Order Code RL32488
Venezuela: Political Conditions
and U.S. Policy
Updated January 11, 2008
Mark P. Sullivan
Specialist in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Nelson Olhero
Research Associate
Foreign Affairs, Defense, and Trade Division

Venezuela: Political Conditions and U.S. Policy
Summary
Under the populist rule of President Hugo Chávez, first elected in 1998 and
most recently reelected to a six-year term in December 2006, Venezuela has
undergone enormous political changes, with a new constitution and unicameral
legislature, and even a new name for the country, the Bolivarian Republic of
Venezuela. U.S. officials and human rights organizations have expressed concerns
about the deterioration of democratic institutions and threats to freedom of
expression under President Chávez, who has survived several attempts to remove
him from power. The government has benefitted from the rise in world oil prices,
which has sparked an economic boom and allowed Chávez to increase expenditures
on social programs associated with his populist agenda. After he was reelected,
Chávez announced new measures to move the country toward socialism. His May
2007 closure of a popular Venezuelan television station (RCTV) that was critical of
the government sparked student-led protests and international condemnation.
President Chávez was dealt a setback on December 2, 2007, when his proposed
constitutional amendment package was defeated by a close margin in a national
referendum. Many of the amendments proved controversial, such as the removal of
presidential term limits and the government’s ability to suspend certain constitutional
rights during a state of emergency.
The United States traditionally has had close relations with Venezuela, the
fourth major supplier of foreign oil to the United States, but there has been friction
in relations with the Chávez government. U.S. officials have expressed concerns
about President Chávez’s military arms purchases, his relations with such countries
as Cuba and Iran, his efforts to export his brand of populism to other Latin American
countries, and concerns about the state of democracy. Declining cooperation on anti-
drug and anti-terrorism efforts has also been a U.S. concern. Since 2005, President
Bush has annually designated Venezuela as a country that has failed demonstrably
to adhere to its obligations under international narcotics agreements, and since 2006,
the Department of State prohibited the sale of defense articles and services to
Venezuela because of its lack of cooperation on anti-terrorism efforts.
Congressional concerns regarding Venezuela focus on the state of democracy
human rights and energy issues. On May 24, 2007, the Senate approved S.Res. 211,
expressing profound concerns regarding freedom of expression and Venezuela’s
decision not to renew the license of RCTV. The House version of H.R. 2764, the
FY2008 State Department and Foreign Operations appropriations bill approved in
June 2007, would have directed $10 million for targeted international broadcasting
to Venezuela. The final enacted measure (P.L. 110-161, Division J) did not
specifically earmark such funding, but the explanatory statement to the bill expressed
support for restoring shortwave and medium wave transmission to Venezuela. On
November 5, 2007, the House approved H.Res. 435, expressing concern about Iran’s
efforts to expand its influence in Latin America, and noting Venezuela’s increasing
cooperation with Iran. Additional House initiatives include two human rights
resolutions, H.Con.Res. 50 and H.Con.Res. 77; and H.Res. 560, which would
express concern about Venezuela’s actions in the oil sector. Two Senate bills, S. 193
and S. 1007, would increase hemispheric cooperation on energy issues.

Contents
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Political Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chávez’s Brief Ouster in April 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Continued Opposition and Strike in 2002 and 2003 . . . . . . . . . . . . . . . 6
August 2004 Presidential Recall Referendum . . . . . . . . . . . . . . . . . . . . 7
December 2005 Legislative Elections . . . . . . . . . . . . . . . . . . . . . . . . . . 9
December 2006 Presidential Election . . . . . . . . . . . . . . . . . . . . . . . . . 11
Political Developments in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RCTV Closure and Public Reaction . . . . . . . . . . . . . . . . . . . . . . . . . . 14
December 2, 2007 Constitutional Reform Referendum . . . . . . . . . . . 16
Human Rights Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Trafficking in Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Venezuela’s Social Missions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
U.S. Policy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Background and Overview of U.S.-Venezuelan Relations . . . . . . . . . . . . . 28
Tensions Increase in 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Developments in 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Developments in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
General Policy Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
U.S. Funding for Democracy Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Oil Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Counternarcotics Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Concerns about Venezuela’s Military Purchases . . . . . . . . . . . . . . . . . . . . . 42
Concerns About Venezuela’s Activities in Latin America . . . . . . . . . . . . . 44
Terrorism Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Venezuela’s Extradition Requests
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Legislative Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
List of Figures
Figure 1. Map of Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Venezuela:
Political Conditions and U.S. Policy
Recent Developments
On January 10, 2008, the Revolutionary Armed Forces of Colombia (FARC)
released to Venezuelan officials two prominent Colombians that had been held
hostage for several years. President Chávez played an active role in their release, and
the release raised expectations that the FARC might release additional hostages. Over
700 people reportedly are held by the FARC, including three American contractors
held since 2003 when their plane was shot down. (For additional background, see
CRS Report RL32250, Colombia: Issues for Congress.)
On December 31, 2007, President Chávez granted amnesty to those in
Venezuela facing charges who had supported the short-lived coup that ousted him
temporarily from power in April 2002. Critics maintained that the amnesty was
discriminatory because it did not include those individuals who fled Venezuela to
other countries.
On December 11, 2007, three Venezuelans and one Uruguayan national were
arrested and charged in U.S. federal court in Miami with acting and conspiring to act
as agents of the Venezuelan government without prior notification to the U.S.
Attorney General. All four were alleged to have conspired in a scheme to conceal the
source and destination and the role of the Venezuelan government in the attempted
delivery of $800,000 to Argentina by a U.S. businessman, Guido Alejandro Antonini
Wilson.
On December 2, 2007, Venezuelan voters rejected the Chávez government’s
constitutional referendum proposals by a close margin. Among the most controversial
provisions were amendments that would have removed presidential term limits,
eliminated the independence of the Central Bank, and given the President power to
suspend certain constitutional rights during a state of national emergency. There had
been growing opposition to the constitutional changes, including opposition by
university students, business groups, the Catholic Church, and some prominent
former supporters of President Chávez. (See section below on “December 2, 2007
Constitutional Reform Referendum.”)
On November 22, 2007, Colombian President Alvaro Uribe withdrew support
of efforts by President Chávez to mediate with the FARC for the release of some 45
hostages, including three American contractors held since 2003. In August 2007,
Uribe had authorized Chávez to mediate with the FARC, but halted the efforts when
the Venezuelan President broke protocol by having direct contact with the top

CRS-2
commander of the Colombian army. Venezuela responded with a public statement
accepting Colombia’s decision, but expressing its frustration.
On November 15, 2007, the House Subcommittee on International
Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs
held a hearing focusing on the case of Luis Posada Carriles. Venezuela has requested
the extradition of Posada for his alleged role in the 1976 bombing of a Cuban airliner
that killed 73 people. (See “Venezuela’s Extradition Requests” below.)
On November 5, 2007, the House approved by voice vote H.Res. 435 (Klein),
which expressed concern over Iran’s efforts to expand its influence in Latin America.
The resolution also noted examples of Venezuela’s increasing relations and
cooperation with Iran.
On September 14, 2007, President Bush, determined (pursuant to international
drug control certification procedures set forth in U.S. legislation) that Venezuela, for
the third year in a row had failed demonstrably to adhere to its obligations under
international counternarcotics agreements. State Department officials maintained
that, although Venezuela indicated that it had developed some new programs to fight
drug trafficking, its efforts continued to be limited. Venezuela maintains that the U.S.
determination process continues to be politicized and disregards Venezuela’s
international cooperation and advances in counternarcotics efforts. (See
“Counternarcotics Cooperation” below.)
On August 15, 2007, President Chávez announced his proposals for
constitutional reform to the National Assembly.
On June 26, 2007, Venezuela announced that two U.S. oil companies,
ConocoPhillips and Exxon Mobil, would be leaving their Orinoco belt oil projects
after not being able to negotiate new terms for their minority partnership with the
Venezuelan government. Venezuela’s state-owned oil company, Petroleos de
Venezuela (PdVSA) announced the signing of new Orinoco partnership agreements
with four other foreign oil companies — BP, Total, Statoil, and U.S.-owned
Chevron.
On June 21, 2007, the House approved by voice vote H.Amdt. 358 (Mack) to
H.R. 2764, the FY2008 State Department and Foreign Operations appropriations bill,
which would direct $10 million in international broadcasting operations for targeted
broadcasting for Venezuela. The House subsequently approved H.R. 2764 on June
22, 2007.
On June 12, 2007, the State Department issued its annual Trafficking in Persons
Report, which again categorized Venezuela as a Tier 3 country that has not made
adequate efforts to combat trafficking in persons. (See the report at
[http://www.state.gov/g/tip/rls/tiprpt/2007/].)
On May 27, 2007, the Chávez government refused to renew the broadcast
license of Radio Caracas Television (RCTV), which frequently carried programing
critical of the government, and the station went off the air. The government’s action

CRS-3
prompted international condemnation and sparked extensive student-led protests in
Venezuela. (See “RCTV Closure and Public Reaction” below.)
On May 24, 2007, the Senate approved S.Res. 211 (Lugar) by unanimous
consent, expressing profound concerns regarding freedom of expression and
Venezuela’s decision not to renew the license of RCTV.
On May 14, 2007, for the second year in a row, the State Department
determined, pursuant to Section 40A of the Arms Export Control Act, that Venezuela
was not cooperating fully with U.S. antiterrorism efforts. Other countries on the list
are Cuba, Iran, North Korea, and Syria.
On April 30, 2007, the State Department issued its annual Country Reports on
Terrorism, which asserted that President Chávez “persisted in public criticism of
U.S. counterterrorism efforts, deepened Venezuelan relationships with Iran and Cuba,
and was unwilling to prevent Venezuelan territory from being used as a safe haven”
by Colombian terrorist groups.
On March 9, 2007, the Inter-American Commission on Human Rights (IACHR)
issued a statement expressing concern about the human rights situation in Venezuela
and appealing to the government to allow an IACHR representative to visit the
country.
On March 6, 2007, the State Department released its annual human rights report,
which stated that Venezuela’s human rights situation was characterized by
“politicization of the judiciary, harassment of the media, and harassment of the
political opposition.” (See the full report at [http://www.state.gov/g/drl/rls/hrrpt/
2006/78909.htm].)
On March 1, 2007, the Department of State released its 2007 International
Narcotics Control Strategy Report (INCSR), which maintained that Venezuela is one
of the principal drug-transit countries in the hemisphere because of its geography,
rampant high-level corruption, weak judicial system, and lack of international
counternarcotics cooperation.
In February 7, 2007, testimony before the House Foreign Affairs Committee,
Secretary of State Condoleezza Rice stated that she believes “there’s an assault on
democracy in Venezuela” and that “the president of Venezuela is really destroying
his own country economically, politically.” Venezuelan Foreign Minister Nicolas
Maduro responded by saying that “no U.S. official has the morality to qualify
Venezuelan democracy or the democratic leadership of President Chávez.”
In January 11, 2007, testimony before the Senate Select Committee on
Intelligence, Director of National Intelligence John Negroponte stated that President
Chávez “is among the most stridently anti-American leaders anywhere in the world,
and will continue to try to undercut U.S. influence in Venezuela, in the rest of Latin
America, and elsewhere internationally.” Negroponte also expressed concern that the
Venezuelan leader’s military purchases and moves toward developing his own
weapons production capability are increasingly worrisome to his neighbors, and
could fuel an arms race in the region.

CRS-4
On January 10, 2007, President Chávez was sworn in to another six-year term,
pledging to move Venezuela toward socialism and proposing changes to the
constitution that would allow the president to be reelected indefinitely instead of the
current two-term limit.

On January 8, 2007, President Chávez announced plans to nationalize the
country’s largest telecommunications company, CANTV, which is partly owned by
Verizon Communications, and electricity companies, which would include EdC
(Electricidad de Caracas), which is majority-owned by the U.S.-based AES
Corporation. In February, the Venezuelan government negotiated agreements for the
purchase of the majority stake of AES in EdC and for Verizon’s stake in CANTV,
with officials from both AES and Verizon describing the agreements as fair.
On January 5, 2007, Secretary General of the Organization of American States
José Miguel Insulza issued a statement expressing concern that Venezuela’s decision
not to renew the license of RCTV gave the appearance of censorship.
On December 28, 2006, President Chávez announced that his government would
not renew the broadcast license for RCTV, which frequently carried programming
critical of the Chávez government. Human rights organizations denounced the
action.
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
Chávez Biography
term, Chávez was the candidate
of the Patriotic Pole, a left-
Hugo Chávez Frias was born on July 28, 1954, in
leaning coalition of 15 parties,
a small farming town in the western Venezuelan state of
with Chávez’s own Fifth
Barinas. The son of school teachers, Chávez was a 1975
Republic Movement (MVR) the
graduate of Venezuela’s Military Academy. He reached
main party in the coalition.
the rank of lieutenant colonel by 1990. In February
1992, Chávez led an unsuccessful attempt to overthrow
the elected government of President Carlos Andres
Most observers attribute
Perez. He was imprisoned for two years for the coup
Chávez’s rise to power to
attempt before being pardoned. While in the military,
Venezuelans’ disillusionment
Chávez founded the nationalistic and left-leaning
with politicians whom they
Bolivarian Revolutionary Movement, which was later
transformed into the Fifth Republic Movement in the
judge to have squandered the
1998 elections when Chávez was first elected president.
country’s oil wealth through
poor management and endemic
Source: Current Leaders of Nations, Gale Group. May
corruption. A central theme of
20, 2004.

CRS-5
his campaign was constitutional reform; Chávez asserted that the system in place
allowed a small elite class to dominate Congress and that revenues from the state-run
oil company, Petroleos de Venezuela (PdVSA), had 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 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 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 reelection 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 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
feared that he was moving toward authoritarian rule and pointed to his domination
of most government institutions. Some argue that Chávez had replaced the country’s
multiparty democracy with a political system that revolves around himself, in essence
a cult of personality; others pointed to Chávez’s open admiration of Fidel Castro and
close relations with Cuba as a disturbing sign. Other observers expressed concern
about the increased role of the military in the government, with Chávez appointing
1 For example, see M. Delal Baer, “Revenge of the Venezuelan Dinosaurs,” Wall Street
Journal
, June 18, 1993.

CRS-6
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
believed that he was trying to politicize the educational system by making changes
to school curriculums. They feared 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
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 least 18
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.
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.

CRS-7
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.
August 2004 Presidential Recall Referendum. After months of
negotiations facilitated by the Organization of American States (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.
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.

