had close with Nicaragua under the presidency of Daniel Ortega, providing substantial assistance, and with Ecuador under the presidency of Rafael Correa.
In 2004, President Chávez launched a Bolivarian Alternative for the Americas (ALBA) as an alternative to the Free Trade Area of the Americas. ALBA advocates a socially oriented trade block that would include mechanisms for poverty reduction, and cooperation in a range of areas including health, education, culture, investment, and finance. Currently nine countries in the region have joined ALBA. Venezuela and Cuba were the first countries to launch ALBA in 2004, while Bolivia joined in 2006, and Nicaragua in 2007. In 2008, the Caribbean nations of Dominica joined in January, while Honduras joined in August. In June 2009, three additional countries joined—Ecuador, St. Vincent and the Grenadines, and Antigua and Barbuda. 
In December 2007, Venezuela and six other South American countries – Argentina, Bolivian, Brazil, Ecuador, Paraguay, and Uruguay – joined to sign the founding act of a new Bank of the South, a Chávez initiative to offer a new source of development financing apart from the World Bank and the International Monetary Fund. The bank reportedly will have a start-up capital of some $7 billion, largely from Brazil and Venezuela, but it remains unclear what the lending conditions of the bank will be.
Since 2005, President Chávez has used so-called "oil diplomacy" to provide oil to Caribbean Basin nations on preferential terms in a program known as PetroCaribe, prompting U.S. concern that Venezuela is using these programs to increase its influence in the region. Under the program, Venezuela initially offered to supply 190,000 barrels per day of oil to the region on preferential terms with 50% of the oil financed over 25 years at an annual interest rate of 1%. At a July 2008 PetroCaribe summit, President Chávez announced that up to 60% of the oil could be financed while oil prices remained over $100 a barrel, and this would rise to 70% financed if oil prices rise to over $150 a barrel. Most Caribbean nations are members, with the exception of Barbados and Trinidad and Tobago. Cuba, a major beneficiary, receives over 90,000 barrels per day (bpd) of oil under the program. In Central America, Nicaragua and Honduras joined PetroCaribe in 2007 and Guatemala joined in July 2008. PetroCaribe also has the goal of putting in place a regional supply, refining, and transportation and storage network, and establishing a development fund for those countries participating in the program.
In addition to these preferential oil arrangements, Venezuela is investing in energy sectors in several Latin American countries. Chávez has pledged to invest $1.5 billion in Bolivia's gas industry. Ecuador and Venezuela have signed agreements for joint development in oil, gas, refining, and petrochemical sectors. In 2005, PdVSA signed an agreement to build an oil refinery in northeastern Brazil. Construction on the 200,000 bpd refinery began in September 2007, and is to be supplied with oil from both Brazil and Venezuela when it begins operations in 2010. Colombia and Venezuela signed an agreement in July 2006 initiating a gas pipeline project that would initially supply gas to Venezuela from northern Colombia, and then reverse the flow once Venezuela develops its own natural gas reserves. Argentina and Venezuela also announced an alliance in July 2006 involving cooperation on hydrocarbon exploration and development in both countries. In Cuba, PdVSA helped refurbish an oil refinery in Cienfuegos, and has signed an exploration and production agreement with Cupet, Cuba's state-oil company.
The potential use of Venezuela's windfall oil profits abroad to influence activities in other Latin American countries was highlighted in December 2007 when three Venezuelans—Franklin Duran, Moises Maionica, and Carlos Kauffmann—and one Uruguayan national were arrested and charged in U.S. federal court in Miami with acting and conspiring to act as agents of the Venezuelan government without prior notification to the U.S. Attorney General. (A fifth foreign national wanted in the case, Antonio José Canchica Gomez, reportedly a Venezuelan intelligence official, remains at large.) All four defendants were alleged to have conspired in a scheme to conceal the source and destination and the role of the Venezuelan government in the attempted delivery of $800,000 to Argentina by a U.S. businessman, Guido Alejandro Antonini Wilson. The funds were alleged to be destined for the presidential campaign of Argentine President Cristina Fernández de Kirchner. High-level Venezuelan officials also were alleged to be involved in the matter, including from the Office of the Vice President and the Intelligence and Preventative Services Directorate (DISIP). Ultimately three of the four defendants facing trial—Maionica, Kauffmann, and Wanseele—pled guilty, while Duran was tried and convicted in early November 2008 and later sentenced to four years.
