Order Code RL32488
CRS Report for Congress
Received through the CRS Web
Venezuela: Political Conditions
and U.S. Policy
July 17, 2004
Mark P. Sullivan
Specialist in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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Venezuela: Political Conditions and U.S. Policy
Summary
An oil-exporting South American nation with a population of about 25 million,
Venezuela has been wracked by several years of political turmoil under the rule of
President Hugo Chavez who was first elected in 1998. Under Chavez, Venezuela has
undergone enormous political changes, with a new constitution in place, a new
unicameral legislature, and even a new name for the country, the Bolivarian Republic
of Venezuela. Chavez was re-elected President with a new six-year term in July 2000
under the new constitution. Although President Chavez remained widely popular
until mid-2001, his popularity has eroded considerably since then amid concerns that
he is imposing a leftist agenda on the country and that his government has been
ineffective in improving living conditions. In April 2002, massive opposition
protests and pressure by the military led to the ouster of Chavez from power for a
brief period. However, the military ultimately restored him to power. Political
opposition to Chavez’s rule continued after his return to office. From early
December 2002 until early February 2003, the opposition orchestrated a general
strike that severely curtailed Venezuela’s oil exports and disrupted the economy but
was unsuccessful in getting President Chavez to agree to an early non-binding
referendum on his rule or new elections.
After months of negotiations facilitated by the Organization of American States
(OAS) and the Carter Center, the government of Hugo Chavez and the political
opposition signed an agreement in May 2003 that set forth mechanisms to resolve the
political crisis, including the possibility of holding a binding presidential recall
referendum pursuant to constitutional provisions. Political polarization between
supporters and opponents of President Chavez has hampered implementation of the
accord. Nevertheless, Venezuela’s National Electoral Council (CNE) has scheduled
a presidential recall referendum for August 15, 2004. To recall President Chavez, the
number of votes cast against him must exceed the number that he received when last
elected in 2000 (3.75 million). If Chavez is recalled, then new presidential elections
will be held within 30 days. Whether President Chavez will be allowed to run for re-
election is uncertain, but most observers believe that the Supreme Court will rule that
he is eligible.
The United States has traditionally had close relations with Venezuela, but there
has been friction in relations with the Chavez government. The Bush Administration
has expressed strong support for the work of the OAS in resolving the crisis,
welcomed the May 2003 political accord, and supports its implementation. A
dilemma for U.S. policymakers is how to press the Chavez government to adhere to
democratic principles without taking sides in Venezuela’s polarized political conflict.
Since Venezuela is a major supplier of foreign oil to the United States (the fourth
major foreign supplier in 2003, after Saudi Arabia, Canada, and Mexico), a key U.S.
interest has been ensuring the continued flow of oil exports at a reasonable and stable
price. There also have been long-held suspicions that Chavez has supported leftist
Colombian guerrillas, although he denies such support.
This report will be updated periodically to reflect major developments.

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Contents
Political Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chavez’s Brief Ouster in April 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Continued Opposition and Strike in 2002 and 2003 . . . . . . . . . . . . . . . . . . . 3
August 2004 Presidential Recall Referendum . . . . . . . . . . . . . . . . . . . . . . . . 4
Human Rights Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Funding for Democracy Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Oil Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Counternarcotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Concerns About Venezuela’s Involvement in Latin America . . . . . . . . . . . 10
Policy Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
List of Figures
Figure 1. Map of Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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Venezuela:
Political Conditions and U.S. Policy
Political Situation
Background
With his election as President in December 1998, Hugo Chavez began to
transform Venezuela’s political system. The watershed election, in which former
coup leader Chavez 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, Chavez was the
candidate of the Patriotic Pole, a left-leaning coalition of 15 parties, with Chavez’s
own Fifth Republic Movement (MVR) the main party in the coalition.
Most observers attribute
Chavez Biography
Chavez’s rise to power to
Venezuelans’ disillusionment
Hugo Chavez Frias was born on July 28, 1954, in
a small farming town in the western Venezuelan state of
with politicians whom they
Barinas. The son of school teachers, Chavez was a 1975
judge to have squandered the
graduate of Venezuela’s Military Academy. He reached
country’s oil wealth through
the rank of lieutenant colonel by 1990. In February
poor management and endemic
1992, Chavez led an unsuccessful attempt to overthrow
corruption. A central theme of
the government of President Carlos Andres Perez. He
was imprisoned for two years for the coup attempt before
his campaign was constitutional
being pardoned. Chavez founded the nationalistic and
reform; Chavez asserted that the
left-leaning Bolivarian Revolutionary Movement in 1982
system in place allowed a small
while in the military, which was later transformed into
elite class to dominate Congress
the Fifth Republic Movement in the 1998 elections when
and that revenues from the
Chavez was first elected president.
state-run oil company, Petroleos
Source: Current Leaders of Nations, Gale Group. May
de Venezuela (PdVSA), had
20, 2004.
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 Chavez 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

