Mention violence in Latin America today and most people think of Mexico. But if you compare the numbers, Latin America’s hotspot is somewhere else entirely: Venezuela, whose homicide rate far surpasses Mexico’s. Under a decade of President Chavez, Venezuela’s homicide rate has increased by about 140 percent, making Venezuela one of the most violent countries in the world.

Not surprisingly, crime in Venezuela has become political enemy number one. According to Latinobarometer, a well regarded regional polling agency, Venezuelans see crime and public safety as the number one challenge for their country; and Venezuela is the only Latin American country where crime is the most important personal issue cited by respondents. Crime was a major concern for voters in the run-up to the November 2008 regional elections. In speeches and ads Chavistas and opposition leaders both blamed the rising violence on their opponents. Perhaps unsure who was culpable, the Venezuelan vote was a draw. Chavez supporters won most of the states, but the opposition won five of the most populous states and some key mayorships, including that of Caracas, meaning that almost half of Venezuelans now live under opposition local governments.

So how bad is it? First, some regional context is necessary. Throughout Latin America, homicide rates hover at three times the global average. But even within that high cohort, Venezela now holds top rank – by far the highest in South America. Violent deaths have more than doubled since 1998, rising from 20 per 100,000 to 48 per 100,000. In Caracas, the government estimates an even higher 130 per 100,000 inhabitants, or seven deaths a day (though some experts believe the true number is closer to 160). By comparison, the murder rate in Capetown, South Africa, is 62 deaths per day. In the region, Mexico’s homicide rate is half of Venezuela’s: 24 per 100,000. Even the former murder capital of South America, Colombia, claims a rate around 40. In fact, the only close comparison in Latin America is the Colombian crime rate in the 1990s, when druglord Pablo Escobar and his rivals were tearing the state to shreds. These murders occur mostly at night, and spike every two weeks around payday. Young people are increasingly the victims, now three times as likely to be killed today than ten years ago.

There are any number of conjectures as to how things got so bad. Venezuela does share some of its neighbors’ security challenges – most notably drug trafficking. The U.S. Drug Enforcement Agency (which was kicked out of Venezuela in 2005), claims drug shipments passing through the country have increased tenfold during Chavez’s tenure. The U.N.’s Office on Drugs and Crime has also tracked Venezuela’s growing role in the drug trade, and believes it is now the major transit country for shipments to Europe. This is surely linked to some rise in violence – but not all.

As in other Latin American countries, a substantial part of the problem rests with the police force. The Venezuelan police have neither the ability, nor skills, nor an interest in properly investigating crimes. In promotions, loyalty is prized over capacity, and some even suggest the government has encouraged the selective enforcement of its laws — for instance, ignoring tire burning and petty crime in poorer neighborhoods in order to avoid conflict with Chavez’s support base: the country’s poor. If the often cited “broken windows” theory holds true, allowing these petty infractions creates a climate of lawlessness that opens the door for more serious and violent crimes, such as murder. National polls show that the vast majority of citizens believe the police are involved in many of the crimes committed, with a full one-fourth of respondents claiming the police are behind nearly all crimes committed. As a result, most crimes are not even reported, leaving little to dissuade the criminally inclined.

A poor justice system is also to blame. Only three of every 100 murderers are actually sentenced. Courts are underfunded and politicized, as they often serve the interest of the government over justice. Some experts in fact link a rise in police brutality to a lack of confidence in the judiciary; police officers are more inclined to take justice into their own hands, knowing the courts will be unable or unwilling to intercede.

But the rise in violence may also have something to do with Chavez’s particular way of governing. During his weekly address “Alo Presidente” and other speeches, Chavez incites violence against anti-government protesters, justifies law breaking, accuses political figures, the media, and others of crimes, and calls on the citizenry to take on the role of the enforcement forces into its own hands. As a result, after a decade of Chavez’s rule, respect for rule of law has dwindled. Those that support the president know they can act with impunity, while those that oppose him often fear even expressing themselves.

Until recently, Venezuela had the fiscal wherewithal to do something about its crime. Several years of high oil prices allowed Chavez’s government to ramp up spending, quadrupling it from $17 billion in 2003 to over $70 billion for 2009. Billions of these dollars went to the Misiones Bolivarianas, Chavez’s centerpiece redistribution programs to bring health care, literacy programs, housing, and subsidized food to Venezuela’s citizens. Chavez doubled the defense budget, allowing the military to purchase submarines, aircrafts, helicopters, and over 100,000 AK-47-type rifles from Russia.

But very little from the oil bonanza trickled down to a basic security system desperately in need of an overhaul. The President responded to the growing calls to do something about rising crime by creating a new centralized National Police Force to eventually replace Venezuela’s numerous local forces. But rather than establishing firm and functioning democratic institutions; the new armed force appears to be just another organization at the beck and call of the executive branch.

