[Senate Hearing 108-685]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 108-685

                   THE STATE OF DEMOCRACY IN VENEZUELA

=======================================================================

                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON WESTERN HEMISPHERE,
                   PEACE CORPS, AND NARCOTICS AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 24, 2004

                               __________

       Printed for the use of the Committee on Foreign Relations


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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming             RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio            BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee           BILL NELSON, Florida
NORM COLEMAN, Minnesota              JOHN D. ROCKEFELLER IV, West 
JOHN E. SUNUNU, New Hampshire            Virginia
                                     JON S. CORZINE, New Jersey

                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                 ------                                

               SUBCOMMITTEE ON WESTERN HEMISPHERE, PEACE
                      CORPS AND NARCOTICS AFFAIRS

                   NORM COLEMAN, Minnesota, Chairman

LINCOLN CHAFEE, Rhode Island         CHRISTOPHER J. DODD, Connecticut
GEORGE ALLEN, Virginia               BARBARA BOXER, California
MICHAEL B. ENZI, Wyoming             BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        JOSEPH R. BIDEN, Jr., Delaware
                                     JOHN F. KERRY, Massachusetts

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

Coleman, Hon. Norm, U.S. Senator from Minnesota, opening 
  statement......................................................     1

Diaz, Mr. Miguel, director, Americas Program (MERCOSUR/South 
  America), Center for Strategic and International Studies.......    51
    Prepared statement...........................................    54

Dodd, Hon. Christopher J., U.S. Senator from Connecticut, opening 
  statement......................................................    17
    ``U.S. Casts Wary Eye on Venezuela Vote, Action Promised if 
      Vote is Rigged,'' article by David R. Sands, The Washington 
      Times, May 26, 2004........................................    24
    ``Democracy in Venezuela,'' press release of Secretary Colin 
      L. Powell, May 27, 2004....................................    25

Maisto, Hon. John F., United States Permanent Representative to 
  the Organization of American States, Washington, DC............    12
    Prepared statement...........................................    15
    Responses to additional questions for the record from Senator 
      Lugar......................................................    75

McCoy, Dr. Jennifer, director, The Americas Program, Carter 
  Center, and Georgia State University, Atlanta, GA..............    28
    Prepared statement...........................................    29

Nelson, Hon. Bill, U.S. Senator from Florida, opening statement..     4

Noriega, Hon. Roger F., Assistant Secretary of State for Western 
  Hemisphere Affairs, U.S. Department of State, Washington, DC...     6
    Prepared statement...........................................     9
    Responses to additional questions for the record from Senator 
      Lugar......................................................    75

Tissot, Mr. Roger, director, Markets and Countries Group, Latin 
  America, PFC Energy, Washington, DC............................    57
    Prepared statement...........................................    59

Vivanco, Mr. Jose M., executive director, Americas Division, 
  Human Rights Watch, Washington, DC.............................    33
    Prepared statement with attachment...........................    36

Weisbrot, Dr. Mark, co-director, Center for Economic and Policy 
  Research, Washington, DC.......................................    61
    Prepared statement with attachments..........................    64

                                 (iii)

  

 
                  THE STATE OF DEMOCRACY IN VENEZUELA

                              ----------                              


                        THURSDAY, JUNE 24, 2004

                           U.S. Senate,    
        Subcommittee on Western Hemisphere,
                Peace Corps, and Narcotics Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met at 2:08 p.m., in room SD-419, Dirksen 
Senate Office Building, Hon. Norm Coleman (chairman of the 
subcommittee), presiding.
    Present: Senators Coleman, Dodd, and Bill Nelson.
    Senator Coleman. This hearing of the Senate Foreign 
Relations Subcommittee on Western Hemisphere, Peace Corps, and 
Narcotics Affairs is called to order.


               opening statement of senator norm coleman


    The political situation in Venezuela continues to represent 
perhaps the single most important test of democracy in the 
Western Hemisphere today. Venezuela is a highly polarized 
society. Supporters and opponents of President Chavez have been 
at odds for years. Now we are presented with yet another 
deadline: on August 15 there will be a recall referendum on 
President Chavez.
    The United States has a tremendous interest in what happens 
in Venezuela. Venezuela is in our neighborhood. The Western 
Hemisphere is, by and large, a community of democracies. We do 
not want to see any steps backward in what has been a very 
encouraging stride toward democracy in recent decades, 
particularly in a country like Venezuela with such a strong 
democratic tradition. We cannot afford to see a large exodus of 
Venezuelans fleeing their nation. We are interested in 
preventing terrorism and drug trafficking in the region. And it 
goes without saying that Venezuela is a major energy supplier 
to the United States. Another major disruption in Venezuela 
will hurt average Americans at the gas pump.
    We in the United States may have an interest in what 
happens in Venezuela, but it is the Venezuelan people who must 
have the opportunity to determine the future of their nation 
for themselves. What we in the United States can do is support, 
even insist upon, a fair process as guaranteed under the 
Venezuelan Constitution and as agreed upon by the Chavez 
government and the opposition. We in the United States can 
press for respect for universal human rights, such as the right 
of free assembly and the right to express one's political views 
without fear of retribution.
    I also believe America can and should take exception when 
President Chavez makes disparaging remarks about our President 
and our troops in Iraq. These are times when words matter.
    Relations between the United States and Venezuela are in a 
difficult state, and I acknowledge that the mutual distrust is 
not entirely unrelated to the handling of the 2002 coup 
attempt. In spite of these bad feelings, I believe we must 
continue to work with the Venezuelans where at all possible to 
pursue shared goals. We must cooperate on counter-narcotics and 
counter-terrorism issues. We must find ways to work together on 
issues of importance to the region as a whole, from trade to 
energy to stability. And I reiterate we must get beyond the 
hostile rhetoric coming from Caracas.
    The August 15 vote will be a decisive moment for democracy 
in the Americas. The Venezuelan people will have a chance to 
express themselves, thus finding a peaceful way out of a 
lengthy crisis, and the rest of the Americas will have a chance 
to stand up for democracy. As such, it is absolutely essential 
that the process be democratic and credible. It must be 
conducted in such a way that procedural problems do not cast 
any doubt on the results. To this end, I call upon the 
Government of Venezuela to carefully consider three key 
elements of this vote.
    First, the presence of objective international observers is 
a must. To date, the work of the OAS and the Carter Center in 
observing the process in Venezuela has added credibility to 
events. I urge the Government of Venezuela to invite 
international observers, particularly by these respected 
groups, to monitor the August vote.
    A second concern involves the voting machines which the 
Government of Venezuela has announced will be used. The fear is 
that the use of untested machines could cast doubt upon the 
results. As such, I urge the Government of Venezuela to work 
with the international community to conduct the voting in a 
manner that will not be open to criticism. The machinery used 
must not create more question than the voting was intended to 
resolve.
    A third concern involves recent announcements regarding the 
composition of Venezuela's supreme court. We in the United 
States can speak from experience. We all recall an election 
here that was so closely contested that it became necessary for 
the supreme court to become involved, and in Venezuela, the 
courts have already been involved in making key decisions 
related to this process.
    The concern is that by adding members to the Venezuelan 
supreme court, there will be questions raised about its 
independence as an institution. During Franklin Delano 
Roosevelt's Presidency, we in the U.S. considered increasing 
the size of the Supreme Court, but we found it to be a very bad 
idea. I would urge the Government of Venezuela to treat any 
decision regarding the supreme court with the utmost care, lest 
it cast a shadow on the results of the political process.
    There are other concerns in Venezuela. Human rights 
observers have pointed to political arrests and the use of 
excessive force against peaceful protesters. There are 
indications that Venezuelans who signed the recall petitions 
have been subject to harassment or lost their jobs. And there 
are regional issues to consider as well. For example, some 
reports suggest that Colombian guerrillas are using Venezuelan 
territory for R&R, or worse. In my discussions with the 
Venezuelan Ambassador, they have clearly denied that.
    When it comes to promoting democracy in the hemisphere, I 
believe the United States should not go it alone, and we do not 
have to. Through the Organization of American States, the 
countries of this hemisphere have made a commitment to uphold 
democracy. The OAS is rightly involved in the current political 
process in Venezuela and must continue to play an observation 
role during the August 15 vote and beyond, as well as a 
political role in responding to whatever the results of that 
vote may be.
    There is also a Group of Friends of Venezuela, working in 
connection with the OAS efforts, that has already taken a stand 
in support of Venezuelan democracy. This group, which includes 
Brazil, Chile, Mexico, Portugal, and Spain, may once again 
prove to be a useful multilateral forum for supporting 
Venezuelan democracy.
    We are wise to begin thinking today about how to support 
Venezuelan democracy in the future. But one word of caution. 
Venezuela has a tendency to defy conventional wisdom. As the 
recent reparos process unfolded, Washington observers were 
certain that President Chavez would never accede to its result. 
I want to acknowledge here that President Chavez did, indeed, 
defy conventional wisdom. He accepted the results of the 
reparos and is apparently willing to subject himself to this 
democratic referendum. This was a good choice by President 
Chavez.
    As the political process continues to unfold, it is my 
sincere desire that all parties in Venezuela will make good 
choices. There is much at stake here, for Venezuela and for 
democracy in the hemisphere.
    Testifying before the subcommittee today, we have a 
distinguished set of witnesses. Our first panel will consist of 
Assistant Secretary of State for Western Hemisphere Affairs, 
Roger Noriega, and Ambassador John Maisto, U.S. Representative 
to the Organization of American States.
    Assistant Secretary Noriega is no stranger to this 
committee, having served as a staff member for the Senate 
Foreign Relations Committee from 1997 to 2001 and from 1994 to 
1997 for the House International Relations Committee. 
Immediately prior to becoming Assistant Secretary for Western 
Hemisphere Affairs, Ambassador Noriega served as our 
Representative to the OAS. We are always grateful for the 
Assistant Secretary's willingness to appear before this 
subcommittee.
    Ambassador John Maisto has been our Representative to the 
OAS since July of last year. He served as Ambassador to 
Venezuela from 1997 to 2000 and as Ambassador to Nicaragua from 
1993 to 1996. I look forward to hearing Ambassador Maisto's 
remarks about the role of the OAS and member states in 
supporting Venezuelan democracy to date, as well as the role 
the OAS will play in the upcoming months.
    Our second panel will consist of five witnesses. The first 
will be Dr. Jennifer McCoy, director of the Americas Program at 
the Carter Center. Dr. McCoy has been intimately involved in 
the political process in Venezuela for several years. I also 
want to note with some pride that Dr. McCoy received her Ph.D. 
from the University of Minnesota.
    Second we hear from Mr. Jose Vivanco, executive director of 
the Americas Division at Human Rights Watch, a position he has 
held since September 1994. Mr. Vivanco has also worked as an 
attorney for the Inter-American Commission on Human Rights at 
the OAS, as well as in other human rights promotion 
organizations.
    Next will be Mr. Miguel Diaz, director of the South America 
Project at the Center for Strategic and International Studies. 
Prior to this position, Mr. Diaz worked in investment banking, 
journalism, and as a CIA economist.
    Mr. Roger Tissot is director of Markets and Countries Group 
for Latin America at PFC Energy where he is responsible for the 
Petroleum Risk Manager, a Web-based resource that evaluates 
political, economic, and industry-specific risks in leading 
oil-producing countries around the globe. Mr. Tissot will 
provide the subcommittee with important insight about the role 
of the oil sector in Venezuela and in U.S.-Venezuelan 
relations.
    Finally, we will hear from Dr. Mark Weisbrot, co-director 
for the Center for Economic and Policy Research. Dr. Weisbrot 
is an economist and writes a regular column distributed by 
Knight-Ridder/Tribune Information Services and also writes for 
Business Week.com.
    Now I would like to acknowledge Senator Nelson for any 
opening comments that he might have.


