Order Code RL32488
CRS Report for Congress
Received through the CRS Web
Venezuela: Political Conditions
and U.S. Policy
Updated November 22, 2005
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
Under the populist rule of President Hugo Chávez, first elected in 1998,
Venezuela has undergone enormous political changes, with a new constitution, a new
unicameral legislature, and even a new name for the country, the Bolivarian Republic
of Venezuela. Although Chávez remained widely popular until mid-2001, his
popularity eroded considerably after that, amid concerns that he was imposing a
leftist agenda. In April 2002, massive opposition protests led to the ouster of Chávez
from power for a brief period, but the military restored him to power after an interim
government resorted to such hardline measures as dismantling the National Assembly
and suspending the Constitution. After months of negotiations, the Chávez
government and the political opposition signed an agreement in May 2003 that
ultimately led to an August 2004 presidential recall referendum. Chávez survived the
vote by a margin of 59% to 41%, and his rule was further strengthened when his
allies won a majority of gubernatorial and municipal posts in October 2004 elections.
Legislative elections will take place on December 4, 2005, and it is expected
that pro-Chávez parties will gain more seats in the National Assembly, where they
already enjoy a narrow majority. The country’s next presidential elections are set for
the end of 2006, and there is a strong chance that Chávez could win another six-year
term. The government has benefitted from the rise in world oil prices, which has
sparked an economic boom. As a result, Chávez has been able to increase
government expenditures on anti-poverty and other social programs associated with
the populist agenda of his Bolivarian revolution.
The United States traditionally has had close relations with Venezuela, but there
has been friction in relations with the Chávez government. In 2005, relations have
deteriorated markedly, with Venezuela’s cancellation of a bilateral military exchange
program in April and its suspension of cooperation with the Drug Enforcement
Administration in August. On September 15, 2005, President Bush designated
Venezuela as a country that has failed demonstrably to adhere to its obligations under
international narcotics agreements, although he waived economic sanctions that
would have curtailed U.S. assistance for democracy programs in Venezuela. A
dilemma for U.S. policymakers has been how to press the Chávez government to
adhere to democratic principles without taking sides in Venezuela’s polarized
political conflict. Since Venezuela is the fourth major supplier of foreign oil to the
United States, a key U.S. interest has been ensuring the continued flow of oil exports.
In the 109th Congress, there has been legislative action on several initiatives on
Venezuela. The FY2006 Foreign Operations appropriations measure (P.L. 109-102,
H.Rept. 109-265) provides $2 million in FY2006 for democracy programs in
Venezuela, and $2.252 million in assistance under the Andean Counterdrug Initiative.
The House-passed version of H.R. 2601 would authorize $9 million for each of
FY2006 and FY2007 for democracy programs in Venezuela. H.R. 2601 would also
authorize funds for U.S.-government broadcasting to Venezuela. Finally, with regard
to the human rights situation in Venezuela, H.Con.Res. 224 (Fortuño) calls on the
Venezuelan government to uphold the human rights and civil liberties of the people
of Venezuela.

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Contents
Political Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chávez’s Brief Ouster in April 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Continued Opposition and Strike in 2002 and 2003 . . . . . . . . . . . . . . . . . . . 3
August 2004 Presidential Recall Referendum . . . . . . . . . . . . . . . . . . . . . . . . 4
Background Leading to the Referendum . . . . . . . . . . . . . . . . . . . . . . . . 4
Referendum Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Political Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
December 4, 2005 Legislative Elections . . . . . . . . . . . . . . . . . . . . . . . . 7
Human Rights Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Policy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Tensions Increase in 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Policy Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S. Funding for Democracy Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Oil Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Counternarcotics Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Venezuela’s Designation as Country that Has Failed
Demonstrably in Counter-narcotics Efforts . . . . . . . . . . . . . . . . . 17
Concerns About Venezuela’s Involvement in Latin America . . . . . . . . . . . 18
Venezuela’s Extradition Requests
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Legislative Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Figures
Figure 1. Map of Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

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

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CRS-2
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 Chávez, 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 Chávez often invokes. In 1999, Venezuelans went to the polls on
three occasions — 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
Chávez. 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 Chávez 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%; Chávez’s term will expire in
January 2007. Chávez’s Patriotic Pole coalition also captured 14 of 23 governorships
and a majority of seats in the National Assembly.
From the outset, critics raised concerns about Chávez and his government. They
fear that he is moving toward authoritarian rule and point to his domination of most
government institutions. Some argue that Chávez has replaced the country’s
multiparty democracy with a political system that revolves around himself, in essence
a cult of personality; others point to Chávez’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 Chávez 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 Chávez believe
that he is trying to politicize the educational system by making changes to school
curriculums. They fear Chávez’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 Chávez, in Fidel’s Image,” National Review, April 3, 2003; Stephen Johnson,
“Venezuela Erupting,” National Review, March 5, 2004.

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Chávez’s Brief Ouster in April 2002
Although President Chávez 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 Chávez’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
Chávez’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 Chávez from power for a brief period. However, he ultimately was restored
to power by the military. Chávez 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 Chávez 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 Chávez’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
Chávez supporters convinced military commanders to back Chávez’s return.
Moreover, some military factions had continued to support Chávez during his ouster.
Continued Opposition and Strike in 2002 and 2003
After Chávez’s return to power, some 40 disparate opposition groups united in
a coalition known as the Democratic Coordinator (CD) in an effort to remove Chávez
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 Chávez’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 Chávez 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 Chávez to agree to an early non-
binding referendum on his rule or new elections. At various junctures, there were
violent clashes between Chávez supporters and the opposition, resulting in several
deaths. The Chávez government responded to the oil sector strike by firing 13,000-
16,000 PdVSA employees.

