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Venezuela: How Long Can Ch?vez Stand the Heat?

Ch?vez out!" That cry is growing louder by the day in Venezuela, where citizens are taking to the streets to protest against President Hugo Ch?vez. The former paratrooper has seen his approval rating plunge from 80% in 1999 to 24% today, as citizens have grown dissatisfied with his inability to improve their living standards. Even some in the military are giving Ch?vez a thumbs-down. On Feb. 6, Air Force Colonel Pedro Soto and National Guard Captain Pedro Flores marched with protesters to Ch?vez' home and called on him to resign. A military commission is deciding whether to discharge the officers.

Ch?vez is feeling the heat. Indeed, in a speech to the nation on Feb. 12, he offered an olive branch to his critics. "The opposition has to be constructive. I'm ready to revise whatever there is to revise," he vowed. Ch?vez also took a drastic step to curb capital flight and slash Venezuela's yawning budget deficit by allowing the currency, the bolivar, to float freely. The bolivar's value against the dollar plunged 20% on Feb. 13.

But even these steps are unlikely to prevent Venezuela, the world's No. 4 oil exporter and the No. 3 U.S. oil supplier, from escaping a period of political instability. The emboldened opposition is openly discussing ways to oust the President. Most experts rule out a coup, even though Soto claims most of the armed forces agree that Ch?vez should resign. Instead, opposition leaders and political experts believe that the military would back a constitutional effort to force Ch?vez out.

Initial moves against the President are under way. In early February, the opposition Democratic Action Party filed a motion with the Supreme Court challenging Ch?vez' mental competence. That's taking a page from Ecuador's book, where in 1997, Congress ousted President Abdal? Bucaram on grounds of insanity. Opposition members say they are collecting psychiatric evaluations of Ch?vez, who is known for mood swings. The opposition may also charge Ch?vez with misusing defense funds for social projects, such as employing troops to sell subsidized food. Such an approach worked in 1994, when Venezuela's Congress impeached President Carlos Andr?s P?rez for misuse of funds. Since Ch?vez' Fifth Republic Movement leads the National Assembly by just one vote, the opposition sees a chance to impeach him. Opposition strategists also think moderate Supreme Court justices will withdraw support from Ch?vez as protests mount. The court has yet to rule on the insanity motion.

Meanwhile, the business community is lining up against Ch?vez. Business is appalled by a package of 49 economic laws that Ch?vez imposed by decree in November. They vastly increase state intervention in industries such as oil and fishing. To show their dismay, 80% of Venezuela's businesses shut down for a one-day "civic strike" on Dec. 10. "We don't like playing the role of the political opposition, but we're fighting for our very existence," says Luis H. Ball, president of medical-supplies maker Eurociencia and former president of industrial association Conindustria. Key figures in the Roman Catholic Church, trade unions, and media may also back an effort to topple Ch?vez, who has blasted them with vitriolic rhetoric.

If Ch?vez goes, who will take over? One suggestion in Caracas political circles is to have a civilian junta made up of representatives of business, labor, and opposition parties rule until new elections can be held. Among those likely to contest the presidency would be Caracas Mayor Alfredo Pe?a and National Assembly Deputy Julio Borges, both center-right leaders. But Ch?vez won't step down without a fight. Venezuelans are bracing for a turbulent year. British Airways (BAB) continues to shrink. On Feb. 13, Chief Executive Rod Eddington said the flag carrier would slash 5,800 employees, bringing the total layoffs since September 11 to 13,000--nearly a quarter of the former workforce. It will also cease operating on 10 routes and curtail its use of Gatwick Airport, south of London. But analysts doubt that the moves are radical enough to return the company to strong profitability. BA is expected to lose approximately $700 million for the current fiscal year ending Mar. 31.

Eddington may have wanted to go further. He has told colleagues BA needs to drastically pare its loss-making European short-haul services. BA Chairman Colin Marshall may have thwarted more radical steps. But Marshall, 68, won't be able to protect forever the empire he helped build. The much publicized war-crimes trial of former Yugoslav President Slobodan Milosevic, which opened on Feb. 12 in The Hague, could undermine Serbian Prime Minister Zoran Djindjic's already shaky political situation at home. Most Serbs have little sympathy for Milosevic, but view The Hague tribunal as an anti-Serb show trial. Since Djindjic engineered Milosevic's extradition under pressure from the U.S. last year, Serbs partly blame the Prime Minister for the bad publicity.

Although Djindjic's popularity rating is just 14%, he is pressing ahead with an unpopular economic restructuring that could hike unemployment above 30%. That could hurt Djindjic just before new elections expected this fall.

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