subsections: section_title: Chávez Role in Release of FARC Hostages
paragraphs: In August 2007, Colombian President Alvaro Uribe authorized President Chávez and Colombian Senator Piedad Cordoba to play a role in negotiations with the FARC to release some 45 high-profile hostages. This included efforts to release three American defense contractors – Marc Gonsalves, Keith Stansell, and Thomas Howes – held since February 2003, when their plane crashed in FARC-controlled territory. In late November 2007, however, Uribe withdrew his support of these efforts because Chávez reportedly broke protocol by having direct contact with the top commander of the Colombian army. Nevertheless, Chávez continued to play a key role in the effort to release the hostages. On January 10, 2008, the FARC ultimately released to Venezuelan officials two prominent Colombians that had been hostage for several years. A day after the two hostages' release, Chávez's calls for the international community to no longer label the FARC and the National Liberation Army (ELN) as terrorist groups prompted widespread condemnation. Nevertheless, his role in the release of hostages continued. On February 27, 2008, the FARC released four former members of the Colombian Congress to Venezuelan officials in Colombian territory. On March 7, 2008, the Venezuelan government received from the FARC "proofs of life" for 10 Colombian soldiers held by the FARC.
In the aftermath of the Ecuador-Colombia border crisis (discussed below), Chávez's role in future hostage releases became unclear. Moreover, on July 2, 2008, the Colombian military rescued the three American hostages along with former Colombian presidential candidate Ingrid Betancourt and 11 other hostages. Over 700 hostages are still being held by the FARC.
section_title: March 2008 Ecuador-Colombia Border Crisis
paragraphs: Venezuela initially played a significant role in stoking regional tensions in the aftermath of Colombia's March 1, 2008 bombing of a FARC camp in Ecuador that killed Raúl Reyes, the FARC's second highest commander. President Chávez warned Colombian President Uribe not to do anything similar in Venezuelan territory "because it would be a cause for war." Venezuela, along with Ecuador, announced that it would mobilize troops along its border with Colombia, and Chávez threatened to send its Russian fighter jets to attack Colombia if President Uribe attempted a similar operation against the FARC rebels on the Venezuelan side of the border. He ordered 10 battalions to the Colombian border, including tank units, closed the Venezuela Embassy in Bogotá, and expelled Colombia's Ambassador from Venezuela.
Few analysts took Chávez's order to send tanks and fighter jets to the border as a serious threat of war, maintaining that Venezuela's active military of 115,000 troops pales in comparison to Colombia's 254,000 troops that have seen active combat against insurgent groups for many years. Moreover, some maintain that Venezuela's troop movements were delayed for several days, and may have been far less than Chávez led everyone to believe.
Just days after the Colombian incursion, President Chávez reportedly played an important role at the successful Rio Group summit that helped resolve the crisis. OAS Secretary General Insulza maintained that Chávez's role was "decisive and tremendously constructive" in sorting out the crisis at the Santo Domingo meeting. After six hours of contentious exchanges, Chávez reportedly called for reflection and cooling off, and paved the way for Dominican President Leonel Fernández to urge the parties to end the meeting with a cordial embrace. He maintained that the conflict cannot be solved militarily, and must be resolved by a negotiated settlement. By March 10, Venezuela announced that it was fully establishing diplomatic and commercial ties with Colombia, and pulled its troops back.
section_title: Terrorism Issues
paragraphs: U.S. officials have expressed concerns over the past several years about Venezuela's lack of cooperation on antiterrorism efforts, its relations with Cuba and Iran, and President Chávez's sympathetic statements for Colombian terrorist groups. Since May 2006, the Secretary of State has made an annual determination that Venezuela has not been "cooperating fully with United States antiterrorism efforts" pursuant to Section 40A of the Arms Export Control Act (P.L. 90-629). As a result, the United States has imposed an arms embargo on Venezuela since 2006, which ended all U.S. commercial arms sales and re-transfers to Venezuela. When the State Department issued its first determination in 2006, it was based on Venezuela's near lack of antiterrorism cooperation over the previous year, citing its support for Iraqi insurgents and Iran's development of nuclear capabilities, the country's status as a safe haven for Colombian and Basque terrorist groups, and its effort to derail hemispheric efforts to advance counter-terrorism policies in the OAS. 
The State Department's April 2009 Country Reports on Terrorism maintained that while Venezuela President Hugo Chávez's ideological sympathy for the FARC and the ELN had limited Venezuelan cooperation with Colombia in combating terrorism, President Chávez publicly changed course in June 2008 and called on the FARC to unconditionally release all hostages, declaring that armed struggle is "out of place" in modern Latin America. In July 2008, the Venezuelan military detained a senior FARC official and handed him over to Colombian authorities. Nevertheless, in September 2008, the Treasury Department froze the assets of two senior Venezuelan intelligence officials—General Hugo Carvajal and General Henry Rangel—and the former interior minister, Ramón Rodríguez Chacín, for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with weapons and drug trafficking. 