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August 2004 Presidential Recall Referendum
After months of negotiations facilitated by the OAS and the Carter Center, the
government of Hugo Chávez and the opposition signed an agreement on May 29,
2003, that set forth mechanisms to help resolve the political crisis. Implementation
of the accord was difficult at times and hampered by political polarization between
supporters and opponents of President Chávez. Nevertheless, Venezuela’s National
Electoral Council (CNE) announced on June 8, 2004, that a presidential recall
referendum would be held on August 15, 2004. Chávez won the referendum
convincingly by a margin of 59.3% to 40.7%, according to the CNE’s final official
results.3
Background Leading to the Referendum. 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 was significant because under the constitution, if it were
held after August 19 (one year after the half-way point of Chávez’s term) and Chávez
lost the referendum, then Vice President Jose Vicente Rangel (a Chávez ally) would
serve the remainder of the President’s term until January 2007.
In order for President Chávez to be recalled, the majority of voters needed to vote
“yes” and the number of votes to recall him needed to exceed the number that he
received when last elected in July 2000 (3.75 million). If Chávez had been recalled,
new presidential elections would have been held within 30 days. It was unclear
whether President Chávez would have been allowed to run for re-election, but most
observers believed that the Supreme Court would have ruled that he was eligible to
run. One of the problems that plagued the opposition was that it did not have a well-
organized or coherent political coalition. As a result, it could have been difficult for
3 “CNE Emitió Resultados Oficiales Del Referendo Revocatorio Presidencial,” Consejo
Nacional Electoral, August 26, 2004.
4 “President Carter’s Trip Report on Venezuela, May 29-June 1, 2004,” The Carter Center,
June 4, 2004.

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CRS-5
the opposition to present a single candidate who could have defeated Chávez in new
elections, assuming that he was permitted to run.
Public opinion polls conducted in June and July 2004 by various survey firms
yielded significantly different results, with some favoring the opposition and some
favoring Chávez, but by early August 2004 a number of polls showed Chávez with an
advantage. A June 2004 poll by Datanálisis, a Venezuelan research firm, showed that
57% of Venezuelans would vote to recall President Chávez, 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
Chávez, compared to 57% favoring the president.6 A poll in late July by the U.S. firm
of Evans/McDonough and Varianzas Opinión of Venezuela showed that 43% would
vote against Chávez and 51% would vote for him.7 In early August, a newspaper that
has been a strong opposition supporter, Ultimas Noticias, published four polls
showing that Chávez would win by at least 10%.8 Some observers, however,
maintained that many people were not being truthful in these opinion polls because
of fear of retribution for answering truthfully; they maintained that these so-called
“hidden voters” could determine the outcome of the referendum.9
Referendum Results. With a turnout of about 70% of registered voters,
President Chávez won the recall referendum convincingly with 5.80 million people
voting “no” to reject his recall, or 59.25% of the vote, and 3.989 million people, or
40.74%, voting “yes” in favor of his recall.10 Observers from the OAS and the Carter
Center maintained that these results were compatible with their own quick count
results. The opposition claimed that massive fraud had taken place and cited their exit
polls showing that 59% had voted to recall President Chávez.11 The Carter Center and
the OAS conducted a second audit of the vote on August 19-21 and concluded that the
vote results announced by the CNE reflect the will of the Venezuelan people.12
On August 26, 2004, the OAS approved a resolution expressing “satisfaction
with the holding of the presidential recall referendum” and calling “upon all players
to respect the results.” In the resolution, the OAS also welcomed the offer made by
President Chávez “to foster national dialogue” and called “for a process of
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 “A Poll of Polls,” Miami Herald, August 11, 2004.
8 “Chávez on Course for Victory,” Latinnews Daily, August 9, 2004.
9 Steven Dudley, “Chávez Recall Vote Confounds Pollsters,” Miami Herald, August 11,
2004.
10 “CNE Emitió Resultados Oficiales Del Referendo Revocatorio Presidencial,” Consejo
Nacional Electoral, August 26, 2004.
11 Andy Webb-Vidal, “Auditing of Chávez Vote Begins as Fraud Allegations Multiply,”
Financial Times, August 20, 2004.
12 Last Phase of the Venezuelan Recall Referendum: Carter Center Report (English and
Spanish), Carter Center, August 21, 2004.

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reconciliation ... in which differences are settled in the framework of the democratic
systems and in a spirit of transparency, pluralism, and tolerance.”13
There are various factors that explain President Chávez’s victory in the recall
referendum. The economy, fueled by proceeds from high oil prices, turned around in
2004. The president was able to use oil proceeds to boost social spending for the
poor. He made anti-poverty programs an important focus of his administration.
Another factor has been the strength of the opposition. As noted above, the opposition
in Venezuela has been fragmented and did not wage an effective campaign during the
recall referendum. Even if it had won the referendum, it was unclear whether it would
have been able to present a single candidate to challenge Chávez in a subsequent
election.
Political Conditions
Even before the recall referendum, some analysts maintained that the vote would
not necessarily resolve Venezuela’s political conflict, which has been fueled by high
levels of political polarization between supporters and opponents of President Chávez.
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 the referendum’s outcome.14 In the aftermath of Chávez’s victory in the
recall referendum, many observers maintain that efforts toward political reconciliation
— by both the government and the opposition — will be the key to returning political
stability to the country.
Chávez’s rule was further strengthened when his allies won a majority of
gubernatorial and municipal posts in elections held in late October 2004. Legislative
elections will take place on December 4, 2005, and it is expected that pro-Chávez
parties will gain more seats in the National Assembly, where they already enjoy a
narrow majority in the 165-member body. The country’s next presidential elections
are set for the end of 2006, and there is a strong chance that Chávez could win another
six-year term. The government has benefitted from the rise in world oil prices, which
has increased government revenues, and sparked an economic boom, with a growth
rate of almost 18% in 2004 and a projected growth rate over 9% in 2005.15 As a
result, Chávez has been able to increase government expenditures on anti-poverty and
other social programs associated with the populist agenda of his Bolivarian revolution.
While some polls have shown President Chávez maintaining popularity over
70%, others maintain that support for him has begun to erode, with his popularity
13 Organization of American States, Permanent Council. “Results of the Presidential Recall
Referendum Held in Venezuela on August 15, 2004,” CP/RES. 869 (1436/04), Adopted
August 26, 2004.
14 For example, see Marifeli Pérez-Stable, “Venezuela: Only Dialogue Can Restore
Shattered Trust,” Miami Herald, June 10, 2004.
15 “Country Report, Venezuela,” Economist Intelligence Unit, November 2005.