                OPENING STATEMENT OF SENATOR BILL NELSON


    Senator Nelson. Thank you, Mr. Chairman, and I want to 
thank you for calling this very timely hearing on a timely 
subject.
    At the end of the day, what we would like to have is a 
continuing good relationship with the country of Venezuela, and 
there are troubling, intervening incidents and events that seem 
to want to prevent that good relationship. I believe that it is 
in the mutual interest of the United States and Venezuela to 
continue to have that good relationship.
    I want to thank everyone who has continued to stand up for 
the rule of law, for standing up for democracy, and standing up 
for the Venezuelan people in keeping the referendum process 
from being derailed, so far. The Carter Center, especially 
President Carter and Dr. McCoy, your efforts have been 
tireless. You deserve tremendous credit for the reparos process 
ending in a legitimate and widely accepted result. I had the 
pleasure of running into President Carter, not in Venezuela, 
but in Bolivia, and having spoken a little Spanish with him, I 
can say that he truly speaks Spanish with a southern accent.
    Now, the OAS has been a champ. Secretary General Gaviria 
has also risen in my opinion to the occasion. I appreciate his 
leadership, as well as the efforts of the Ambassador who is 
going to testify to us today.
    Secretary Noriega, you have played a key role as well with 
some tough and some timely statements.
    Whenever given the opportunity, this Senator from Florida 
that has a great number of Venezuelans living in my 
constituency has tried to deliver a message that was 
nonpartisan. Bottom line is that our country will not tolerate 
subversion of democracy in Venezuela because it will threaten 
stability in the hemisphere.
    I want to commend Senator Kerry, and this is not a partisan 
statement. Senator Kerry issued a very strong, unequivocal 
statement, and it was well-timed and it was effective.
    But we have got a long way to go. Under article 72 of the 
Venezuelan Constitution, the recall referendum is set for 
August 15, and there is a lot of uncertainty surrounding it. In 
fact, the only reason the recall is going forward is because of 
the intense pressure and the scrutiny brought by the 
international community, the glare of the international 
spotlight and the tireless efforts of the people that I have 
already mentioned. And I hope that that is going to continue.
    There are many possible avenues for bumps along the road. 
One is the possibility of a manipulated or an inaccurate 
tabulation of the election results due to unproven, suspect 
technology. I have seen media reports about a Florida company, 
and I am concerned about what effect it could have on the 
voting machines and the software that goes along with those 
voting machines. I have asked the OAS and the Carter Center to 
consider these allegations that have been public and to look 
closely at this aspect of the referendum as they monitor these 
elections.
    Now, there are other dangers. President Chavez and 
supporters give the appearance that they are attempting to pack 
the supreme court with judges sympathetic to their side and to 
purge the judiciary of those that they consider opponents. The 
supreme court could well be in a position to make critical 
decisions related to the recall referendum, including whether 
or not the President can run in an election to succeed himself.
    There are also the ongoing concerns of harassment of 
members of the opposition and voter intimidation and the 
hijacking of media to espouse pro-President Chavez views. It is 
also going to be interesting to see the amount of money that is 
going to be spent in the next 60 days, although that probably 
will pale in comparison to the amount of money that is being 
spent in this Presidential election year.
    When the recall referendum is held, there will need to be, 
in the opinion of this Senator from Florida, international 
attention and strong, credible monitors, such as the Carter 
Center and the OAS, to determine if the elections are free and 
fair and if the result is legitimate.
    Venezuela has certainly had its problems, and on this 
committee we have to be concerned about democracy continuing in 
a robust fashion in that country. It is concerning that there 
is a movement apparently in the Government of Venezuela to 
consolidate and concentrate power and diffuse free institutions 
and civil society. I get concerned when I see an alliance 
struck with Mr. Morales in Bolivia, a person who is seeking to 
expand the drug trade.
    And of course, I get concerned when I see the close ties to 
Fidel Castro. There is extensive evidence of cooperation 
between Cuban and Venezuelan intelligence services and a great 
number of Cuban nationals are employed in Venezuela, and they 
are not all just employed as doctors.
    I have seen evidence that Venezuela has provided safe haven 
for the FARC as it crosses the line from Colombia into 
Venezuela. At a time when Colombia is making slow, but steady 
gains in its long struggle against the drug trade, the last 
thing it needs is to have a neighboring power, especially 
Venezuela, give assistance to this adversary.
    In the defense authorization bill that we passed last 
night, there is an amendment that I inserted that was accepted 
that will have the State Department give a report by all other 
states that are assisting any of the drug trade elements in 
Colombia. And that report, of course, will cover what I have 
just talked about.
    Now, one other thing, Mr. Chairman, that I am quite 
concerned about for the future of our relations is that 
President Chavez has made some outrageous statements such as 
praising Iraqi insurgents who attack American soldiers, Mr. 
Ambassador. He has also tried to use his oil supply 
relationship to leverage small nations in the Caribbean, in 
some cases to get them to oppose U.S. policies. And President 
Chavez has threatened to cutoff oil exports to the United 
States.
    So, Mr. Chairman, if these deteriorating relations between 
our governments continue, it is going to be a tragedy with a 
longtime ally, and it would represent a reversal of a 
longstanding good relationship between the United States and 
Venezuela.
    So I am very, very grateful to you for calling this 
hearing. If there continues to be a threat to Venezuela's 
democracy, if we continue to see the siding of the Government 
of Venezuela with adversaries to the United States, and if 
Venezuela does not continue to abide by its own constitution in 
this whole process of the elections, then I worry if we may 
eventually reach the point where we have to treat the 
Venezuelan Government as an unfriendly government that is 
hostile to the United States, and that would sadden me very 
much.
    My hope is that this knowledge will cause the 
administration and the international community to make it clear 
to President Chavez that our government and the free nations of 
this hemisphere place a high priority on democracy, the rule of 
law, and the responsible conduct in international relations and 
that any actions to the contrary in the Government of 
Venezuela, it will be made clear will have consequences not 
only in relations but in the relations with other nations 
around the world.
    Thank you, Mr. Chairman.
    Senator Coleman. Thank you, Senator Nelson.
    Before beginning with the testimony, I will note that 
Chairman Lugar has submitted a series of questions for 
Secretary Noriega and Ambassador Maisto. They will be made part 
of the official record.
    With that, I will turn to Secretary Noriega.

  STATEMENT OF HON. ROGER F. NORIEGA, ASSISTANT SECRETARY OF 
STATE, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF 
                             STATE