Information on captured computer files from Colombia's March 2008 raid of a FARC camp in Ecuador had raised questions about potential support of the FARC by the Chávez government. Venezuelan officials have dismissed the data as having been fabricated even though Interpol verified in May 2008 that the files had not been tampered with since they were seized. On June 6, 2008, two Venezuelan nationals (one a national guard sergeant) and two Colombians were arrested in eastern Colombia for gun-running. The four were captured with some 40,000 rounds of ammunition allegedly destined for the FARC.
In the April 2009 terrorism report, the State Department stated that the FARC, ELN, and remnants of the AUC often crossed into Venezuelan territory to rest and regroup as well as to extort protection money and kidnap Venezuelans in order to finance their operations. According to the report, the Venezuelan government also did not systematically police its country's border with Colombia to prevent the movement of armed groups or to interdict the flow of narcotics. Some limited amounts of weapons and ammunition from official Venezuelan stocks and facilities were reported to have ended up in the hands of Colombian terrorist groups. As noted above, the Swedish government questioned Venezuela in late July on how FARC had obtained Swedish-made anti-tank rocket launchers that had been sold to Venezuela in the 1980s.
The State Department terrorism report also cited two other concerns about Venezuela. First, as noted in the past, Venezuelan citizenship, identity, and travel documents remained easy to obtain, making the country a potentially attractive way-station for terrorists. Second, the report noted that passengers on weekly flights connecting Tehran and Damascus with Caracas were subject only to cursory immigration and customs controls in Caracas. 
There has been increasing concern in recent years about Iran's increasing interest in Latin America, particularly its relations with Venezuela under President Hugo Chávez. One reason for the concern is Iran's ties to the radical Lebanon-based Islamic group Hezbollah (Party of God), which is reported to have been linked to the 1994 bombing of a Jewish cultural center in Buenos Aires. In June 2008, the Treasury Department announced that it was freezing the U.S. assets of two Venezuelans for providing financial and other support to Hezbollah. In the 110 th Congress, the House approved H.Res. 435 (Klein) in November 2007, which expressed concern about Iran's efforts to expand its influence in Latin America, and noted Venezuela's increasing cooperation with Iran.
subsections: section_title: State Sponsors of Terrorism List
paragraphs: In light of the captured FARC documents cited above, some observers, including some Members of Congress, had called on the Bush Administration in 2008 to designate Venezuela as a state sponsor of terrorism pursuant to Section 6(j) of the Export Administration Act (EAA) of 1979 ( P.L. 96-72 ). Other countries currently on the state sponsors of terrorism list include Cuba, Iran, Sudan, and Syria. The Bush Administration began an initial inquiry into designating Venezuela as a state sponsor in March 2008, but did not make such a designation. In the 110 th Congress, H.Res. 1049 (Mack), introduced in March 2008, would have urged the Administration to designate Venezuela as such.
In terms of economic sanctions associated with being on the terrorism list, the EAA requires a validated license for the export of goods and technology to a country if the Secretary of State determines that the government of such a country "has repeatedly provided support for acts of international terrorism" and if the export of such goods and technology could make a significant contribution to the country's military potential or could enhance its ability to support acts of international terrorism. Beyond the EAA, several provisions of law impose additional sanctions on countries on the state sponsors of terrorism list, such as: a ban on arms-related exports and sales; various restrictions and prohibitions on foreign assistance; denial of duty-free treatment of goods exported to the United States under the Generalized System of Preferences (GSP); denying companies and individuals tax credits for income earned in the terrorist-listed countries; and authority to prohibit any U.S. citizen from engaging in a financial transaction with a terrorist-list government without a Treasury Department license.
The sanctions associated with being on the terrorism list would likely have an effect on U.S.-Venezuelan economic relations. A substantial portion of U.S. exports to Venezuela, particularly for the oil sector, would likely require validated licenses for so-called dual-use exports and technology. The termination of the tax credit that prevents double taxation would increase the cost of U.S. companies operating in Venezuela, and could be a disincentive for some U.S. companies operating there. The stock of U.S. foreign investment in Venezuela is estimated at $11.6 billion, concentrated in the manufacturing and mining sector. The state sponsor of terrorism designation also potentially could complicate U.S. oil imports from Venezuela, in part because PdVSA owns Citgo , based in Houston Texas, which operates three oil refineries and two asphalt refineries in the United States and has some 14,000 branded retail outlets selling gasoline across the United States. PdVSA also has a 50% interest in a large refinery in the U.S. Virgin Islands. According to the Venezuelan government, PdVSA and Citgo annually purchase more than $2 billion in goods and services from 800 U.S. companies.