CRS-8
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 reelection, 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 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
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.

CRS-9
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
reconciliation ... in which differences are settled in the framework of the democratic
systems and in a spirit of transparency, pluralism, and tolerance.”13
Various factors 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.
After the August 2004 recall referendum, President Chávez’s rule was further
strengthened when his allies won a majority of gubernatorial and municipal posts in
elections held in late October 2004 and municipal posts in municipal elections held
in August 2005.
December 2005 Legislative Elections. Just days before the December 4,
2005, elections, in which all 167 seats in the National Assembly were at stake,
Venezuela’s five major opposition parties announced that they would boycott the
election. They maintained that the National Electoral Council (CNE) was dominated
by the government and accused it of making decisions in favor of parties supporting
the government. The parties withdrawing from the race consisted of the country’s
two parties that had been historically dominant until 1998, Democratic Action (AD)
and the Social Christian Party (COPEI), and three other key opposition parties: the
Movement to Socialism (MAS), the center-right Justice First party (PJ), and Project
Venezuela (PV).
Before the boycott, the opposition’s major concern was the CNE’s plan to use
digital fingerprint machines. The opposition feared that the government would be
able to determine how individuals had voted and that this information would be used
for political retribution, just as they assert that there was discrimination against those
people who signed the petition in favor of having the 2004 presidential recall
referendum. On November 28, 2005, however, the CNE, in a decision brokered by
the Organization of American States, announced that it would not use the
controversial digital fingerprint machines. Nevertheless, a day later, opposition
12 Last Phase of the Venezuelan Recall Referendum: Carter Center Report (English and
Spanish), Carter Center, August 21, 2004.
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.

CRS-10
parties began announcing their boycott of the legislative elections. The move
surprised election officials, and some reports indicate that international observers
were unhappy that the opposition had reneged on a commitment to participate in the
elections if the digital fingerprint machines were not used.14
In the lead up to the legislative elections, some opposition groups had also
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 a majority of votes are elected.) The pro-Chávez
coalition had used this method to win some 77% of seats in municipal elections held
in August 2005. In late October 2005, Venezuela’s Supreme Court rejected an
injunction against this practice that was filed by the opposition AD.15
Election Results. Because of the opposition boycott, pro-Chávez parties won
all 167 seats in the National Assembly, with 114 going to the President’s Fifth
Republic Movement (MVR) and the remaining 53 going to smaller pro-Chávez
parties as well as to independents and representatives of some social groups that
support the government. The voter participation rate was low and estimated at 25%,
or 2.9 million voters out of an electorate of 14.5 million. Legislators were elected for
five-year terms that began on January 5, 2006. In the previous National Assembly,
which had 165 members, pro-Chávez supporters controlled 86 seats, while
opposition parties controlled 79. In the lead-up to the December 2005 election,
observers predicted that the opposition would struggle to win one-third of the seats
in the Assembly and that the pro-Chávez parties would win a two-thirds majority
control of the legislature. The opposition’s boycott guaranteed that pro-Chávez
supporters will completely control the legislative branch.
International Observers. Both the OAS and the European Union sent
delegations to observe the elections. Both groups lamented the withdrawal of the
opposition, but also raised questions and had criticisms regarding the conduct of the
elections.
The EU observer group maintained that wide sectors of Venezuelan society do
not have trust in the electoral process and in the independence of the electoral
authority. It found that the electoral campaign focused almost exclusively on the
issue of distrust in the electoral process and the lack of independence of the CNE.
Overall, the EU concluded that the elections represented a lost opportunity and did
not contribute to the reduction of the fracture in Venezuelan society. Nevertheless,
the EU lauded the steps taken by the CNE to open the automated voting system to
external scrutiny and to modify various aspects that were questioned by the
opposition. In particular, the EU stated the CNE’s decision to eliminate the digital
fingerprint devices from the voting process was timely, effective, and constructive,
14 Phil Gunson, “Vote Boycott Sparks Test of Wills,” Miami Herald, December 3, 2005.
15 “Court Rebuffs AD Bid to Change Electoral Rules,” Latin American Weekly Report,
November 1, 2005.

CRS-11
and noted with surprise the opposition’s withdrawal just four days before the
election.16
The OAS delegation noted that there remains a distrust of the CNE on the part
of a significant segment of the population in terms of the origin and composition of
the CNE and the perception that its actions lack transparency and impartiality. It
suggested that a new democratic consensus be reached through dialogue that could
include a discussion of the election of the CNE, the automated voting system, the
electoral law, the process of issuing identification cards, a parliamentary system to
ensure proportional representation of minorities, and the strengthening of the
principle of separation, independence, and balance of powers. It criticized the
opposition’s withdrawal from the election, stating that every democracy requires an
institutional opposition committed to the electoral process, so that it can loyally
participate in the democratic system.17
Political Significance. With Chávez supporters controlling the legislature,
it will be far easier for the government to enact its legislative agenda and to enact
constitutional changes. With opposition parties having no representation in the
legislature, they will virtually have no official role in the political system. Some
observers question the wisdom of the opposition’s boycott of the election and
contend that the decision not to participate will erode its legitimacy. According to
Jose Miguel Vivanco from Human Rights Watch, which has been a critic of President
Chávez, the opposition’s tactics will not help them “gain any ground,” and it will be
difficult for “them to present themselves as victims that deserve solidarity from the
international community.”18 Other observers contend that the high abstention rate in
the election could allow the opposition to question the legitimacy of the National
Assembly. According to this view, the boycott helped send a message that
democracy is at threat in Venezuela and could bolster international support to press
the Chávez government for transparency and accountability.
December 2006 Presidential Election. In Venezuela’s December 3, 2006,
presidential election, President Chávez was resoundingly elected to another six-year
term in an election that international observers judged to be satisfactory. In the lead
up to the vote, polls showed Chávez with a lead of more than 20% over opposition
candidate Manuel Rosales in an election with 22 candidates on the ballot. The final
result showed Chávez with 62.87% and Rosales with 36.88%.
The government benefitted from the rise in world oil prices, which increased
government revenues and sparked an economic boom. As a result, Chávez was able
to increase government expenditures on anti-poverty and other social programs
associated with the populist agenda of his Bolivarian revolution. His reelection
demonstrated strong and widespread support for his social policy of redistributing the
16 “EU Election Observation Mission to Venezuela, Parliamentary Elections 2005,”
Preliminary Statement, December 6, 2005.
17 “Preliminary OAS Observations on the Legislative Elections in Venezuela,” Press
Release, December 6, 2005.
18 Juan Forero, “Chávez’s Grip Tightens as Rivals Boycott Vote,” New York Times,
December 5, 2005.

CRS-12
country’s oil wealth. Most observers credit the government’s numerous misiones or
social programs as the key to the government’s support and do not believe that
Venezuelans’ support for President Chávez is ideologically based.
For the opposition, the most significant aspect of the race was that Rosales
conceded his defeat in a legitimate election. Although the political opposition
remained weak and fragmented in the aftermath of the August 2004 recall
referendum and their boycott of the December 2005 legislative elections, it managed
to agree on a single unified presidential candidate for 2006, Manuel Rosales, who
was governor of the western oil-rich state of Zulia and former mayor of Maracaibo,
Venezuela’s second largest city. A primary had been scheduled for August 13, 2006
to select the opposition candidate, but on August 9, eight other candidates dropped
out of the presidential race in support of Rosales who was the frontrunner. Those
standing down in favor of Rosales included Julio Borges of the center-right Justice
First Party, and Teodoro Petkoff, a leftist newspaper editor and former planning
minister.
Although Rosales trailed in the polls, most observers credit him with running
a strong campaign that resonated with many Venezuelans. He ran a populist
campaign that emphasized social justice and an alliance between lower income
sectors and the middle class. He criticized the Chávez government for not doing
enough to reduce poverty and called for a program to transfer oil revenues directly
to the poor via a debit card, controversially named “Mi Negra,” that would provide
payments to poor families ranging from $280 to $460 monthly. He supported efforts
to bolster the private sector and a strategy to increase both domestic and foreign
investment. Rosales also called for efficiency and transparency in the judicial system
and has pledged to crack down on soaring crime. He vowed to call new legislative
elections with a system of proportional representation and supported a reduction in
the presidential term of office from six to four years. He criticized President Chávez
for providing so much assistance to foreign countries while there is extensive poverty
in Venezuela, and he criticized the government’s alliances with countries like Cuba
and Iran.19
Opposition supporters and other observers had complained that President
Chávez had used state resources for his reelection, with government expenditures for
advertising and access to television. They argued that the Chávez government had
distributed Christmas bonuses for public-sector employees earlier than normal in
order to gain favor in the presidential vote. Observers also asserted that the
government was using political coercion to ensure support among public sector
employees and pointed to a video of Venezuela’s Minister of Energy and Petroleum
urging PdVSA workers to support Chávez’s reelection.20
19 “Can Rosales Win?,”Andean Group Report, November 7, 2006; “Venezuela: Opposition
Candidate Proposes Building New Social Democracy,” Open Source Center (Caracas
Globovision Televison) November 7, 2006; Simon Romero, “Venezuelans Square Off Over
Race, Oil and a Populist Political Slogan,” New York Times, November 12, 2006.
20 Steven Dudley, “Government Power Give Chávez Campaign Edge,” Miami Herald,
November 11, 2006; Elizabeth M. Nunez, “Opponents of Chávez Release Video,”
(continued...)

CRS-13
Both the Organization of American States and the European Union sent
delegations to observe the elections and, despite various problems, judged the
elections to have been held in a satisfactory manner. According to a preliminary
statement by the EU, “the high turnout, peaceful nature, and general acceptance of
results of the presidential elections in Venezuela open the way forward to substantial
improvements in the quality and public confidence in electoral processes.”21 The
OAS congratulated “the Venezuelan people, its government, and its political parties
and democratic institutions for the civic behavior that prevailed during the electoral
process.”22
Political Developments in 2007
As President Chávez was inaugurated to another six-year term in January 2007,
he announced a number of measures to further strengthen his power and move
Venezuela toward his vision of 21st century socialism. He called for the National
Assembly to approve a new law that would enable him to pass laws by decree.
Subsequently, on January 31, the Assembly approved a law giving Chávez broad
powers, for a period of 18 months, to enact measures by decree in a number of
economic, social, and military areas. Critics fear that the move will further
undermine democratic institutions and lead to authoritarianism, while supporters
maintain that the measure will help the President move ahead more quickly to enact
a new economic and social model in Venezuela.
Among other proposals announced by the President in January were plans to
eliminate the autonomy of the central bank; to make PdVSA a majority shareholder
of current Orinoco Belt oil projects with foreign companies; to change the
constitution to allow the president to be reelected indefinitely instead of the current
two-term limit; to launch a new drive for “Bolivarian popular education” that would
deepen Venezuela’s new social values; to create federations of communal councils
(thousands of local communal councils were established in 2006) that could
eventually replace state government institutions; and to nationalize the country’s
largest telecommunications company, CANTV, and electricity companies, including
EdC (Electricidad de Caracas).23
CANTV is partly owned by Verizon Communications, while EdC is majority-
owned by the U.S.-based AES Corporation. When the nationalizations of CANTV
and EdC were announced, there was considerable concern that the companies would
not receive adequate compensation. In February 2007, the Venezuelan government
20 (...continued)
Associated Press, November 3, 2006.
21 European Union Election Observation Mission, Presidential Elections Venezuela 2006,
Preliminary Statement, December 5, 2006.
22 “OAS Hears Reports on Elections in Ecuador and Venezuela,” Organization of American
States, Press Release, December 13, 2006.
23 “21st Century Socialism,” Latin American Regional Report, Andean Group, January 2007;
Gregory Wilpert, “Chávez Sworn in to Second Full Term as Venezuela’s President,”
Venezuelanalysis.com, January 10, 2007.

CRS-14
ultimately negotiated agreements for the purchase of the majority stake of AES in
EdC and for Verizon’s stake in CANTV. Officials of both AES and Verizon
described the agreements as fair.24 Foreign investors will likely be wary of investing
in Venezuela giving the nationalizations and the government’s increasing role in the
economy.
RCTV Closure and Public Reaction. On December 28, 2006, President
Chávez announced that his government would not renew the broadcast license for
RCTV, Venezuela’s oldest television station, which frequently carried programming
critical of the Chávez government. Venezuelan officials maintained that the non-
renewal of RCTV’s license was for its actions in support of the April 2002 coup
against President Chávez. Because of this, they assert that it was within the
government’s rights not to renew RCTV’s public broadcasting license, but that
RCTV could continue to broadcast on private cable or satellite stations. RCTV
maintains that its broadcast license is valid until 2022, not May 27, 2007, as claimed
by the Venezuelan government, and that the action by the government is part of an
effort to silence public opinion.
The OAS Office of the Special Rapporteur for Freedom of Expression expressed
concern in late December 2006 about Venezuela’s decision and its effect on freedom
of expression. OAS Secretary General José Miguel Insulza issued a statement on
January 5, 2007, expressing concern that Venezuela’s decision not to renew the
license of Radio Caracas Television (RCTV) gave the appearance of censorship. He
expressed hope that the action would be reversed by the Venezuelan government.25
The Inter-American Commission on Human Rights expressed concern about freedom
of expression in Venezuela and called on the Venezuelan government to protect
pluralism in the media.26
Numerous human rights also organizations denounced Venezuela’s decision not
to renew RCTV’s license as a violation of freedom of speech. These included the
Inter-American Press Association, Reporters Without Borders, the Committee to
Protect Journalists, the Instituto Prensa y Sociedad, and Human Rights Watch, which
maintained that the government’s decision was politically motivated and was a
serious setback for freedom of expression.27
Thousands of protestors marched in Caracas at events in April and May 2007
denouncing the government decision, but the government followed through with its
24 “AES to Sell Utility Stake to Venezuela,” Washington Post, February 9, 2007;
“Venezuela: Government Buys Verizon’s Stake in CANTV,” Latinnews Daily, February
13, 2007.
25 Organization of American States, “OAS Secretary General Expresses Concern Over
Decision Not to Review Broadcasting License of Venezuelan Television Station,” Press
Release, January 5, 2007.
26 Inter-American Commission on Human Rights, “IACHR Concerned About Freedom of
Expression in Venezuela,” Press Release, May 25, 2007.
27 “Venezuela: Shutdown Harms Free Expression,” Press Release, Human Rights Watch,
May 25, 2007.