    Mr. Noriega. Thank you very much, Mr. Chairman. First of 
all, I apologize for being tardy. I will not offer any excuses.
    We thank you, Mr. Chairman and Senator Nelson, for your 
interest and engagement in U.S. policy toward Venezuela. That 
is very critical.
    I will summarize my written statement, Mr. Chairman, and 
submit it for the record.
    I want to express my appreciation, first and foremost, for 
your clear and thorough statements, both of which I think 
reflect a strong bipartisan consensus behind our policy toward 
Venezuela, and it reflects an agreement, a meeting of minds 
between the executive branch and the legislative branch, which 
I think is also very helpful as we pursue our interests.
    My statement will seek to update you on the current 
conditions and current challenges that Venezuela is facing and 
our efforts to help the Venezuelan people strengthen their 
democracy and bring a peaceful end to the political unrest in 
that country. My colleague, Ambassador Maisto, will address the 
important role that the Organization of American States has 
played and will continue to play in Venezuela.
    Mr. Chairman, the administration's policy in Venezuela has 
been and remains to work with our international partners, led 
by the OAS, the Friends of the Secretary General, coordinated 
by the Brazilian Government, and the Carter Center, to support 
the efforts of the Venezuelan people to achieve a 
constitutional, democratic, peaceful, and electoral solution to 
the current political polarization in that country, as called 
for by OAS Resolution 833.
    Mr. Chairman, our engagement is entirely consistent with 
the commitments that we and the Venezuela Government have made 
under the Inter-American Democratic Charter, and it is a 
statement of solidarity with the Venezuelan people who, as all 
of the people of the Americas, have a right to representative 
democracy.
    In addition, our bilateral interests are to recover a 
cordial, constructive and mutually-beneficial relationship that 
Venezuela and the United States had enjoyed for decades.
    The stakes are very high for the Venezuelan people, by all 
means. In addition to the political turmoil that they are 
dealing with, continued social polarization and economic 
mismanagement have taken a toll on Venezuela's economy. Living 
standards have fallen sharply with per capita income dropping 
25 percent between 1998 and 2003. As a result, the proportion 
of Venezuelans living in extreme poverty has increased from 21 
percent in 1998 to 33 percent in 2002, exacerbating the plight 
of those most vulnerable in Venezuelan society.
    Foreign direct investment has fallen by almost 65 percent 
between 1998 and 2003, reflecting in part an anxiety over the 
increasing corruption which is documented by Transparency 
International, among other groups.
    The world's fifth largest oil producer, Venezuela has 
traditionally been considered a reliable energy partner of the 
United States, and we have valued that relationship very much. 
Nevertheless, the political turmoil has undermined Venezuela's 
standing as a reliable supplier of oil. These concerns 
underscore the urgent need to reach a peaceful, democratic 
resolution to the current impasse.
    In a number of areas vital to the health of any democracy, 
we have witnessed troubling developments over the past year, 
some of which have been referred to already. As noted in the 
State Department's Human Rights Report in 2003, the Venezuelan 
Government's human rights record has been and remains poor. We 
are troubled by what appears to be politically-motivated 
tensions, indictments, and arrest orders.
    The on-going detention of Baruta municipality Mayor 
Henrique Capriles and the indictments of Alejandro Plaz and 
Maria Corina Machado of the NGO Sumate are two recent examples 
that demand international attention. The Sumate case is 
particularly troubling, Mr. Chairman and Senator Nelson, 
because these are individuals who are charged with 
``conspiring'' against the government for receiving support for 
electoral observation and voter education from the National 
Endowment for Democracy, which seems to be the only basis for 
the charges being brought against them.
    As we all know, of course, NED is an independent 
organization that enjoys bipartisan support and helps people 
around the world in strengthening democratic institutions. 
NED's transparent mandate is to fortify democracies, not to 
topple governments, and frankly, it is outrageous that the fact 
that the groups have received money from this particular 
organization would be used to bring criminal charges against 
them.
    Our international partners and we are disturbed also by the 
reports of systematic and brazen intimidation of recall 
signatories, including the dismissal of public employees who 
signed the recall petition. These types of actions, frankly, 
have no place in a democratic process.
    Legislation recently passed by the Venezuelan National 
Assembly to expand the size of the supreme court, to double the 
size, and allows a simple majority of the assembly to appoint 
or suspend judges also raises concern. If the public concerns 
that we now have about the impartiality of the government-
dominated National Electoral Council are any indication, then 
we have ample reason to be concerned about the future 
independence of the Venezuelan judiciary.
    Freedom of the press faces serious threats as well, 
including the rise of physical attacks against journalists and 
television stations.
    Mr. Chairman, mindful of Venezuela's deep polarization, we 
have consistently urged all parties to refrain from violence 
and respect freedom of expression of all political views. The 
Venezuelan state has a singular obligation, however, to create 
the conditions in which all of its citizens can exercise their 
constitutional rights and express their views free from fear 
and intimidation.
    The coming weeks are likely to define the long-term future 
of Venezuela. A peaceful, democratic resolution is not only in 
the interest of the Venezuelan people, but of the region as a 
whole. Such an outcome will allow Venezuelans to move beyond 
the social and economic challenges by focusing on a common 
commitment to national reconciliation, to economic recovery and 
the creation of jobs, to social inclusion, to building an 
effective, transparent government with strong democratic 
institutions, and to reintegrate Venezuela into the diplomatic 
and economic life of the rest of the Americas.
    Bilaterally we will continue to maintain good working 
relationships with Venezuela, to the extent we can, on counter-
narcotics, for example. However, on counter-terrorism and 
military cooperation, among other areas, this cooperation has 
deteriorated, something we regret. The Venezuelan and U.S. 
militaries historically have had close ties based on a shared 
commitment to democracy, the rule of law, and respect for human 
rights, and we are disappointed that those close bilateral ties 
have been undermined.
    Mr. Chairman, in closing, throughout this process, the 
Venezuelan people, including most Chavez supporters, as well as 
the opposition, have demonstrated a commendable civic spirit 
worthy of the Venezuelan democratic tradition. The United 
States and our international partners stand ready to support 
the democratic aspirations of the Venezuelan people, and we 
reject and condemn any unconstitutional effort to depose a 
democratically-elected government, be it in Venezuela or 
anywhere else in the Americas.
    We also reiterate our strong support for the important work 
of the OAS and the Carter Center. These observer missions enjoy 
strong international backing, and I associate myself, Senator 
Nelson, with your specific praise for the work of Secretary 
General Gaviria and Dr. McCoy, as well as President Carter. The 
international community considers their continued participation 
and their unfettered access to all aspects of the process as 
essential to a credible, free, and transparent resolution of 
Venezuela's crisis. And we commend the role that Brazil is 
playing, in particular, as a coordinator of the Friends process 
to ensure that the international observers have that access.
    Mr. Chairman, the American people and the Venezuelan people 
share a strong mutual commitment to democracy and we will 
defend those shared values in the challenging days ahead. Thank 
you very much, Mr. Chairman.
    [The prepared statement of Mr. Noriega follows:]

              Prepared Statement of Hon. Roger F. Noriega

    Good afternoon. Mr. Chairman, members of the committee, allow me 
first to express the Administration's appreciation for your on-going 
interest in, and support for, U.S. policy toward Venezuela.
    I appear before you today at a critical moment for Venezuela. For 
years one of Latin America's most stable democracies, Venezuela today 
is at a crossroads. Deepening polarization over the past three years 
has placed enormous strains on the country's democratic institutions. 
Amid these challenges, the Venezuelan people have shown an unshakable 
commitment to the defense of their constitutional rights and to 
pursuing a ``constitutional, democratic, peaceful and electoral 
solution'' to the current impasse, as called for in Organization of 
American States (OAS) Permanent Council Resolution 833.
    OAS Resolution 833, adopted in December 2002, serves as the anchor 
of multilateral efforts, in which the United States has played a 
prominent role, to strengthen Venezuelan democracy and bring a peaceful 
end to the political conflict. The Administration's policy has been and 
remains to work with our international partners--led by the OAS, the 
Friends of the OAS Secretary General's Mission for Venezuela (comprised 
of Brazil, Chile, Mexico, Spain, Portugal and the United States) and 
the Carter Center--to support Venezuelans' efforts to achieve a 
peaceful, democratic, constitutional and electoral solution to their 
political problems. Moreover, we seek a return to the cordial bilateral 
relationship we have always had with Venezuela.
    My colleague, Ambassador John Maisto, will address in greater 
detail the important role the Organization of American States (OAS) has 
played, and will continue to play, in facilitating a resolution of the 
political impasse in Venezuela, as well as the vital role the OAS is 
playing in promoting democracy throughout the Hemisphere. I would like 
to offer an update on the current challenges facing Venezuela, and 
outline our efforts to help Venezuela and its people strengthen 
democracy and bring a peaceful end to the political conflict.
    Mr. Chairman, after overcoming a number of formidable hurdles, 
which Ambassador Maisto will very shortly review with you, the 
Venezuelan people succeeded in advancing an electoral solution that is 
consistent with Venezuela's constitution and the May 29, 2003 OAS-
facilitated agreement between the Government of Venezuela and the 
democratic opposition. The National Electoral Council (CNE) has 
scheduled a recall referendum on President Chavez' continued mandate 
for August 15. This announcement is an important step toward realizing 
the goals of OAS Res. 833 and a testament to the desire on the part of 
a majority of Venezuelans to resolve their differences peacefully.
    Throughout this process, the Venezuelan people have demonstrated a 
commendable civic spirit worthy of their rich democratic traditions. 
Encouragingly, the Venezuelan people have rejected President Chavez' 
attempts to cast the U.S. as his adversary. As during the recall 
petition drives and the recent ``reparos'' process, international 
observation, led by the OAS and Carter Center, will be indispensable to 
ensuring a credible, fair and transparent recall election. We are 
working with our international partners to support the efforts of the 
OAS and Carter Center to increase participation in the observer 
missions and to draw international attention to the referendum. 
Additionally, through the United States Agency for International 
Development (USAID), we are providing support for programs to 
strengthen democratic institutions, respect for civil society and to 
reduce polarization.
    Venezuelans today face a difficult economic environment. Continued 
social and political unrest combined with economic mismanagement have 
taken a toll on the country's economy. Living standards have fallen 
sharply, with real per capita income dropping 25 percent between 1998 
and 2003. This has occurred despite high international prices for 
Venezuela's principal export, oil. The plunge in real income has led to 
an increase in poverty. The proportion of Venezuelans living in extreme 
poverty surged from 21 percent in 1998 to 33 percent in 2002, 
exacerbating the plight of Venezuela's most vulnerable.
    At the same time, high inflation has steadily eroded purchasing 
power, while price controls have resulted in shortages and lower 
quality products. The imposition of strict controls on foreign 
exchange, beginning in February 2003, has damaged the country's 
productive base. Erosion of public confidence in the Government's 
management of the economy has caused the bolivar to drop in value from 
564 bolivars per U.S. dollar at the end of 1998 to approximately 3,000 
per dollar on the parallel exchange market today. Falling investment--
foreign direct investment fell by almost 65 percent between 1998 and 
2003--and continued Government attempts to politicize institutions, 
including the Central Bank, have undermined prospects for future 
economic growth.
    Endemic corruption is also a factor undermining Venezuela's 
economic performance. Venezuela today ranks among the worst offenders 
in the world on the problem of corruption according to Transparency 
International's annual rankings (On a scale of 1 to 10, with 10 being 
``highly clean'' and 0 being ``highly corrupt,'' Venezuela received a 
score of 2.4 in 2003). Corruption not only affects investor confidence. 
It also breeds financial mismanagement and undermines public trust in 
institutions. President Chavez was originally elected in 1998 on an 
anti-corruption platform. Yet under his administration, the problem 
appears to be worsening.
    The world's fifth largest oil producer, oil accounts for about 80 
percent of Venezuela's export earnings, 40 percent of government 
revenues and 25 percent or more of the country's GDP. Venezuela has 
traditionally been a reliable energy partner, and we value our energy 
relationship. Despite the strains in our relationship, we maintain a 
vigorous, candid dialogue on energy issues with the Government of 
Venezuela. Still, the political turmoil has undermined Venezuela's 
reputation as a reliable energy supplier. These concerns about the 
political conflict's impact on supplier reliability underscore the need 
to reach a peaceful, democratic resolution to the current impasse.
    The economy is obviously only one of many aspects of life in 
Venezuela to be adversely affected by the political impasse. The 
importance of a free, open process, whose outcome all Venezuelans can 
deem credible, thus cannot be overstated. A peaceful, democratic 
resolution to the Venezuela's political crisis would have a favorable 
impact in a number of areas vital to the health of any democracy, 
including the area of human rights, which has witnessed troubling 
developments over the past year. As noted in our 2003 Country Report on 
Human Rights Practices in Venezuela, the Government's human rights 
record has been and remains poor. Security forces in Venezuela have 
been linked to the mistreatment of prisoners and forced disappearances. 
Also of great concern is an increased militarization of public 
administration, including the use of loyalist military officers in key 
political posts and as political candidates, and the growing and 
inappropriate involvement of public security forces in partisan 
political processes.
    Public security forces used excessive force during opposition 
demonstration in late February and early March 2004. The opposition 
reported 11 deaths, 417 politically motivated arrests and over 1700 
injuries. There have been credible reports--amply documented in Human 
Right's Watch April 9 letter to President Chavez--of the arbitrary 
detention and torture of detainees during this period. There have been 
reported threats and reprisals against witnesses and victims of human 
rights violations. A failure to maintain impartiality and independence 
in key protective institutions contributes to the general impunity and 
lack of respect for the rule of law.
    Of grave concern in this respect is legislation recently passed 
which expands the size of the supreme court from 20 to 32, allowing a 
simple majority of the National Assembly--controlled by the pro-
Government party, the Fifth Republican Movement (MVR)--to appoint and 
suspend judges. The new law allows the ``Fiscal'' or attorney general 
and other public powers to unilaterally suspend judges. And if public 
concerns about the impartiality of the government-dominated electoral 
council in Venezuela today are any indication, then we have ample 
reason to be concerned about the future independence of the Venezuelan 
judiciary.
    On June 17, Human Rights Watch issued a 24-page report denouncing 
what it called the Venezuelan government's ``undermining [of] the 
independence of the country's judiciary ahead of a presidential recall 
referendum that may ultimately be decided in the courts . . . '' The 
report notes the pro-Government legislative majority's ``intention to 
name 12 new justices by July and remove sitting justices whom they 
identify with the opposition,'' concluding that the ``government is 
rigging the justice system to favor its own interests.''
    Also troubling are what appear to be politically motivated 
detentions, indictments and orders of arrest. The ongoing detention of 
Baruta municipality Mayor Henrique Capriles and the recent indictments 
of Alejandro Plaz and Maria Corina Machado of the electoral NGO Sumate 
are two recent examples that merit international attention. The Sumate 
case is especially troubling. The organization's leaders are charged 
with ``conspiring'' against the Government for receiving a grant from 
the National Endowment for Democracy (NED) for electoral observation 
and voter education activities. NED is an independent, private 
organization that enjoys wide bipartisan support for its work to help 
strengthen democratic institutions around the world. NED is not in the 
business of toppling governments. The Venezuela Government's efforts 
against Sumate are intended to intimidate and dissuade participation in 
the referendum process. Such actions are unacceptable in any democratic 
society.
    While Venezuela enjoys a diverse, independent media, freedom of the 
press faces serious threats, including a rise in physical attacks 
against journalists and television stations. The Government has 
intimidated the media through strict defamation laws (including 
potential prison terms for journalists who show ``lack of respect'' for 
government officials); proposals for new legislation which, if enacted, 
would violate basic press freedoms; and finally by the misuse of legal 
authorities against the media.
    Our bilateral relations in a range of areas have suffered due to 
unilateral decisions taken by the Venezuelan Government. For four 
decades, our relationship with Venezuela was anchored by a common 
commitment to democracy, the rule of law, respect for human rights, and 
freedom. We were allies in a broader effort to help democratize the 
hemisphere, and to spread prosperity and economic opportunity. This 
relationship has suffered over the past four years, largely as a result 
of President Chavez's opposition to key U.S. security and economic 
goals, his penchant for associating himself with dictatorial regimes, 
and his anti-U.S. rhetoric. Our bilateral trade relationship has 
declined significantly. At the same, joint cooperation on security and 
counter-terrorism have deteriorated. Given our long-standing, positive 
bilateral relationship, it would be our clear preference to return to 
the cooperative, cordial relations that we have traditionally enjoyed 
with Venezuela.
    Mr. Chairman, mindful of Venezuela's deep polarization, we have 
consistently urged all parties to act in accordance with the principles 
enshrined in the Inter-American Democratic Charter, and to honor their 
commitments under the May 29, 2003 agreement and the February 2003 non-
violence pledge to refrain from violence and respect the free 
expression of different political views. Accordingly, we reject any 
violent or unconstitutional efforts to depose a democratically elected 
government--be it in Venezuela or in any other country in the Americas.
    The Government of Venezuela has a special responsibility to ensure 
Venezuelans can express their views free from fear or intimidation. 
Like democratic governments everywhere, the Government of Venezuela and 
the keepers of public order have a unique obligation to create the 
conditions for Venezuelans to exercise their constitutional rights. Our 
international partners and we are disturbed by reports of intimidation 
against recall signatories by supporters of the Government, as well as 
by the dismissal of public employees who signed the recall petition. 
These actions have no place in a democratic process.
    Some in the Venezuelan Government have sought to portray the 
upcoming referendum as a U.S.-Venezuela confrontation. Nothing could be 
further from the truth. The referendum is an opportunity--one provided 
in the Venezuelan constitution--for Venezuelans to freely choose, 
through the ballot box, the course of their country's future. The 
Inter-American Democratic Charter, to which Venezuela is a signatory, 
clearly states that ``The peoples of the Americas have a right to 
democracy and their governments have an obligation to promote and 
defend it.'' It is crucial that all Venezuelans be allowed to exercise 
these rights in a free and fair election witnessed by impartial, 
international observers.
    The coming weeks and months will bring defining moments for the 
future of Venezuela. The ongoing constitutional process--the degree to 
which the recall referendum is fair and transparent--will test the 
strength of the country's democratic institutions. We all have an 
interest in seeing Venezuelans succeed. A peaceful, democratic 
resolution is not just in the interest of the Venezuelan people, but 
that of the region as a whole. Instability and debilitated democratic 
governance in Venezuela poses grave dangers to security and stability 
in neighboring countries. Venezuela can still serve as an example of 
peaceful conflict resolution in a hemisphere that, in the past, all too 
often resorted to violence and force to address political turmoil. 
Conversely, the failure to achieve a free and fair referendum process 
would deal a severe blow to the democratic hopes of Venezuelans and 
their neighbors and present a setback for democracy in the hemisphere.
    Finally, a peaceful, democratic outcome will allow Venezuelans to 
take on the serious social and economic challenges the country faces in 
ensuring that all citizens--not just a privileged minority--can benefit 
from the fruits of democracy, free trade and enterprise. After all, the 
principal responsibility of any democratic government is ensuring 
security, well-being and opportunities for its citizens in an 
environment that guarantees the protection of individual freedoms, 
human rights and respects the rule of law.
    Overcoming the current crisis will empower Venezuelans to focus 
their energies on the issues that concern average citizens--national 
reconciliation, economic recovery and job creation, social inclusion, 
effective, transparent government, strong democratic institutions, and 
reintegration in the diplomatic and economic life of the region.
    The United States and the international community stand together in 
support of the democratic aspirations of the Venezuelan people. As 
Secretary Powell said recently in Quito, ``We, the democratic nations 
of the Americas, must give the peoples of our hemisphere good reason to 
count on their neighbors when their own democracies suffer setbacks.'' 
We reiterate our strong support for the important work of the OAS and 
Carter Center observer missions.
    The American and Venezuelan people share a strong, mutual 
commitment to democracy, and we will continue to draw on our shared 
values in the challenging days ahead.