The designation of Venezuela as a state sponsor of terrorism in 2008 also could have increased popular support for President Chávez at a time when Venezuela was preparing for state and local elections in November 2008. Some Venezuelan opposition figures maintain that such a designation would have only been helpful to the Chávez government, which would have portrayed itself as a victim. Short of designating Venezuela as a state sponsor of terrorism, some observers have suggested the consideration of "smart" or targeted sanctions aimed at Venezuelan officials or particular activities in order to demonstrate U.S. concern with their alleged actions supporting the FARC. Suggestions for such sanctions generally include denying entry into the United States of designated individuals or freezing assets of named individuals or entities, such as occurred on September 12, 2008, when the Treasury Department froze the assets of three high-ranking Venezuelan officials for their support for the FARC (noted above).
section_title: Iran and Hezbollah
paragraphs: Venezuela's relations with Iran have been longstanding because they were both founding members of OPEC. Nevertheless, as their relations have intensified over the past several years, U.S. officials and some Members of Congress have expressed concerns. In November 2007, the House approved H.Res. 435 (Klein), expressing concern about Iran's efforts to expand its influence in Latin America, and noting Venezuela's increasing cooperation with Iran.
Iranian President Mahmoud Ahmadinejad has visited Caracas on several occasions since 2006, and President Chávez has visited Iran several times. The personal relationship between the two leaders has driven the strengthening of bilateral ties. The two nations have signed a variety of agreements in agriculture, petrochemicals, oil exploration in the Orinoco region of Venezuela, and the manufacturing of automobiles, bicycles, and tractors. Weekly flights between the two countries began in 2007. In February 5, 2008 testimony before the Senate Select Intelligence Committee, then Director of National Intelligence (DNI) Michael McConnell maintained that most cooperation between Iran and Venezuela has been on the economic and energy fronts, but that military cooperation is growing, and the two nations have discussed cooperation on nuclear energy. In October 2008, the U.S. Treasury Department imposed sanctions on an Iranian-owned bank based in Caracas, the Banco Internacional de Desarollo, C.A., under Executive Order 13382, which allows the President to block the assets of proliferators of weapons of mass destruction and their supporters. The bank is linked to the Export Development Bank of Iran (EDBI), which the Treasury Department asserts has provided or attempted to provide services to Iran's Ministry of Defense and Armed Forces Logistics. During an April 2009 trip to Tehran, Chávez and Ahmadinejad inaugurated a new development bank for economic projects in both countries, with each country providing $100 million in initial capital.
Venezuela also has played a key role in the development of Iran's expanding relations with the region. DNI Dennis Blair maintained in February 2009 congressional testimony that Venezuela "is serving as a bridge to help Iran build relations with other Latin American countries." In recent years, Iran's relations have grown with Bolivia under President Evo Morales, with Ecuador under President Rafael Correa, and with Nicaragua under President Daniel Ortega. While Iran has promised significant assistance and investment to these countries, observers maintain that there has been no evidence that such promises have materialized. In Nicaragua for example, Iran has not followed through with its promise to finance the construction of a deep-water port. Likewise in Bolivia and Ecuador, there is little evidence showing that Iran has followed up with its promises of investment. 
A major rationale for Iran's recent overtures toward Latin America is to show that it is not isolated diplomatically. For some observers, a key reason for Ahmadinejad's increased interest in the region, especially with countries such as Venezuela, has been to develop leverage against the United States in its own neighborhood, rather than any real economic interest in Latin America. 
Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon has said that one of the concerns about Iran's increasing interest in Latin America is its ties to the radical Lebanon-based Islamic group Hezbollah. According to Shannon, "What worries us is Iran's history of activities in the region and especially its links to Hezbollah and the terrorist attack that took place in Buenos Aires [in 1994]." On June 18, 2008, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) announced that it was freezing the U.S. assets of two Venezuelans—Ghazi Nasr al Din (a Venezuelan diplomat serving in Lebanon) and Fawzi Kan'an—for providing financial and other support to Hezbollah. U.S. citizens are also prohibited in engaging in any transactions with the two Venezuelans, including any business with two travel agencies in Caracas owned by Kan'an. In March 2009 congressional testimony, Admiral James G. Stavridis, then commander of the U.S. Southern Command (Southcom), also asserted that the main concern about Iran's increased activity in Latin America is its links to Hezbollah. He maintained that there was Hezbollah activity throughout South America, particularly the tri-border area (TBA) of Argentina, Brazil, and Paraguay as well as parts of Brazil and the Caribbean Basin.