CRS-15
decision and RCTV ceased its public broadcasting on May 27. The closure of RCTV
prompted protests, primarily by students who oppose the government’s action as a
violation of freedom of their civil rights. The strength and endurance of the student-
led protests appear to have taken the government by surprise. Polls reportedly show
that more than 70% of Venezuelans disagree with President Chávez’s decision to
close RCTV.28 Nevertheless, the government has threatened legal action against
another private television station, Globovisión, accusing it of inciting assassination
attempts against President Chávez. Venezuelan Foreign Minister Nicolas Maduro
has asserted that the United States is behind plans to destabilize Venezuela.
Several countries, including the United States, spoke out against Venezuela’s
action. The U.S. Senate approved S.Res. 211 (Lugar) on May 24, 2007 by
unanimous consent expressing profound concerns regarding freedom of expression
in Venezuela and the government’s decision not to renew the license of RCTV. In
the aftermath of RCTV’s closure, the State Department issued a statement calling on
Venezuela to reverse its policies that limit freedom of expression.29 The European
Parliament adopted a resolution on May 24, 2007, expressing concern about
Venezuela’s action, and calling for the government to ensure equal treatment under
the law for all media. On May 31, 2007, the Brazilian Senate issued a strong
statement calling for President Chávez to review his decision. The Chilean Senate
also supported a resolution against the closure of RCTV. At the OAS General
Assembly meeting held in Panama June 3-5, 2007, several nations, such as Canada,
Chile, El Salvador, Guatemala, and Peru, in addition to the United States, spoke out
for freedom of the press. Ultimately, however, the OAS did not approve a resolution
specifically criticizing Venezuela for its actions, but adopted a resolution reaffirming
the right to freedom of expression and calling upon member states to respect and
ensure respect for this right.30
In July 2007, RCTV resumed broadcasting through cable and satellite, as RCTV
International (a subsidiary of RCTV). Only about a third of Venezuelan households,
however, have access to cable or satellite television.31 The government responded
to the broadcaster’s return to the airwaves by ordering RCTV International to register
as a Venezuelan broadcaster in order to be subject to local regulations. Otherwise, it
would face losing its licence to broadcast via cable. Since RCTV International is
based in Miami, it claims that it is not a national broadcaster and therefore exempt
from registration and local regulations. The Venezuelan National
Telecommunications Commission rejected this argument and threatened cable
28 Richard Lapper, “TV Channel Axed in Latest Chávez Drama,” Financial Times, May 26,
2007.
29 U.S. Department of State, “Statement on Closing of Venezuela’s Only Independent
Television Network with Nationwide Broadcast Coverage,” Daily Press Briefing, May 29,
2007.
30 Organization of American States, Declaration and Resolutions Adopted by the General
Assembly, June 5, 2007, pp. 100-103, AG/RES. 2287, Right to Freedom of Thought and
Expression and the Importance of the Media.
31 Benedict Mander, “Television Channel Critical of Chavez Returns,” Financial Times, July
16, 2007.

CRS-16
companies with fines if they continued to carry RCTV International. On August 2,
2007, the Venezuelan Supreme Court ruled that cable companies could continue to
carry RCTV International without fear of government retaliation, since no clear
regulation exists defining what constitutes a national broadcaster.32 Venezuela’s
telecommunications minister, Jesse Chacon, responded to the Supreme Court’s
decision by stating that norms that clearly define a national broadcaster would be
elaborated in order to compel RCTV International to submit to government
regulation.
December 2, 2007 Constitutional Reform Referendum. In August
2007, Venezuelan President Hugo Chávez announced his proposals for
constitutional reform that would alter 33 of the 350 articles of the 1999 Venezuelan
constitution, and that he claimed would move Venezuela toward a new a model of
development known as “socialism in the 21st century” embracing participatory
democracy and a mixed economy. According to the Venezuelan government, the
purpose of the reforms was to speed the redistribution of Venezuela’s oil resources
to benefit the poor; de-centralize political power to grant citizens more direct say in
their affairs; and outline the legal foundation of a new, more equitable model of
development and democracy.33 Venezuela’s National Assembly debated the proposals
in three rounds, and ended up adding reforms to amend 36 additional articles for a
total of 69 constitutional amendments that were finalized by the Assembly on
November 2, 2007.
The amendments were subject to a public referendum held on December 2,
2007, with the 69 reforms split into two parts. Block “A” consisted of amendments
to 46 of the constitution’s articles, including the 33 reforms proposed by Chávez and
13 proposed by the National Assembly. Block “B” consisted of amendments to 23
articles proposed solely by the National Assembly.
Among some of the proposals for constitutional changes included in Block A
of the referendum were the following amendments:
! to lower the voting age from 18 to 16 years of age (Article 64);
! to prohibit foreign financing of associations with political goals, and
provide for government financing of electoral activities (Article 67);
! to decrease the workweek from 44 to 36 hours and the workday from
8 hours to 6 hours (Article 90);
! to recognize Venezuela’s multi-cultural diversity and the importance
of its indigenous, European, and African cultures (Article 100);
! to provide that the government promote and develop distinct forms
of businesses and economic units of social property and social
production or distribution in order to create the best conditions for
the collective and cooperative construction of a socialist economy
(Article 112);
32 “RCTV Allowed to Broadcast Despite Misgivings,” Latin American Andean Group
Report
, August 2007.
33 “Constitutional Reforms in Venezuela,” Embassy of the Bolivarian Republic of
Venezuela, Washington, D.C., November 2007.

CRS-17
! in addition to private property, to add several new classifications for
property – public, social, collective, and mixed (Article 115);
! to remove the presidential two-term limit, and extend the
presidential term from six to seven years (Article 230);
! to state that the socioeconomic system of Venezuela is founded on
socialist and anti-imperialist principles, among others (Article 299);
and
! to eliminate the independence of the Central Bank, which would
include putting international reserves under the administration and
direction of the President (Article 318).
Among some of the proposals for constitutional changes included in Block B
of the referendum were the following amendments:
! to prohibit discrimination based on health and sexual orientation
(Article 21);
! to give the President power to suspend certain constitutional rights,
such as the right of information and certain rights of due process
(that are protected under the current constitution) during a declared
“state of exception” (national emergency), but prohibit the
suspension of the rights to life, defense, and personal integrity or the
suspension of prohibitions against torture, being held
incommunicado, or disappearance (Article 337);
! to remove the time limitation for a declared state of exception
(Article 338);
! to increase the percentage of signatures required for citizens to
initiate constitutional amendments from 15% to 20% of those on the
electoral registry (Article 341).
One of the most controversial reforms would have extended the presidential
term from six to seven years and abolished the presidential two-term limit by
allowing indefinite reelection, a reform that would have allowed President Chávez,
last elected in 2006, to run for reelection in 2012. Opponents viewed it as a means
for President Chávez to remain in power indefinitely, while government officials
pointed out that constitutional provisions would still require the president to be re-
elected each term, with the possibility of facing a recall referendum midway in the
presidential term.
Other proposed reforms that raised concerns included amendments that would
have: given the state greater control over the economy; eliminated the independence
of the Central Bank and put international reserves under the control of the President;
given the President power to suspend certain rights (right of information and certain
rights of due process) during a state of emergency that are currently protected under
the existing constitution; and removed the time limits that a state of emergency could
be imposed.
Various provisions that would promote a “socialist economy” and “socialist
democracy” were also controversial. The reforms would have declared that the
socioeconomic system was based on socialist principles, and that state should
promote the active participation of citizens, restoring power to the people and

CRS-18
creating the best conditions for the construction of a socialist democracy. The
proposed reforms would have allowed for changes in the administrative division of
Venezuelan territory and the structure of local government, which according to
President Chávez, would represent “a new geometry of power.” New federal districts
with economic and political autonomy would be created and existing communal
councils (thousands have been created since 2006) would be given legal status and
empowered. As a result of this change, the government could channel funds and
resources directly to the federal districts and communal councils, bypassing local
government officials. National budget payments to the states would have increased
from 20% to 25% of the budget, with 5% designated for financing the communal
councils. Councils of popular power (such as communal councils, workers councils,
student councils, youth councils fishermen councils etc) would have been established
as a means of citizen participation. The work of the missions (the social programs
begun by the Chávez government in 2003) would be set forth in the constitution as
an official part of public administration created to satisfy the urgent needs of the
population.
The proposed constitutional reforms also included changes to the structure of
the military. The military would have been defined as a patriotic, popular, and anti-
imperialist body with the objective of guaranteeing Venezuela’s independence and
sovereignty. The National Reserves would be transformed into the “National
Bolivarian Militia,” which would constitute the fifth official component of the armed
forces.
Referendum Results. While initially it appeared that President Chávez’s
overall popularity and the decision to include such popular measures in the reform
as decreasing the work day would help ensure passage of the referendum, its approval
no longer appeared certain in the days leading up to the vote. There was growing
opposition to the constitutional reforms, including by a number of student
organizations, business groups, the Catholic Church, and even some past supporters
of President Chávez, such as the popular former minister of defense General Raúl
Baduel. Various polls in November 2007 showed that those opposing the
referendum had gained momentum and were in the majority.34 Despite the polls,
many observers still maintained that the government had the organization and
resources to mobilize its supporters, and pointed out that Chávez, who still remains
popular, had never lost an election.35

Early in the morning of December 3, 2007, Venezuela’s National Electoral
Council (CNE) announced that both blocks had been rejected by a slim margin, with
Block A defeated by 1.41% and Block B defeated by 2.11%. President Chávez
immediately addressed the country on national television, and conceded the loss. The
CNE subsequently issued an updated total of the vote on December 7, 2007 that
34 Ian James, “Venezuelan Voters Oppose Chávez’s Proposed Constitutional Changes, Poll
Shows,” Associated Press, November 24, 2007; Enrique Andres Pretel, “Poll Says Chávez
Loses Venezuela Referendum Lead,” Reuters News, November 24, 2007.
35 Tyler Bridges, “Turnout of anti-Chávez Voters is Questionable,” Miami Herald,
November 25, 2007.

CRS-19
changed the margin only slightly, with Block A defeated by 1.31% and Block B
defeated by 2.02%. (Table 1 below shows the CNE’s final vote totals.)
Table 1. CNE’s December 2, 2007 Constitutional Reform Results
Yes (votes)
Yes (%)
No (votes)
No (%)
Block A
4,404,626
49.34%
4,521,494
50.65%
Block B
4,369,014
48.99%
4,539,707
51.01%
Source: National Electoral Council, Bolivarian Republic of Venezuela, December
7, 2007.
Why the Reform Failed. A key to the failure of the reform effort appears to
lie with the large abstention of Venezuelans that in the past supported President
Chávez. About 56% of the electorate participated in the referendum vote compared
to almost 75% in the December 2006 presidential election. About three million fewer
voters supported the constitutional reform than voted for Chávez in 2006. President
Chávez acknowledged these statistics in his concession speech pointing out the
abstention of many of his supporters. In contrast, those rejecting the constitutional
reform received almost 250,000 votes more than opposition candidate Manuel
Rosales had in the 2006 presidential election, just a slight increase.
There are a number of factors that resulted in Chávez supporters staying home
for the referendum. One of the most significant was former and current supporters
of President Chávez concerned that the Chávez government is becoming too
radicalized with power too concentrated in the presidency. In the National Assembly,
the Podemos Party, a democratic socialist party that had been supportive of the
Chávez government, called the reform amendments a “constitutional coup,” and was
the sole party to vote against the reforms. Its leader Ismael García and other party
members were dubbed traitors for opposing the reform effort. The party, which
actively participated in the “No” campaign, had originally supported the
establishment of a Constituent Assembly to amend the Constitution. It is likely that
the opposition of Podemos contributed to the No vote, and also resulted in Chavistas
abstaining.
Another significant defection from the Chavista camp was the ex-wife of
President Chávez, Marisabel Rodriguez, who actively opposed the reform,
maintaining that it would concentrate absolute power. Rodriguez has a significant
political profile in Venezuela, and was a member of the Constituent Assembly that
drafted the current 1999 Constitution, which she maintains was a product of
legitimate and valid public debate.36
Perhaps the most significant opposition from within the Chavista movement was
from retired General Raúl Baduel, former commander of the Venezuelan army and
36 Chris Kraul, “Despite Outcry, Chávez Plan Likely to Pass,” Los Angeles Times,
November 15, 2007.

CRS-20
former Defense Minister, who in early November 2007 labeled the reform proposal
a coup d’etat intended to abolish checks on the President’s expanding power.37
Baduel had been one of Chávez’s closest advisors since he helped him return to
power in April 2002, and reportedly commands respect among many Chavistas and
within the Venezuelan military.38 Badhuel asserted that the constitutional reform
proposal was “nothing less than an attempt to establish a socialist state in
Venezuela.” He also cited the government’s failure to address such severe problems
as high rates of crime and violence, inflation, a housing shortage, and poor education
and health care, and maintained that the current constitution gives ample room for
any decent and honest government to address these challenges.39
Despite a booming Venezuelan economy and a fall in poverty rates over the past
several years, several significant economic problems in Venezuela contributed to the
rejection of the constitutional reform. Inflation, estimated at over 20% in 2007, has
been the highest in the region. Price controls on basic staples like milk, eggs, and
chicken have resulted in significant product shortages and long lines as domestic
production has dwindled. Venezuela’s currency is also significantly overvalued, with
a substantial difference between the official exchange rate and the parallel market.
The economic difficulties caused Venezuelans to question the government’s
management of the economy, asking such questions as how a booming economy
could be experiencing so many problems.
As expected, the political opposition also strongly criticized the proposed
constitutional changes, maintaining that the reforms would be a means for President
Chávez to extend his power and remain in office indefinitely, while steering
Venezuela towards Cuban-style totalitarianism. Opposition leader and former
presidential candidate Manuel Rosales of the Un Nuevo Tiempo (UNT) party called
the proposed changes a “constitutional coup,” and warned that the reform would
further exacerbate shortages for basic products as the country moves toward a
socialist system.40 An important aspect of the opposition’s “No” campaign was that
it concentrated on the substance of the reforms, and was not focused on Chávez
himself. Such a strategy proved less threatening for Chávez supporters who could
oppose the reform or abstain from voting and still support Chávez as their President
through 2012.
University students, which took the lead in the demonstrations against the
government’s closure of Radio Caracas Television ( RCTV) in May 2007, also
played a major role in defeating the constitutional reform by taking the lead in street
protests. On November 7, 2007, some 80,000 thousand students marched to the
37 Simon Romero, “Venezuelan General Likens Chávez’s Proposals for Constitution to a
Coup,” New York Times, November 6, 2007.
38 John Otis, “One-time Allies Blast Chávez’s Push for Power,” Houston Chronicle,
November 17, 2007.
39 Raul Isaias Baduel, “Why I Parted Ways with Chávez,” New York Times, December 1,
2007.
40 “Advierte Líder Opositor Venezolano Que Reforma Profundizará Desabasto,” Agencia
Mexicana de Noticias
, November 24, 2007.