    Senator Coleman. Thank you, Secretary Noriega.
    Ambassador Maisto, before you begin your remarks, I should 
note the presence of Ambassador Alvarez here and thank him for 
his attendance.
    Ambassador Maisto.

   STATEMENT OF HON. JOHN F. MAISTO, UNITED STATES PERMANENT 
     REPRESENTATIVE TO THE ORGANIZATION OF AMERICAN STATES

    Ambassador Maisto. Thank you, Chairman Coleman, and thank 
you, Senator Nelson. Thank you both for your warm welcome and 
for the opportunity this afternoon to discuss with you the 
vital role that the Organization of American States has played, 
is playing, and will continue to play in facilitating the 
restoration of the political impasse in Venezuela, as well as 
the role that the OAS carries out in promoting democracy 
throughout the Western Hemisphere.
    Mr. Chairman, OAS Resolution 833 of December 16, 2002, 
which calls for a ``constitutional, democratic, peaceful and 
electoral'' solution, remains the cornerstone of the 
administration's multilateral approach to resolving the current 
situation in Venezuela. We are actively working with our 
international partners, led by the Organization of American 
States, the Friends of the OAS Secretary General's Mission for 
Venezuela--and they are Brazil, Chile, Mexico, Spain, Portugal, 
and of course, ourselves--and the Carter Center, to support the 
efforts of the Venezuelan people to find a solution in 
accordance with that OAS Resolution 833.
    During the OAS General Assembly held just 2 weeks ago in 
Quito, Ecuador, Secretary Powell commended the decisive role of 
the OAS and the Carter Center in Venezuela, most recently in 
the process of signature verification that has led to the 
referendum, which is now scheduled for August 15.
    While OAS involvement began immediately after the events of 
April 11, 2002, it was in May 2003, after months of tenacious 
diplomacy in Venezuela by OAS Secretary General Cesar Gaviria, 
that a political accord between the Government of Venezuela and 
the Opposition Democratic Coordinator was reached, setting 
forth the framework for the recall referendum process outlined 
in article 72 of the 1999 Venezuelan constitution.
    I must underscore, however, that the joint mission of the 
OAS and the Carter Center has not had an easy go of it in 
Venezuela. Secretary General Gaviria, his chief of staff, and 
the OAS mission have been the object of all sorts of unfounded 
allegations of bias.
    In addition to bearing the brunt of attacks in Caracas, the 
OAS and the Carter Center have had to work with consummate 
diplomatic skill and political savvy to surmount the obstacles 
placed in the path of the recall referendum process.
    Late last year, the democratic opposition set out to 
fulfill the constitutional requirement for convoking a 
Presidential recall referendum. In what international observers 
characterized as a generally peaceful, fair process, the 
opposition asserted it had collected over 3 million signatures, 
600,000 more than the 2.4 million required to trigger a 
referendum on the mandate of the President of Venezuela.
    Amid charges claiming that the tally was a result of 
megafraud, the joint OAS-Carter Center mission concluded that 
``the process was completed peacefully and without major 
obstacles that would have impeded the free exercise of 
constitutional rights.''
    President Carter later declared that the ``sovereign 
expression of the citizen must be privileged over excessive 
technicalities'' in resolving issues surrounding the tabulation 
of signatures.
    Nevertheless, Venezuela's National Electoral Council 
validated only 1.9 million signatures, essentially obliging a 
signature appeals process to reconfirm the 1.2 million 
signatures questioned by the council.
    This follow-on appeals process, known as the reparos and 
conducted from May 27 to 31 of this year, allowed Venezuelans 
the option of reaffirming or excluding their signatures from 
the recall petition. Over 120 international observers 
participated in the joint OAS-Carter Center mission to help 
ensure a transparent, credible, and fair process.
    On June 3, the CNE announced the confirmation of enough 
signatures during the reparos process to trigger a Presidential 
recall referendum, and that evening the President of Venezuela 
said he accepted the results and the referendum would go 
forward, now scheduled for August 15.
    The coming weeks and months will bring defining moments for 
the future of democracy in Venezuela. As during the recall 
petition drives and the reparos process, international 
observation, led by the OAS and the Carter Center, will be 
indispensable to ensuring a credible, fair, and transparent 
recall election. This is a view that is widely held not only in 
the United States, as we have seen in editorial comment in so 
many U.S. newspapers and by interested NGOs, but also 
throughout the multilateral community and many governments 
throughout the hemisphere and beyond.
    We remain in close contact with our international partners 
to support the efforts of the OAS and the Carter Center to 
increase participation in the observer mission and to draw 
international attention to the referendum. Mr. Chairman, only 
Venezuelans can resolve political problems in their country. 
Our overriding objective in Venezuela is free and fair 
elections, conducted on a level playing field, free from fear 
and intimidation so that the will of the people can be 
determined and respected.
    Venezuelan citizens groups, such as Sumate and other 
democratic organizations, have played an important role in 
contributing to the credibility and transparency of the process 
underway.
    Respected human rights groups have documented credible 
reports of intimidation and harassment of those who signed the 
original recall petition, as well as limitations on freedom of 
the press, violent repression of opposition demonstrations and 
most recently a Human Rights Watch report that speaks for 
itself.
    Unfortunately, the attacks on democratic civil society 
organizations have extended to the floor of the OAS Permanent 
Council, where the Venezuelan Permanent Representative, in 
addition to attacking the Inter-American Commission on Human 
Rights, its Special Rapporteur on Freedom of Expression for its 
report on Venezuela, the OAS mission in Venezuela, and its 
interim director, and U.S. Government officials, launched a 
barrage of accusations on March 31 against the National 
Endowment for Democracy and its support for Sumate and other 
Venezuelan groups.
    As U.S. Permanent Representative, I immediately, and also 
on the floor of the Permanent Council, rejected these baseless 
charges of intervention, pointed out the good work the NED has 
performed in a number of Latin American countries, and noted 
that not everyone agrees on the value of NEDs work, 
unfortunately.
    I cited another criticism of NED made by a Latin American 
leader, and I quote it. ``Then there is the foreign aggressor 
that, for purposes of revenge or disinformation, seeks to help 
those who sell out their homeland by spending millions of 
dollars on an unacceptable intervention that our people, I am 
sure, will reject completely.'' Mr. Chairman, that was a 
reaction of Chilean dictator Augusto Pinochet on January 1, 
1988 to an announcement that the U.S. Congress had approved 
funding to the National Endowment for Democracy to support a 
transition to democracy in Chile.
    On April 20, the chairmen of the NED, IRI, and NDI, Vin 
Weber, John McCain, and Secretary of State Albright, sent a 
joint letter to all OAS Ambassadors rebutting those claims.
    I shall conclude, Mr. Chairman, with a citation of the 
Inter-American Democratic Charter, which we always carry with 
us, which is used in the OAS, and a welcoming and a thanks to 
you for the strong statements that reflect bipartisan views and 
concerns about Venezuela.
    Thank you.
    [The prepared statement of Ambassador Maisto follows:]