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CRS-7
dipping below 50%.16 Even if Chávez’s popularity has waned, this does not
necessarily translate into support for the political opposition, which remains weak and
fragmented in the aftermath of the August 2004 recall referendum.
December 4, 2005 Legislative Elections. In the lead up to Venezuela’s
legislative elections, some opposition groups have objected to parties fielding
candidates under two separate banners in order to increase the chances of winning
additional seats. (Venezuela’s electoral system utilizes a combination of proportional
representation on a national party list and electoral districts where individuals who
win majority of votes are elected.) The pro-Chávez coalition utilized this method to
win some 77% of seats in municipal elections held in August 2005. In late October,
Venezuela’s Supreme Court rejected an injunction against this practice that was filed
by the opposition party Democratic Action (Acción Democrática, AD).17 Opposition
groups also maintain that Venezuela’s National Electoral Council (CNE) is
dominated by the government, and that it interprets electoral legislation in favor of the
government.
At this juncture, there is little evidence that opposition parties have been able to
generate widespread electoral appeal, or to develop a grassroots base of support. Some
observers maintain that the opposition will struggle to win one-third of the seats in the
National Assembly (which will increase to a 167-member body) and that pro-Chávez
parties could potentially win a two-thirds majority control of the legislature. The pro-
Chávez alliance consists of the President’s Fifth Republic Movement (MVR) and
three smaller leftist parties. Opposition parties include the two historically dominant
parties, AD and the Social Christian Party (COPEI), and several smaller parties such
as the Movement to Socialism (MAS), the center-right Justice First party (Primero
Justicia, PJ), Project Venezuela (PV), and the National Convergence. Several smaller
opposition parties might boycott the election.
Both the OAS and the European Union plan to observe the upcoming legislative
elections. The OAS sent a technical mission to the August 7, 2005 municipal
elections in order to begin planning for its observation of the December elections. The
EU plans to send a delegation of 150 observers.
Human Rights Concerns. U.S. officials and human rights organizations
have expressed concerns about the deterioration of democratic institutions and threats
to freedom of speech and press in Venezuela under the Chávez government. At the
same time, however, a majority of Venezuelans (almost 60%) have expressed
satisfaction with how democracy in their country is working, according to a 2005 poll
by Latinobarómetro, a far greater percentage than in most Latin American countries.18
16 “Chavez Popularity Sags in Venezuelan Polls,” Voice of America News, September 21,
2005; Foreign Broadcast Information Service. Highlights: Venezuela Political Press,
October 24, 2005, “Poll: Almost 77% of Venezuelans Approve of Chavez’s Performance,”
(Ultimas Noticias, October 23, 2005).
17 “Court Rebuffs AD Bid to Change Electoral Rules,” Latin American Weekly Report,
November 1, 2005.
18 Ten-year Rut, The Latinobarómetro Poll,” The Economist, October 29, 2005.

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CRS-8
The Inter-American Commission on Human Rights (IACHR) issued a report last
year expressing concerns about the Chávez government’s tendency to militarize public
administration. The Commission expressed extreme concern about reports of “undue
influence of the armed forces in the country’s political affairs” and “excessive
involvement by the armed forces in political decision-making.”19 According to the
State Department’s February 2005 human rights report on Venezuela, “the military
has played an increasingly larger role in civilian life,” with active and retired military
officers holding high-ranking government positions. Under President Chávez, the
military has also become involved in numerous public service and development
projects. This coincides with Chávez’s view of the “military as an instrument of social
transformation,” part of his so-called Bolivarian revolution.20
Some observers are concerned that Chávez is using his political strength to push
toward authoritarian rule. Human Rights Watch maintains that the Chávez
government dealt a severe blow to judicial independence by packing the Supreme
Court with his supporters under a new law that expanded the court from 20 to 32
justices. The Chávez government enacted a broadcast media law in December 2004
that could allow the government to restrict news coverage that is critical of the
government, while in March 2005 it amended Venezuela’s criminal code to broaden
laws that punish “disrespect for government authorities.” The IACHR, human rights
groups, and other observers have expressed concerns that these measures have
restricted freedom of expression, with newspaper and broadcasters practicing self-
censorship.21 The government has also reportedly used the tax code to intimidate
media critics.22 Other observers, however, assert that freedom of the press and
assembly thrive in Venezuela, and that allegations of threats to Venezuelan judicial
independence are grossly exaggerated.23 As some human rights groups have noted,
even before the Chávez government took office, Venezuela’s Supreme Court was
highly politicized and undermined by chronic corruption.24
The IACHR has also expressed concerns about acts of violence and persecution
against human rights activists. In recent testimony before the Commission, members
of several Venezuelan human rights organizations asserted that the government has
labeled members of human rights groups as traitors and coup plotters. One example
is Carlos Ayala, a former president of the IACHR, who has been charged with
supporting the April 2002 coup against Chávez even though he had opposed the coup
19 Inter-American Commission on Human Rights, “Report on the Situation of Human Rights
in Venezuela,” December 29, 2003 (original in Spanish); released in March 2004.
20 Michael Shifter, “Chávez Should Not Steer U.S. Policy,” Financial Times, April 7, 2005.
21 Inter-American Commission on Human Rights, “IACHR Reports on Human Rights
Situation at the Conclusion of its Session,” Press Release, Oct. 28, 2005; Danna Harman,
“Latin Strongman Rebels Against U.S.-Centric News,” Christian Science Monitor, May 13,
2005
22 Foreign Broadcast Information Service, “Analysis: Venezuela: Government Using Laws
to Harass Media Critics,” November 4, 2005.
23 Mark Weisbrot, “Chavez is Admired in Latin America,” Augusta Chronicle, June 20,
2005; “U.S. Criticism of Chávez Unfounded,” Miami Herald, December 20, 2004.
24 “Freedom in the World 2005, Country Reports,” Freedom House, p. 700.