CRS-21
Supreme Court calling on the judicial body to suspend the referendum. Students also
played a major role in the final demonstration of the “No” campaign, which
mobilized more than 100,000 people in Caracas on November 29, 2007. With their
ability to mobilize demonstrators, students emerged as perhaps the most prominent
and visible opponents of the constitutional reform effort, and some observers believe
that the reform would not have been defeated had it not been for the students.
Historically, students in Venezuela have often played an important role in political
change, including most notably in the overthrow of dictator Marcos Pérez Jiménez
in 1958. The student movement that emerged in 2007 was not discredited by the
Chávez government despite attempts to portray them as spoiled children of the
oligarchy.
The Catholic Church in Venezuela, which criticized the constitutional reform
effort as concentrating power in the hands of the President and favoring
authoritarianism, also likely had some influence on the vote. In October 2007,
Venezuelan bishops issues a public statement on the reforms, maintaining that the
proposition of a Socialist State was contrary to the fundamental principles of the
existing constitution, and asserting that the reforms would restrict liberties and
represent a step backward in progress on human rights.41
Venezuelan human rights groups also actively questioned and criticized the
constitutional reforms. Forum for Life, a coalition of Venezuelan nongovernmental
human rights organizations, petitioned the Supreme Court in mid-November to
declare the proposed reforms unconstitutional. The coalition of human rights
activists believed that the reforms represented a regression in the protection of human
rights recognized in the 1999 constitution. Among the various objections of the
Forum were concerns about proposed reforms to Article 337, which would eliminate
the right of information and essential elements of the right of due process from the
list of rights that cannot be suspended during a state of emergency. The Forum also
opposed the reform to Article 338, which would have removed the time limit on a
state of exception or emergency.42
Looking Ahead. The rejection of the constitutional reform will likely
improve public confidence in the electoral process, and in the National Electoral
Council. In the past, critics have often portrayed the CNE as dominated by the
Chávez government and questioned the outcome of elections. In the aftermath of the
“No” win, some opposition politicians claimed that the reform was defeated by a
much larger margin. But opposition leaders, including Manuel Rosales of the UNT,
agreed with the CNE’s numbers, which are listed on the electoral body’s website
41 Conferencia Episcopal Venezolana, “Exhortación de los obispos sobre la reforma
constitucional,” October 19, 2007, available at
[http://www.cev.org.ve/noticias_det.php?id=266]
42 “Foro por la Vida introduce acción de inconstitucionalidad de la propuesta de reforma
ante el TSJ,” Comunicado de Prensa, Foro por la Vida, Caracas, November 15, 2007,
available at
[http://www.derechos.org.ve/actualidad/comunicados/comu_prensa_2007/recursoreform
a.html]

CRS-22
down to the level of each voting site and table.43 Such level of transparency should
increase confidence that Venezuela can conduct free and fair elections.
Nevertheless, while many observers lauded the CNE for the conduct of the vote
on election day, government critics still claim that during the electoral campaign the
CNE sided with the government on many decisions, and did nothing to stop the
government from using its considerable resources to fund the campaign in favor of
the reform. For example, Caracas was blanketed with propaganda in favor of the
reform. The CNE was also widely criticized, including by the non-governmental
Venezuelan domestic election observer group Electoral Eye, for the several hour
delay in releasing the vote results, which contributed to increased tension across the
country until the vote was announced.
The win of the “No” vote could result in more independent debate with the
National Assembly, with more legislators feeling safer to question the government’s
projects and proposals. In particular, the role of the small Podemos party and its
leader Ismael Garcia has been elevated and will likely promote legitimate debate in
the legislative body. The rejection of the reform also elevated the potential future
political role of former Gen. Raúl Baduel, a former close supporter of President
Chávez, who reportedly is close with the Podemos party.
For opposition parties such as the center-left UNT and center-right Primero
Justicia, the rejection of the reform demonstrates that they can oppose the Chávez
government at the ballot box and win. Going forward, however, it is obvious that the
margin was very slim, and that just a small shift of votes – less than 60,000 for Block
A and about 85,000 for Block B – would have reversed the results. Observers assert
that victory by such a close vote suggests that the opposition will need to be unified
and work with other former Chávez supporters such as Podemos to attract more
electoral support. The next electoral races will take place in October 2008 when
regional and state elections will be held, and in December 2010 when national
elections will be held for the National Assembly
For President Chávez, while the referendum vote was his first electoral loss, he
still wields considerable power as President. While initially conciliatory in his
remarks following the defeat of the referendum, the President subsequently spoke
disparagingly of those Chavistas who abstained and vowed to continue efforts to get
the constitutional reforms approved. Moreover, observers point out that Chávez
could enact a number of the reform proposals by decree or through the regular
legislative process since he still has the support of most of the National Assembly.
Some of the more controversial proposals, however, including the elimination of
presidential term limits, can only be changed through the constitutional reform
process spelled out in the current constitution, which includes the avenue of using an
elected Constituent Assembly.
A key decision for President Chávez will be how he proceeds politically in the
aftermath of the defeat of the constitutional reform. In the past, the President has
resorted to harsh political rhetoric and polarization to win at the ballot box, and
43 The CNE’s website is available at [http:www.cne.gov.ve/].

CRS-23
ensure his popular support. The defeat of the referendum, however, could be a sign
that such hardline tactics may no longer be as successful. Some observers think that
the defeat could cause Chávez to use more pragmatic political tactics that would
appeal to moderate Chavistas and those supporters that abstained in the 2007
referendum. Such an approach might enable the President to regain strong popular
support, or enough support to again attempt efforts to achieve passage of
constitutional reforms in the future, particularly the elimination of presidential term
limits. Other observers contend that it is unlikely that Chávez will refrain from
hardline tactics to enact his radical agenda, especially given now that he is term
limited until early 2013. Such a strategy of continued polarization, however, could
be counterproductive for the President at the ballot box if it alienates moderate
Chavistas. Moreover, at this juncture, the government’s attempt to impose any
unpopular policy that affects civil rights or the state of democracy risks triggering
widespread street protests by an energized student movement and the political
opposition.
Human Rights Concerns
In addition to concerns about some of the constitutional amendments proposed
in 2007, human rights organizations and U.S. officials have expressed concerns for
several years about the deterioration of democratic institutions and threats to freedom
of speech and press in Venezuela under the Chávez The State Department’s March
2007 human rights report stated that Venezuela’s human rights situation was
characterized by “politicization of the judiciary, harassment of the media, and
harassment of the political opposition.”44 At the same time, however, a majority of
Venezuelans (57%) have expressed satisfaction with how democracy in their country
is working, according to a 2006 poll by Latinobarómetro, a far greater percentage
than in most Latin American countries.45
The Inter-American Commission on Human Rights (IACHR) issued a report in
2004 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.”46 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.47
On March 9, 2007, the IACHR issued a statement expressing concern about the
human rights situation in Venezuela and appealing to the government to allow an
IACHR representative to visit the country. The Commission stated that in the last
years it “has observed a gradual deterioration of the constitutional order that has
44 See the full report at [http://www.state.gov/g/drl/rls/hrrpt/2006/78909.htm].
45 Corporación Latinobarómetro, “Latinobarómetro Report 2006,” December 8, 2006.
46 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.
47 Michael Shifter, “Chávez Should Not Steer U.S. Policy,” Financial Times, April 7, 2005.

CRS-24
compromised the full enjoyment of human rights” and expressed concern about
freedom of expression in the country.48
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 and human
rights groups such as the Committee to Protect Journalists, Reporters Without
Borders, and the Inter-American Press Association maintain that these measures have
restricted freedom of expression, with newspapers and broadcasters practicing self-
censorship. (Also see “RCTV Closure and Public Reaction” above.)
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 conspiracy and treason. The
State Department’s March 2007 human rights report noted that the trial of leaders has
been indefinitely postponed.
Trafficking in Persons. Venezuela has been on the State Department’s Tier
3 list for trafficking in persons since 2004, which means that the government is
categorized as one that has failed to make significant efforts to bring itself into
compliance with the minium standards for the elimination of trafficking in persons.
The State Department’s June 2007 Trafficking in Persons (TIP) Report maintains that
Venezuela is a source, transit, and destination country for women and children
trafficked for sexual exploitation and forced labor. The report asserted that although
the Venezuelan government has made efforts to train public officials and has
undertaken public awareness efforts, it should amend its laws to prohibit all forms
of trafficking in persons and show credible efforts to investigate and prosecute
trafficking offenses.49 The Venezuelan government rejected the findings of the TIP
report and accused the United States of trying to damage the image of the Chávez
government.50 (Also see CRS Report RL33200, Trafficking in Persons in Latin
America and the Caribbean
, by Clare M. Ribando.)
48 Inter-American Commission on Human Rights, “The Inter-American Commission on
Human Rights Appeals To Be Allowed To Visit Venezuela,” Press Release, March 9, 2007.
49 U.S. Department of State, “Trafficking in Persons Report,” June 12, 2007, p. 207. See the
report at [http://www.state.gov/g/tip/rls/tiprpt/2007/].
50 “Venezuela Denounces U.S. Report on Human Trafficking,” Venezuelanalysis.com, June
14, 2007.

CRS-25
Economic Conditions
Venezuela’s major economic sector is petroleum, which accounts for one-third
of its gross domestic product and 80% of exports. The country is classified by the
World Bank as an upper middle income developing country because of its relatively
high per capita income of $6,070 (2006).
Despite the country’s oil wealth, economic conditions in the country
deteriorated in the 1990s. 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 2000.51 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 2002 to early 2003
contributed to a contraction of the national economy by almost 9% in 2002 and 7.7%
in 2003.
Since 2004, however, the economy has rebounded, with a growth rate over 18%
in 2004 and 10.3% in 2005 and 2006, fueled by the windfall in international oil
prices. The estimate for 2007 is 7.9% growth.52 The growth has allowed the Chávez
government 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.
Venezuela’s economy has experienced problems, however, such as high levels
of inflation and shortages of basic food staples. In December 2007, the annual
inflation rate for the year had reached 22.5%, the highest in Latin America.
Shortages of basic staples such as milk, sugar, and eggs worsened in November 2007
as a result of price controls that have stifled local production. While the government
decided in December 2007 to ease price controls on several staples, such as milk, it
is unclear whether the loosening will spur domestic industries to produce. The easing
of some price controls could also further boost inflation. In early January 2008, the
government introduced a new currency, the bolívar fuerte (strong bolivar), that
eliminates three zeroes from the bolívar and is intended in part to stem high inflation
rates, but some observers contend that inflation will only be curbed by a fiscal
adjustment by the government.53
51 World Bank, “Venezuela Country Brief,” August 2004.
52 “Venezuela Country Report,” Economist Intelligence Unit, December 2007.
53 Ibid; “Venezuela Economy: New Bolívar Makes Debut,” EIU Viewswire, January 2, 2008;
“Venezuelan Economy: Food Shortages Worsen,” EIU Viewswire, November 28, 2007.

CRS-26
Venezuela’s Social Missions
Venezuela is using windfall oil profits to boost social spending and programs
to fight poverty. Beginning in 2003, the Chávez government began implementing an
array of social programs and services known as misiones, or missions. As a result of
the booming economy and increased social spending, poverty rates in Venezuela
have declined. The U.N. Economic Commission for Latin America and the
Caribbean reports that poverty fell from 48.6% in 2002 to 30.2% in 2006, with
extreme poverty falling from 22.2% to 9.9% over the same period.54
The popularity of the missions was instrumental to President Chávez’s
reelection in December 2006 and has been a major factor in the President’s support
among the poor. A key characteristic of the missions is that they are generally
deinstitutionalized, functioning primarily through a parallel system that is not a part
of the bureaucratic apparatus of the state. The missions have been funded through
the government’s central budget and allocations by PdVSA. Some observers contend
that the work of the missions should be integrated into existing ministries and
institutions of the Venezuelan government in order to improve administration and
oversight.55
There are currently some 20 social missions in Venezuela, covering a wide array
of services in the fields of education, health, nutrition, the environment, sports,
culture, housing, and targeted programs for indigenous rights and services for street
children and adolescents.56
In the education field, the Misión Robinson constitutes a national literacy
campaign, with the government reporting that over 1.5 million Venezuelans have
learned to read and write since the program began in 2003.57 The Misión Robinson
2
focuses on adults in need of primary school education, particularly those who have
just learned how to read and write through the Misión Robinson. According to
government figures, between 2003 and 2006, over 1.2 million people were enrolled
in the mission’s primary school education program.58 The Misión Ribas provides
adult Venezuelans who never finished high school the opportunity to obtain a
secondary education. The Misión Sucre has established state-run university villages
in order to provide opportunities to attend university to those who were previously
excluded from the higher educational system. These universities are especially geared
to those students who completed their secondary education through the Misión Ribas.
54 U.N. Economic Commission for Latin America and the Caribbean, Social Panorama of
Latin America, 2007,
preliminary version, November 2007.
55 “Venezuela Country Profile 2007,” Economist Intelligence Unit, p. 18.
56 For background on the various missions, see the Venezuelan government’s website at
[http://www.misionesbolivarianas.gob.ve/].
57 See the government’s website on the Misión Robinson at [http://www.misiones
bolivarianas.gob.ve/misiones/mision-robinson.html].
58 See the government’s website on the Misión Robinson 2 at [http://www.misione
bolivarianas.gob.ve/misiones/mision-robinson-2.html].

