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This apprehension has continued despite the fact that Chávez has taken measures to resolve the crisis in education and has brought in Cuban doctors to help the national health care system, Rojas says, adding that although oil prices are at record-high levels, companies are closing down and jobs are disappearing forever. Rather than find permanent solutions, the Chávez regime is merely "applying band-aids" to the situation, Rojas states.

According to Guillén, although Chávez has been in power for years, the percentage of poor people in Venezuela has not declined. Moreover, rather than attract badly needed new investment to Venezuela, the regime is taking a confrontational approach that only alienates multinationals. Rojas describes this as part of the "the anti-globalist vision" of Chávez, and his strategy of "permanent confrontation with the United States."

For the foreseeable future, Venezuela's fate will be tied, of course, to the future of oil prices. Parisi says that OPEC could find a balance of between $28 and $32 a barrel over a three-year period. Nevertheless, there will be a strong and constant volatility until interest rates in the United States return to levels around 5.5 percent.

Venezuela "has opted to reduce production in order to have higher prices," says Rojas. "Petroleum revenues depend on volume and prices; we have high prices but we have lower production, which theoretically is not enough for an economy like ours, which is so dependent on petroleum."

Some sources in Venezuela believe that the government's real production levels are less than the levels it announces. The government says it is producing 3.2 million barrels a day at $35 a barrel. If so, according to Rojas, its international reserves should be much higher than they are. He cautions that Venezuela will suffer an even greater crisis if oil prices collapse to the $20/barrel level – unless drastic measures are taken. "Venezuela is not investing in major exploration and maintenance, and that leads to the exhaustion of wells and deposits," says Rojas. "They are doing nothing to improve the system of production."

The Venezuelan oil industry, he adds, "is going to have to go abroad to be able to obtain financing for investment." This, in turn, will make the country "much more vulnerable" because Venezuela might not get the financing it needs at an affordable price. This would lead to delays in exploration and maintenance, and we could wind up in a difficult situation." A similar scenario unfolded in Libya, Rojas notes, another "anti-democratic" country that cut its petroleum production "in order to satisfy the needs of the group in power."

Rojas worries that the situation in Venezuela could lead to something even worse – "the loss of the institutional value of voting. If people stop believing in their votes, we are one step away from a dictatorship."

How Long Will Chávez Remain in Power?
How long will Chávez remain president of Venezuela? Guillén predicts that Chávez will run for re-election in 2006. "We can expect the same populist measures [as now]. Chávez will continue throwing money at the people who support him." His power rests in his control of the state's treasury, not in any ideology, says Guillén.

Furthermore, given that oil prices are high, Chávez "is going to be particularly difficult to dislodge from power," Guillen adds. "He will have plenty of money, and he will have plenty of room to maneuver." If the price of oil were at, say, $16 to $18 a barrel, as it was two years ago, he would have far less [space]. With oil prices at near-record levels, he has been raising pensions and promising infrastructure improvements in such areas as water and sewage systems "where he thinks he can get support."

While politicians all over the world rely on such patronage, the problem in Venezuela, says Guillén, is that the usual checks and balances do not exist. "Parliament is a puppet and the President has a lot of power, as long as the price of oil is high. All the tools are at his disposal, not just legal tools."

If oil prices fall far from current levels, it may not take long for Chávez to feel the sting, experts agree. "Already, petroleum isn't providing for enough of the needs of Venezuelan society," notes Rojas. "Imagine, for a moment, how much worse the situation would be in Venezuela if oil prices were to drop to $20 a barrel. At the moment, what we have in Venezuela is much more of a political crisis than an economic problem. On the margins of the national budget, the government has been giving away money to its supporters to maintain itself in power, but it has been excluding most Venezuelans."

Rojas cautions that "the Venezuelan economy is going to grow, but only because the growth we had in recent years left us practically in the basement … Growth is almost nothing compared with the levels we had four or five years ago."

Unless Chávez makes a fundamental change in his approach, uncertainty about Venezuela will continue to be a problem for the country and for global energy markets, Rojas says. "It is time for the President to stop being exclusive. The President has an obligation to play by the rules of democracy, which are much more inclusive." Chávez must "eliminate political violence. Venezuelans are tired of a situation of permanent violence, both physical and verbal. There is a terrible insecurity in this country."

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