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CRS-9
attempt. The charges were filed after Ayala initiated human rights cases against the
government.25
Human rights groups and the Bush Administration have criticized Venezuela’s
charges against four leaders of the Venezuelan civic group Súmate (Join Up) for
accepting U.S. foreign assistance for a program to encourage citizen participation in
the presidential recall referendum. The four, including María Corina Machado who
met with President Bush in May 2005, are charged with conspiring against the
government and could face up to 16 years in prison; they are due to appear in court
on December 6, 2005. Súmate asserts that there are more than 200 political prisoners
in Venezuela today, and that there is targeted political retribution and discrimination
against those who signed a petition in favor of having the 2004 presidential recall
referendum.26
Finally, there has been increasing concern about the Venezuelan government’s
expropriations of large land holdings and private companies that observers see as a
violation of property rights and due legal process. In late August, the government
expropriated Empresas Polar, the country’s largest food and beer company, for
reportedly underutilizing its land and capital. In early September 2005, the
government seized a tomato processing plant belonging to H.J. Heinz, a U.S.
company. The Venezuelan government reportedly is reviewing some 700 large land
holdings and companies to see if they are underutilized, as part of a campaign to turn
them into productive enterprises for poor farmers and workers.27
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 $3,490 (2003), 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 32.2% to 48.5% of the
population between 1991 and 2000, while the percentage of the population in extreme
poverty (income of less than $1 a day) increased from 11.8% in 1990 to 23.5% in
2000.28
In 2002-2003, the country’s political instability and polarization between the
government and the opposition contributed to a poor investment climate, capital flight,
and declines in GDP. The national strike orchestrated by the opposition from late
25 “Venezuela’s Conscience,” Washington Post, October 30, 2005.
26 House International Relations Committee, Subcommittee on the Western Hemisphere,
Hearing on Democracy in Venezuela, Statement of Ana Julia Jatar, Súmate, November 17,
2005.
27 Jens Gould, “Chávez Now Aims for Corporate-Owned Land,” Christian Science Monitor,
November 1, 2005.
28 World Bank, “Venezuela Country Brief,” August 2004.

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CRS-10
2002 to early 2003 contributed to a contraction of the national economy by almost 9%
in 2002 and 7.7% in 2003.
The economy rebounded in 2004, with a growth rate over of almost 18% fueled
by the windfall in international oil prices. The forecast for 2005 is for a growth rate
over 9%. Given this positive outlook, the Chávez government is expected to move
ahead with economic goals that fit into his “Bolivarian revolution.” These include the
expansion of a state-led development model, land reform, renegotiation of contracts
with large foreign investors (especially in the petroleum sector), the restructuring of
operations at the state oil company, and diversification of trade and investment
partners.29 As noted above, the government is using the windfall in oil profits to boost
social spending and programs to fight poverty.
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 Chávez government. In the aftermath of the September
11 terrorist attacks, U.S. officials became far less tolerant of President Chávez’s anti-
American rhetoric.
After Chávez’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
encouraged by the Chávez administration provoked the political crisis.30 With
Chávez’s return to power, the United States called on President Chávez to heed the
message sent by the Venezuelan people by correcting the course of his administration
and “governing in a fully democratic manner.”31 In contrast, many Latin American
nations condemned the overthrow of Chávez, labeling it a coup. Venezuelan
allegations of U.S. involvement in the attempted overthrow of President Chávez have
contributed to strained relations. U.S. officials have repeatedly rejected the charges
that the United States was involved.32 In the aftermath of Chávez’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 Chávez’s overthrow.33
29 Economist Intelligence Unit, “Venezuela Country Report,” November 2005.
30 U.S. Dept. of State, “Venezuela: Change of Government,” Press Statement, Apr. 12, 2002.
31 U.S. Dept. of State, International Information Programs, “White House Calls on
Venezuela’s Chávez to Preserve Peace, Democracy,” Washington File, Apr. 14, 2002.
32 U.S. Dept. of State, International Information Programs, Washington File, “U.S. Again
Rejects Charges of Meddling in Venezuelan Affairs,” April 19, 2004.
33 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.

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CRS-11
The Bush Administration 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 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.”34 Venezuelan Vice President Jose Vicente Rangel strongly criticized
Noriega’s statement as prejudging the outcome of the “repair” period. President
Chávez, 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 referendum, and
that the United States would “govern” in Venezuela if the opposition wins the recall
referendum and subsequent election.35
After the August 2004 recall referendum, the Administration congratulated the
Venezuelan people for their commitment to democracy and commended the work of
the OAS and Carter Center. At the same time, U.S. officials stressed the importance
of reconciliation on the part of the government and the opposition in order to resolve
their political differences peacefully.
Tensions Increase in 2005
In 2005, however, Administration officials have voiced increasing concern about
President Chávez, and tensions have increased in U.S.-Venezuelan relations, with
elevated rhetoric on both sides. In both March and September 2005, State Department
officials testified to Congress that President Chávez’s “efforts to concentrate power
at home, his suspect relationship with destabilizing forces in the region, and his plans
for arms purchases are causes of major concern.” They asserted that the United States
“will support democratic elements in Venezuela so they can fill the political space to
which they are entitled.”36 Secretary of Defense Donald Rumsfeld expressed concerns
34 David R. Sands, “U.S. Casts Wary Eye on Venezuela Vote; Action Promised if Vote is
Rigged,” Washington Times, May 26, 2004.
35 Alice M. Chacon, “Venezuelan President Says His Greatest Rival is George W. Bush,”
Associated Press, June 12, 2004.
36 House International Relations Committee, Subcommittee on the Western Hemisphere,
(continued...)

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CRS-12
in March about Venezuela’s plan to buy 10 military helicopters and 100,000 AK-47
rifles from Russia and questioned why Venezuela needs the weapons.37 U.S. officials
have also expressed concerns about Venezuela’s plans to buy patrol boats and military
transport aircraft from Spain as well as a decision by Venezuela in April 2005 to
cancel a U.S.-Venezuelan bilateral military exchange program.
On May 31, 2005, President Bush met with Maria Corina Machado, the founder
of Súmate, a Venezuelan civic group that was involved in the signature drive for the
August 2004 recall referendum. The meeting exacerbated the already tense U.S.-
Venezuelan bilateral relations. Machado is facing charges in Venezuela for conspiring
against the government by accepting U.S. funding from the National Endowment for
Democracy for Súmate’s activities leading up to the recall referendum. U.S. officials
and some Members of Congress have strongly defended the NED’s activities in
Venezuela and have criticized the Venezuelan government’s efforts to intimidate the
leaders of Súmate. (See U.S. Funding for Democracy Projects, below.)
In early August 2005, Venezuela suspended its cooperation with the U.S. Drug
Enforcement Administration (DEA) because it alleged that DEA agents were spying
on Venezuela. U.S. officials asserted that the accusations were “baseless and
outrageous” but also indicated that the United States would like to improve U.S.
relations with Venezuela and reverse the negative trend in relations over the past
couple of months.38
While traveling in South America in August 2005, Secretary of State Donald
Rumsfeld asserted that “there certainly is evidence that both Cuba and Venezuela have
been involved in the situation in Bolivia in unhelpful ways.”39 Some Members of
Congress, such as Senator Arlen Specter, reportedly called for the Secretary to tone
down his rhetoric.40 Specter met with President Chávez and Venezuelan ministers in
mid-August 2005 to discuss cooperation on drug interdiction. Subsequently, on
September 15, 2005, President Bush designated Venezuela as a country that has
“failed demonstrably during the previous 12 months to adhere to their obligations
under international counternarcotics agreements.” At the same time, the President
waived economic sanctions that would have curtailed U.S. assistance for democracy
programs in Venezuela. (Also see Counternarcotics Cooperation below.)
36 (...continued)
Hearing on “The State of Democracy in Latin America,” Testimony of Roger F. Noriega,
Assistant Secretary of State for Western Hemisphere Affairs, March 9, 2005; Hearing on
“Keeping Democracy on Track: Hotspots in Latin America,” Testimony of Charles A.
Shapiro, Principal Deputy Assistant Secretary of State, September 28, 2005.
37 Todd Benson, “Rumsfeld in Brazil, Criticizes Venezuela on Assault Rifles,” New York
Times, March 24, 2005.
38 Lauren Monsen, “United States Hopes for Improved Cooperation,” Washington File, U.S.
Department of State, August 19, 2005.
39 Josh White, “Rumsfeld in Latin America, Voices Democracy Concerns,” Washington
Post, August 17, 2005.
40 Holly Yeager, “Senator Takes Rumsfeld to Task Over Chavez Criticism,” Financial
Times, August 20, 2005.

