Chavez had threatened to fine banks and withdraw the armed forces' deposits from private institutions if they didn't resume activities. Bankers said they provide a public service, which influenced the decision. "We owe the public," Nelson Mezerhane, the council's vice president, said after a Wednesday council meeting. "They have their earnings and money in our institutions." Fearing effects of the work stoppage - shortages of food, medicine, fuel and cash - could hurt their cause, many businesses plan to reopen next week. The possibility of having to declare bankruptcy by remaining closed also prompted owners of shopping malls, restaurants, franchises and schools to soon open their doors to the public. ***
Stratfor military sources in Caracas have insisted in the past year that a majority of the FAN's officers are opposed to the Chavez regime. Opposition is greatest in the National Guard, Navy and Air Force, according to these sources, while a small group of hardcore loyalists and opportunists in the Army have constituted the base of Chavez's support within the military.
However, since Chavez survived the rebellion, he appears to have successfully purged his most dangerous foes from key command positions within the FAN. For instance, the top command structures within the FAN appear to be solidly pro-Chavez for political or opportunistic reasons, while strategically key units in Caracas, and in the nearby cities of Maracay and Valencia, are commanded by Chavez loyalists. This likely makes it difficult for anti-Chavez forces to launch a successful coup without incurring significant casualties and -- in the end -- possibly failing.
However, it also appears that FAN officers loyal to Chavez for ideological reasons are a minority within the armed forces. The vast majority of seemingly pro-Chavez officers are loyal more out of opportunistic self-interest than true commitment to their president's increasingly dictatorial revolution.
The implications of this are that Chavez has to continue feeding the needs of this opportunistic pro-regime faction within the FAN, or risk losing their loyalty and possibly his presidency. In part, this helps explain why Chavez has reserved the authority to dispense foreign exchange for defense and security purposes under the upcoming new exchange control regime.
Retaining the FAN's loyalty will be very expensive economically for Chavez. Moreover, with PDVSA in ruins and the economy in a state of collapse throughout 2003, Chavez likely will encounter cash-flow difficulties as he tries to retain the loyalty in the FAN with command perks and economic incentives. In effect, there simply won't be enough cash in the Treasury to cover all of the government's spending needs.
PDVSA has managed to raise production to over 1 million barrels per day since the strike began nearly two months ago, and in another 90 days, it might double that output to slightly more than 2 million bpd if international transportation and marketing blockages can be resolved. However, PDVSA will not restore crude oil production to pre-strike levels of 3.2 million bpd in 2003, and possibly not for years to come.
Additionally, by the time PDVSA finally does increase production to about 2 million bpd in another three or four months, it is very likely that global oil prices will have declined significantly from their current levels of about $31-$33 per barrel. This means that the Chavez regime won't reap the financial benefits of the price windfall caused in part by PDVSA's strike.
Right now, Chavez gives the impression that he's winning the confrontation with his foes. However, the costs of that victory are very high in terms of PDVSA's destruction, the economy's collapse and the certainty of significantly increased hardship for millions, including his poor supporters.
As the country's economic and social difficulties grow in a climate of continued polarization and political conflict, the president's control over the FAN could weaken. Ultimately, Chavez is not a Fidel Castro and his only perceived ideology is to remain in power indefinitely regardless of how much destruction he inflicts. Eventually, some members of the FAN now putatively loyal to Chavez may side with opposition groups within the armed forces to remove him from power. However, whoever replaces Chavez might not be an improvement, which means that Venezuela could remain in the dark ages for years to come.