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CRS-2
reform program was the real reason for his ouster.1 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 Chavez, 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 19th century South American liberator Simon
Bolivar, whom Chavez often invokes. In 1999, Venezuelans went to the polls on
three occasion — 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
Chavez. 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 re-election 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 Chavez 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%; Chavez’s term will expire in
January 2007. Chavez’s Patriotic Pole coalition also captured 14 of 23 governorships
and a majority of seats in the National Assembly.
From the outset, critics have raised concerns about Chavez and his government.
They fear that he is moving toward authoritarian rule and point to his domination of
most government institutions. Some argue that Chavez has replaced the country’s
multiparty democracy with a political system that revolves around himself, in essence
a cult of personality; others point to Chavez’s open admiration of Fidel Castro and
close relations with Cuba as a disturbing sign. Other observers express concern
about the increased role of the military in the government, with Chavez 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 Chavez
believe that he is trying to politicize the educational system by making changes to
school curriculums. They fear Chavez’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.2
1 For example, see M. Delal Baer, “Revenge of the Venezuelan Dinosaurs,” Wall Street
Journal, June 18, 1993.
2 For example, see William S. Prillman, “The Castro in Caracas: Venezuelan Strongman
Hugo Chavez, in Fidel’s Image,” National Review, April 3, 2003; Stephen Johnson,
“Venezuela Erupting,” National Review, March 5, 2004.

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Chavez’s Brief Ouster in April 2002
Although President Chavez 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 Chavez’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
Chavez’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 Chavez from power for a brief period. However, he ultimately was
restored to power by the military. Chavez was ousted from office on April 11, 2002,
after protests by hundreds of thousands of Venezuelans and the death of at least18
people. Venezuelan military leaders expressed outrage at the massacre of unarmed
civilians and blamed President Chavez 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 Chavez’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 Chavez supporters convinced military commanders to
back Chavez’s return. Moreover, some military factions had continued to support
Chavez during his ouster.
Continued Opposition and Strike in 2002 and 2003
After Chavez’s return to power, some 40 disparate opposition groups united in
a coalition known as the Democratic Coordinator (CD) in an effort to remove Chavez
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 Chavez’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 Chavez
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 Chavez to agree to an early non-
binding referendum on his rule or new elections. At various junctures, there were
violent clashes between Chavez supporters and the opposition, resulting in several
deaths. The Chavez government responded to the oil sector strike by firing 13,000-