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CRS-13
On August 22, 2005, the comments of TV evangelist Pat Robertson that the
United States should “assassinate” Chávez evoked a strong response from Venezuelan
officials and from many U.S. policymakers. The State Department responded by
labeling Robertson’s comments as “inappropriate.”41 (For further information on the
U.S. prohibition against assassination, see CRS Report RS21037, Assassination Ban
and E.O. 12333: A Brief Summary, by Elizabeth B. Bazan.)
In testifying to Congress on November 17, 2005, the new Assistant Secretary of
State for Western Hemisphere Affairs Thomas Shannon asserted that there is “a
growing hemispheric and international consensus that democracy in Venezuela is in
grave peril.” He stated that the United States was working multilaterally and
bilaterally with Latin American and European nations to support Venezuelan civil
society, speak out against abuses of democracy, and hold Venezuela accountable to
its commitments under the Inter-American Democratic Charter. He described U.S.
funding for democracy projects in Venezuela as “working to preserve political and
civic space for increasingly at-risk groups.”42 Reflecting an escalation of the
Venezuelan President’s harsh rhetoric, Chávez responded to Shannon’s comments by
calling President Bush a “crazy, genocidal killer.43
Policy Approaches
A dilemma for U.S. policymakers has been how to press the Chávez 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 Chávez government. In the lead up to the recall referendum, the Chávez
government portrayed the opposition as supported by the U.S. government and the
United States as Venezuela’s main adversary. As noted above, for the most part, the
Bush Administration worked through the OAS and the Carter Center from 2002-2004
to help resolve the country’s political crisis. At the same time, U.S. officials have not
refrained from criticizing the Chávez government on various occasions for its anti-
democratic actions.
According to press reports, the Administration was involved in a major
reassessment of policy toward Venezuela in the spring of 2005, with the policy review
resulting in a two-prong strategy to increase support to civil groups in Venezuela and
to convince other countries that Chávez should be viewed as a troublesome meddler
in other countries’ affairs.44 Some observers, however, have expressed concerns that
41 U.S. Department of State, Daily Press Briefing, August 23, 2005.
42 House International Relations Committee, Subcommittee on the Western Hemisphere,
Hearing on Democracy in Venezuela, Statement by Asst. Sec. of State Thomas A. Shannon,
Nov. 17, 2005.
43 “Venezuela: Chávez Responds to Shannon’s Criticism,” Latinnews Daily, November 18,
2005.
44 Pablo Bachelet, “U.S. Tries Everything, But Can’t Slow Chávez,” Miami Herald,
September 7, 2005; Pablo Bachelet, “U.S. Exploring Taming Chávez,” Miami Herald,
(continued...)

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CRS-14
a more aggressive approach could create further estrangement and tension in the
bilateral relationship.
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 Chávez government and attempt to work cooperatively on issues of mutual
concern, such as drug trafficking. Some also maintain that United States should
ensure that no U.S. funding goes to any groups headed by individuals who participated
in the April 2002 ouster of President Chávez or to any partisan groups.45
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 Chávez. 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.46
U.S. Funding for Democracy Projects
The United States has provided funding for democracy projects in Venezuela
through the National Endowment for Democracy (NED) since 1992, but the level of
funding has increased over the past several years under the Chávez government. In the
FY2006 Foreign Operations appropriations measure (P.L. 109-102), Congress
provided $2 million in Democracy Funds for NED for democracy programs in
Venezuela. In FY2005, NED provided $902,000 for 16 democracy projects in
Venezuela. Prior to that, NED funded 13 democracy projects with about $874,000 in
FY2004, and funded 15 democracy projects with $1.05 million in FY2003.
In addition to the NED funding, the United States has provided Economic
Support Funds (ESF) for democracy-related projects in Venezuela. For FY2006, the
Administration requested $500,000 in ESF for such projects, although no money was
earmarked for this in the FY2006 Foreign Operations measure. In FY2005, an
estimated $496,000 in ESF was provided, while an estimated $1.497 million
(including $1 million in reprogrammed funds to support political reconciliation) was
provided in FY2004, and $470,000 in FY2003.
In other legislative action in the 109th Congress, the House-passed version of the
FY2006 and FY2007 Foreign Relations Authorization Act, H.R. 2601 (H.Rept. 109-
168), would authorize $9 million in Economic Support Funds for each of FY2006 and
FY2007 to fund support for a variety of activities in support of democratic and
accountable governance in Venezuela.
44 (...continued)
March 18, 2005; Juan Forero “U.S. Considers Toughening Stance Toward Venezuela,” New
York Times, April 26, 2005.
45 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.
46 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.