CRS-27
In the health field, the Misión Barrio Adentro (Inside the Neighborhood
Mission) consists of free health care clinics in historically marginalized areas
throughout the country that are staffed primarily by Cuban medical personnel. The
medical personnel live in the barrios and make home visits to those who are too ill
to visit the community health clinics. The government intends to gradually replace
many of the Cuban doctors with Venezuelan doctors. Although there were more than
20,000 Cuban medical personnel serving in Venezuela supporting the mission, over
the past year thousands reportedly have left, leaving about 15,000; as a result, a
number of the clinics reportedly have closed.59 A July 2006 report published by the
Pan American Health Organization showed that the mission has had a positive
impact on the health of Venezuela’s poor. The report maintains that there has been
a reduction in child mortality from diarrhea and pneumonia since the mission began
operating and that medical consultations performed by the mission in 2004 and 2005
saved over 18,000 lives.60 A related health mission, the Misión Milagro (Miracle
Mission), provides free eye care clinics and eye surgery.
In the area of nutrition, Misión Mercal attempts to ensure that poor Venezuelans
obtain staple foodstuffs. The key component of the mission is the state-run Mercal
supermarket and grocery store chain, where prices are subsidized by the government
up to 40% less expensive than elsewhere.61 This mission also includes soup kitchens
that provide daily free meals and a service by which foodstuffs and meals are
delivered to the homes of those living in extreme poverty. The government claims
that the mission has been successful by pointing to the fact that over 47% of
Venezuelans shop at Mercal62 and that over nine and a half million people have
benefitted from the Mercal Mission in some way.63
Some observers have praised the missions for constituting an integrated package
of poverty-reduction measures that address the various conditions associated with
poverty, representing a holistic approach to poverty-reduction. The missions are
viewed by some as a potentially more effective alternative to simple cash transfers,
which have been the primary basis for poverty-alleviation programs in Latin
America. Some critics of the missions, however, maintain that they focus on
alleviating the harsh conditions associated with poverty rather than addressing the
structural roots of the problem. They maintain that the missions are paternalistic and
create a dependency on the state among the poor, without providing solutions to lift
people out of poverty permanently. Some critics question the sustainability of the
59 Phil Gunson, “Venezuela Struggles with Doctor Shortage,” Miami Herald, February 12,
2007.
60 “Mission Barrio Adentro: The Right to Health and Social Inclusion in Venezuela,” Pan
American Health Organization, July 2006, pp. 82 and 107-112.
61 Indira A.R. Lakshmanan, “Critics Slam Venezuelan Oil Windfall Spending,” Boston
Globe
, August 13, 2006.
62 “Chávez Reaches Out with Bolivarian Missions,” NPR, Weekend Edition, December 3,
2006.
63 See the government’s website on the Misión Mercal at [http://www.misiones
bolivarianas.gob.ve/misiones/mision-alimentacion.html]

CRS-28
missions since they are funded primarily from oil revenues. They argue that the
missions will likely disappear or be cut back significantly if oil revenue declined.64
U.S. Policy
Background and Overview of U.S.-Venezuelan Relations
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.65 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.”66 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.67 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.68
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
64 Indira A.R. Lakshmanan “ Critics Slam Venezuelan Oil Windfall Spending,” Boston
Globe
, August 13, 2006; José Orozco, “With ‘Misiones,’ Chávez Builds Support Among
Venezuela’s Poor,” WorldPoliticsWatch, December 10, 2006.
65 U.S. Dept. of State, “Venezuela: Change of Government,” Press Statement, April 12,
2002.
66 U.S. Dept. of State, International Information Programs, “White House Calls on
Venezuela’s Chávez to Preserve Peace, Democracy,” Washington File, April 14, 2002.
67 U.S. Dept. of State, International Information Programs, Washington File, “U.S. Again
Rejects Charges of Meddling in Venezuelan Affairs,” April 19, 2004.
68 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.

CRS-29
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, then 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.”69 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, maintained that President Bush would 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.70
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. Administration officials voiced increasing
concern about President Chávez in 2005, and tensions 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.”71 Then Secretary of Defense
Donald Rumsfeld expressed concerns in March about Venezuela’s plan to buy 10
military helicopters and 100,000 AK-47 rifles from Russia and questioned why
69 David R. Sands, “U.S. Casts Wary Eye on Venezuela Vote; Action Promised if Vote is
Rigged,” Washington Times, May 26, 2004.
70 Alice M. Chacon, “Venezuelan President Says His Greatest Rival is George W. Bush,”
Associated Press, June 12, 2004.
71 House International Relations Committee, Subcommittee on the Western Hemisphere,
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.

CRS-30
Venezuela needs the weapons.72 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 few
months.73
While traveling in South America in August 2005, then 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.”74 Some
Members of Congress, such as Senator Arlen Specter, reportedly called for the
Secretary to tone down his rhetoric.75 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.)
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
72 Todd Benson, “Rumsfeld in Brazil, Criticizes Venezuela on Assault Rifles,” New York
Times
, March 24, 2005.
73 Lauren Monsen, “United States Hopes for Improved Cooperation,” Washington File, U.S.
Department of State, August 19, 2005.
74 Josh White, “Rumsfeld in Latin America, Voices Democracy Concerns,” Washington
Post
, August 17, 2005.
75 Holly Yeager, “Senator Takes Rumsfeld to Task Over Chávez Criticism,” Financial
Times
, August 20, 2005.

CRS-31
responded by labeling Robertson’s comments as “inappropriate.”76 (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.”77 Reflecting an escalation of the
Venezuelan President’s harsh rhetoric, Chávez responded to Shannon’s comments
by calling President Bush a “crazy, genocidal killer.”78
U.S. reaction to the Venezuelan elections on December 5, 2005, was restrained,
with a State Department spokesman indicating that United States would wait until
the OAS and EU observers make their reports. Nevertheless, the State Department
did point to the high voter abstention rate in the election and maintained that it
reflected “a broad lack of confidence in the impartiality and transparency of the
electoral process.”79 (There was a 75% abstention rate in the December legislative
election, compared to an abstention rate of 44% in the last legislative election in July
2000, which occurred at the same time that voters elected a president and state and
local officials.80)
Developments in 2006. U.S.-Venezuelan relations continued to be tense in
2006, with several incidents and rhetoric exacerbating the poor state of relations. On
February 2, 2006, then Secretary of Defense Donald Rumsfeld compared President
Chávez to Adolf Hitler in terms of someone who was elected legally and then
consolidated power.81 Chávez responded by referring to President Bush as Hitler and
as a madman, with plans to invade Venezuela. On February 2, 2006, President
Chávez announced that his government would expel a U.S. naval attache for spying,
which U.S. officials strongly denied. In response, the United States expelled a
Venezuelan diplomat based in Washington.
76 U.S. Department of State, Daily Press Briefing, August 23, 2005.
77 House International Relations Committee, Subcommittee on the Western Hemisphere,
Hearing on Democracy in Venezuela, Statement by Asst. Sec. of State Thomas A. Shannon,
November 17, 2005.
78 “Venezuela: Chávez Responds to Shannon’s Criticism,” Latinnews Daily, November 18,
2005.
79 U.S. Department of State, Daily Press Briefing, December 5, 2005.
80 “State Department Holds Fire on Election Result,” Latinnews Daily, December 6, 2005.
81 “Donald H. Rumsfeld Delivers Remarks at the National Press Club,” CQ Transcriptions,
February 2, 2006.

CRS-32
Administration testimony before Congress in February 2006 highlighted U.S.
concern about Venezuela’s foreign relations. In February 16, 2006 congressional
testimony, Secretary of State Condoleezza Rice stated that one of the biggest
problems for the United States in Latin America was Venezuela, which she
characterized as “attempting to influence its neighbors away from democratic
processes.” Secretary Rice also expressed concerns about Venezuela’s relationship
with Cuba, describing it as “a particular danger to the region,” and also referred to
both countries as Iran’s “sidekicks” in reference to those countries’ votes in the
International Atomic Energy Agency against reporting Iran to the U.N. Security
Council over its uranium enrichment program.82 Also in February 2006
congressional testimony, Director of National Intelligence John Negroponte
expressed concern that President Chávez “is seeking closer economic, military, and
diplomatic ties with Iran and North Korea.”83
In April 2006, the State Department issued its annual Country Reports on
Terrorism, which asserted that “Venezuela virtually ceased its cooperation in the
global war on terror, tolerating terrorists in its territory and seeking closer relations
with Cuba and Iran, both state sponsors of terrorism.” This was followed up in mid-
May 2006, with a State Department announcement that, pursuant to Section 40A of
the Arms Export Control Act, it was prohibiting the sale or license of defense articles
and services to Venezuela because of its lack of cooperation on antiterrorism efforts.
The State Department asserted that the determination was based on Venezuela’s near
lack of antiterrorism cooperation over the last year, citing its support for Iraqi
insurgents and Iran’s development of nuclear capabilities, the country’s status as a
safe haven for Colombian and Basque terrorist groups, and its effort to derail
hemispheric efforts to advance counter-terrorism policies in the OAS. In July 13,
2006, congressional testimony, the State Department’s Principal Deputy Coordinator
for Counterterrorism, Frank Urbancic, asserted that Venezuelan travel and
identification documents are easy to obtain for persons not entitled to them, including
non-Venezuelans, and maintained that the United States was detaining increasing
numbers of third-country aliens at its borders carrying falsified or fraudulently issued
Venezuelan documents.84
On August 18, 2006, U.S. Director of National Intelligence John Negroponte
announced the establishment of the position of Mission Manager for Cuba and
Venezuela responsible for integrating collection and analysis on the two countries
across the Intelligence Community. Venezuelan officials responded that they would
reconsider signing an anti-drug cooperation agreement negotiated between the two
countries. Press reports in June and July had indicated that the two countries were
on the verge of signing such an agreement.
82 House International Relations Committee, Hearing on the Fiscal Year 2007 International
Affairs Budget, Testimony of Secretary of State Condoleezza Rice, February 16, 2006.
83 Senate Select Intelligence Committee, Hearing on World Wide Threats, Testimony of
Director of National Intelligence John Negroponte, February 2, 2006.
84 House International Relations Committee, Subcommittee on International Terrorism and
Nonproliferation, Hearing on “Venezuela: Terrorism Hub of South America?,” July 13,
2006.

CRS-33
In speaking before the U.N. General Assembly on September 20, 2006,
President Chávez strongly criticized U.S. foreign policy and spoke pejoratively of
President Bush. President Chávez repeatedly referred to President Bush as the
“Devil” and asserted that “the hegemonic pretension of U.S. imperialism ... puts at
risk the very survival of the human species.”85
In response to President Chávez’s comments, Secretary of State Condoleezza
Rice maintained his remarks “were not becoming of a head of state,” while then U.S.
Ambassador to the United Nations John Bolton said that the Administration would
“not address this sort of comic-strip approach to international affairs.”86 State
Department spokesman Tony Casey said that he would “leave it to the Venezuelan
people to determine whether President Chávez represented them and presented them
in a way they would have liked to have seen.”87 President Chávez’s remarks at the
U.N. were not the first time that the Venezuelan president has spoken disparagingly
of President Bush or other U.S. officials or criticized U.S. policy. He routinely refers
to President Bush as a “donkey,” “Mr. Danger,” or other pejorative terms.88 U.S.
officials appear largely to have refrained from responding to such personal charges
or criticisms leveled by President Chávez and instead have focused on the negative
aspects of his policies, such as the status of democracy and human rights under his
government, the extent of Venezuela’s military purchases, or President Chávez’s
efforts to influence political events in other Latin American countries. Several
Members of Congress criticized President Chávez for his anti-American rhetoric and
introduced resolutions condemning his statements, including S.Res. 607 approved
by the Senate on December 6, 2006.
In response to President Chávez’s reelection on December 3, 2006, State
Department officials initially emphasized that the United States was looking forward
to working with the Venezuelan government on issues of mutual concern.89
Subsequently, Assistant Secretary of State for Western Hemisphere Affairs Thomas
Shannon stated that the election was positive in that there was a clear winner and that
the opposition accepted the results.90
85 “Venezuela’s Chávez Says World Faces Choice Between U.S. Hegemony and Survival,”
Venezuelanalysis.com, September 20, 2006 [includes transcript of President Chávez’s
speech before the U.N. General Assembly].
86 U.S. Department of State, Secretary of State Condoleezza Rice, “Remarks After the
United Nations Security Council Meeting on the Middle East Process,” September 21, 2006;
Pablo Bachelet, “Chávez Bashes Bush on U.N. Stage,” Miami Herald, September 21, 2006.
87 U.S. Department of State, Daily Press Briefing, September 20, 2006.
88 For example, see “President Hugo Chávez Travels the World,” Voice of America News,
September 15, 2006; “Danger, Danger George Bush,” Washington Post, August 6, 2006;
Christopher Toothaker, “U.S. Ambassador Urges Venezuela to Consider Dialogue, Leave
Insults Aside,” Associated Press, March 30, 2006; “Venezuela’s Chávez Calls Bush
‘Coward’ Over Iraq,” BBC Worldwide Monitoring, March 20, 2006; “Hugo Chávez to Condi
Rice: Don’t Mess with Me, Girl,” Agence France Presse, February 19, 2006.
89 “U.S. Gives Tepid Response to Reelection of Chávez,” Miami Herald, December 5, 2006.
90 “Election Result in Venezuela Positive,” Agence France Presse, December 14, 2006;
(continued...)

CRS-34
Developments in 2007. U.S. officials continued to speak out about threats
to democracy in Venezuela, its military buildup, and other concerns in 2007. In
January 11, 2007, testimony before the Senate Select Committee on Intelligence, then
Director of National Intelligence John Negroponte stated that President Chávez “is
among the most stridently anti-American leaders anywhere in the world, and will
continue to try to undercut U.S. influence in Venezuela, in the rest of Latin America,
and elsewhere internationally.” Negroponte also expressed concern that the
Venezuelan leader’s military purchases and moves toward developing his own
weapons production capability are increasingly worrisome to his neighbors and could
fuel an arms race in the region.
In February 7, 2007, testimony before the House Foreign Affairs Committee,
Secretary of State Condoleezza Rice stated that she believes “there’s an assault on
democracy in Venezuela” and that “the president of Venezuela is really destroying
his own country economically, politically.” Venezuelan Foreign Minister Nicolas
Maduro responded by saying that “no U.S. official has the morality to qualify
Venezuelan democracy or the democratic leadership of President Chávez.”91
President Chávez continued his tough rhetoric against the United States and
President Bush. During the U.S. President’s visit to Latin America in March 2007,
Chávez led a rally in Argentina in which he denounced President Bush and U.S.
policy in Latin America. U.S. officials maintained that they do not want to get into
a rhetorical contest with Chávez, but want to focus on a positive agenda of U.S.
engagement in Latin America. Many observers contend that President Bush’s March
trip to the region was at least in part an attempt to counter the growing influence of
President Chávez in Latin America.