            Prepared Statement of Ambassador John F. Maisto

    Mr. Chairman, Members of the Subcommittee:
    Thank you for the opportunity this afternoon to discuss with you 
the vital role the Organization of American States (OAS) has played, is 
playing and will continue to play in facilitating resolution of the 
political impasse in Venezuela, as well as the OAS role in promoting 
democracy throughout the Western Hemisphere.

                       THE OAS ROLE IN VENEZUELA
 
   OAS Resolution 833, of December 16, 2002, which calls for a 
``constitutional, democratic, peaceful and electoral'' solution, 
remains the cornerstone of the Administration's multilateral approach 
to resolving the current situation in Venezuela. We are actively 
working with our international partners--led by the OAS, the Friends of 
the OAS Secretary General's Mission for Venezuela (Brazil, Chile, 
Mexico, Spain, Portugal and, of course, the United States), and the 
Carter Center--to support the efforts of the Venezuelan people to find 
a solution, in accordance with OAS Resolution 833.
    During the OAS General Assembly held two weeks ago in Quito, 
Ecuador, Secretary Powell commended the ``decisive role'' of the OAS 
and the Carter Center in Venezuela, most recently in the process of 
signature verification that has led to the referendum, now scheduled 
for August 15.
    While OAS involvement began immediately after the events of April 
11, 2002, it was in May 2003, after months of tenacious diplomacy in 
Venezuela by OAS Secretary General Cesar Gaviria, that a political 
accord between the Government of Venezuela and the Opposition 
Democratic Coordinator was reached, setting the framework for the 
recall referendum process outlined in Article 72 of the 1999 Venezuelan 
Constitution.
    I must underscore, however, that the Joint Mission of the OAS and 
the Carter Center has not had an easy go of it in Venezuela. Secretary 
General Gaviria, his Chief of Staff, and the OAS Mission have been the 
object of all sorts of unfounded allegations of bias.
    In addition to bearing the brunt of attacks from the Venezuelan 
Government and its supporters in Caracas, the OAS and the Carter Center 
have had to work with consummate diplomatic skill and political savvy 
to surmount the obstacles placed in the path of the recall referendum 
process.
    Late last year, the democratic opposition set out to fulfill the 
constitutional requirement for convoking a presidential recall 
referendum. In what international observers characterized as a 
generally peaceful, fair process, the opposition asserted it had 
collected over 3 million signatures--600,000 more than the 2.4 million 
required to trigger a referendum on the mandate of President Chavez.
    Amid charges claiming the tally was a result of ``megafraud,'' the 
Joint OAS-Carter Center Mission rejected that notion and concluded 
``that the process was completed peacefully and without major obstacles 
that would have impeded the free exercise of constitutional rights.''
    President Carter later declared that the ``sovereign expression of 
the citizen must be privileged over excessive technicalities'' in 
resolving issues surrounding the tabulation of signatures.
    Nevertheless, Venezuela's National Electoral Council (CNE) 
validated only 1.9 million signatures, essentially obliging the 
democratic opposition to undergo a signature appeals process to 
reconfirm the 1.2 million signatures questioned by the CNE.
    This follow-on appeals process, known as the reparos and conducted 
from May 27-31 of this year, allowed Venezuelans the option of 
reaffirming or excluding their signatures from the recall petition. 
Over 120 international observers participated in the Joint OAS and 
Carter Center Mission to help ensure a transparent, credible and fair 
process.
    Of particular significance for the transparency of the process, was 
the visit paid to CNE headquarters by President Carter and Secretary 
General Gaviria after the process had concluded and before the results 
were tabulated.
    On June 3, the CNE announced that the democratic opposition had 
confirmed enough signatures during the reparos to trigger a 
presidential recall referendum. That evening President Chavez said he 
accepted the results and the referendum would go forward, now 
scheduled, as I noted earlier, for August 15.
    The coming weeks and months will bring defining moments for the 
future of democracy in Venezuela. As during the recall petition drives 
and the reparos process, international observation, led by the OAS and 
the Carter Center, will be indispensable to ensuring a credible, fair 
and transparent recall election. This is a view that is widely held, 
not only in the United States, as we have seen in editorial comment in 
so many U.S. newspapers and by interested NGOs, but also throughout the 
multilateral community and many governments throughout the hemisphere 
and beyond.
    We remain in close contact with our international partners to 
support the efforts of the OAS and the Carter Center, to increase 
participation in the observer missions, and to draw international 
attention to the referendum. Our overriding objective in Venezuela is 
free and fair elections conducted on a level playing field, free from 
fear and intimidation, so that the will of the people can be determined 
and respected.
    Venezuelan citizens' groups, such as Sumate and other democratic 
organizations, have played an important role in contributing to the 
credibility and transparency of the process underway.
    Respected human rights groups have documented credible reports of 
intimidation and harassment of those who signed the original recall 
petition, as well as limitations on freedom of the press, violent 
repression of opposition demonstrations, and, most recently, Human 
Rights Watch stated that ``the biggest threat to the country's rule of 
law comes from the government itself.''
    Unfortunately, the Government of Venezuela's attacks on democratic 
civil society organizations have extended to the floor of the OAS 
Permanent Council, where the Venezuelan Permanent Representative--in 
addition to attacking the Inter-American Commission on Human Rights, 
its Special Rapporteur on Freedom of Expression, the OAS Mission in 
Venezuela and its interim director, and U.S. Government officials--
launched a barrage of accusations on March 31 against the National 
Endowment for Democracy and its support for Sumate and other Venezuelan 
groups.
    I immediately, and also on the floor of the Permanent Council, 
rejected these baseless charges of intervention, pointed out the good 
work the NED has performed in a number of Latin American countries, and 
noted that not everyone agrees on the value of NED's work.
    I cited the only other criticism of NED ever made by a Latin 
American leader. And I quote: ``Then there is the foreign aggressor 
that, for purposes of revenge or disinformation, seeks to help those 
who sell out their homeland by spending millions of dollars on an 
unacceptable intervention that our people, I am sure, will reject 
completely.''
    Mr. Chairman, that was the reaction of Chilean dictator Augusto 
Pinochet on January 2, 1988, to an announcement that the United States 
Congress had approved funding to the National Endowment for Democracy 
to support a transition to democracy in Chile.
    On April 20, the Chairmen of NED, IRI and NDI--Vin Weber, John 
McCain and Madeleine Albright--sent a joint letter to all OAS 
ambassadors rebutting the outrageous claims made by Venezuela's 
Permanent Representative.
    The international community must remain vigilant to ensure that 
democratic citizens' organizations in Venezuela are allowed to continue 
to freely exercise their constitutional rights and participate in the 
electoral process, in accordance with the May 2003, political 
agreement.
    A peaceful, democratic, constitutional resolution through the 
ballot box is not just in the interest of the Venezuelan people. It is 
in the interest of the region as a whole, if our hemispheric neighbors, 
through their democratic governments, are to preserve regional 
stability and consolidate the hard-won democratic gains of the last two 
decades.

              THE UNITED STATES AND OAS DEMOCRACY PROGRAMS

    Thus far this year, the U.S. Permanent Mission to the OAS has 
contributed more than $500,000 to OAS election observation missions in 
the Western Hemisphere. The OAS this calendar year alone has fielded 
missions in the Dominican Republic, El Salvador and Panama, in addition 
to Venezuela.
    We have contributed to these and other such OAS observer missions 
over the years--and will continue to do so--because ``the holding of 
periodic, free, and fair elections'' is one of the essential elements 
of democracy specifically mentioned in Article 3 of the Inter-American 
Democratic Charter, to which all OAS member states are bound.
    We provide almost $3 million a year to OAS Democracy programs, 
including election observation missions, because the United States and 
all OAS member states have an obligation to promote and defend the 
right to democracy of the peoples of the Americas, under Article 1 of 
the Democratic Charter.
    This funding goes to OAS programs that teach democratic values and 
increase public awareness of the Democratic Charter; to programs that 
strengthen political parties and legislative institutions, promote 
dialogue and conflict resolution, and foster decentralization and good 
governance, to name a few.

