Saturday, December 09, 2006

The Best Election Money Could Buy

The Best Election Money Could Buy

December 8, 2006; Page A17, WSJ (pasted here as WSJ is by subscription only)

CARACAS -- As midday Mass at the Cathedral on Plaza Bolivar drew to a
close on Sunday, the celebrant issued a plea for peace: The winner of
the presidential election must be respected, he told the congregation,
but so too the loser, who is also a Venezuelan in this land blessed by

I gazed at the crucifix behind the altar and pondered the admonition.
It was only 1 p.m., far too early to call a winner in the race between
President Hugo Chávez and the challenger, Zulia Governor Manuel
Rosales. But the Church was already signaling concern -- as it has
been for the past eight years under the Chávez government -- about the
end of tolerance in a nation that is supposed to be a democracy. There
was good reason.

The words from the pulpit echoed in my mind that evening, when some 20
loudly rumbling motorcycles passed in front of the car in which I was
riding near Plaza Altimira, where anti-Chávez Venezuelans have been
known to gather. Each bike carried two helmeted men in military garb,
armed with riot shields and long rifles.

It was nearly 6:30 p.m. and darkness had fallen. I remembered that
Chávez supporters had more than once shot and killed unarmed civilians
with impunity and I thought about heading back to my hotel. But I
wanted to see whether the opposition would rally on its own turf. So I
continued around the square. What I saw next was truly frightening.

The flowers growing in the plaza were drooping under a tropical shower
as members of Mr. Chávez's feared National Guard poured out of a
military vehicle on one side of the street and armies of informal
government enforcers known as chavistas gathered on the other. A red
truck was blaring revolutionary music. A bus carrying about 10
chavistas, their heads wrapped in the signature red of the Chávez
campaign, drove menacingly up and down the street. It honked its horn
and pulled wild U-turns as its passengers, at least one of whom was
naked from the waist up, leaned out the door and windows pumping their
fists and shouting angrily into the evening air.

Mr. Chávez's metropolitan police and the military ignored their
lawlessness. A 23-year-old woman driving past the plaza later that
night says she was set upon by chavistas wielding baseball bats and
that her car windows were smashed. I wondered why, if the president
had won re-election, he needed to turn his goons on the civilian

I never believed that Fidel Castro's Venezuelan "mini-me" would be
defeated on Sunday even though there is scant evidence that a majority
of Venezuelans back his socialist revolution. Instead, I expected that
a Chávez victory could be had "legally" through a combination of
coercion, manipulation and the liberal use of state funds.

This seems to be what happened. The National Electoral Council (CNE)
says that Mr. Chávez got about 61% of the vote versus 37% for Mr.
Rosales; no one in the opposition is challenging his victory.
Nevertheless, it is difficult to judge the race fair.

Among the irrefutable complaints from the independent electoral
watchdog group known as Súmate (literally "Join Up") is the charge
that the government would not allow an independent and reliable audit
of the electoral registry; in the two years and three months since the
recall referendum, voter rolls grew more than 30%. This left a lot of
Venezuelans wondering who these new voters were but the government
refused to release the full registry (including addresses) or post
local lists at polling stations, as required by law.

Economic intimidation also played a role. It may be true that the
poorest voted heavily Chávez. I don't know. But one economic step up
from the most destitute, I have found palpable distrust of this
president. In the struggling municipality called Caricuao, 30 tiny
medical clinics and a number of larger ones have opened in the past
year. I visited three clinics there on Monday, all of which are
staffed by Cubans and decorated with anti-American propaganda. Yet
this huge state effort to ideologically capture a barrio seems to have
delivered only mediocre results.

A local woman I interviewed told me that her neighborhood was
politically divided. Many dislike Mr. Chávez greatly, she said, but
believed that the electronic voting machines and the fingerprint
tracking machines at the polls would allow the government to know how
they voted and that they would lose their government jobs if they went
against him. Such fears are not irrational. It is well documented that
the government has created enemies lists and fires dissidents.

Perhaps the working poor dismiss Mr. Chávez because they see so many
apparatchiks getting fat off corruption while they get only crumbs. A
new report by former Venezuelan oil company director Gustavo Coronel,
published by the Cato Institute's Center for Global Liberty and
Prosperity, finds that during the past eight years government oil
revenues and revenue from issuing new debt total at least $175 billion
and that this windfall has been accompanied by a sharp drop in
transparency. "For example," Mr. Coronel writes, "the state-owned oil
company ceased publishing its consolidated annual financial statements
in 2003, and Chávez has created new state-run financial institutions,
whose operations are also opaque, that spend funds at the discretion
of the executive."

Unaccounted for state funds could have been used to finance Mr.
Chávez's re-election in more than one way. According to Goldman Sachs
emerging-market analyst Alberto Ramos, "if you include imports, car
sales are expected to almost double this year to about 300,000, many
of them luxury models." If you have the right politics, you too might
join the fun.

Yet trouble is looming as expectations rise and delivering on promises
becomes more difficult. Mr. Ramos notes that "serious macro imbalances
are emerging in the economy," including "accelerating inflation,
sharply depreciated black market exchange rate. . . and the gradual
atrophy of the non-oil sector." It is worth worrying about what Mr.
Chávez will do to maintain power when the money runs out. The Church
may have some reasonable fears.