Venezuelan President Hugo Chávez has announced more Cabinet changes in his weekly radio address. Gone was the fiery rhetoric that is normal for Chávez and the address was short -- at a mere three hours. Chávez bowed to his critics by replacing his planning and finance ministers, and naming as defense minister a general whom three weeks ago he called "a coward."
Though Chávez came back to power three days after the confused April 11 coup attempt, it is apparent he is now a much weakened figure. Most of the appointments he made Sunday were urged on him by his critics in the armed forces and the business sector.
The new defense minister is Gen. Lucas Rincón, the man who, three weeks ago, announced to the world that Chávez had resigned: a deed for which Chávez and his supporters later called him "a coward."
On Saturday, and presumably in order to pave the way for his appointment to Chávez's Cabinet, Rincón said that Chávez had not in fact resigned but that he had had to say something "to calm the country." So the fact that Rincón had announced Chávez's departure to the world, and no doubt with pleasure, was patched over. But it is clear that Chávez has appointed Rincón as his defense minister now not out of choice but because he had no other option.
Another appointment might be seen to some degree as a balancing one. Chávez named one of his closest supporters, Diosdado Cabello -- whom he had replaced days before as vice president -- as the new interior minister.
Cabello is a controversial figure and unpopular with most of the military hierarchy, if not with the officers at Maracay, two hours from Caracas, who helped to return Chávez to power in mid-April.
Cabello, like Chávez, is a former middle-ranking military officer and was part of the 1992 coup attempt that first brought Chávez to prominence. More recently Cabello has been the organizer of the "Bolivarian circles" formed by Chávez in defense of his self-proclaimed Bolivarian revolution.
These "circles" are a phenomenon that preoccupy many Venezuelans, and not least the armed forces. What are the "circles" the beginning of? A militia? A guerrilla movement?
Chávez said Sunday that if any "circles" were, by chance, armed, they should lay down their arms. But by making Cabello interior minister, Chávez kept in his Cabinet the man closest to them.
On the economic front, too, important changes were made Sunday. Chávez appointed Felipe Pérez in the key Planning Ministry role in place of Jorge Giordani, and gave Tobías Nóbrega the role of finance minister.
The business community has been calling for new faces. The Planning Ministry generally has a senior role to that of Finance, and Giordani, an academic and long an associate of Chávez, has held the post throughout Chávez's three years in power. Even for supporters of more radical policies, his has been a disappointing term.
Under his vague and aloof direction, economic policy did not head anywhere in particular. There was no decided anti-market shift, but there was an erosion of property rights, which has encouraged Venezuelans to take their money out of the country and has deterred foreign investors from investing in it.
Now, both the new economic appointees are economists with doctorates: Pérez from the University of Chicago and Nóbrega from the University of Madrid in Spain. Yet Pérez, in particular, may not bring the clear and market-friendly leadership the business community is looking for. Indeed, the new planning minister appears to have a Giordani-like side to him.
In an interview after being appointed, Perez said he was looking for a "fourth way." How this differs from the "third way" sometimes spoken of in Europe, not least by British Prime Minister Tony Blair, is unclear, but Pérez mentioned markets, the state and "solidarity." BBO Financial Services in Caracas described Pérez as a person who comes across "more like a theologian than an economist."
As for the "third way," it's a "third way" to socialism and capitalism -- a combined approach that joins the free market with social protections of various kinds.
Venezuela's new economics team faces two huge problems.
First, international reserves are being drained by capital flight, creating the risk that at some point imports will have to be rationed, or the currency allowed to fall heavily, making imports more expensive.
Devaluation would also stretch dollar oil revenues further in local currency terms, which would help to correct the second major problem, the huge fiscal deficit, currently estimated at around $7 billion, though at the cost of pushing inflation up and risking still greater social tension.
Without a big devaluation or a cut in government spending, the government will soon be forced to raise fresh money, some of it internationally. A government presided over by Chávez is not going to find that easy to do. The economy that he has mismanaged so badly could prove Chavez's downfall.
The picture is poor. Chávez is on the defensive, but the new ministers he has brought in are unlikely to fit in with the ministers he has retained -- or indeed with his own ideas. Venezuela needs a fresh start. Chávez is not going to provide it.
He has become more conciliatory, less provocative. He is not appreciated in the United States or anywhere else in the West, but the short-lived mid-April coup caused warning flags to be waved around the world. No one wants to see coups returning to Latin America's political landscape.
Chávez's opponents in Venezuela may therefore need patience. If he does not provoke his own demise through some unconstitutional act, he may be able to cling to power for a long time, though it still seems unlikely that he can hang on till 2006, when his term is due to end.
Nonetheless, he has some time, a second life, in which to show his true qualities. Most in Venezuela and outside will fear he has already done so.
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