                 THE INTER-AMERICAN DEMOCRATIC CHARTER

    The Inter-American Democratic Charter was born in the Americas, and 
thrives in the Americas. No other region of the world has such an 
explicit commitment to democracy.
    With the advent of the Charter, no OAS member state can remain a 
disinterested spectator to what occurs in our Hemisphere. As an 
organization and individually, we are bound by the Democratic Charter 
to assist our neighbors when democracy is threatened or at risk.
    The Charter is a living, functioning document, referenced 
frequently in meetings of the Permanent Council and its committees, and 
the General Assembly. All OAS ambassadors treat it like that well-known 
credit card: ``Don't leave home without it.''
    It is not a stale document gathering dust on a bookshelf. It is the 
cornerstone of the Hemisphere's efforts to consolidate democracy and 
its institutions, and serves as a model to be duplicated elsewhere in 
the world.
    The Charter, signed September 11, 2001 in Lima, is a direct result 
of the OAS experience in Peru where a democratically elected autocrat, 
Alberto Fujimori, used every constitutional (as well as many extra-
legal) means at his disposal to undermine democracy.
    Based on the Peru experience, OAS member states understood that 
elections alone do not a democracy make. The Inter-American Democratic 
Charter recognizes a right to democracy and the obligation of 
governments to promote and defend it. It outlines the essential 
elements of democracy, and sets forth several tools by which the OAS 
can serve to help member states strengthen their democratic 
institutions and practices.
    Mr. Chairman, Members of the Subcommittee: Whether it be in 
Venezuela, where the OAS's patient work is moving the election process 
along, or in any other member state that seeks OAS support, the United 
States stands ready to work shoulder to shoulder with our partners in 
the OAS to promote and safeguard democracy under the Inter-American 
Democratic Charter.
    Thank you again for this opportunity and I'll be pleased to take 
any questions you may have.

    Senator Coleman. Thank you, Ambassador Maisto.
    Before I begin with the questioning, I would turn to 
Senator Dodd for any opening comments.

            OPENING STATEMENT OF SENATOR CHRISTOPHER J. DODD

    Senator Dodd. Well, thanks, Mr. Chairman. My apologies to 
our witnesses and my colleagues for being a few minutes late in 
arriving.
    Let me, first of all, thank you, Mr. Chairman. This is a 
very, very timely hearing. With the votes coming up in August, 
this is just a perfect time for us to hear from people who are 
knowledgeable about the circumstances in Venezuela. So I am 
very, very grateful to you for providing the committee with 
this opportunity.
    On June 3, as we know, the Venezuelan National Electoral 
Council announced the success of a petition for a recall 
referendum. Certainly I join--I am sure most do--the Carter 
Center and the Organization of American States in 
congratulating all of the parties involved, including the 
government of President Chavez and those who organized the 
referendum, for respecting the constitution and for 
strengthening democracy in Venezuela. In President Carter's own 
words, the repair process was ``a triumph for the democratic 
process in Venezuela, and all the elements of the process 
deserve credit.''
    The recall referendum constitutes an important development 
for a representative government in Venezuela, but it is only 
the first of many steps that must be taken. With that in mind, 
I urge all of the parties to remain committed to democracy. If 
they do, then Venezuela in my view will emerge as a more robust 
democracy where strong institutions prevail over demagoguery 
and oligarchy.
    First and foremost, the government of President Chavez must 
respect the electoral rules laid out in the constitution. On 
August 15, when Venezuelans vote on the referendum, President 
Chavez must ensure that the process is free and fair. If 
Venezuelans vote to revoke his Presidency, he must make no 
effort, in my view, to impede a new Presidential election. If 
Venezuelans affirm his Presidency, there can be no reprisals 
against his opponents.
    As a report recently released by the Human Rights Watch 
makes clear, which Mr. Vivanco will speak about when he 
testifies later this afternoon, there is deep concern that 
President Chavez could manipulate the electoral process by 
rigging the judicial branch oversight. I would hope he and pro-
government members of the National Assembly would reject that 
temptation, and I would strongly urge that President Chavez and 
members of the National Assembly consider delaying the 
implementation of the new law governing the appointment of the 
supreme court judges until after the recall process. Once the 
recall petition is behind us, there will be time to reassess 
whether this new law is likely to achieve its stated goal of 
enhancing the honesty and independence of the Venezuelan 
judiciary.
    Members of the opposition also have an obligation, in my 
view, to respect the constitutional process. But in the same 
manner that I call upon President Chavez to respect democratic 
institutions, I certainly call upon the opposition to respect 
the outcome as well, even if the referendum fails to garner the 
3.7 million votes needed to recall the President.
    I also urge the people of Venezuela to eschew violence. The 
recent attack on opposition lawmaker Rafael Marin may have been 
an isolated incident propagated by misguided extremists. Or it 
might have been a dangerous harbinger of things to come. Let us 
hope that it was an isolated incident and that others 
understand that using violence as a political tactic is always 
deplorable and never democratic.
    The Carter Center and the Organization of American States 
must have unfettered access to all of the electoral mechanisms. 
The presence of well-respected international observers 
discourages electoral fraud and provides a measure of 
legitimacy. Without this kind of oversight, any outcome will be 
suspect.
    I have one final concern, Mr. Chairman, for democracy in 
Venezuela. As we all know, the foundation of any democracy is a 
well-informed citizenry, for which the media are indispensable. 
Unfortunately, over the past few years, both private and state-
run media have discarded the mantle of objectivity and plunged 
into the abyss of partisanship. The Carter Center is attempting 
to rectify this by formulating an agreement between the 
government and media owners regarding news reports and 
political coverage during the referendum. This agreement, in 
conjunction with good faith efforts by both sides to uphold 
journalistic principles, will make open debate possible again.
    Let me now turn to the role of the United States, if I can, 
very quickly.
    The last 2 years have been a frustrating time for those of 
us seeking improved relations between the United States and 
Venezuela, and neither side is wholly without blame. Having 
said that, a large measure of responsibility for the erosion in 
the bilateral relationship rests with President Chavez. To put 
it mildly, he has been his own worst public relations 
spokesman. Having said that, the missteps by others, including 
the United States, have complicated an already strained 
relationship. In the minds of many Venezuelans, the Bush 
administration's tacit support for the anti-democratic coup in 
April of 2002 cast a very dark shadow over our ability to act 
as an honest broker in helping to resolve the political crisis 
in Venezuela.
    Fortunately, the Carter Center and the OAS have stepped 
into the breach to play an important role. Standing up for 
democracy means prioritizing the wishes of the many over the 
whims of a few, whether it be in Washington or Caracas. 
President Carter and Cesar Gaviria have sought to do just that 
by supporting the constitutional resolution of Venezuela's 
problems.
    In the next few weeks, the United States has an opportunity 
to regain credibility with the Venezuelan people by acting in 
accord with our democratic principles and with our hemispheric 
partners in unequivocally supporting the Carter Center and the 
OAS efforts.
    We have the benefit today of having a number of witnesses 
with a deep knowledge of the ongoing events in Venezuela and 
about the specifics of the referendum process. I believe that 
their testimony, Mr. Chairman, will help members of this 
committee better understand what may occur in the coming weeks 
and the implications of the various scenarios that could unfold 
on the United States economic and foreign policy interests.
    I want again to offer a special welcome to Dr. Jennifer 
McCoy, who is taking time out of a very hectic schedule to be 
here today. Her role at the Carter Center in facilitating many 
of the advances in the political process in Venezuela has been 
essential, and I commend her for them. I look forward to the 
insights that she can provide to this committee as to how we 
can be supportive of the ongoing efforts in consolidating 
Venezuelan democracy.
    With that, Mr. Chairman, I appreciate your giving me a few 
minutes to make these remarks.
    Senator Coleman. Thank you very, very much, Senator Dodd.
    I think there is, amongst all of us, my colleagues here, 
some clear agreement of the importance of the role of the 
Carter Center and the OAS in ensuring that the process is 
played out fairly. I would ask Ambassador Maisto, what is the 
United States doing to ensure that the OAS and Carter Center 
international election observers are allowed to observe the 
recall referendum on August 15, 2004? What specifically can be 
done to make sure that those observers are allowed in?
    Ambassador Maisto. Mr. Chairman, the United States has 
unequivocally supported both the OAS and the Carter Center in 
their past observation efforts from the get-go in Venezuela, 
and we continue to do that. The issue, Mr. Chairman, of the OAS 
and Carter Center presence in Venezuela has to do with an 
invitation from the Government of Venezuela to observe that 
election process. As of just before the beginning of this 
session, when I checked with the OAS, such an invitation had 
not come forth from the Government of Venezuela.
    Nevertheless, the OAS is preparing a mission and it is 
organizing itself internally as it does in terms of lining up 
people to serve on the mission, but until that invitation comes 
forward, the OAS is not going to be able to dispatch a mission 
to Venezuela.
    Senator Coleman. Secretary Noriega, you talked about the 
indictment of Sumate's Alejandro Plaz and Maria Corina Machado. 
You used the phrase ``troubling and outrageous.'' Is there 
anything that we can do to impact that situation? Is there 
anything we can do to lend a helping hand?
    Mr. Noriega. Certainly. Senator, Mr. Chairman, if I could 
comment also on the other question.
    Senator Coleman. Please.
    Mr. Noriega. I wanted to note that Secretary Powell 
beginning at the OAS General Assembly in Quito earlier this 
month, has been deeply engaged with our Friends partners, 
Brazil, Chile, Mexico, Portugal, and Spain, and has been in 
touch with President Carter and the Foreign Minister of Brazil 
to encourage contact with the Venezuelan authorities and to 
encourage them to extend an invitation and welcome the 
international observers.
    What we are hearing from them is that there will be a role 
for the OAS and other international observers, the Carter 
Center and other international organizations that want to 
participate as observers. So we are hopeful about that and 
believe that the government is moving in a positive direction 
in accommodating that important presence.
    We believe on the issue of the NED grantees and on the 
whole issue of apparent harassment for political purposes of 
opposition figures that raising attention in the international 
community is extraordinarily important. These groups in various 
