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Venezuela's economy sagged
and its budget deficit grew as oil prices fell again in the late
1990s. Relations with Colombia, long strained over control of
offshore oil reserves and the illegal movement of many
Colombians into Venezuela to work, deteriorated in the 1990s as
Venezuela claimed that Colombian guerrillas were trafficking
drugs and arms across the border. In 1999, Hugo Chávez Frías , a
former army colonel who had participated in a failed coup
attempt against Pérez, became president after running as an
independent. He called for a halt to privatization of state
assets and approved a law enabling him to rule by decree in
economic matters for six months. He also cut Venezuela's oil
production to force up prices, and pushed for other OPEC members
to do the same.
A referendum in Apr., 1999, called for a national constituent
assembly to draft a new constitution; the assembly was elected
in July and convened a month later. The assembly and Chávez
engaged in a contest for power with the congress and judiciary;
the assembly declared a national emergency and stripped the
congress of its powers. A constitution establishing a strong
president with a six-year term in office and the ability to run
for immediate reelection and a unicameral National Assembly was
approved in referendum in December; the new constitution also
reduced civilian control of the military and increased the
government's control of the economy. In the same month Venezuela
experienced its worst natural disaster of the century, as
torrential rains caused huge, devastating mudslides along the
Caribbean coast; perhaps as many as 5,000 people were killed.
The disaster slowed plans for new elections, but the congress
was replaced with a 21-member interim council. In July, 2000,
Chávez won election to the presidency under the new
constitution; his coalition, the Political Pole, won 99 of the
165 seats in the assembly, short of the two-thirds majority
needed to rule without constraints. Chávez won approval from the
assembly to legislate by decree, and won passage of a Dec.,
2000, referendum that ousted Venezuela's labor leaders, a move
denounced by the International Labor Organization. Chávez also
revived the dormant boundary dispute with Guyana, declaring that
a satellite-launching facility being built by an American
company in the territory claimed by Venezuela was a cover for a
U.S. military presence.
In 2001, Chávez became somewhat more unpopular with the
increasingly polarized Venezuelan people, although he still
retained significant support among the lower classes. His
attempts to assert control over the state oil company led to
strikes and demonstrations in early 2002, and in April he was
briefly ousted in a coup attempt. Latin American nations
refused, however, to recognize a self-proclaimed interim
government under business executive Pedro Carmona Estanga, and
poorer Venezuelans mounted counter-demonstrations in his
support. Chávez was restored to office and called for
reconciliation; a subsequent cabinet shakeup gave his government
a less ideological cast.
The ongoing political turmoil, which led to a prolonged,
polarizing antigovernment strike in the vital oil industry
(Dec., 2002-Feb., 2003), sent the country into recession and
reduced oil exports. Although Chávez outlasted his striking
opponents, the crisis further eroded public support for his
government. An agreement between the two sides, negotiated by
the Organization of American States in May, 2003, called for an
end to violence and a referendum on Chávez's presidency later in
the year. An opposition petition calling for a referendum on
Chávez was rejected in September, however, because of procedural
errors.
A new petition for a recall referendum was presented in
December, but so many of the signatures were rejected by the
electoral commission that the petition was unsuccessful.
Negotiations ultimately led to a compromise in which the
opposition was allowed three days in May, 2004, to reaffirm
disputed signatures, and the petition was validated. Also in
May, a number of civilians and military officers were arrested
on charges of plotting a coup against Chávez. In the referendum,
held in August, 58% voted to retain Chávez, and despite
opposition denunciations of the result, foreign observers
strongly endorsed it. Several opposition leaders were later
charged (July, 2005) with conspiring to undermine Venezuela's
government because their organization, Súmate, which played a
major role in the petition drive, had received U.S. funds that
were alleged to have been used to fund the referendum effort.
In Jan., 2005, the president signed a decree establishing a
national land commission that would begin the process of
breaking up the country's large estates and redistributing the
land. During the same month relations with Colombia were tense
after a Colombian rebel in Venezuela was kidnapped (Dec., 2004)
by bounty hunters and turned over to Colombia authorities, but
the dispute was resolved by the time both nations' presidents
met in Caracas in February. National assembly elections in Dec.,
2005, resulted in a sweep for parties supporting the president,
but only a quarter of the electorate voted. Most opposition
candidates withdrew from the contest before the vote in protest
against what they said were biases and flaws in the electoral
process, ceding complete control of the legislature to Chávez.
Chávez has used Venezuela's increased oil revenues to fund
social programs, to create a large military reserve and expanded
militia, and to establish programs that reduce the effects of
high energy prices on Caribbean nations. Chávez also has
publicly accused the United States of planning an invasion to
overthrow him, while U.S. officials have accused him of
supporting antidemocratic forces in Bolivia, Colombia, and
Ecuador.
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