section_title: Venezuela's Extradition Requests
paragraphs: Venezuela requested the extradition of three of its citizens from the United States in two controversial terrorism cases. In early 2004, the Chávez government requested the extradition of two former Venezuelan National Guard lieutenants, José Antonio Colina and German Rodolfo Varela, charged with the February 2003 bombings of the Spanish Embassy and the Colombian Consulate in Caracas. Both applied for political asylum because they claimed that they would be executed or tortured if returned to Venezuela. They were held from December 2003 until April 2006 by U.S. Immigration and Customs Enforcement (ICE). In February 2005, a U.S. immigration judge denied them asylum because of "serious reasons for believing" that they were involved in the bombings but prohibited the United States from deporting them to Venezuela because of the likelihood of being tortured. The Department of Homeland Security (DHS) asked an immigration appeals court to deport the two Venezuelans, arguing that they would not be tortured if returned home. As evidence, they cited the treatment of a former general arrested in Venezuela for the same case.
In late December 2005, Colina and Varela—on a hunger strike for a month in protest of being held by U.S. immigration—were transferred from Florida to Houston for medical treatment. They ended their 33-day hunger strike in early January 2006. In April 2006, ICE reversed its stance on the deportation case and joined with the attorneys for Colina and Varela in filing a joint motion asking the immigration appeals court to dismiss the case, whereupon they were released. Lawyers for the two former officers maintain that the State Department's March 2006 human rights report on Venezuela played a role in ICE's decision to abandon its efforts to deport Colina and Varela. The report cited accusations that a military general imprisoned in Venezuela for alleged involvement in the bombings had been subject to sensory deprivation and psychological torture. The Venezuelan government condemned the release of Colina and Varela, maintaining that the United States had become a "sanctuary for terrorists."
In another controversial case, Venezuela has requested the extradition of anti-Castro activist Luis Posada Carriles for his alleged role in the 1976 bombing of a Cuban airliner that killed 73 people. In April 2005, Posada's lawyer announced that Posada had entered the United States illegally from Mexico and would apply for asylum because he has a "well-founded fear of persecution" for his opposition to Fidel Castro. Posada had been imprisoned in Venezuela for the bombing of the Cuban airliner but reportedly was allowed to "escape" from prison in 1985 after his supporters paid a bribe to the prison warden. He had been acquitted for the bombing but remained in prison pending a prosecutorial appeal. Posada also reportedly admitted, but later denied, involvement in a string of bombings in Havana in 1997, one of which killed an Italian tourist. More recently, Posada was imprisoned for several years in Panama for his involvement in an alleged plot in November 2000 to kill Fidel Castro. He was convicted on weapons charges in the case and sentenced to eight years in prison, but ultimately was pardoned by outgoing President Mireya Moscoso in August 2004.
ICE arrested Posada on May 17, 2005, and subsequently charged him with illegally entering the United States. A DHS press release indicated that ICE does not generally deport people to Cuba or countries believed to be acting on Cuba's behalf. Venezuela has pledged that it would not hand Posada over to Cuba, but on September 26, 2005, a U.S. immigration judge ruled that Posada could not be deported to Venezuela because he could be tortured. ICE reviewed the case and determined on March 22, 2006, that Posada would not be freed from a federal immigration facility in El Paso, Texas.
In November 2006, however, a U.S. federal judge, who was considering Posada's plea that he be released, ordered the government to supply evidence, by February 1, 2007, justifying his continued detention. On January 11, 2007, a federal grand jury in Texas indicted Posada on seven counts for lying about how he entered the United States illegally in March 2005, whereupon he was transferred from immigration detention in El Paso to a country jail in New Mexico near the Texas border.
Posada was released from jail in New Mexico on April 19, 2007, and allowed to return to Miami under house arrest to await an upcoming trial on immigration fraud charges, but on May 9, 2007 a federal judge in Texas dismissed the charges. The judge maintained that the U.S. government mistranslated testimony from Posada and manipulated evidence. On June 5, 2007, Justice Department prosecutors filed a notice of appeal with the 5 th U.S. Circuit Court of Appeals in New Orleans and on November 6, 2007, federal prosecutors field a brief requesting that the court reverse the lower court's decision. Both Venezuela and Cuba strongly denounced Posada's release, contending that he is a terrorist, and in mid-March 2008, the two countries raised the issue at a UN Security Council meeting on the UN's anti-terrorism strategy. Venezuela maintains that the State Department has ignored its request to extradite Posada. 