As noted above, in the aftermath of the closing of the Venezuelan government’s
closing of RCTV in late May 2007, the State Department issued a statement calling
on Venezuela to reverse its policies that limit freedom of expression.92 Secretary of
State Condoleezza Rice raised the issue on June 4, 2007, at the OAS General
Assembly Meeting in Panama, and called on the OAS to address the issue.
Ultimately, the OAS did not specifically criticize Venezuela for its action, but
adopted a resolution calling upon members states to respect freedom of expression.
In the aftermath of the rejection of President Chávez’s proposed constitutional
changes in December 2007, President Bush said that the “Venezuelan people rejected
one-man rule,” and “voted for democracy.”93 Under Secretary of State for Political
90 (...continued)
State Department Briefing, Press Roundtable with Thomas Shannon, December 13, 2006.
91 Liza Figueroa-Clark, “Venezuelan Foreign Minister, Bishop, Slam Rice over Comments
on Venezuela.” Venezuelanalysis.com, February 10, 2007.
92 U.S. Department of State, “Statement on Closing of Venezuela’s Only Independent
Television Network with Nationwide Broadcast Coverage,” Daily Press Briefing, May 29,
2007.
93 White House, Press Conference by the President, December 4, 2007.

CRS-35
Affairs Nicholas Burns said that the vote was a “victory for the people of
Venezuela.”94
General 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. In the
lead up to the 2004 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.
Elevated rhetoric, however, on both sides has at times exacerbated tensions in
bilateral relations.
There have been various 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, terrorism, and energy. 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.95 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.96 Another policy approach advocated by some observers is for
the United States to take a more proactive approach to address the deterioration of
democracy in Venezuela and the Chávez government’s actions in the hemisphere.
This approach emphasizes the threat that Chávez poses not only to Venezuela but to
other countries in the region. It calls for increased support for democratic groups in
Venezuela and efforts to counter Venezuela’s military build-up.
A November 2006 report published by the Council on Foreign Relations
proposed that, in the short term, the United States should ignore President Chávez’s
political theatrics and seek to work pragmatically on issues of bilateral and regional
concern, such as energy security, terrorism, poverty reduction, and the environment.
Over the longer term, the report suggested that the United States needs to address the
94 U.S. Department of State, R. Nicholas Burns, Under Secretary for Political Affairs,
“Media Roundtable in Singapore,” December 3, 2007.
95 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.
96 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.

CRS-36
underlying challenges of inequality and poverty that have helped feed Chávez’s
popularity.97
In March 2007, the Inter-American Dialogue issued a report on U.S. policy
toward Venezuela, that recommended, among other measures, that the United States
work through multilateral organizations like the OAS to identify violations of
democratic norms and practice. At the same time, it recommended that U.S. officials
exercise restraint in issuing highly public denunciations. The report also suggested
that the Administration needs to develop a thorough inventory of diplomatic levers
to respond to anti-U.S. actions taken by the Chávez government, but also
recommended that U.S. officials make every effort to initiate discussions, either
formally or informally, in order to build mutual trust and bridge the sharp divide
between the two governments. It also called for the Administration to drop its efforts
for a united front against Chávez among friendly Latin American governments,
maintaining that such efforts can distance the United States from friendly
governments in the region.98
U.S. Funding for Democracy Projects
The United States has funded democracy-related projects in Venezuela for a
number of years through a variety of programs funded by the State Department, the
U.S. Agency for International Development (USAID), and the National Endowment
for Democracy (NED).
USAID, through its Office of Transition Initiatives, has funded democracy
projects in Venezuela since 2002, with the goals of strengthening democratic
institutions, promoting space for dialogue, and encouraging citizens’ participation in
democratic processes. Transitions Initiatives (TI) funding in recent years was $5
million in FY2005, $3.7 million in FY2006, and was projected to be $1.7 million in
FY2007. According to USAID, the funding supports projects implemented by five
U.S. organizations: Development Alternatives Inc, which focuses on dialogue, public
debate, citizen participation and leadership training; the International Republican
Institute and the National Democratic Institute, which offer technical assistance for
political parties; Freedom House, which provides technical support to human rights
groups; and the Pan-American Development Foundation, which provides support to
civil society.99
The State Department has supported democracy projects in Venezuela through
Economic Support Funds (ESF). In FY2004, $1.497 million was provided (including
$1 million in reprogrammed funds to support political reconciliation), and in
FY2005, $2.4 million in ESF was provided. For FY2006, although the
97 Richard Lapper, “Living with Hugo, U.S. Policy Toward Hugo Chávez’s Venezuela,”
Council on Foreign Relations, The Center for Preventive Action, November 2006.
98 Michael Shifter, “Hugo Chávez: A Test for U.S. Policy,” Inter-American Dialogue, March
2007.
99 U.S. Agency for International Development, USAID/OTI Venezuela Field Report, April-
June 2006.

CRS-37
Administration requested $500,000 in ESF for such projects, it did not allocate any
ESF for Venezuela. For FY2007, the Administration allocated $1.6 million in ESF
for Venezuela democracy initiatives. The Administration did not request any ESF
for Venezuela for FY2008, but it requested $3 million in Development Assistance
“to help ensure civil society groups continued serving as one of the last checks on an
increasingly authoritarian Venezuelan government.”100

NED has funded democracy projects in Venezuela since 1992, but the level of
funding has increased under the Chávez government. In FY2003, NED funded 15
Venezuela projects with $1.05 million. In FY2004, it funded 13 projects with about
$874,000. In FY2005, NED funded 16 democracy projects with $902,000. For
FY2006, the FY2006 Foreign Operations appropriations measure (P.L. 109-102)
provided $2 million in Democracy Funds for NED for democracy programs in
Venezuela. During FY2006, NED funded 18 democracy projects in Venezuela and
5 regional democracy projects that included components in Venezuela. For FY2007,
NED funded 17 projects with over $800,000 in funding.
The Venezuelan government and some other critics have criticized NED’s
funding of opposition groups.101 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 2004 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.”102
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
100 U.S. Department of State, FY2008 Congressional Budget Justification for Foreign
Operations, p. 1204.
101 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.
102 “United States Rejects Venezuelan Decision to Try Civic Group,” Department of State,
Washington File, July 8, 2005.

CRS-38
process and to encourage citizens to participate.”103 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.104 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.105
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 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 2006, after Canada, Mexico, and Saudi Arabia),
providing about 11% of U.S. crude oil imports, a key U.S. interest has been ensuring
the continued flow of oil exports. Some 68% of Venezuela’s oil exports are destined
for the United States, highlighting the dependency of Venezuela on the U.S. market,
and oil exports account for the overwhelming majority of Venezuela’s exports to the
United States. In 2006, Venezuela’s total exports destined for the United States
amounted to $37.2 billion, with oil products accounting for $35.1 billion, or 94% of
the total.106 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. Venezuela’s state-run oil
company, PdVSA, owns CITGO, which operates three crude oil refineries and a
network of some 14,000 retail gasoline stations in the United States.
The Chávez government has benefitted from the rise in world oil prices, which
has increased government revenues and sparked an economic boom. As a result,
Chávez has been able to increase government expenditures on anti-poverty and other
social programs associated with his populist agenda.
103 National Endowment for Democracy, “NED Venezuela Programs FAQ,” available online
at [http://www.ned.org/grants/venezuelaFacts.html].
104 Telephone conversation with NED official July 15, 2004; also see Andres Oppenheimer,
U.S. Group’s Funds Aid Democracy, Miami Herald, July 15, 2004.
105 Pablo Bachelet, “Citizens Group to Get U.S. Funds,” Miami Herald, September 13, 2005.
106 Department of Commerce statistics, as presented by World Trade Atlas.

CRS-39
By March 2006, the Venezuelan government had completed the conversion of
its operating agreements with foreign oil companies to joint ventures, with the
Venezuelan government now holding a majority share of between 60-70% in the
ventures. PdVSA also has been a minority owner in four extra-heavy oil Orinoco
River Basin projects involving six foreign companies — U.S.-based ConocoPhillips,
Chevron, and Exxon Mobil, Norway’s Statoil, Britain’s BP, and France’s Total —
but the Venezuelan government is bringing these projects under its majority control.
President Chávez set a deadline of May 1, 2007, and on that date formally
announced the government’s control of the projects. Nevertheless, the Venezuelan
government gave companies until June 26 to negotiate the terms of their conversion
to minority partners. On that date, PdVSA signed new partnership agreements giving
it majority control in Orinoco ventures with BP, Total, Statoil, and Chevron. At the
same time, the Venezuelan government announced that ConocoPhillips and Exxon
Mobil would be leaving their Orinoco projects after not being able to negotiate new
terms. The two U.S. companies were negotiating the compensation to be paid by
Venezuela for their existing Orinoco investments. According to a lawyer with
PdVSA, ConocoPhillips and Exxon Mobil were demanding a combined $5 billion
from Venezuela for their Orinoco Belt heavy oil assets.107 On August 29, 2007,
Venezuela’s energy minister, Rafael Ramirez, submitted a new law in the National
Assembly that would transfer the assets owned by ExxonMobil and ConocoPhillips
to state hands and stated that the Venezuelan government was negotiating with the
companies that refused to come under state control in order to finalize their
departure, but that no compensation would be offered.108
Majority state ownership in the oil sector fulfills a policy goal of the Chávez
government to assert greater control over the country’s oil reserves, but has
reportedly slowed the rate of foreign investment. Production also has reportedly not
been able to recover from the firing of some 18,000 PdVSA employees in early 2003
and from continued underinvestment in maintenance and repairs.109 Some oil
analysts question whether PdVSA is prepared to take over operation of the heavy oil
fields in the Orinoco.110
Despite notable frictions in bilateral relations, Venezuela continues to be a
major supplier of oil to the United States. Even though Venezuela opposed 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 February
2006, he asserted that the “U.S. government should know that, if it crosses the line,
107 “Exxon, COP Seek $5 Billion in Orinoco Compensation: PdVSA Lawyer”, Platts
Commodity News
, August 14, 2007
108 “Venezuela Wants Two U.S. Oil Firms to Leave”, Agence France Presse, August 30,
2007
109 Danna Harman, “Venezuela’s Oil Model: Is Production Rising or Falling?,” Christian
Science Monitor
, May 31, 2006.
110 Juan Forero, “Venezuela Set to Assume Control of Its Oil Fields,” Washington Post, May
1, 2007.

CRS-40
it will not get Venezuelan oil.”111 In April 2006, he warned that his government
would blow up its oil fields if the United States ever were to attack.112 On November
4, 2006 (amid Venezuela’s presidential election campaign), President Chávez
asserted that Venezuela would “not send one more drop of oil to the U.S.” if the
United States or its “ lackeys” in Venezuela try a “new coup,” fail to recognize the
elections, or try to overthrow the oil industry. Venezuela’s Ambassador to the United
States asserted in late July 2006 that oil-cutoff comments by Venezuelan officials,
including President Chávez, only reflect what would be Venezuela’s response against
aggression initiated by the U.S. government.113 Many observers believe Chávez’s
threats have been merely part of his rhetoric that is designed to bolster his domestic
political support.

Some observers, however, have raised questions about the security of Venezuela
as a major supplier of foreign oil. There are also concerns that Venezuela is looking
to develop China as a replacement market, although Venezuelan officials maintain
that they are only attempting to diversify Venezuela’s oil markets. In June 2006, the
Government Accountability Office (GAO) issued a report, requested by Senate
Foreign Relations Committee Chairman Richard Lugar, on the issue of potential
Venezuelan oil supply disruption. The GAO report concluded that a sudden loss of
all or most Venezuelan oil from the world market could raise world prices up to $11
per barrel and decrease U.S. gross domestic product by about $23 billion. It also
concluded that if Venezuela does not maintain or expand its current level of oil
production, then the world oil market may become even tighter than it is now, putting
pressures on both the level and volatility of energy prices.114
For additional information see CRS Report RL33693, Latin America: Energy
Supply, Political Developments, and U.S. Policy Approaches, by Mark P. Sullivan,
Clare M. Ribando, and Nelson Olhero.
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. As noted
above, Venezuela suspended its cooperation with the U.S. DEA in early August 2005
because it alleged that DEA agents were spying on Venezuela. U.S. officials
maintained that the charges were baseless. Since 2005, President Bush has annually
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
111 “U.S. Warned to Back off or Risk Losing Oil Supply,” Miami Herald, February 18. 2006;
“Chávez Threatens To Cut Oil in Case U.S. ‘Crosses Line,’” Open Source Center, Foreign
Broadcast Information Service, February 18, 2006.
112 “Chávez Says He’ll Blow up Oil Fields If U.S. Attacks,” Miami Herald, April 20, 2006.
113 Andy Webb-Vidal, “Venezuela Will Not Cut Off Oil Despite Hostile U.S. Attitude,”
Financial Times, August 1, 2006.
114 U.S. Government Accountability Office, “Energy Security: Issues Related to Potential
Reductions in Venezuelan Oil Production,” GAO-06-668, June 2006.

