After Chavez?

What happens after Hugo Chavez?

Hugo Chavez had an operation for cancer in December and hasn’t been seen in public since. Now, the country is in political limbo. The 58-year old has been President of Venezuela for the past 15 years, where he has been both highly popular and highly divisive. Constitutional reform, land reform, nationalization of key industries—all were part of Chavez’s policies. At times Chavez has been autocratic and vicious.

But the source of his popularity is simple: of the roughly $800 billion in oil revenues earned by Venezuela since he took power, approximately $200 billion have been used to alleviate poverty. It’s easy to be popular when you can hand out billions. But that oil-wealth is going to be a cause of trouble going forward.

When Chavez dies it will pitch rivals against one another. In fact, his senior lieutenants have already begun to jockey for position. His older brother Adan; a crowd of politically-connected tycoons; a group of ideologues known as “Chavistas”; and of course the army—all would like to control $40 billion a year in oil-export revenues in a country of 30 million people.

Who else is watching the coming succession battle? Cuba, of course. They’ve received billions in subsidized oil. And Nicaragua—which had a $30 million loan from Venezuela forgiven, along with a “gift” of another $10 million. Indeed, much of the Latin American “pink tide” of the last decade has been supported by Venezuelan oil money. When Chavez is gone, that money—and perhaps the movement—may go with it.

Latin America has been unusually quiet for the past decade. When Hugo Chavez passes out of the picture, that’s likely to change.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-01-18T10:57:50+00:00 January 18th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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