In a new turn of events, Posada was again indicted by a federal grand jury in Texas on April 8, 2009. In the 10-count indictment, Posada was accused, among other things, of lying during immigration proceedings regarding his involvement in bombings in Havana in 1997. Originally, a federal trial was set to begin in August 2009 but was rescheduled until February 2010 in order to give him time to prepare his defense. Press reports maintain that Posada is also being investigated by a grand jury in New Jersey for his role in the 1997 bombings in Cuba.
section_title: Legislative Initiatives
subsections: section_title: 111th Congress
paragraphs: On July 22, 2009, the Senate approved S.Amdt. 1536 (Martinez) to the Senate version of the National Defense Authorization Act for FY2010, S. 1390 , that requires the Director of National Intelligence to provide a report on Venezuela to the defense and intelligence committees within 180 days of the enactment of the Act. The Senate subsequently approved S. 1390 on July 23, 2009.
The required report is to address the following topics: (1) an inventory of all weapons purchases by, and transfers to, the government of Venezuela and Venezuela's transfers to other countries since 1998; (2) the mining and shipping of Venezuelan uranium to Iran, North Korea, and other states suspected of nuclear proliferation; (3) the extent to which Hugo Chávez and other Venezuelan officials and supporters of the Venezuelan government provide political counsel, collaboration financial ties, refuge, and other forms of support, including military materiel, to the FARC; (4) the extent to which Hugo Chávez and other Venezuelan officials provide funding, logistical and political support to the Islamist terrorist organization Hezbollah; (5) deployment of Venezuelan security or intelligence personnel to Bolivia, including any role such personnel have in suppressing opponents of the government of Bolivia; (6) Venezuela's clandestine material support for political movements and individuals throughout the Western Hemisphere with the objective of influencing the internal affairs of Western Hemisphere nations; (7) efforts by Hugo Chávez and other officials or supporters of the Venezuelan government to convert or launder funds that are the property of Venezuelan government agencies, instrumentalities, parastatals, including PdVSA; and (8) covert payments by Hugo Chávez or other officials or supporters of the Venezuelan government to foreign political candidates, government officials, or officials of international organizations for the purpose of influencing the performance of their official duties.
Several resolutions and bills related to Venezuela have also been introduced in the 111 th Congress. H.R. 375 (Ros-Lehtinen), introduced January 9, 2009 as the Western Hemisphere Counterterrorism and Nonproliferation Act of 2009, would, among its provisions, place restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela or Cuba (section 209). The bill would also authorize the President to impose foreign aid and export controls on countries that the President determines is engaged in military cooperation or nonmarket-based trade with a state sponsor of terrorism, is carrying out policies that threaten U.S. national security interests, or is not fully cooperating with U.S. counterterrorism or nonproliferation efforts (section 106). It would also amend annual international drug control certification procedures to include progress in adhering to obligations under international counterterrorism agreements and the implementation of effective counterterrorism measures (section 104). 
H.R. 2475 (Ros-Lehtinen), the Foreign Relations Authorization and Reform Act for FY2010 and FY2011 introduced on May 19, 2009, includes a provision (section 728) identical to that in H.R. 375 described above that would place restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela or Cuba.
Before Venezuela's February 2009 constitutional referendum was held, H.Res. 161 (Mack) was introduced on February 11. The resolution would express the sense of the House regarding the need for free, democratic, transparent, and fair elections in Venezuela without threats or intimidation. 
Two introduced resolutions express concern about anti-Semitism in Venezuela. H.Res. 174 (Hastings), introduced February 13, 2009, would acknowledge "the growing threat of anti-Semitism throughout South America, namely in Venezuela, Bolivia, and Argentina." H.Con.Res. 124 (Mack), introduced May 12, 2009, would express the support of Congress for the Jewish community in Venezuela. Among its provisions, the resolution would condemn anti-Semitic acts in Venezuela and urge the government of Venezuela to take verifiable steps to ensure the safety of the Jewish community in the country. The resolution also would express grave concern regarding the increased collaboration between Iran, Hezbollah, and the Venezuelan government, and the ramifications of such collaboration on the Jewish community in Venezuela. 
section_title: 110th Congress
paragraphs: In the 110 th Congress, congressional concerns regarding Venezuela focused on the state of democracy and human rights, energy issues, terrorism issues, and the overall status of bilateral relations and U.S. policy. The House Subcommittee on the Western Hemisphere held an oversight hearing on Venezuela on July 17, 2008 focusing on U.S. policy and developments in Venezuela.
In terms of legislative action in the 110 th Congress, the Senate and House approved resolutions on Venezuela. The Senate approved S.Res. 211 (Lugar) on May 24, 2007, which expressed profound concerns regarding freedom of expression and Venezuela's decision not to renew the license of RCTV. The House approved by voice vote H.Res. 435 (Klein) on November 5, 2007, which expressed "concern over the emerging national security implications of the Iranian regime's efforts to expand its influence in Latin America." Among other provisions, the resolution noted Venezuela's support for Iran in the International Atomic Energy Agency, plans for a $2 million Iranian-Venezuelan fund for investments in third countries, and the establishment of direct civilian airline flights from Iran to Venezuela.
