With Regime Change Possible, Venezuela's Difficulties Persist

Venezuela's upcoming presidential election and the continuing illness of President Hugo Chavez have left the country in a state of deep uncertainty. After 13 years, a leadership change in Venezuela is possible this year. Chavez's challenger in the Oct. 7 election, Miranda state Gov. Henrique Capriles Radonski, has criticized Chavez's stewardship of the Venezuelan economy and has promised that he will improve Venezuela's business climate for foreign investors if elected.

Even if Chavez wins the election, his health issues make it unlikely he will be able to complete his term, and a government led by a more pragmatic successor from within his inner circle will also likely attempt to improve the country's business climate. However, his government's policies aimed at redistributing income to the poor and increasing government control over the economy are a large part of the regime's considerable public support. Perceiving this, Capriles has even made continuity a central part of his presidential campaign, promising to abide by Venezuela's current commitments to the poor, workers and foreign countries. Nevertheless, Venezuela's economy is struggling from persistent distortions that will endure beyond the Chavez regime and well into any new government. While new investment would provide some relief, fixing the distorted currency, financing trade and repairing damage to the energy sector will take years.