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CRS-15
The Venezuelan government and some other critics have criticized NED’s
funding of opposition groups.47 They maintain that the NED has funded groups
headed by people involved in the overthrow of Chávez 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 have funded such a group.
U.S. officials and some Members of Congress 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. The State Department asserts that the charges are without merit, and
constitute an attempt “to intimidate members of civil society for exercising their
democratic rights.”48
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.”49 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.50 In early September 2005, the board of the NED approved
a new $107,000 grant to Súmate for a program to train thousands of people on their
electoral rights.51
As a result of the controversy, the conference report to the FY2005 Consolidated
Appropriations Act (Division B of P.L. 108-447, H.Rept. 108-792) required a
comprehensive report on NED’s activities in Venezuela since FY2001, and reaffirmed
NED’s duty to ensure that all sponsored activities adhere to core NED principles.
The reporting requirement had first been included in the report to the House version
47 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.
48 “United States Rejects Venezuelan Decision to Try Civic Group,” Department of State,
Washington File, July 8, 2005.
49 National Endowment for Democracy, “NED Venezuela Programs FAQ,” available at
[http://www.ned.org/grants/venezuelaFacts.html].
50 Telephone conversation with NED official July 15, 2004; also see Andres Oppenheimer,
U.S. Group’s Funds Aid Democracy, Miami Herald, July 15, 2004.
51 Pablo Bachelet, “Citizens Group to Get U.S. Funds,” Miami Herald, September 13, 2005.

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CRS-16
of the FY2005 Commerce, Justice, and State Appropriations bill (H.R. 4754, H.Rept.
108-576).
Oil Issues
Since Venezuela is a major supplier of foreign oil to the United States (the fourth
major foreign supplier in 2004, after Canada, Mexico, and Saudi Arabia), a key U.S.
interest has been ensuring the continued flow of oil exports. Oil exports account for
the overwhelming majority of Venezuela’s exports to the United States. In 2004,
Venezuela’s total exports destined for the United States amounted to $24.0 billion,
with oil products accounting for $22.5 billion, or 90% of the total. The December
2002 strike orchestrated by the opposition reduced Venezuela’s oil exports, but by
May 2003, Venezuelan officials maintained that overall oil production returned to the
pre-strike level. Venezuelan officials maintain that national production currently
amounts to about 3.2 billion barrels per day but critics and independent analysts assert
that the figure is about 2.6 billion barrels per day.52 PdVSA announced in December
2004 that outside auditors would be appointed to verify the country’s oil production.53
Despite the friction in U.S.-Venezuelan relations and Venezuela’s opposition to
the U.S. war in Iraq, the Chávez government announced before the military conflict
that it would be a reliable wartime supplier of oil to the United States. At various
junctures, however, Chávez 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.”54 Many observers believe that Chávez’s threats have
been merely part of his rhetoric that is designed to divert attention from the country’s
political crisis.
Some observers, however, have raised questions about the security of Venezuela
as a major supplier of foreign oil for the United States. There are also concerns that
Venezuela is looking to supplant China as a replacement market, although Venezuelan
officials maintain that they are only attempting to diversify Venezuela’s oil markets.
Senate Foreign Relations Committee Chairman Richard Lugar has asked the
Government Accountability Office (GAO) to study the issue of potential Venezuelan
oil supply disruption.55
Counternarcotics Cooperation
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. According to the
Department of State, in its March 2005 International Narcotics Control Strategy
Report (INCSR), cocaine seizures by the Venezuelan government amounted to 17.8
52 “Venezuela’s state-run oil company changes eight of its eleven board members,”
Associated Press, January 13, 2005.
53 “Venezuela Industry: Oil and Gas Update,” EIU ViewsWire, December 16, 2004.
54 “Chávez Threatens to Halt Oil to U.S.,” Miami Herald, April 19, 2004.
55 Andy Webb-Vidal, “U.S. to look into Venezuela oil supply reliance,” Financial Times,
January 14, 2005.

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CRS-17
metric tons (mt) in 2002, 19.5 mt in 2003, and 19.1 mt during the first six months of
2004. Previously, the March 2004 INCSR reported that Venezuela’s cocaine seizures
in 2003 had amounted to 32 metric tons in 2003, but the State Department
subsequently revised the figure downward to 19.5 mt in large part because the
previous figure had included a large seizure in international waters by the Spanish
navy, with cooperation from the Venezuelan Coast Guard. Nevertheless, the March
2005 INCSR asserted that cocaine seizures during the first six months of 2004 equaled
the total amount seized in 2003 in large part because of two multi-ton seizures made
by Venezuelan task forces that worked closely with U.S. law enforcement.
The Venezuelan government maintains that its cocaine seizures in 2004
amounted to 19.6 mt and amounted to 18.7 mt in the first eight months of 2005. U.S.
officials reportedly maintain that Venezuela’s figures are exaggerated because they
include four tons seized aboard Venezuelan ships by French and Dutch authorities in
the Caribbean.56
Despite the friction in U.S.-Venezuelan relations, cooperation between the two
countries at the law enforcement agency level led to significant cocaine seizures in
2004, according to the State Department’s March 2005 INCSR. The report asserted
that Venezuela carried out some 400 cocaine and heroin seizures in the first half of
2004 and that several important cocaine and heroin trafficking organizations were
effectively attacked in 2004, including several important extraditions. Nevertheless,
the Department of State maintained in the report that Venezuela needs to make
substantial efforts in five areas: passing an Organized Crime Law; making effective
efforts to combat corruption; cracking down on document fraud; enforcing court-
ordered wiretaps; and conducting opium poppy and coca eradication operations at
least annually. Venezuela has received small amounts of U.S. assistance under the
Administration’s Andean Counterdrug Initiative: $5 million in FY2002; $2.075
million in FY2003; $5 million in FY2004; almost $3 million for FY2005; and $2.252
million in FY2006 (P.L. 109-102). 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.)
Venezuela’s Designation as Country that Has Failed Demonstrably
in Counter-narcotics Efforts. As noted above, Venezuela suspended its
cooperation with the U.S. Drug Enforcement Administration (DEA) in early August
2005 because it alleged that DEA agents were spying on Venezuela. U.S. officials
maintained that the charges were baseless. Senator Specter met with President
Chávez and Venezuelan ministers in mid-August 2005 to discuss cooperation on drug
interdiction.
On September 15, 2005, President Bush designated Venezuela, pursuant to
international drug control certification procedures set forth in the Foreign Relations
Authorization Act, FY2003 (P.L. 107-228), as a country that has failed demonstrably
to adhere to its obligations under international narcotics agreements, although he
56 Steven Dudley and Pablo Bachelet, “Venezuela No Longer U.S. Ally in Drug War,”
Miami Herald, September 16, 2005.