What is most unusual in Venezuela is that crime rates skyrocketed as poverty decreased. Now, with the economy in freefall, things could get even worse. And Chavez is not helping. Over the last three months, as pointing fingers at the “American empire” has failed to pay dividends, Chavez has shifted his strategy and attacked the opposition, stripping the new opposition mayor of Caracas of much of his authority, accusing the TV station Globovision of “”media terrorism” and threatening to close it down, and bringing what may prove to be unfounded corruption charges against prominent (and popular) opposition leaders. As the Venezuelan government moves farther down the path to authoritarian rule, law enforcement institutions will surely follow, bending and breaking the rules as necessary.

Venezuela’s institutions are threatened not just by drug traffickers, organized crime, or guerrillas, but also by the decisions of elected officials. It is this challenge the Venezuelans now face, holding in the balance their safety, their prosperity, and increasingly, their very lives.

This article first appeared on Foreign Policy Passport.

The referendum does matter. Ten years of single strong executive rule have taken a toll on the country’s democratic institutions. The referendum’s passage would open the possibility for Chávez to run again in 2012, and indeed to remain in office for decades to come. But, Chávez would still have to win reelection – and that may now prove to be the most difficult part.

High oil prices granted Chávez an extraordinary political honeymoon. Multi-year double digit economic growth, historically low unemployment, and prolific public spending on social programs fueled the adoration of previously excluded sectors of society. Skyrocketing consumption and the halving of poverty levels won the approval of the middle class.  In fact, according to the pollster Latinobarometer, Venezuelans are among the most satisfied with their democracy in the region.

Yet this situation is about to change. As international oil prices crash, so too will Venezuela’s economy. Predictions for 2009 and 2010 foresee a deep recession in the making. Unemployment will spike into the double digits. Public debt and deficit levels will surge. Inflation is already the highest in Latin America, and forecast to continue its upward climb.

On top of low oil prices, Venezuelan oil production is falling. Outside Energy Information Administration (EIA) and OPEC (of which Venezuela is a member) estimates of 2009 oil production are a third less than Venezuelan government predictions. With oil revenues funding at least half of the $80 billion federal budget, price and output declines mean hard choices. The economic party in the petrostate has come to an end, and Venezuela needs to prepare for the political hangover.

How will Chávez deal with the looming economic crisis? He is unlikely to cut back government outlays to balance his budget, especially since social spending and programs are a key part of his allure. Even the mention of raising domestic gasoline prices– currently essentially free – led to unrest and a quick public backtrack. But continuing lavish spending is also untenable for much longer, even with billions of dollars in reserves. It also fuels the inflation that hits Venezuela’s poor – and Chávez’s base – the hardest.

Venezuela has gone through this economic cycle of oil boom and bust before. In the most recent iteration – in the late 1980s and early 1990s –a popular president faced low oil prices, cut public spending, unrest ensued, deaths occurred, and a group of military officers – including then Lieutenant Colonel  Hugo Chávez – attempted a coup. This economic downturn mortally wounded the political system, opening up the space for Chávez and his “Bolivarian Revolution.”

Will Chávez fare differently? Chávez bases his legitimacy on constant voter affirmation. So far, he has mostly gotten it. He won two presidential elections, two parliamentary elections, and three referendums in the last 10 years. He lost (though closely) a 2007 referendum, and basically tied in the December 2008 regional elections against the opposition.

Pollsters now show a dead heat in the upcoming referendum. A win for the no would bolster Venezuelan democracy. But even if the referendum passes, Chávez has to win again in 2012 to stay in office. With the economy headed south, this is an increasingly doubtful proposition. If the past holds any lessons, he should be more worried about 2010 than beyond. In the Venezuelan petrostate, economics trumps politics.

The Promise and Perils of South American Integration
Shannon O’Neil
January 12, 2009
World Politics Review

In the 21st century so far, regional integration has been one of the most notable elements of South American foreign relations. Picking up speed in recent years, the continent’s heads of state have enthusiastically met in numerous summits, promising increased political, economic, social, and development cooperation. Across the spectrum, governments are expanding current integration frameworks and entering into new agreements. Expectations are no less grand. As Brazil’s President Luis Inacio “Lula” da Silva recently stated, “South America, united, will move the board game of power in the world, not for its own benefit, but for everyone’s.” Read the entire article here.

The report has gotten some great feedback so far, and I hope will help jumpstart a new conversation within the next Administration and Congress with regard to the region.

To kick things off, here is a link to a new Independent Task Force report from the Council on Foreign Relations, titled U.S.-Latin America Relations: A New Direction for a New Reality. The Council brought together 19 individuals of various interest and expertise under the chairmanship of Charlene Barshefsky and General James T. Hill. As director of the project, I can attest to the long hours of intense and at times spirited discussion among its members.
The group decided that U.S. policy should focus on four critical areas: poverty and inequality, public security, migration, and energy integration. The main recommendations are the following:

Poverty and Inequality:

• U.S. should expand targeted assistance for poverty alleviation and institution building by fully funding the Millennium Challenge Account and developing new initiatives to reach the poor regions of the larger middle income countries. These programs should reflect the priorities of Latin American governments and also involve restructuring and integrating the programs of various U.S. government bureaucracies and multilateral institutions.
• Alongside aid, the United States should approve pending free trade agreements with Colombia and Panama and extend trade preferences to Bolivia and Ecuador to encourage productive relations with these complex countries.

