Venezuela's Chavez Wins Lawmaking Powers

Granted the authority to pass laws by decree for 18 months, the socialist President can push his plans for nationalization of oil and other key sectors

You might have thought that having supporters in all 167 seats of the National Assembly would be enough for Venezuelan President Hugo Chavez. Apparently not.

On Jan. 31, Venezuela's congress voted to grant Chavez' request for extraordinary powers, allowing the President to pass laws by decree for 18 months. The so-called enabling law, which now goes to Chavez for final approval, will allow him to fulfill pledges to deepen his socialist revolution.

Chavez is expected to unleash a raft of up to 60 laws, including key legislation facilitating the nationalization of the country's largest publicly traded telephone and power companies. He is also expected to dictate legislation that would allow the government to take a majority stake in four heavy-oil ventures, which now account for roughly a fifth of the country's daily oil output of about 2.45 million barrels a day. The President has also indicated that he will seek to remove constitutional limits on presidential terms, so he can serve indefinitely.

Authoritarian State?

"We want to install a dictatorship of real democracy," Venezuelan Vice-President Jorge Rodríguez said during a special outdoor session of congress held in a plaza in central Caracas, allowing citizens to participate. Hundreds of red-T-shirt-wearing Chavez supporters showed up, many carrying signs reading "Socialism is democracy."

Opposition politicians charge that congress' action is laying the groundwork for the creation of an authoritarian state. Eduardo Fernandez, who heads the opposition COPEI party, said the law would convert "the President into a dictator."

Although Venezuela boasts of having South America's oldest democracy, the country grants its presidents extraordinary powers to pass legislation by decree, especially when legislators shy from tackling sensitive issues. This is the third time Chavez has been granted special powers, having received similar powers in 1999 when he first took office and again in 2000–2001. Laws enacted in the second period led to public unrest and a short-lived coup against Chavez in April, 2002.

Nationalization Plans

U.S. officials said they were monitoring developments. "We will see how President Chavez exercises these powers," U.S. State Dept. spokesman Sean McCormack said in a statement. Chavez and the U.S. have been at loggerheads since the paratrooper and one-time coup leader assumed power in 1999. Chavez has repeatedly accused the U.S. of seeking his removal and even plotting to assassinate him, while U.S. officials claim Chavez is a destabilizing force in the region. Despite the rhetoric, Venezuela is Washington's fourth-largest oil supplier, while the U.S. is Venezuela's biggest supplier of goods.

Relations will likely get even thornier now that Chavez is pressing ahead with plans to nationalize entire sectors of the economy. On Jan. 8, he stunned many with his announcement that the state would take control of the country's largest telephone company, CA Nacional Telefonos de Venezuela, as well as CA Electricidad de Caracas, the country's largest publicly traded electricity company. Verizon Communications (VZ) owns a 28.5% stake in the telephone carrier, while AES Corp. (AES) holds a majority stake in the power company.

Chavez also is expected to seize control of four heavy-oil ventures now headed by Exxon Mobil (XOM), ConocoPhillips (COP), and France's Total (TOT). Other shareholders include Chevron (CVX), BP (BP), and Norway's Statoil (STO). Venezuela's state-owned oil company, Petroleos de Venezuela, currently holds stakes ranging from 30% to 49.9% in these projects. Government sources say they will work out compensation terms with foreign investors.

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