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CRS-18
waived economic sanctions that would have curtailed U.S. assistance for democracy
programs in Venezuela. Small amounts of U.S. counter-narcotics assistance to
Venezuela under the Andean Counter-drug Initiative will also continue. (For
background on the law, see CRS Report RL32038, Drug Certification/Designation
Procedures for Illicit Narcotics Producing and Transit Countries, by K. Larry Storrs.)
According to the State Department’s justification for Venezuela’s designation,
some 150 metric tons of cocaine and increasing quantities of heroin move through its
territory annually. The justification noted that despite Venezuela’s increase in drug
seizures over the past four years, Venezuela has not addressed the increasing use of
Venezuelan territory to transport drugs to the United States. According to the State
Department, the overall picture is one of decreasing Venezuelan focus on
counternarcotics initiatives and reduced cooperation with the United States. It noted
that President Chávez suspended cooperation with the DEA and that many of
Venezuela’s most effective high-level officials in law enforcement and national drug
policy were removed from their posts in 2005.
Venezuelan officials maintain that the decision to designate Venezuela was
purely political because of the overall state of U.S.-Venezuelan relations. They assert
that Venezuela has made considerable counter-narcotics efforts that were lauded in
the State Department’s March 2005 International Narcotics Control Strategy
Report.57
During November 17, 2005 testimony before the House International Relations
Committee’s Western Hemisphere Subcommittee, Assistant Secretary of State
Thomas Shannon indicated that the United States was in discussions with the
Venezuelan government in order to get anti-drug cooperation back on track.
Concerns About Venezuela’s Involvement in Latin America
There have been long-held suspicions that Chávez has supported leftist
Colombian guerrillas, although Chávez denies such support. The State Department’s
April 2005 Country Reports on Terrorism maintains that Colombia’s three terrorist
groups — the leftist Revolutionary Armed Forces of Colombia (FARC) and the
National Liberation Army (ELN), and the rightist United Self-Defense Forces of
Colombia (AUC) — often cross into sparsely populated Venezuelan border areas,
regarding it as a safe area to rest, secure logistical supplies, and transship arms and
drugs. They also commit kidnapping and extortion for profit in Venezuelan territory.
The report maintained, however, that “it is unclear to what extent and at what level the
Venezuelan Government approves of or condones material support to Colombian
terrorists.” Nevertheless, the State Department asserted in the report that President
Chávez’s ideological affinity with the FARC and ELN limited antiterrorism
cooperation with Colombia. Unconfirmed Ecuadorian intelligence reports have
alleged that a small number of Latin Americans from various countries received
57 Ian James, “Venezuela Says U.S. Move to Call Country Uncooperative on Drugs is Pure
Politics,” Associated Press, September 16, 2005.

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CRS-19
guerrilla training in Venezuela in 2005, although President Chávez dismissed the
reports as propaganda.58
In addition to Colombia, U.S. officials have expressed concerns about President
Chávez’s close relationship with Cuba’s Fidel Castro, as well as allegations that he
has financed leftist groups in Ecuador and Bolivia. Chávez has denied such allegations
about financing leftist groups59 and defends his relationship with Cuba. Venezuela
supplies oil to Cuba on a concessionary basis, which in 2005 reportedly increased
from 53,000 to 90,000 barrels per day. In return, Venezuela has received support from
thousands of Cuban health care workers and sports instructors in the country. During
an April 2005 trip to Cuba, Presidents Chávez and Castro announced commercial
deals worth over $400 million, including a joint shipyard to build small navy ships
and a joint housing construction company.
President Chávez’s popularity has grown throughout Latin America, in part
because of his strong stance toward the United States and also because of his so-called
“oil diplomacy.” He has launched a Bolivarian Alternative for the Americas (ALBA)
as an alternative to the Free Trade Area of the Americas. ALBA advocates a socially
oriented trade block that would include mechanisms for poverty reduction. At the June
2005 OAS meeting held in Florida, Latin American governments refrained from
supporting a U.S. proposal that would have established a permanent committee to
monitor democracy in the region. They viewed it as an attempt to monitor Venezuela
through the OAS. During the Fourth Summit of the Americas held recently in
Argentina, President Chávez, while participating in a counter-summit, denounced the
FTAA and strongly criticized the Bush Administration. Chávez is also funding a new
24-hour hemispheric television network, TV of the South (Televisora del Sur or
Telesur) that began broadcasts in July. Some observers fear that the network will
spread Chávez’s populist and anti-U.S. rhetoric throughout the hemisphere.
Venezuela is offering oil to Caribbean nations on preferential terms in a new
program known as PetroCaribe, and there has been some U.S. concern that the
program could increase Venezuela’s influence in the Caribbean region. Since 1980,
Caribbean nations have benefitted from preferential oil imports from Venezuela and
Mexico under the San Jose Pact, and since 2001, Venezuela has provided additional
support for Caribbean oil imports under the Caracas Energy Accord. PetroCaribe,
however, would go further with the goal of putting in place a regional supply, refining,
and transportation and storage network, and establishing a development fund for those
countries participating in the program. Under the program, Venezuela announced that
it would supply 190,000 barrels per day of oil to the region, with countries paying
market prices for 50% of the oil within 90 days, and the balance paid over 25 years at
an annual rate of 2%. When the price of crude oil is over $50 a barrel, as it is now, the
58 Steven Dudley, “Report Alleges Rebels Trained in Venezuela,” Miami Herald, October
23, 2005.
59 Phil Gunson, “Chávez’s ‘Revolution’ Seen as Different From Castro’s,” Miami Herald,
June 13, 2004.