cases have taken their cases to the Inter-American Commission 
on Human Rights and Inter-American Court on Human Rights. So 
there is a mechanism where the government can be held 
specifically accountable.
    We think it is very important that we tell the 
international community what NED is all about and what our 
democracy assistance is all about to give light to any 
assertion that somehow this is illegitimate. So bringing those 
facts to light is extraordinarily important. Of course, we have 
communicated with the Venezuelan Government through our 
Ambassador in Caracas, and in particular in contacts with 
senior officials in Venezuela, that this is totally legitimate 
assistance and that we intend that it would support the efforts 
of the Venezuelan people to strengthen their democracy and for 
no other reason.
    Senator Coleman. Thank you, Mr. Secretary.
    A great deal has been said in public and private about 
President's Chavez's meddling in the affairs of other countries 
in the region. Either of you or both can respond. Can you 
discuss Chavez's influence in the region and explain the level 
of concern these activities elicit among our neighbors in the 
hemisphere? I am going to be very specific. Chile, Ecuador, 
Peru, Bolivia, Brazil, Colombia, Uruguay, El Salvador. I would 
be interested in your impressions.
    Mr. Noriega. Yes, Mr. Chairman. I am sure that you and 
other members of the committee are probably picking up the same 
sorts of things that we do in our contact with representatives 
of other countries in the Americas where they recognize that 
the Venezuelan diplomatic representation and other informal 
contacts are pretty robust in terms of contact with groups in 
these individual countries. President Chavez makes no secret of 
his interest in an international Bolivarian movement, and there 
are organizations that exist in many countries in Latin 
America, including a good number of the ones you mentioned, 
that are associated with and receive funding from friends in 
Venezuela.
    So there are varying degree of whether people are alarmed 
by this or just simply concerned or think it is unusual. I have 
raised this with various ambassadors, and it is a concern 
because these countries want to carry out their democratic 
activities in a sovereign way, and there is a lack of 
transparency sometimes about what sort of support these groups 
may be getting from the Bolivarian allies in Caracas.
    Having said that, there are groups, in many cases, that are 
not particularly democratic, that are not committed to 
democracy. We provide support in a transparent, open way to 
people who are committed to democracy in Venezuela, and we 
think that is an effective way to advance our values.
    Senator Coleman. Thank you.
    One last question. If President Chavez prevails in the 
election, what will U.S. policy be, and how will the Venezuelan 
people be able to heal the wounds of a divisive campaigning and 
move on? Can we have any impact on that?
    Mr. Noriega. I think it is very important that there be 
international observation, as you have stated, that will be a 
basis upon which we can judge the fairness of any process. Let 
me emphasize that we will be making that sort of judgment and 
consideration along with our neighbors and not in a unilateral 
way. We will base it on the engagement of the OAS and the views 
of the international community as they observe the electoral 
process. We will respect the outcome, whatever the outcome is.
    Senator Coleman. Thank you.
    Senator Dodd.
    Senator Dodd. Thanks, Mr. Chairman.
    Let me, if I can, begin with you, Ambassador Maisto. I am 
sure many people in the audience here, but others may not be 
aware exactly what numbers need to be reached in order for 
certain results to occur. This I think can be rather confusing 
to some. It is certainly a bit confusing to me. As I understand 
it--and you correct me if I am wrong--roughly there are over--
what is it--I think about 12.5 million eligible voters in 
Venezuela. You stop me, by the way, if I misstate anything. The 
assumption is that about 65 percent of the Venezuelans will 
exercise their franchise. Is that a low number, a high number? 
What is your experience in that, by the way?
    Ambassador Maisto. Senator, it is hard to say. You have 
cited averages. But there is such a unique situation going on 
in Venezuela right now. I think it is a little difficult to go 
anywhere other than the constitutionally-established numbers 
that are needed in this next phase.
    Senator Dodd. The number we do not know. Certainly my guess 
would be no lower than 65, but it could be higher given the 
intensity of this issue. Is that a fair statement?
    Ambassador Maisto. I would say so, but to be quite frank 
with you, I would defer to such people as Jennifer McCoy who 
really is on top of this.
    Senator Dodd. I will ask Jennifer about that in a minute.
    Mr. Noriega. Senator.
    Senator Dodd. Yes.
    Mr. Noriega. For the recall to be successful, they have to 
have a majority plus a number voting si, yes----
    Senator Dodd. That exceeds the votes that President Chavez 
received in the last election.
    Mr. Noriega. Right. They have to get 3.8 million votes.
    Senator Dodd. I thought it was a little bit above 3.7 
million.
    Mr. Noriega. Well, I am relying on Ambassador Alvarez. So 
3.7 or 3.8 million.
    Senator Dodd. Between 3.7 and 3.8 million.
    Mr. Noriega. Yes.
    Senator Dodd. That is what I think most people are not 
aware of, and that is why I wanted to make that point that this 
is not just a majority, but it has to exceed the vote that 
President Chavez received in the last election. So that is 
important.
    Let me ask, if I can, Ambassador Maisto, but certainly, 
Secretary Noriega, you can respond as well, and that is about 
the Venezuelan military. I wonder if you could give us a sense 
of the state of the Venezuelan military and how it is reacting 
to these events. The information we are getting here is there 
is some division, divided by the participation of certain 
elements of the Armed Forces in the April 2002 coup. So you 
have got some division within the ranks, to put it mildly. I am 
curious as to whether or not the military in Venezuela as an 
institution supports the referendum process, No. 1, and does it 
appear that the military as an institution will respect the 
outcome.
    Ambassador Maisto. I think the short answer would be yes, 
the Venezuelan military does support the constitutional process 
that is underway, and two, that everything I know about the 
Venezuelan military indicates that they will support an outcome 
that is free and fair and so considered in Venezuela. I would 
defer to the Assistant Secretary. I used to follow those things 
much more closely than I do right now from my multilateral 
perch. But the Venezuelan military is quite institutional and 
quite constitutional.
    Senator Dodd. Do you want to comment on that?
    Mr. Noriega. Mr. Chairman, we along with, for example, the 
Inter-American Commission on Human Rights, have expressed some 
concern about the increasing involvement of military persons in 
political matters in the Venezuelan Government, but they do so 
in a transparent way. It is just a concern.
    Having said that, I think there may be divisions in the 
military, but by and large, I believe and we would certainly 
hope that the vast majority of Venezuelan military will respect 
the constitution, will respect the results of a constitutional 
process, and will respect political rights of the Venezuelan 
people.
    Senator Dodd. Mr. Secretary, let me ask you, if I can. 
First of all, it is my understanding that the administration 
was supportive of President Carter and the OAS's efforts to 
broker a resolution to the dispute over the validity of certain 
signatures. Is that an accurate statement?
    Mr. Noriega. Yes, sir.
    Senator Dodd. What I am curious about--that process began 
on the 27th of May, and I am looking at articles in the press 
on the date of the 26th of May in which you are quoted as 
suggesting that if Venezuela does not respect the process, they 
could be sanctioned by the OAS. In another statement here, they 
are quoting you, and if it is not correct, you correct me here. 
This was in the Washington Times. You are quoted as saying--
again, this is on May 26th, the day before the actual 
verification vote begins--`` `It's very clear to us the 
requisite number of people supported the petition,' for a 
referendum, Mr. Noriega told the editors and reporters during a 
visit to The Washington Times yesterday. `If through some very 
tortured bureaucratic process, those signatures are tossed out, 
it could have very dire consequences for Venezuelans and for 
those who support their rights under the constitution.' ''
    My point is this, Roger. This is a process and a way people 
are going to begin to verify the next day. So I am curious as 
to why you would be making statements, in effect, sort of 
determining the outcome of that process a day before it even 
begins.
    In fact, the next day the Secretary of State on the 27th, 
Secretary Powell issued the following statement. ``The 
Venezuelan people have reached a defining moment for their 
democracy beginning May 28, where more than one million 
citizens will have the opportunity to reconfirm their 
signatures on petitions calling for a referendum on the tenure 
of President Hugo Chavez.'' He goes on and suggests that there 
be no violence and so forth, but a very different tone than the 
tone you suggest by sort of guaranteeing what the outcome was 
going to be before it began. Now, if that is a misstatement----
    Mr. Noriega. No, Senator, I do not think it is a 
misstatement necessarily. There was a misinterpretation, an 
inference. When I was referring to the number of signatures 
having been collected, I was referring to the process earlier 
in the year where, as it turns out, I was right. A requisite 
number of signatures had been collected.
    After that process earlier in the year, President Carter 
said, quote, ``The sovereign expression of the citizens must be 
privileged over excessive technicalities,'' in resolving issues 
surrounding the tabulation of the signatures. So I do not think 
anything that I said was inconsistent with what he said.
    In terms of the timing, the statements that I made were 
referring to the earlier collection of the signatures not----
    Senator Dodd. That is not very clear in this article.
    Mr. Noriega. I think that is right.
    Senator Dodd. The day before people are going to show up. 
There is no reference in here. You do not talk about previous.
    Mr. Noriega. I can get you the entire text and it says 
quite explicitly that we were referring to the previous 
collection of signatures.
    In my statement, the results of the reparos process had to 
be respected, which was the process that had not begun, but we 
were just simply calling----
    Senator Dodd. You understand the paper says--I did not 
quote this, but the paragraph before says, ``Roger Noriega, 
assistant secretary of state, for Western Hemisphere affairs, 
said Mr. Chavez's government faces a `make-or-break exercise' 
as selection officials this weekend decide whether to validate 
hundreds of thousands of disputed signatures . . . .''
    Mr. Noriega. I think that is right.
    Senator Dodd. And then it goes on to quote you. So it is 
clearly referring to that weekend coming up.
    Mr. Noriega. Oh, sure. But I think we are mixing the two 
references. I was referring to the earlier process. When I said 
that the results had to be respected and when I said that they 
had to repair the signatures, I was referring to the process 
that was ensuing thereafter. But I do not think it is all that 
complicated, but some of the comments are taken out of context.
    Senator Dodd. You understand my point, though.
    Mr. Noriega. No, not really.
    Senator Dodd. Thank you, Mr. Chairman.
    [The two articles discussed follow:]