Also in the 110 th Congress, the House approved two measures related to Venezuela that ultimately were not enacted into law. First, on June 21, 2007, the House approved by voice vote H.Amdt. 358 (Mack) to H.R. 2764 , the FY2008 State Department and Foreign Operations appropriations bill, which would have directed $10 million in international broadcasting operations funding for targeted broadcasting for Venezuela. The House subsequently approved H.R. 2764 on June 22, 2007. The Senate version of the bill, approved September 6, 2007, did not include such a provision. The final enacted measure, the Consolidated Appropriations Act for FY2008 ( P.L. 110-161 , Division J), did not specify such funding, but the joint explanatory statement on the bill expresses support for restoring shortwave and medium wave transmission to Venezuela. 
Second, on July 23, 2008, the House passed H.R. 6545 (Cazayouz) by a vote of 414-0, 2 present, which would have required a national intelligence assessment on national and energy security issues. This would have included an assessment of "the implications of the potential use of energy resources as leverage against the United States by Venezuela, Iran, or other potential adversaries of the United States as a result of increased energy prices." The Senate did not take action on the measure.
There were also several legislative initiatives introduced in the House and Senate that were not considered in the 110 th Congress.
In the House, seven resolutions were introduced: H.Con.Res. 50 (Fortuño), introduced January 31, 2007, which would have called on the Venezuelan government to uphold the human rights and civil liberties of its people; H.Con.Res. 77 (Weller), introduced March 1, 2007, which would have called on the Venezuelan government to respect a free and independent media and to avoid all acts of censorship against the media and free expression; H.Res. 560 (Barton), introduced July 19, 2007, which would have expressed concern about the Venezuelan government taking control of the majority stakes of the operations of six major oil companies and stripping these companies of all operational control of their energy development projects in Venezuela; H.Res. 965 (Issa), introduced February 7, 2008, which, among other provisions, would have called upon the Chávez government to take action to deny Venezuelan territory and weapons from being used by terrorist organizations; H.Res. 1049 (Mack), introduced March 13, 2008, which, among other provisions, would have urged the Administration to designate Venezuela a state sponsor of terrorism; H.Res. 1483 (Burton), which would have expressed outrage over the expulsion of U.S. Ambassadors to Venezuelan and Bolivia, and called for these countries to resume full counternarcotics cooperation with the United States; and H.Res. 1510 (McCotter), introduced September 26, 2008, which would have, among its provisions, regarded Venezuela's (future) attainment of nuclear energy programs or nuclear weapons as a grave danger to peace and U.S. national interests and considered the Russian military deployments in the Western Hemisphere as reckless, provocative, and in violation of the Monroe Doctrine.
In the Senate, two bills would have increased hemispheric cooperation on energy issues: S. 193 (Lugar), the Energy Diplomacy and Security Act of 2007, introduced January 4, 2007, and reported by the Senate Foreign Relations Committee April 12, 2007 ( S.Rept. 110-54 ); and S. 1007 (Lugar), the United States-Brazil Energy Cooperation Pact of 2007, introduced March 28, 2007, and reported by the Senate Foreign Relations Committee on September 23, 2008.
section_title: 109th Congress
paragraphs: In the 109 th Congress, there was legislative action on several initiatives on Venezuela and oversight hearings were held in both houses. The FY2006 Foreign Operations appropriations measure ( P.L. 109-102 , H.R. 3057 , H.Rept. 109-265 ) appropriated $2 million in Democracy Funds for the NED for democracy programs in Venezuela and $2.252 million in funding under the Andean Counterdrug Initiative (ACI), although slightly less was provided because of a 1% across-the-board rescission in the Defense Department appropriations measure ( P.L. 109-148 ) that affected Foreign Operations funding. The Administration also had requested $500,000 in Economic Support Funds (ESF) for Venezuela, although no specific earmark was provided in the conference report to P.L. 109-102 , and the Administration ultimately did not allocate the assistance.
For FY2007, the Administration requested $1 million in ACI funding, $1.5 million in ESF for democracy initiatives, and $45,000 for International Military Education and Training (IMET). The House-passed version of the FY2007 foreign operations appropriation bill, H.R. 5522 , would have provided no ACI funding for Venezuela. The Senate Appropriations Committee report to the bill recommended fully funding the Administration's $1 million ACI and ESF requests for Venezuela. Final action on FY2007 foreign aid appropriations was not completed by the end of the year, leaving the 110 th Congress to complete action in 2007.