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interest rate is cut to 1%.60 Venezuela is moving ahead with additional preferential
oil agreements in the Andean region (known as PetroAndina) and with other South
American countries (PetroSur).61
Despite Chávez’s advances throughout the region, there has been friction at
times with various countries and leaders. The most recent case is the diplomatic row
with Mexican President Vicente Fox that led to the two countries recalling their
ambassadors. President Chávez had referred to Fox as a “puppy” of the United States,
while Fox accused Chávez of intolerance at the recent Summit of the Americas in
Argentina.62
Venezuela’s Extradition Requests
Venezuela has requested the extradition of three of its citizens from the United
States in two controversial terrorism cases. In early 2004, the Chávez government
requested the extradition of two former Venezuelan National Guard lieutenants, José
Antonio Colina and German Rodolfo Varela, charged with the February 2003
bombings of the Spanish Embassy and the Colombian Consulate in Caracas. Both
applied for political asylum because they claimed that they would be executed or
tortured if returned to Venezuela. They have been held since December 2003 at the
Krome Detention Center in Florida run by U.S. Immigration and Customs
Enforcement (ICE). In February 2005, a U.S. immigration judge denied them asylum
because of “serious reasons for believing” that they were involved in the bombings but
prohibited the United States from deporting them to Venezuela.63 The Department of
Homeland Security (DHS) has asked an immigration appeals court to deport the two
Venezuelans, arguing that they would not be tortured if returned home. As evidence,
they cite the treatment of a former general arrested in Venezuela for the same case.64
In another controversial case, Venezuela has requested the extradition of anti-
Castro activist Luis Posada Carriles for his alleged role in the 1976 bombing of a
Cuban airliner that killed 73 people.65 In April 2005, Posada’s lawyer announced that
Posada had entered the United States illegally from Mexico and would apply for
asylum because he has a “well-founded fear of persecution” for his opposition to Fidel
Castro.66 Posada had been imprisoned in Venezuela for the bombing of the Cuban
60 “Venezuela: Caribbean Will Receive 190,000 bpd,” Latinnews Daily, September 8, 2005.
61 Steven Dudley, “Chávez Oil Diplomacy Attracting New Friends,” Miami Herald,
November 17, 2005.
62 Phil Gunson, “Venezuela, Mexico Rift Widens in War of Words,” Miami Herald,
November 15, 2005.
63 Gerardo Reyes and Alfonso Chardy, “Wanted Chavez Foes Flee to South Florida,” Miami
Herald, April 5, 2005.
64 Alfonso Chardy, “Deport Venezuelan Bombing Suspects, U.S. Urges Court,” Miami
Herald, March 25, 2005.
65 Also see CRS Report RL32730, Cuba: Issues for the 109th Congress, by Mark P. Sullivan.
66 Alfonso Chardy and Nancy San Martin, “Lawyer Expects Posada to Show Soon,” Miami
(continued...)

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airliner but reportedly was allowed to “escape” from prison in 1985 after his
supporters paid a bribe to the prison warden.67 He had been acquitted for the bombing
but remained in prison pending a prosecutorial appeal. Posada also reportedly
admitted, but later denied, involvement in a string of bombings in Havana in 1997,
one of which killed an Italian tourist.68 More recently, Posada was imprisoned for
several years in Panama for his involvement in an alleged plot in November 2000 to
kill Fidel Castro. He was convicted on weapons charges in the case and sentenced to
eight years in prison, but ultimately was pardoned by outgoing President Mireya
Moscoso in August 2004.
ICE arrested Posada on May 17, 2005, and subsequently charged him with
illegally entering the United States. A DHS press release indicated that ICE does not
generally deport people to Cuba or countries believed to be acting on Cuba’s behalf.69
Venezuela has pledged that it would not hand Posada over to Cuba, but on September
26, 2005, a U.S. immigration judge ruled that Posada cannot be deported to Venezuela
because he could be tortured.70
Legislative Initiatives
108th Congress. In the 108th Congress, Members of Congress had 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
August recall referendum.71 As noted above (U.S. Funding for Democracy Projects),
the conference report to the FY2005 Consolidated Appropriations Act (Division B of
P.L. 108-447, H.Rept. 108-792) required a comprehensive report on NED’s activities
in Venezuela since FY2001 and reaffirmed NED’s duty to ensure that all sponsored
activities adhere to core NED principles.
Also in the 108th Congress, two resolutions were introduced in the House, but no
action was taken on these measures. H.Res. 716, introduced by Representative Elton
Gallegly on July 14, 2004, would, among other provisions, have encouraged
Venezuelans to participate in a constitutional, peaceful, democratic, and electoral
solution to the political crisis in Venezuela, and appealed to the Venezuelan
government and the opposition to support a free, fair, and transparent recall
66 (...continued)
Herald, April 14, 2005.
67 Ann Louise Bardach, “Our Man’s in Miami. Patriot or Terrorist?,” Washington Post,
April 17, 2005.
68 Oscar Corral and Alfonso Chardy, “Victim’s Kin Oppose Posada Bid for Asylum,” Miami
Herald, May 7, 2005.
69 Department of Homeland Security, Office of Public Affairs, Statement, May 17, 2005.
70 Alicia Caldwell, “Judge Says Cuban Militant Can’t Be Deported to Venezuela,”
Associated Press, September 28, 2005.
71 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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referendum in accordance with the Venezuelan Constitution. H.Res. 867, introduced
by Representative Tom Lantos on November 20, 2004, would have expressed support
for the National Endowment for Democracy in Venezuela. The resolution would have
expressed the view that charges against Súmate were politically motivated. As noted
above, Súmate is a Venezuelan civic organization involved in voter education and
electoral observation that received funding from the National Endowment of
Democracy. The resolution also would have welcomed the dropping of charges by the
Venezuelan government against Súmate. Earlier in the year, in a July 12, 2004, letter
to President Chávez, the House International Relations Committee expressed serious
concern about the treatment of the leaders of Súmate.
109th Congress. In the 109th Congress, there has been legislative action on
several initiatives on Venezuela. The FY2006 Foreign Operations appropriations
measure (P.L. 109-102, H.R. 3057, H.Rept. 109-265) provides $2 million in
Democracy Funds for the NED for democracy programs in Venezuela and $2.252
million in funding under the Andean Counterdrug Initiative. The Administration also
requested $500,000 in Economic Support Funds for Venezuela, although no specific
earmark was provided in the conference report.
In other action, the House-passed version of H.R. 2601 (H.Rept. 109-168), the
FY2006 and FY2007 Foreign Relations Authorization Act, has a provision (Section
1025), authorizing $9 million in Economic Support Funds for each of FY2006 and
FY2007 “to fund activities which support political parties, the rule of law, civil
society, an independent media, and otherwise promote democratic, accountable
governance in Venezuela.”
H.R. 2601 also has a provision, in Section 106(5), authorizing funds for the
“Broadcasting Board of Governors to carry out broadcasting to Venezuela for at least
30 minutes per day of balanced, objective, and comprehensive television news
programming, radio news programming, or both.”
Finally, with regard to the human rights situation in Venezuela, H.Con.Res. 224
(Fortuño) calls on the Venezuelan government to uphold the human rights and civil
liberties of the people of Venezuela.

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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
Trinidad
Isla de
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)
crsphpgw

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