Public Security:

• The United States should assist Latin American countries in strengthening their law enforcement and judicial systems. Only through strong institutions can criminal networks and drug traffickers be controlled in the long term. The United States should also focus more on the demand side of the drug equation, working closely with other large drug consuming nations, specifically those in the European Union.

Migration:

• Push through a comprehensive reform in 2009. This must deal with border security, employer responsibility, some sort of regularization of the 12 million unauthorized workers here today, and a flexible guest worker program to deal with future labor demands.

Energy Security:

• The United States should provide FDI incentives to help build energy infrastructure i the region. It should also sponsor regional and subregional working groups to forward best practices.

Finally, the task force touches briefly on 4 bilateral relations. It recommends deepening U.S. relations with Brazil to promote global trade negotiations and manage energy demands; strengthening cooperation with Mexico to stop narcotics trafficking, increase U.S. investment in energy production, and reform immigration policies; using multilateral institutions to address foreign and domestic policies of Venezuela; and opening informal and formal channels of communication with Cuba, with the eventual goal of lifting the embargo.

The polls show varying results, with some proclaiming a majority in support of the changes and others showing a majority against the proposals. What will really matter is turnout. Here, the “yes” vote has an advantage, since the government is already canvassing the media and will undoubtedly use state resources to encourage supporters to get to the polls. This mobilization will matter.

In addition, Chavez has played again the international anti-imperialist card in the lead up to the referendum. Chavez’s recent international outbursts,  first with the King of Spain and more recently with Colombian President Uribe, deflect from the growing domestic discontent and confusion. His evocation of former Spanish Prime Minister Jose Maria Aznar, who along with President George W. Bush tacitly supported the 2002 coup attempt against his government, seems designed to rally supporters before the upcoming vote, implicitly reminding voters of the turmoil brought on by political polarization. If that isn’t enough, the violence in recent weeks toward the opposition may scare some “no” voters away on Sunday.

Finally, the opposition has not been able to rally around one position, “ unlike more successful “no” campaigns, such as that leading up to Chile’s 1988 referendum. Some, notably those loyal to the old Accion Democratica political party are calling for a boycott. Others, including former Presidential candidate Manuel Rosales and his followers, are rallying for the no vote. And few seemed to have reached out to Chavez’s former defense minister, General Raul Isaias Baduel, who has criticized the proposals as effectively realizing a constitutional “coup.”

Whether the opposition can galvanize the uneasiness with these reform proposals, which encompasses not just the traditional opposition but student movements and many moderate Chavez supporters, will be answered on Sunday.

But heterdox economic policies – reminiscent of Sarney’s Brazil, Alfonsin’s Argentina, and Garcia’s Peru (the first time around) – have reemerged. In both Argentina and Venezuela, the Kirchner and Chavez governments are using wage and price controls on basic goods as key parts of economic policy. Venezuela has gone a step further to reintroduce public control and management of “key” industries, including telecommunications, oil, and now perhaps steel and the banking sector. These policies are bringing back worries of inflation and leading to shortages in basic goods.

Venezuela’s inflation for 2006 topped 17%, the highest in Latin America. Most expect it to surpass 20% this year. Argentina too has seen increasing inflation, from a negative rate in the late 1990s to 10% last year. As worrisome, Kirchner fired the head of the national statistics agency, INDEC, briefly replacing her with a more malleable political appointee until public clamor forced the promotion of a INDEC senior employee.

Shortages in these economies are as important, and hamper both consumer-led and manufacturing-led growth. A recent Wall Street journal article argues that Chavez’s threat to nationalize the steel and banking industries has as much to do with the issue of shortages as with nationalism. News articles, as well as personal conversations, show that shortages and economic bottlenecks are again appearing in Argentina. These mismatches are hampering growth, not to mention the quality of life of individuals within the country.

Poverty, inequality, and equal opportunity are key issues for the future of Latin American nations. Government programs to directly improve the health care, education, and resources of the poor are important and laudable. But, these governments should not overlook the dire effects of inflation on poverty and inequality. Inflation hits the poor the hardest. They are the ones least likely to receive compensatory pay raises, and are those unable to hedge their savings in indexed accounts or abroad. High inflation will wipe out any benefits of direct assistance programs, leaving individuals certainly no better off and most likely in a much worse situation. This means that as governments are designing programs for the poor, they need to include measures to keep inflation low, be that independent monetary policy, controlled deficits, and better financial regulation. Only with this combination will governments be able to truly help those at the bottom of the pyramid.