Two resolutions on Venezuela were also approved in the 109 th Congress. With regard to counternarcotics cooperation, the House approved H.Con.Res. 400 (Burton), by voice vote on July 26, 2006, which expressed the sense of Congress that Venezuela should actively support strategies for ensuring secure airport facilities that meet international certifications to prevent trafficking of controlled substances, narcotics, and laundered money. The resolution also condemned Venezuela's failures to stem the flow of narcotics through its territory and called for, among other measures, steps to restore cooperation between Venezuela and the DEA. S.Res. 607 (Bunning), approved by unanimous consent on December 6, 2006, condemned President Chávez's anti-American rhetoric during his September 20, 2006, speech before the U.N. General Assembly and "the undemocratic actions of President Chávez."
In other action, the House-passed version of H.R. 2601 ( H.Rept. 109-168 ), the FY2006 and FY2007 Foreign Relations Authorization Act, had a provision (Section 1025) that would have authorized $9 million in Economic Support Funds for each of FY2006 and FY2007 "to fund activities which support political parties, the rule of law, civil society, an independent media, and otherwise promote democratic, accountable governance in Venezuela." H.R. 2601 also had a provision, in Section 106(5), that would have authorized funds for the "Broadcasting Board of Governors to carry out broadcasting to Venezuela for at least 30 minutes per day of balanced, objective, and comprehensive television news programming, radio news programming, or both." Final action on H.R. 2601 was not completed by the end of the 109 th Congress.
Other legislative initiatives not completed before the end of the 109 th Congress included H.Con.Res. 224 (Fortuño), which would have called on the Venezuelan government to uphold human rights and civil liberties; H.Con.Res. 328 (Mack), which would have condemned President Chávez's anti-democratic actions; S. 2435 (Lugar), which would have increased hemispheric cooperation on energy issues, including cooperation among the governments of Brazil, Canada, Mexico, the United States, and Venezuela; H.Res. 1033 (Graves), which would have condemned President Chávez's anti-American rhetoric at the United Nations; and S.Res. 587 (Santorum), which would have condemned the anti-democratic actions and statements of the leaders of Iran, Cuba, and Venezuela and expressed concern about the national security implications of the relationships between those leaders.
Several oversight hearings were held in the 109 th Congress dealing with Venezuela policy issues. On November 17, 2005, the House International Relations Committee, Subcommittee on the Western Hemisphere, held a hearing on the status of democracy in Venezuela. Earlier in the year, the subcommittee held hearings on March 9 and September 28, 2005, regarding the state of democracy in the Latin America, both of which touched on Venezuela. In 2006, the full House International Relations Committee held a June 21 hearing on the status of democracy in Latin America that covered Venezuela, while the House Subcommittee on International Terrorism and Nonproliferation held a July 13, 2006, hearing specifically on Venezuela and terrorism issues. In terms of energy security in the Western Hemisphere, the House Subcommittee on the Western Hemisphere held a hearing on March 2, 2006, while the Senate Foreign Relations Committee held a hearing on June 22, 2006.
section_title: 108th Congress
paragraphs: In the 108 th Congress, Members of Congress expressed concerns about the political situation in Venezuela. The Senate Foreign Relations Committee held hearing in June 2004 on the status of democracy in Venezuela and the August recall referendum. As noted above (U.S. Funding for Democracy Projects), the conference report to the FY2005 Consolidated Appropriations Act (Division B of P.L. 108-447 , H.Rept. 108-792 ) required a comprehensive report on NED's activities in Venezuela since FY2001 and reaffirmed NED's duty to ensure that all sponsored activities adhere to core NED principles.
Also in the 108 th Congress, two resolutions were introduced in the House, but no action was taken on these measures. H.Res. 716 , introduced by Representative Elton Gallegly on July 14, 2004, would, among other provisions, have encouraged Venezuelans to participate in a constitutional, peaceful, democratic, and electoral solution to the political crisis in Venezuela, and appealed to the Venezuelan government and the opposition to support a free, fair, and transparent recall referendum in accordance with the Venezuelan constitution. H.Res. 867 , introduced by Representative Tom Lantos on November 20, 2004, would have expressed support for the National Endowment for Democracy in Venezuela. The resolution would have expressed the view that charges against Súmate were politically motivated. As noted above, Súmate is a Venezuelan civic organization involved in voter education and electoral observation that received funding from the National Endowment of Democracy. The resolution also would have welcomed the dropping of charges by the Venezuelan government against Súmate. Earlier in the year, in a July 12, 2004, letter to President Chávez, the House International Relations Committee expressed serious concern about the treatment of the leaders of Súmate.