INTRODUCTION
Since politics and the energy sector are very much linked to each other in Venezuela, it is important to
understand the current political situation of the country and its background.
HISTORY OF CHÁVEZ ADMINISTRATION
President Chávez was elected president of Venezuela in December 1998. After having taken office in 1999 he was re-elected in July 2000 under a new constitution for a six year-term. In April 2002 opposition groups tried to forcefully oust president Chávez but after two days of conflict the president returned to office. In August 2004, President Chávez won a referendum on whether he should serve out the rest of his term.
At the elections in 2006 president Chávez won with a majority of 63% of the votes. Directly after his victory he announced his intentions to intensify his Bolivarian Revolution aimed at establishing socialism of the 21
st century in Venezuela. As part of this strategy the government has nationalized or expropriated a large number of companies in what is seen as strategic sectors of the economy. According to the Observatory of Property Rights, 1.119 properties were nationalized or expropriated between 2005 and 2009, the majority of which in the agricultural sector. The government has expressed its commitment to a fair compensation, although there have been long delays in negotiations and final payments.
DOMESTIC POLICY
The policies of the Chávez government have led to a marked polarization of Venezuelan society. The president finds his main support amongst the lower classes, which are drawn by the president’s professed objective to integrate the people (el pueblo) into the political, economic and social processes of the country from which they were formerly excluded. These policies have however alienated many of the members of the higher and middle classes, who blame the government for wanting to turn Venezuela into a communist state, for destroying the business environment in the country and neglecting important issues such as the security
situation.
The political situation in Venezuela is greatly influenced by the oil prices. If oil prices are high, the increase in
cash flow gives the government more opportunity to raise social and political contributions, which creates
more support for the government. When the oil prices are lower, as they were in 2008 and 2009, there is
much less room for social spending. The opposition parties have blamed the Chávez government of forcing the state oil company PDVSA to spend a substantial part of its income on government programmes, thereby
neglecting the company’s own investment needs and compromising oil production levels. Official figures put
the level of output at 2.89 million barrels per day for 2010.
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