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16,000 PdVSA employees. The six-week strike contributed to a sharp contraction of
the national economy by almost 9% in 2002 and 9.2% in 2003.3
August 2004 Presidential Recall Referendum
After months of negotiations facilitated by the OAS and the Carter Center, the
government of Hugo Chavez and the opposition signed an agreement on May 29,
2003, that set forth mechanisms to help resolve the political crisis. Implementation
of the accord has been difficult at times and hampered by political polarization
between supporters and opponents of President Chavez. Nevertheless, Venezuela’s
National Electoral Council (CNE) announced on June 8, 2004, that a presidential
recall referendum is scheduled for August 15, 2004.
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.4
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 is significant because under the constitution, if it were
held after August 19 (one year after the half-way point of Chavez’s term) and Chavez
lost the referendum, then Vice President Jose Vicente Rangel (a Chavez ally) would
serve the remainder of the President’s term through early 2007.
Under the constitution, in order for President Chavez to be recalled, the number
of votes cast against him must exceed the number that Chavez received when last
elected in July 2000 (3.75 million). If Chavez is recalled, new presidential elections
will be held within 30 days. Whether President Chavez will be allowed to run for re-
election is uncertain, but most observers believe that the Supreme Court would rule
that he is eligible to run.
3 Economist Intelligence Unit, “Venezuela Country Report,” June 2004.
4 “President Carter’s Trip Report on Venezuela, May 29-June 1, 2004,” The Carter Center,
June 4, 2004.

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One of the problems that has plagued the opposition is that it has not had a well
organized or coherent political coalition. As a result, it could be difficult for the
opposition to present a single candidate who could defeat Chavez in new elections,
assuming that he is permitted to run. Nevertheless, in early July 2004, the
Democratic Coordinator coalition unveiled a “Consensus Country Plan” focusing on
reconciliation and reconstruction. The platform covered such areas as job creation,
enhanced security, and health and education improvements. Whether the plan will
be able to engender support for the recall of President Chavez is uncertain.
Public opinion polls by various survey firms have yielded significantly different
results, with estimates of those who would vote to recall Chavez ranging from 41-
57%. A June 2004 poll by Datanálisis, a Venezuelan research firm, showed that 57%
of Venezuelans would vote to recall President Chavez, 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.5 Another poll by North American Opinion
Research Inc. published in early July 2004 showed that 41% would vote to recall
Chavez, compared to 57% favoring the president.6
Some analysts maintain that the recall referendum will not necessarily resolve
Venezuela’s political conflict, which has been fueled by high levels of political
polarization between supporters and opponents of President Chavez. According to
this view, dialogue, inclusion, and the advancement of national reconciliation will
be the keys needed to alleviate political conflict in the country, regardless of who
wins the referendum.7
Human Rights Concerns
There have been increasing concerns expressed by international human rights
organizations about the deterioration of democratic institutions and threats to
freedom of speech and press in Venezuela under the Chavez government.
The Inter-American Commission on Human Rights (IACHR) issued a report in
March 2004 expressing concerns about growing concentration of power in the
executive branch of government, the tendency to militarize public administration,
attacks and intimidation against human rights activists and organizations, the
government’s tendency to confront and disparage the political opposition and its
constant attacks on journalists and the media. While Venezuela has vigorous print
and electronic media, the IACHR report maintained that draft legislation on social
responsibility in radio and television could severely constrain the full exercise of
freedom of expression.
Other groups such as the Committee for the Protection of Journalists and
Reporters Without Borders have expressed concerns about President Chavez’s
5 “Battle of the Polls is Engaged,” Latin American Weekly Report, July 6, 2004.
6 “Venezuela’s Recall Referendum,” BBC Worldwide Monitoring, July 8, 2004.
7 For example, see Marifeli Pérez-Stable, “Venezuela: Only Dialogue Can Restore
Shattered Trust,” Miami Herald, June 10, 2004.