CRS-41
narcotics agreements, although he waived economic sanctions that would have
curtailed U.S. assistance for democracy programs in Venezuela. Venezuelan officials
maintain that President Bush’s decision to designate Venezuela was purely political
because of the overall state of U.S.-Venezuelan relations.115
Press reports in late June and July 2006 indicated that the United States and
Venezuela were on the verge of signing an anti-drug cooperation agreement that
would allow the DEA to continue working with the Venezuelan government, but
approval of the agreement has still not taken place.116 In August 2006, Venezuelan
officials said that they were reconsidering signing the agreement in response to the
announcement by U.S. Director of National Intelligence John Negroponte on the
establishment of a new position of Mission Manager for Cuba and Venezuela.
According to the Bush Administration’s September 2006 justification for
determining that Venezuela had “failed demonstrably” to adhere to counternarcotics
obligations, “the role and status of the DEA in Venezuela remains in limbo since the
host country refuses to sign a memorandum of understanding authorizing” a DEA
presence “even after successfully concluding a lengthy process of negotiation with
U.S. officials.”117 On July 26, 2006, the House approved H.Con.Res. 400 (Burton),
which, among other provisions, condemns Venezuela’s failures to stem the flow of
narcotics through its territory and calls for, among other measures, steps to restore
cooperation between Venezuela and the DEA.
The Department of State, in its March 2007 International Narcotics Control
Strategy Report (INCSR), maintained that Venezuela is one of the principal drug-
transit countries in the hemisphere because of its geography, rampant high-level
corruption, weak judicial system, and lack of international counternarcotics
cooperation.118 According to the report, “despite the Venezuelan government’s
refusal to cooperate, the DEA has continued working with its law enforcement
contacts, developing information and leads that resulted in several multi-ton seizures
in 2006 outside Venezuela.” The report asserted that drug seizures within Venezuela
dropped sharply, from 35-40 metric tons in 2005 to 20-25 metric tons in 2006, while
seizures by other countries of drugs coming out of Venezuela have more than tripled.
The Venezuelan government maintains that it has continued its strong record of drug
interdiction since it suspended its cooperation with the DEA, with 77 tons interdicted
in 2005 and 60 tons indicted in 2006.119 The State Department report stated that the
115 Ian James, “Venezuela Says U.S. Move to Call Country Uncooperative on Drugs is Pure
Politics,” Associated Press, September 16, 2005.
116 “DEA to Continue Working with Venezuela,” Latin American Regional Report, Andean
Group
, July 2006; “Venezuela, U.S. to Sign Anti-drug Agreement,” Miami Herald, June 27,
2006.
117 U.S. Department of State, “Memorandum of the Secretary of State: Presidential
Determination on Major Drug Transit or Major Illicit Drug Producing Countries for Fiscal
Year 2007,” Presidential Determination No. 2006-24, White House Press Release,
September 15, 2006.
118 See the report at [http://www.state.gov/p/inl/rls/nrcrpt/2007/vol1/html/80855.htm].
119 Chris Carlson, “U.S. Drug Report Criticizes Venezuela and Bolivia,”
(continued...)

CRS-42
U.S. government “remains prepared to renew cooperation with Venezuelan
counterparts to fight drugs.” The report also stated that the United States would try
to work with Venezuela to make the Container Inspection Facility (CIF) at Puerto
Cabello operational.
In September 2007, President Bush issued a determination that Venezuela, for
the third year in a row, had failed demonstrably over the previous 12 months to
adhere to its obligations under international counternarcotics agreements. State
Department officials maintained that, although Venezuela indicated that it had
developed some new programs to fight drug trafficking and were making seizure, its
efforts continued to be limited. They maintained that Venezuela is a growing
transhipment point for drugs bound for the United States and for Europe. The
officials also pointed out that Venezuela has not renewed formal counternarcotics
agreements with the United States.120 Venezuela maintains that the U.S.
determination process continues to be politicized and disregards the government’s
international cooperation and advances in counternarcotics efforts. The Venezuelan
government also maintains that the U.S. prohibition on the sale of military
equipment, imposed in 2006, has blocked equipment crucial to patrol its coasts and
combat drug trafficking.121
Over the past several years, 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 in
FY2005; $2.229 million in FY2006; and an estimated $1 million in FY2007. For
FY2008, the Administration did not request any ACI funding for Venezuela. ACI
programs in Venezuela focus on counternarcotics cooperation and judicial reform
support. (For further information, see CRS Report RL33370, Andean Counterdrug
Initiative (ACI) and Related Funding Programs: FY2007 Assistance
, by Connie
Veillette.)
Concerns about Venezuela’s Military Purchases
As noted above, the Bush Administration has expressed concerns about
Venezuela’s purchases of military equipment. Defense Intelligence Agency Director
Lt. Gen. Michael Maples expressed concern in February 2006 congressional
testimony about Venezuela’s arms purchases, maintaining that Venezuela was
seeking to increase their capability for their own defense and to operate elsewhere in
Latin America and the Gulf area.122 State Department officials maintain that
Venezuela’s military purchases from Russia go far beyond what the country needs
119 (...continued)
Venezuelanalysis.com, March 4, 2007.
120 U.S. Department of State, “Briefing on Release of Annual Report on the Major Illicit
Drug Producing Countries for FY2008,” September 17, 20007.
121 “Venezuela’s Fight Against Drug Trafficking,” Venezuela Information Office,
Washington D.C. 2007.
122 Senate Armed Services Committee, Hearing on Worldwide Threats to U.S. National
Security, Testimony of Lt. Gen. Michael D. Maples, Direction, DIA, February 28, 2008.

CRS-43
for self-defense. Secretary of State Donald Rumsfeld cited concerns among
neighboring Latin American countries about Venezuela’s military purchases and also
a concern that the assault rifles could end up in the hands of terrorist groups like the
Revolutionary Armed Forces of Colombia.123 President Chávez criticized Secretary
Rumsfeld for suggesting that countries such as Colombia are concerned about
Venezuela’s military purchases. In January 11, 2007 testimony before the Senate
Select Committee on Intelligence, Director of National Intelligence John Negroponte
expressed concern that the President Chávez’s military purchases and moves toward
developing his own weapons production capability are increasingly worrisome to his
neighbors, and could fuel an arms race in the region.
In January 2006, the State Department indicated that the United States had
denied licenses — required by the Arms Export Control Act — to transfer U.S.
technology for use in 12 military transport planes that Spanish companies had
contracted to sell to Venezuela. According to a State Department spokesman, the
proposed sale could contribute to de-stabilization in Latin America. Spain initially
responded by indicating that it would go ahead with the sale of the airplanes utilizing
non-U.S. technology, but in mid-October 2006, Spain’s Foreign Minister announced
that such an alternative was not economically feasible and the deal was cancelled.124
Venezuela responded to the U.S. action by labeling it as “imperialist.” The State
Department official also indicated that the United States had expressed similar
concerns to Brazil about military sales to Venezuela. Venezuela expressed interested
in purchasing at least a dozen light-attack aircraft, manufactured by Embrarer, that
contain U.S. technology. 125
In May 2006, as discussed below (“Terrorism Issues”), the State Department
determined (pursuant to Section 40A of the Arms Export Control Act) that
Venezuela was not fully cooperating with U.S. antiterrorism efforts, an action that
triggered a prohibition on the sale or license of defense articles and services to
Venezuela.
President Chávez has vowed to continue with his nation’s military purchases,
asserting that he was acquiring the minimum equipment for Venezuela to defend
itself from the United States. Venezuela is buying significant amounts of military
equipment from Russia. This includes contracts to buy 24 Sukhoi Su-30 fighter jets,
50 military helicopters, 100,000 Kalashnikov assault rifles, a license to build a
123 U.S. Department of Defense, “Media Availability with Secretary of Defense Donald
Rumsfeld After the First Day of Meetings with Western Hemisphere Defense Ministers
from Managua, Nicaragua,” October 2, 2006.
124 Renwick McLean, “U.S. Objections Lead Spain to End Venezuela Deal,” New York
Times
, October 19, 2006.
125 U.S. Department of State, Daily Press Briefing, January 13, 2006; Phil Gunson and Pablo
Bachelet, “Spain’s Planes for Chávez Can’t Use U.S. Components,” Miami Herald, January
14, 2006; Leslie Crawford and Andy Webb-Vidal, “Spain to Defy U.S. over Military Sale
to Venezuela,” Financial Times, January 14, 2006.

CRS-44
factory to produce Kalashnikov rifles in Venezuela, and several submarines.126 In a
visit to Russia in late June 2007, President Chávez said that he was negotiating the
purchase of five submarines in order to defend Venezuela’s revolution. The
Venezuelan government maintains that it is buying the Russian fighter jets because
the United States is refusing to sell the country spare parts for its aging fleet of F-16
fighters that it purchased in the 1980s. Defense analysts predict that Venezuela will
speed up it arms procurement plans from Russia and China in light of U.S. efforts to
block countries like Spain from selling it military equipment.127
Concerns About Venezuela’s Activities in Latin America
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 in November 2005 in Argentina, President Chávez, while participating in a
counter-summit, denounced the FTAA and strongly criticized the Bush
Administration. Some observers fear that the network will spread Chávez’s populist
and anti-U.S. rhetoric throughout the hemisphere.
Venezuela joined the Southern Common Market (Mercosur) in 2006, but its
application for full membership has run into problems because of President Chávez’s
decision not to renew the broadcast license of RCTV. In late June 2007, Chávez said
that Venezuela would withdraw its Mercosur application if member nations were
unwilling to break with U.S.-style capitalism.128
President Chávez is providing oil to Latin American and Caribbean nations on
preferential terms, and there has been some U.S. concern that these programs could
increase Venezuela’s influence in the region. In the Caribbean, Venezuela is offering
oil on preferential terms in a new program known as PetroCaribe. Since 1980,
Caribbean nations have benefitted from preferential oil imports from Venezuela and
Mexico under the San José Pact, and since 2001, Venezuela has provided additional
support for Caribbean oil imports under the Caracas Energy Accord. PetroCaribe,
however, goes further with the goal of putting in place a regional supply, refining,
126 Neil Buckley and Andy Webb-Vidal, “Chávez Seeks to Link Putin with Anti-U.S.
Alliance,” Financial Times, July 26, 2006; Simon Romero, “Venezuela Spending on Arms
Soars to World’s Top Ranks,” New York Times, February 25, 2007.
127 Andy Webb-Vidal, “Caracas Eyes Arms from China, Russia,” Financial Times, October
19, 2006.
128 “Chávez Says If Mercosur Won’t Change, Venezuela Not Interested in Joining,”
Associated Press Newswires, June 30, 2007.

CRS-45
and transportation and storage network, and establishing a development fund for
those countries participating in the program.
Under the program, Venezuela is offering to supply 190,000 barrels per day of
oil to the region on preferential terms. When oil prices are over $50 a barrel, 40%
of the volume is financed over 25 years at an annual interest rate of 1%. Fourteen
Caribbean nations are signatories of PetroCaribe. In Central America, Venezuela
reportedly will supply 10,000 bpd of oil to Nicaragua based on agreements signed
with the new government of Daniel Ortega in January 2007.
In addition to these preferential oil arrangements, Venezuela is investing in
energy sectors in several Latin American countries. Chávez has pledged to invest
$1.5 billion in Bolivia’s gas industry. Ecuador and Venezuela have signed
agreements for joint development in oil, gas, refining, and petrochemical sectors. In
2005, PdVSA signed an agreement to build an oil refinery in northeastern Brazil.
Construction on the 200,000 bpd refinery is expected to start in 2007, and is to be
supplied with oil from both Brazil and Venezuela. Colombia and Venezuela signed
an agreement in July 2006 initiating a gas pipeline project that would initially supply
gas to Venezuela from northern Colombia, and then reverse the flow once Venezuela
develops its own natural gas reserves. Argentina and Venezuela also announced an
alliance in July 2006 involving cooperation on hydrocarbon exploration and
development in both countries. In Cuba, PdVSA is involved in refurbishing an
unfinished oil refinery in Cienfuegos, and recently signed an exploration and
production agreement with Cupet, Cuba’s state-oil company.129
There also have been U.S. concerns about President Chávez’s attempts to export
his brand of populism to other Latin America countries. He strongly supports
Bolivia’s President Evo Morales and offered assistance for development projects and
assistance to help Bolivia re-write its constitution and implement radical reforms to
the economy. In Peru’s presidential elections, Chávez openly supported the
presidential candidacy of Ollanta Humala in Peru, a nationalist former army colonel
who had led a failed uprising against former President Fujimori in 2000. Humala’s
defeat by Alan Garcia in a second presidential round held in June 2006 allayed
concerns about the future of Peruvian democracy and Venezuela’s influence on the
government. In Nicaragua, there were concerns about President Chávez’s support
for Sandinista candidate Daniel Ortega who won the November 5, 2006, presidential
election, while in Ecuador, there were concerns about Chávez’s support for Rafael
Correa, who was elected president in late November 2006.
In early November 2006, President Chávez also lost a hard-fought effort to
secure a two-year rotating Latin America seat for Venezuela on the U.N. Security
Council. Venezuela had been pitted against Guatemala — supported by the United
States — in 47 rounds of voting. Guatemala received about 25-30 votes more than
Venezuela during most of the voting rounds, but neither country received the two-
thirds vote needed for the seat. Ultimately, both countries turned to Panama as a
compromise candidate. The failure of President Chávez to secure the seat for
129 “Venezuela: Oil Revenues Boost International Influence,” Oxford Analytica, July 19,
2006.

CRS-46
Venezuela can be attributed in part to his strong anti-American speech at the United
Nations in September 2006 in which he spoke disparagingly of President Bush.
Terrorism Issues
In May 2006, the State Department determined that, pursuant to Section 40A of
the Arms Export Control Act, Venezuela was not fully cooperating with U.S.
antiterrorism efforts. This triggered a prohibition on the sale or license of defense
articles and services to Venezuela. Other countries on the Section 40A list include
Cuba, Iran, North Korea, and Syria, not to be confused with the “state sponsors of
terrorism” list under Section 6(j) of the Export Administration Act of 1979, which
currently includes Cuba, Iran, North Korea, Sudan, and Syria. The State Department
asserted that the Section 40A determination was based on Venezuela’s near lack of
antiterrorism cooperation over the last year, citing its support for Iraqi insurgents and
Iran’s development of nuclear capabilities, the country’s status as a safe haven for
Colombian and Basque terrorist groups, and its effort to derail hemispheric efforts
to advance counter-terrorism policies in the OAS. In May 2007, the State
Department again included Venezuela in its annual Section 40A determination that
it was not cooperating fully with U.S. antiterrorism efforts.
In late April 2007, the State Department issued its annual Country Reports on
Terrorism, which asserted that President Chávez “persisted in public criticism of
U.S. counterterrorism efforts, deepened Venezuelan relationships with Iran and Cuba,
and was unwilling to prevent Venezuelan territory from being used as a safe haven”
by Colombian terrorist groups.
There have been long-held suspicions that Chávez has supported leftist
Colombian guerrillas, although Chávez denies such support. The State Department’s
terrorism report maintains that units of Colombia’s two leftist terrorist groups — the
Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army
(ELN) — often crossed into Venezuela “to rest and regroup with relative impunity.”
In addition, according to the report, splinter groups of the FARC and a rightist
terrorist group, the United Self-Defense Forces of Colombia (AUC) reportedly
operate in various parts of the country and are involved in drug trafficking. The
report maintained, however, that “it remained unclear to what extent the Venezuelan
Government provided material support to Colombian terrorists.”
In addition, according to the report, Venezuelan citizenship, identity, and travel
documents remained easy to obtain, making the country a potentially attractive way-
station for terrorists. In July 13, 2006, congressional testimony, the State
Department’s Principal Deputy Coordinator for Counterterrorism, Frank Urbancic,
asserted that the United States was detaining increasing numbers of third-country
aliens at its borders carrying falsified or fraudulently issued Venezuelan documents.
U.S. officials also have expressed concerns about President Chávez’s close
relationship with Cuba’s Fidel Castro, but Chávez defends his relationship with
Cuba. Overall Venezuelan support to Cuba is estimated to be more than $2 billion