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condemnation of Venezuela’s private press and attacks against journalists during
street protests. Human Rights Watch issued a public letter to President Chavez
documenting the use of torture and excessive force against protestors that occurred
in late February and early March. Amnesty International issued a report in May 2004
criticizing the Venezuelan security forces’ excessive use of force and the ill-treatment
and torture of detainees.
Observers also have expressed concern about legislation approved by the
National Assembly to enlarge Venezuela’s Supreme Justice Tribunal from 20 to 32
justices and giving the Assembly the power to dismiss judges with a simple majority
vote. Some fear that this amounts to an effort by President Chavez to stack the court
with his supporters and to influence the court in potential future rulings related to the
recall referendum.
Economic Conditions
Venezuela’s major economic sector is petroleum, which accounts for one-third
of its gross domestic product and 80% of exports. While the country is classified by
the World Bank as an upper middle income developing country because of its
relatively high per capita income of $4,080 (2002), economic conditions in the
country have deteriorated over the past decade. The percentage of Venezuelans
living in poverty (income of less than $2 a day) increased from 12.2% to 23.8% of
the population between 1991 and 2000.8 Over the past two years, the country’s
political instability and polarization between the government and the opposition have
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 9.2%
in 2003. The forecast for 2004 and 2005 is for growth rates of 9.8% and 2.6%
respectively, because of increased government expenditures, although even these
growth rates would still leave per capita income levels 19% lower than in 1998.9
U.S. Policy
Although the United States has traditionally had close relations with Venezuela,
characterized by an important trade and investment relationship and cooperation in
combating the production and transit of illegal narcotics, there has been friction and
tension in relations with the Chavez government. In the aftermath of the September
11 terrorist attacks, U.S. officials became far less tolerant of President Chavez’s anti-
American rhetoric.
After Chavez’s brief ouster in April 2002, the United States expressed solidarity
with the Venezuelan people, commended the Venezuelan military for refusing to fire
on peaceful demonstrators, and maintained that undemocratic actions committed or
8 World Bank, “Venezuela Country Brief,” May 2003.
9 Economist Intelligence Unit, “Venezuela Country Report,” June 2004.

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encouraged by the Chavez administration provoked the political crisis.10 With
Chavez’s return to power, the United States called on President Chavez to heed the
message sent by the Venezuelan people by correcting the course of his administration
and “governing in a fully democratic manner.”11 In contrast, many Latin American
nations condemned the overthrow of Chavez, labeling it a coup. Venezuelan
allegations of U.S. involvement in the attempted overthrow of President Chavez have
contributed to strained relations. U.S. officials have repeatedly rejected the charges
that the United States was involved.12 In the aftermath of Chavez’s temporary ouster,
the Department of State’s Office of the Inspector General undertook a review of U.S.
policy toward Venezuela and concluded that the Department of State had not played
any role in President Chavez’s overthrow.13
The Bush Administration has expressed strong support for the work of the OAS
to bring about a resolution to the crisis. With U.S. support, the OAS approved a
resolution on December 16, 2002, that rejected any attempt at a coup or interruption
of the constitutional democratic order in Venezuela, fully supported the work of the
Secretary General in facilitating dialogue, and urged the Venezuelan government and
the Democratic Coordinator “to use good faith negotiations to bring about a
constitutional, democratic, peaceful, and electoral solution...” Beginning in January
2003, the United States joined with five other nations — Brazil, Chile, Mexico,
Spain, and Portugal, in establishing a group known as the “Friends of Venezuela” —
to lend support to the OAS Secretary General’s efforts. U.S. officials welcomed the
May 2003 accord ultimately signed, and maintained that the United States would
continue to work to facilitate a peaceful, constitutional, democratic, and electoral
solution to Venezuela’s political impasse.
Comments by Venezuelan and some U.S. officials have at times exacerbated
tensions in the bilateral relationship. In the lead-up to the “repair” period held in late
May 2004, Assistant Secretary of State for Western Hemisphere Affairs Roger
Noriega maintained that it was already clear that “the requisite number of people
supported the [recall] petition.”14 Venezuelan Vice President Jose Vicente Rangel
strongly criticized Noriega’s statement as prejudging the outcome of the “repair”
period. President Chavez, who has often used anti-American rhetoric to shore up his
domestic support, maintains that President Bush will be his greatest rival in the recall
10 U.S. Dept. of State, “Venezuela: Change of Government,” Press Statement, Apr. 12,
2002.
11 U.S. Dept. of State, International Information Programs, “White House Calls on
Venezuela’s Chavez to Preserve Peace, Democracy,” Washington File, Apr. 14, 2002.
12 U.S. Dept. of State, International Information Programs, Washington File, “U.S. Again
Rejects Charges of Meddling in Venezuelan Affairs,” April 19, 2004.
13 U.S. Department of State and the Broadcasting Board of Governors, Office of Inspector
General, “A Review of U.S. Policy Toward Venezuela November 2001 — April 2002,”
Report Number 02-OIG-003, July 2002.
14 David R. Sands, “U.S. Casts Wary Eye on Venezuela Vote; Action Promised if Vote is
Rigged,” Washington Times, May 26, 2004.

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referendum, and that the United States would “govern” in Venezuela if the
opposition wins the recall referendum and subsequent election.15

U.S. Funding for Democracy Projects
The United States provides funding for democracy projects in Venezuela
through the National Endowment for Democracy (NED) (funded by the Commerce,
Justice, and State appropriations measure) and through Economic Support Funds for
democracy-related projects (funded through the Foreign Operations appropriations
measure). The NED has been funding democracy projects for Venezuela since 1992,
but has increased its funding over the past several years under the Chavez
government. To date in FY2004, the NED has funded six Venezuela projects with
$589,000 while in FY2003, it funded 15 democracy projects with $1.05 million. In
previous years, the NED’s funding for Venezuela projects amounted to $1.1 million
in FY2002, $877,000 in FY2001, $258,000 in FY2000, and $1.1 million in FY1999.
ESF assistance for democracy-related projects in Venezuela amounted to $470,000
in FY2003 and an estimated $1.497 million in FY2004 (including $1 million in
reprogrammed funds to support political reconciliation). For FY2005, the
Administration has requested $500,000 in ESF assistance.

The Venezuelan government and some other critics have criticized NED’s
funding of opposition groups.16 They maintain that the NED has funded groups
headed by people involved in the overthrow of Chavez in April 2002 as well as a
group, Súmate, involved in the signature collecting process for the recall referendum
campaign. Critics argue that Súmate led the signature drive for the recall referendum,
and question whether the NED should be funding such a group. More recently,
President Chavez and other U.S. critics have maintained that the NED helped fund
the Democratic Coordinator coalition’s “Country Consensus Plan” issued in early
July 2004.17
U.S. officials have 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. Assistant
Secretary of State for Western Hemisphere Affairs Roger Noriega maintains that “the
Venezuelan governments efforts against Súmate are intended to intimidate and
dissuade participation in the referendum process.”18
15 Alice M. Chacon, “Venezuelan President Says His Greatest Rival is George W. Bush,”
Associated Press, June 12, 2004.
16 Testimony of Mark Weisbrot, Center for Economic and Policy Research, at a hearing of
the Senate Foreign Relations Committee on “The State of Democracy in Venezuela,” June
24, 2004.
17 “Venezuela’s Opposition’s New ‘Consensus Plan’ Was Financed and Drafted by U.S.,”
Eva Golinger, Venezuelanalysis.com, July 9, 2004.
18 U.S. Department of State, International Information Programs, “U.S. Official Outlines
Challenges Facing Venezuela,” Washington File, June 24, 2004.