CRS-47
a year.130 Venezuela supplies some 90,000 barrels of oil per day to Cuba on a
concessionary basis under PetroCaribe. 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. In January 2007, a delegation
of Cuban officials visited Caracas and signed a number of agreements to increase
economic linkages, including an agreement for joint oil exploration in both countries.
PdVSA also was involved in refurbishing an unfinished Soviet-era oil refinery in
Cienfuegos, Cuba, that was inaugurated in December 2007.
Beyond Latin America, the Bush Administration has expressed concerns with
Venezuela’s growing relations with Iran. In February 2006, Secretary of State Rice
referred to Venezuela, along with Cuba, as “sidekicks” of Iran in reference to those
countries’ votes in the International Atomic Energy Agency against reporting Iran to
the U.N. Security Council over its uranium enrichment program.131 In testimony
before the Senate Select Intelligence Committee in February 2006, Director of
National Intelligence John Negroponte expressed concern that President Chávez “is
seeking closer economic, military, and diplomatic ties with Iran and North Korea.”132
Iran and Venezuela signed an agreement for a $200 million fund to finance joint
investment and social projects, and commercial agreements in the early stages
include plans for a cement factory, oil exploration in the Orinoco River belt, and a
joint operation to build oil and liquid natural gas tankers.133 During a visit by Iranian
President Mahmoud Ahmadinejad to Venezuela in mid-January 2007, the two
countries announced they would use a $2 billion investment fund to finance projects
in both countries and other countries as well.134
Some Members of Congress have expressed concerns about relations between
Venezuela and Iran. In the 110th Congress, H.Res. 435 (Klein), approved by the
House by voice vote on November 5, 2007, expressed concerns about Iran’s efforts
to expand its influence in Latin America, and noted Venezuela’s growing relations
and cooperation with Iran.
130 Frances Robles and Phil Gunson, “Cuba Spotlights Chávez Friendship,” Miami Herald,
January 26, 2007.
131 Pablo Bachelet, “Rice Bashes Venezuelan Leader, Politics,” Miami Herald, February 17,
2006; House International Relations Committee, Hearing on the Fiscal Year 2007
International Affairs Budget, Testimony of Secretary of State Condoleezza Rice, February
16, 2006.
132 Senate Select Intelligence Committee, Hearing on World Wide Threats, Testimony of
Director of National Intelligence John Negroponte, February 2, 2006.
133 Steven Dudley, “Chávez’s Wooing of Iran Called Troubling,” Miami Herald, March 2,
2006.
134 Simon Romero, “Iranian President Visits Venezuela to Strengthen Ties,” New York
Times
, January 14, 2007.

CRS-48
Venezuela’s Extradition Requests
Venezuela 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 were held from December 2003 until April
2006 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 because of the likelihood of being tortured.135 The
Department of Homeland Security (DHS) 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.136
In late December 2005, Colina and Varela — on a hunger strike for a month in
protest of being held by U.S. immigration — were transferred from Florida to
Houston for medical treatment. They ended their 33-day hunger strike in early
January 2006. In April 2006, ICE reversed its stance on the deportation case and
joined with the attorneys for Colina and Varela in filing a joint motion asking the
immigration appeals court to dismiss the case, whereupon they were released.
Lawyers for the two former officers maintain that the State Department’s March 2006
human rights report on Venezuela played a role in ICE’s decision to abandon its
efforts to deport Colina and Varela.137 The report cited accusations that a military
general imprisoned in Venezuela for alleged involvement in the bombings had been
subject to sensory deprivation and psychological torture. The Venezuelan
government condemned the release of Colina and Varela, maintaining that the United
States had become a “sanctuary for terrorists.”138
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.139 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
135 Gerardo Reyes and Alfonso Chardy, “Wanted Chávez Foes Flee to South Florida,” Miami
Herald
, April 5, 2005.
136 Alfonso Chardy, “Deport Venezuelan Bombing Suspects, U.S. Urges Court,” Miami
Herald
, March 25, 2005.
137 Alfonso Chardy, “2 Officers Won’t Be Sent Home,” Miami Herald, April 12, 2006.
138 Christopher Toothaker, “Venezuela’s Chávez Says Bush ‘Demolishing’ U.S. Democracy,
Threatening Peace,” Associated Press, May 24, 2006.
139 Also see CRS Report RL32730, Cuba: Issues for the 109th Congress, by Mark P.
Sullivan.

CRS-49
Fidel Castro.140 Posada had been imprisoned in Venezuela for the bombing of the
Cuban airliner but reportedly was allowed to “escape” from prison in 1985 after his
supporters paid a bribe to the prison warden.141 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.142 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.143 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 could not be
deported to Venezuela because he could be tortured.144 ICE reviewed the case and
determined on March 22, 2006, that Posada would not be freed from a federal
immigration facility in El Paso, Texas.145
In November 2006, however, a U.S. federal judge, who was considering
Posada’s plea that he be released, ordered the government to supply evidence, by
February 1, 2007, justifying his continued detention. On January 11, 2007, a federal
grand jury in Texas indicted Posada on seven counts for lying about how he entered
the United States illegally in March 2005, whereupon he was transferred from
immigration detention in El Paso to a country jail in New Mexico near the Texas
border.
Posada was released from jail in New Mexico on April 19, 2007, and allowed
to return to Miami under house arrest to await an upcoming trial on immigration
fraud charges, but on May 9, 2007 a federal judge in Texas dismissed the charges.
The judge maintained that the U.S. government mistranslated testimony from Posada
and manipulated evidence.146 On June 5, 2007, Justice Department prosecutors filed
140 Alfonso Chardy and Nancy San Martin, “Lawyer Expects Posada to Show Soon,” Miami
Herald
, April 14, 2005.
141 Ann Louise Bardach, “Our Man’s in Miami. Patriot or Terrorist?,” Washington Post,
April 17, 2005.
142 Oscar Corral and Alfonso Chardy, “Victim’s Kin Oppose Posada Bid for Asylum,”
Miami Herald, May 7, 2005.
143 Department of Homeland Security, Office of Public Affairs, Statement, May 17, 2005.
144 Alicia Caldwell, “Judge Says Cuban Militant Can’t Be Deported to Venezuela,”
Associated Press, September 28, 2005.
145 Oscar Corral, “Cuban Exile Militant Luis Posada Denied Release,” Miami Herald, March
22, 2006.
146 Carol J. Williams, “Pressure Grows to Prosecute Cuban Exile,” Los Angeles Times, May
(continued...)

CRS-50
a notice of appeal with the 5th U.S. Circuit Court of Appeals in New Orleans and on
November 6, 2007, federal prosecutors field a brief requesting that the court reverse
the lower court’s decision.147 Both Venezuela and Cuba strongly denounced Posada’s
release, contending that he is a terrorist. Venezuela maintains that the State
Department has ignored its request to extradite Posada. Another grand jury in New
Jersey is reportedly examining Posada’s alleged role in the 1997 bombings in
Cuba.148
On November 15, 2007, the House Subcommittee on International
Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs
held a hearing focusing on the Posada case.
Legislative Initiatives
110th Congress. In the 110th Congress, congressional concerns regarding
Venezuela focus on human rights and political conditions in the country, energy
issues, and the overall status of bilateral relations and U.S. policy.
On May 24, 2007, the Senate approved S.Res. 211 (Lugar) expressing profound
concerns regarding freedom of expression and Venezuela’s decision not to renew the
license of RCTV.
On June 21, 2007, the House approved by voice vote H.Amdt. 358 (Mack) to
H.R. 2764, the FY2008 State Department and Foreign Operations appropriations bill,
which would have directed $10 million in international broadcasting operations
funding for targeted broadcasting for Venezuela. The House subsequently approved
H.R. 2764 on June 22, 2007. The Senate version of the bill, approved September 6,
2007, did not include such a provision. The final enacted measure, the Consolidated
Appropriations Act for FY2008 (P.L. 110-161, Division J), does not specify such
funding, but the joint explanatory statement on the bill expresses support for
restoring shortwave and medium wave transmission to Venezuela. The
Administration’s FY2008 foreign aid budget request also included $3 million in
Development Assistance for support to Venezuelan civil society and $50,000 in
International Military Education and Training.
On November 5, 2007, the House approved by voice vote H.Res. 435 (Klein),
which “expresses concern over the emerging national security implications of the
Iranian regime’s efforts to expand its influence in Latin America.” Among other
provisions, the resolution noted Venezuela’s support for Iran in the International
146 (...continued)
10, 2007.
147 The federal prosecutors’ brief is available at
[http://media.miamiherald.com/smedia/2007/11/06/20/Posada_5CA_07-50737_electroni
c_copy.source.prod_affiliate.56.pdf]
148 Alfonso Chardy and Jay Weaver, “Posada a Target of New Federal Probes,” Miami
Herald
, November 12, 2006, and “Grand Jury Indicts Cuban Exile Militant Luis Posada
Carriles,” Miami Herald, January 12, 2007.

CRS-51
Atomic Energy Agency, plans for a $2 million Iranian-Venezuelan fund for
investments in third countries, and the establishment of direct civilian airline flights
from Iran to Venezuela.
Additional resolutions introduced in the House include H.Con.Res. 50
(Fortuño), which would call on the Venezuelan government to uphold the human
rights and civil liberties of its people; H.Con.Res. 77 (Weller), which would call on
the Venezuelan government to respect a free and independent media and to avoid all
acts of censorship against the media and free expression; and H.Res. 560 (Barton),
which would express concern about the Venezuelan government taking control of
the majority stakes of the operations of six major oil companies and stripping these
companies of all operational control of their energy development projects in
Venezuela.
Two Senate bills, S. 193 (Lugar), the Energy Diplomacy and Security Act of
2007, and S. 1007 (Lugar), the United States-Brazil Energy Cooperation Pact of
2007, would increase hemispheric cooperation on energy issues.
109th Congress. In the 109th Congress, there was legislative action on several
initiatives on Venezuela and oversight hearings were held in both houses. The
FY2006 Foreign Operations appropriations measure (P.L. 109-102, H.R. 3057,
H.Rept. 109-265) appropriated $2 million in Democracy Funds for the NED for
democracy programs in Venezuela and $2.252 million in funding under the Andean
Counterdrug Initiative (ACI), although slightly less was provided because of a 1%
across- the-board rescission in the Defense Department appropriations measure (P.L.
109-148) that affected Foreign Operations funding. The Administration also had
requested $500,000 in Economic Support Funds (ESF) for Venezuela, although no
specific earmark was provided in the conference report to P.L. 109-102, and the
Administration ultimately did not allocate the assistance.
For FY2007, the Administration requested $1 million in ACI funding, $1.5
million in ESF for democracy initiatives, and $45,000 for International Military
Education and Training (IMET). The House-passed version of the FY2007 foreign
operations appropriation bill, H.R. 5522, would have provided no ACI funding for
Venezuela. The Senate Appropriations Committee report to the bill recommended
fully funding the Administration’s $1 million ACI and ESF requests for Venezuela.
Final action on FY2007 foreign aid appropriations was not completed by the end of
the year, leaving the 110th Congress to complete action in 2007.

Two resolutions on Venezuela were also approved in the 109th Congress. With
regard to counternarcotics cooperation, the House approved H.Con.Res. 400
(Burton), by voice vote on July 26, 2006, which expressed the sense of Congress that
Venezuela should actively support strategies for ensuring secure airport facilities that
meet international certifications to prevent trafficking of controlled substances,
narcotics, and laundered money. The resolution also condemned Venezuela’s
failures to stem the flow of narcotics through its territory and called for, among other
measures, steps to restore cooperation between Venezuela and the DEA. S.Res. 607
(Bunning), approved by unanimous consent on December 6, 2006, condemned
President Chávez’s anti-American rhetoric during his September 20, 2006, speech

CRS-52
before the U.N. General Assembly and “the undemocratic actions of President
Chávez.”
In other action, the House-passed version of H.R. 2601 (H.Rept. 109-168), the
FY2006 and FY2007 Foreign Relations Authorization Act, had a provision (Section
1025) that would have authorized $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 had a provision, in Section
106(5), that would have authorized 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.” Final action on H.R. 2601 was not completed by the end of
the 109th Congress.
Other legislative initiatives not completed before the end of the 109th Congress
included H.Con.Res. 224 (Fortuño), which would have called on the Venezuelan
government to uphold human rights and civil liberties; H.Con.Res. 328 (Mack),
which would have condemned President Chávez’s anti-democratic actions; S. 2435
(Lugar), which would have increased hemispheric cooperation on energy issues,
including cooperation among the governments of Brazil, Canada, Mexico, the United
States, and Venezuela; H.Res. 1033 (Graves), which would have condemned
President Chávez’s anti-American rhetoric at the United Nations; and S.Res. 587
(Santorum), which would have condemned the anti-democratic actions and
statements of the leaders of Iran, Cuba, and Venezuela and expressed concern about
the national security implications of the relationships between those leaders.
Several oversight hearings were held in the 109th Congress dealing with
Venezuela policy issues. On November 17, 2005, the House International Relations
Committee, Subcommittee on the Western Hemisphere, held a hearing on the status
of democracy in Venezuela. Earlier in the year, the subcommittee held hearings on
March 9 and September 28, 2005, regarding the state of democracy in the Latin
America, both of which touched on Venezuela. In 2006, the full House International
Relations Committee held a June 21 hearing on the status of democracy in Latin
America that covered Venezuela, while the House Subcommittee on International
Terrorism and Nonproliferation held a July 13, 2006, hearing specifically on
Venezuela and terrorism issues. In terms of energy security in the Western
Hemisphere, the House Subcommittee on the Western Hemisphere held a hearing on
March 2, 2006, while the Senate Foreign Relations Committee held a hearing on June
22, 2006.
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.149 As noted above (U.S. Funding for Democracy
149 Senate Foreign Relations Committee, Subcommittee on Western Hemisphere, Peace
Corps, and Narcotics Affairs, “The State of Democracy in Venezuela,” Hearing, June 24,
(continued...)

CRS-53
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
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.
149 (...continued)
2004.


CRS-54
Figure 1. Map of Venezuela