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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.”19 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.20
Oil Issues
Since Venezuela is a major supplier of foreign oil to the United States (the
fourth major foreign supplier in 2003, after Saudi Arabia, Canada, and Mexico), a
key U.S. interest has been ensuring the continued flow of oil exports at a reasonable
and stable price. The December 2002 strike orchestrated by the opposition reduced
Venezuela’s oil exports, but by May 2003, Venezuelan officials maintained that
overall oil production had returned to the pre-strike level. Despite the friction in
U.S.-Venezuelan relations and Venezuela’s opposition to the U.S. war in Iraq, the
Chavez government announced before the military conflict that it would be a reliable
wartime supplier of oil to the United States. At various junctures, Chavez has
threatened to stop selling oil to the United States; in April 2004, he threatened to do
so if the United States did not stop “intervening in Venezuela’s domestic affairs.”21
Many observers believe that Chavez’s threats are merely part of his rhetoric that is
designed to divert attention from the country’s political crisis.
Counternarcotics
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. Cocaine
seizures by the Venezuelan government increased significantly from 15 metric tons
in 2002 to over 32 metric ton in 2003. Despite the friction in U.S.-Venezuelan
relations, cooperation between the two countries at the law enforcement agency level
continues to be excellent, according to the State Department’s 2003 International
Narcotics Control Strategy Report. Venezuela has received small amounts of U.S.
assistance under the Administration’s Andean Counterdrug Initiative: $5 million in
19 National Endowment for Democracy, “NED Venezuela Programs FAQ,” available at
[http://www.ned.org/grants/venezuelaFacts.html].
20 Telephone conversation with NED official July 15, 2004; also see Andres Oppenheimer,
U.S. Group’s Funds Aid Democracy, Miami Herald, July 15, 2004.
21 “Chavez Threatens to Halt Oil to U.S.,” Miami Herald, April 19, 2004.

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FY2002; $2.075 million in FY2003; an estimated $5 million in FY2004; and a
request of $3 million for FY2005. ACI programs in Venezuela focus on
counternarcotics cooperation and judicial reform support. (For further information,
see CRS Report RL32337, Andean Counterdrug Initiative (ACI) and Related
Funding Programs: FY2005 Assistance, by Connie Veillette.)
Concerns About Venezuela’s Involvement in Latin America
There have been long-held suspicions that Chavez has supported leftist
Colombian guerrillas, although Chavez denies such support. In the 108th Congress,
the conference report (H.Rept. 108-401) on the FY2004 Consolidated Appropriations
Act, H.R. 2673 (P.L. 108-199), requested the Secretary of State to provide (within
90 days of enactment and in a classified form if necessary) “a description of the
extent to which, if any, the Government of Venezuela has supported or assisted
groups designated as terrorist organizations in Colombia.”22
The State Department’s April 2004 Patterns of Global Terrorism report
maintains that the Revolutionary Armed Forces of Colombia (FARC) and the
Colombian National Liberation Army (ELN) often cross into neighboring Venezuela,
regarding it as a safehaven, and that weapons and ammunition continue flowing from
Venezuelan suppliers to these guerrilla groups. The report also maintained, however,
that “it is unclear to what extent the Government of Venezuela approves of or
condones material support to Colombian terrorists and at what level.”
Recent press reports assert that the lack of aggressive Venezuelan border patrols
since Chavez took office has led to increased Colombian guerrilla movements.23 In
addition to Colombia, there have been concerns about President Chavez’s close
relationship with Cuba’s Fidel Castro, and allegations that he has financed leftist
groups in Ecuador and Bolivia; Chavez has denied such allegations.24
Policy Approaches
A dilemma for U.S. policymakers is how to press the Chavez government to
adhere to democratic principles without appearing to interfere in Venezuelan
domestic affairs or taking sides in the country’s polarized political conflict. The
appearance of U.S. interference in Venezuela could result in increased popular
support for the Chavez government, which has attempted to portray the opposition
as supported by the U.S. government and to portray the United States as Venezuela’s
main adversary. As noted above, for the most part, the Bush Administration has
worked through the OAS and the Carter Center to bring about a resolution to the
22 No such report has been submitted, according to the Department of State.
23 Alfonso Chardy, “Fear of Violence Spreads Across Border; Reduced Patrols by
Venezuelan Soldiers Along the Border with Colombia Have Led to Increased Kidnappings,
Murders, and Incursions by Leftist Colombian Guerrillas,” Miami Herald, June 15, 2004.
24 Phil Gunson, “Chavez’s ‘Revolution’ Seen as Different From Castro’s,” Miami Herald,
June 13, 2004.

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crisis. At the same time, U.S. officials have not refrained from criticizing the Chavez
government on various occasions for its anti-democratic actions.
There are other schools of thought about the appropriate U.S. policy toward
Venezuela. Some maintain that the United States should work to normalize relations
with the Chavez government and ensure that no U.S. funding goes to any groups
headed by individuals who participated in the April 2002 temporary ouster of
President Chavez or to any partisan groups working to recall the president.25 Others
argue that the United States should do even more than it is doing now to increase the
level of world attention to the upcoming referendum to ensure that it is conducted
fairly. Another longer-term policy approach advocated by some is that the United
States should work to address the circumstances that led to the rise to power of
Chavez. This policy approach pertains not just to Venezuela, but to other countries
in Latin America struggling with high levels of unemployment, crime, and political
corruption.26
Members of Congress have 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 upcoming recall referendum.27 H.Res.
716, introduced by Representative Elton Gallegly on July 14, 2004, would, among
other provisions, encourage Venezuelans to participate in a constitutional, peaceful,
democratic, and electoral solution to the political crisis in Venezuela, and appeal to
the Venezuelan government and the opposition to support a recall referendum vote
that is free, fair, transparent, and in accordance with the Venezuelan Constitution.
In a letter to President Chavez on July 12, 2004, the House International Relations
Committee expressed serious concern about the treatment of the leaders of Súmate,
a Venezuelan nongovernmental organization involved in voter education and
electoral observation that received funding from the National Endowment of
Democracy (see above for further discussion of Súmate).
25 Testimony of Mark Weisbrot, Center for Economic and Policy Research, at a hearing of
the Senate Foreign Relations Committee on “The State of Democracy in Venezuela,” June
24, 2004.
26 Testimony of Miguel Diaz, Center for Strategic and International Studies, at a hearing of
the Senate Foreign Relations Committee on the “The State of Democracy in Venezuela,”
June 24, 2004.
27 Senate Foreign Relations Committee, Subcommittee on Western Hemisphere, Peace
Corps, and Narcotics Affairs, “The State of Democracy in Venezuela,” Hearing, June 24,
2004.

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Figure 1. Map of Venezuela
Martinique
Fort-de-
(FR.)
France
C a r i b b e a n S e a
Castries
Saint Lucia
Saint Vincent and
Barbados
The Grenadines
Kingstown
Aruba
Netherlands
Bridgetown
(Neth.)
Antilles
Oranjestad
(Neth.)
Saint
Curacao
Aruba
Bonaire
George's Grenada
Willemstad
Punto
Golfo
Fijo
de
Tobago
Venezuela
Coro
Isla la
La Asuncion
Port-of-
Tortuga
Isla de
Trinidad
Riecito
Spain
Margarita
and
Guiria
Maracaibo
La Guaira
Tobago
Gulf
Cabimas
Cumana
San Felipe
Maracay
Caracas
of
Barcelona
Paria
Trinidad
Los
Baraquisimeto
Valencia
Teques
Maturin
Atlantic
San Juan
Valera
San
Ocean
de los
Guanare
Carlos
Tucupita
Morros
Barinas
Curiapo
Merida
Ciudad
Ciudad Guayana
Bolivar
Cabruta
San Fernando
Bochinche
San Cristobal
Guasipati
Caicara
Ciudad Piar
El Amparo
Tumeremo
El Dorado
El Jobal
La Paragua
Canaima
Guyana
V e n e z u e l a
Puerto
Ayacucho
San Juan
Santa Elena
de Manapiare
de Uairen
San Fernando
de Atabapo
C o l o m b i a
Esmeralda
Venezuela
International Boundary
State Capital
B r a z i l
National Capital
0
50
100
150 Kilometers
0
50
100
150 Miles
Source: Map Resources. Adapted by CRS. (K.Yancey 7/15/04)

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