  [From The Washington Times--May 26, 2004, Wednesday, Final Edition]

   U.S. Casts Wary Eye on Venezuela Vote; Action Promised if Vote is 
                                 Rigged

                          (By David R. Sands)

    The United States will push hard for diplomatic pressure against 
Venezuela if President Hugo Chavez tries to rig the upcoming referendum 
on his rule, the State Department's Latin America point man said 
yesterday.
    Roger F. Noriega, Assistant Secretary of State for Western 
Hemisphere Affairs, said Mr. Chavez's government faces a ``make-or-
break exercise'' as election officials this weekend decide whether to 
validate hundreds of thousands of disputed signatures in the referendum 
drive.
    ``It's very clear to us the requisite number of people supported 
the petition'' for a referendum, Mr. Noriega told editors and reporters 
during a visit to The Washington Times yesterday.
    ``If through some very tortured bureaucratic process, those 
signatures are tossed out, it could have very dire consequences for 
Venezuelans and for those who support their rights under the 
constitution,'' he said.
    In wide-ranging remarks about U.S. policy toward Latin America, Mr. 
Noriega defended recent moves to tighten travel and spending 
restrictions for Cuba and expressed cautious hope for Haiti's new 
interim government.
    He also said the war in Iraq and its troubled aftermath had 
``brought some difficulties'' for U.S. public diplomacy in many Central 
and South American countries.
    But he said the Bush administration had been able to establish 
productive relations, even with new center-left governments in Brazil 
and Argentina.
    Mr. Noriega said U.S. officials will be watching closely as 
Venezuelan election officials this weekend decide whether to validate 
about 800,000 disputed signatures for a referendum on Mr. Chavez, a 
populist former military officer who has clashed repeatedly with 
Washington.
    Anti-Chavez activists complained this week of government 
intimidation in the run-up to this weekend's recount. If enough 
signatures are validated, Mr. Chavez faces a recall vote in August that 
many think he is desperate to avoid. His six-year term is supposed to 
end in 2006.
    Mr. Noriega said U.S. officials are not contemplating political or 
economic sanctions, but his comments still were among the toughest to 
date by a senior administration official.
    ``We will use what multilateral levers we have,'' he said. ``We 
have told our partners we think this is a make-or-break exercise to see 
whether the state can respect the wishes of the Venezuelan people.''
    The Organization of American States [OAS], the Atlanta-based Carter 
Center, and a loose alliance of regional powers led by Brazil have 
tried to ease the political stalemate in Caracas.
    Mr. Chavez, who survived a coup attempt in 2002, has blamed unnamed 
Colombian and U.S. forces for seeking to drive him from power, and 
Venezuela's political paralysis has become an economic and political 
distraction for the entire region, Mr. Noriega said.
    Mr. Noriega, a former Capitol Hill staffer and Ambassador to the 
OAS, also was a prime architect of recent moves to toughen U.S. 
economic pressure on Cuba's Fidel Castro and spell out U.S. policy 
toward a democratic, post-Castro Cuba.
    He helped draft the commission report endorsed by President Bush 
earlier this month calling for increased broadcasting to Cuba, as well 
as sharp new limits on the time and money U.S. visitors can spend when 
traveling to the island.
    He acknowledged that even some U.S.-backed dissidents in Cuba had 
criticized the moves as counterproductive, but said the commission 
focused tightly on U.S. policy and avoided any direct interference in 
Cuban affairs.
    ``Clearly, we want to see representative democracy and a free-
market economy come to Cuba, but I hasten to add that those will be 
decisions the Cuban people must make,'' he said.
    He rejected the argument that easing the 40-year U.S. embargo on 
Cuba would hasten the end of Mr. Castro's one-man rule.
    ``If I thought for a moment that a bunch of sun-burned tourists 
could help wash away Castro, I might reconsider the embargo,'' he said, 
``but I just don't see it happening.''
    Mr. Noriega said the situation in Haiti is ``stable'' less than 
three months after U.S. officials helped ease out President Jean-
Bertrand Aristide in the face of a violent uprising against his rule.
    The United States, earlier this week, pledged a $100 million 
economic package to help revive Haiti's devastated economy.
    Mr. Noriega said other countries in the region have shown a 
willingness to contribute financially and militarily to the new interim 
government of Prime Minister Gerard Latortue. Brazil is spearheading a 
new international peacekeeping force for Haiti to replace the U.S.-led 
mission now there.
    ``We're frankly not out of the woods on the security situation, but 
I do see a willingness to invest in Haiti to jump-start the economy and 
plan for new elections,'' Mr. Noriega said.

                                 ______
                                 

                         Democracy in Venezuela

                      BY SECRETARY COLIN L. POWELL

                     [Washington, DC--May 27, 2004]

    The Venezuelan people have reached a defining moment for their 
democracy. Beginning May 28, more than one million citizens will have 
the opportunity to reconfirm their signatures on petitions calling for 
a referendum on the tenure of President Hugo Chavez.
    This process will help Venezuelans resolve their differences and 
build a better, stronger future for their nation.
    I urge the Venezuelan government to honor the wishes of its people 
by supporting a fair and credible process that produces prompt results 
in an atmosphere free of fear and intimidation. I also call on all 
Venezuelans to reject violence as incompatible with the exercise of 
democracy.
    The presence of Organization of American States and Carter Center 
observation missions will promote greater transparency and credibility.
    The United States supports a peaceful, democratic, constitutional 
and electoral solution to Venezuela's political impasse, as called for 
in Organization of American States Resolution 833 and the May 29, 2003 
Agreement between the Government of Venezuela and the democratic 
opposition. The recent statement of the Friends of the Secretary 
General of the OAS for Venezuela calls for such a democratic solution. 
We will continue working with the international community to help the 
people of Venezuela achieve their democratic aspirations.

    Senator Coleman. Senator Nelson.
    Senator Nelson. Mr. Secretary, what is the administration's 
view of Venezuela's cooperation on the war on terrorism, 
particularly with regard to efforts at securing the border with 
Colombia?
    Mr. Noriega. Senator, I think you have fairly characterized 
what we know about the level of cooperation that we receive 
from Venezuelan authorities, particularly on their border with 
Colombia. We have raised concerns, I think as you have, with 
Venezuelan authorities. Without being too terribly specific in 
dealing with sensitive information, we have made it clear that 
we believe we could do better, that the Venezuelan authorities 
as well could do better in the level of cooperation in fighting 
terrorism, securing that border, securing the flow of people, 
arms, and other things across the border with Colombia. We have 
made it very clear that we want to work with Venezuela, as it 
meets its commitments under the U.N. and OAS anti-terrorism 
accords, to prevent the spread of terrorism, prevent any 
persons moving across borders or goods or items or arms moving 
across the border that might involve terrorist groups that 
threaten other countries.
    Senator Nelson. Mr. Ambassador, there was a recent 
editorial by the Chavista political leader Heinz Dederich, and 
he allegedly stated that the referendum is a ``all-or-none'' 
proposition and must be won by any means, and that if Chavez 
loses the referendum, it will leave ``the ELN, FARC, and MAS of 
Bolivia without support.'' Additionally he allegedly went on to 
say, ``Cuba will be in danger.'' He also stated that President 
Chavez must defeat the enemies and went on to list the 
Democratic Charter of the OAS as one of the enemies of the 
regime.
    What is the OAS's view of all this? Do you think it is 
true? And how will you take it into consideration?
    Ambassador Maisto. Senator, I do not know the analyst in 
question, but from your quotes, I would say that my colleagues 
over at the OAS would find the notion that the Inter-American 
Democratic Charter is an enemy of anyone in the hemisphere 
rather preposterous. The Inter-American Democratic Charter has 
been embraced by all the democratic countries of the 
hemisphere, including Venezuela, as the political document that 
is the basis for our political action in this hemisphere in the 
multilateral arena. It embraces multilateralism with every 
country contributing, as best it can. And it is still finding 
its way, and it is being applied. It is not perfect and we are 
struggling with it all the time, but nobody at the OAS leaves 
home without this charter in his or her pocket as we do 
business in the organization. It is referred to every day and 
any notion, such as the one you cited, would be met, I believe, 
with incredulity among the member countries. With regard to the 
United States, I just find that notion preposterous.
    But what is in question here is what is going to happen in 
Venezuela after these electoral processes are completed. There 
is going to be a winner and there is going to be a loser. There 
is going to be a majority and there is going to be a minority 
or several minorities. And it is going to be up to the 
Venezuelans to work through this in a democratic structure. 
Indeed, members of the community will be prepared to help in 
that process. And the charter provides a way to do that.
    So we are hopeful in the OAS about the Democratic Charter 
and we are hopeful whenever we think about the process that is 
going on in Venezuela, thinking about what the OAS and the 
Carter Center have contributed already and want to contribute 
in the days ahead.
    Senator Nelson. What do you expect the OAS to do with 
regard to observing for the goal of a free and fair election on 
August 15?
    Ambassador Maisto. Senator, the OAS is quite proficient in 
election observation. Just this year, the OAS has put election 
observation teams on the field in Panama, in the Dominican 
Republic, El Salvador, Guatemala. We know that there is a lot 
of concern about computers and machines and things like that. 
The OAS has an absolutely first-rate team that they field. They 
have experts that work for them and experts that they tap.
    Senator Nelson. Do you expect to have access to all of the 
polling places?
    Ambassador Maisto. The rules of engagement for the OAS to 
observe elections certainly include access to all the polling 
places and all the technical part of it, looking at the 
machines, testing them out, et cetera. That is standard 
operating procedure in an OAS election observation.
    Senator Nelson. Thank you.
    Senator Coleman. Thank you.
    Secretary Noriega, Ambassador Maisto, there are a lot of 
other questions. I know on the second panel some of the 
witnesses have some time constraints. I have 19 questions from 
Chairman Lugar, everything ranging from questions about 
expectations of a second meeting of a Group of Friends, the 
position of Secretary Powell in regard to what the Group of 
Friends can do to deal with some of these issues. I have 
questions about voting machines, and there were mutual concerns 
raised in Senator Nelson's opening statement about voting 
machines and packing the court and how we respond to that. But 
again, in the interest of having a full opportunity to hear 
from all the witnesses today, what I will do will be to make 
sure that we submit these in writing and would request that you 
respond to them as soon as can be done.
    Mr. Noriega. Thank you very much, Mr. Chairman.
    Senator Coleman. Thank you.
    With that, we will call our second panel. I already 
introduced the second panel in my opening statement. We will 
proceed from my right to my left, starting with Dr. McCoy, Mr. 
Vivanco, Mr. Diaz, Mr. Tissot, and Mr. Weisbrot. Panel members 
understand there is a timing system. When the yellow light goes 
on, I would like you to conclude your testimony. We will, at 
your request, have your entire statement entered as part of the 
official record. With that, Dr. McCoy.

 STATEMENT OF DR. JENNIFER McCOY, DIRECTOR, AMERICAS PROGRAM, 
        THE CARTER CENTER, AND GEORGIA STATE UNIVERSITY

    Dr. McCoy. Thank you very much, Senator Coleman, for the 
invitation here today. As I said to Senator Coleman earlier, I 
am continuing in a role as international observer, so I will 
limit my remarks to the recall process and not to other aspects 
of Venezuelan politics at this time. I was asked to give an 
assessment of this, and I want to say it is based on 20 years 
of study of Venezuela as a scholar as well as monitoring 
elections in Venezuela in 1998 and 2000, and intensive 
involvement in the last 2 years at the invitation of the 
Government of Venezuela and the opposition to help facilitate 
the political crisis there, and most recently observing the 
recall process that has already been begun to be discussed this 
afternoon.
    I would like to start in this brief oral summary just 
listing some of the factors that I think help to explain and 
help us to understand what has happened so far in the recall 
process, to understand some of the delays, the confusions, and 
the controversies because this is affecting the entire recall 
referendum process. Some of these factors will continue, and I 
think it is good to understand these.
    The first is that, in fact, this is an unprecedented 
process. The National Electoral Council board itself was new, 
and there was no law to regulate the process. So the newness, 
novelty of the entire process was one of the reasons for some 
of the delays and confusions.
    Second, we need to keep in mind that this is all occurring 
in a politically polarized climate where the stakes are 
extremely high, and so you have a National Electoral Council 
that becomes the fulcrum of the political dispute within 
Venezuela and in fact the negotiations over the procedures 
themselves become very political. We have to understand that 
every single decision they are taking is as a result of an 
intense negotiation within the CNE and under very intense 
pressure from all the political parties.
    Third, the nature of the signature collection itself was a 
hybrid system, neither completely privately conducted by the 
political parties nor completely publicly conducted by the 
National Electoral Council. And that led to some of the 
subsequent confusion and controversy during the verification 
period.
    Fourth were the cumbersome mechanisms of control and 
verification procedures which arose from the distrust between 
the parties and the desire to prevent fraudulent signatures. So 
that led to the design of an extremely complex set of 
procedures, multiple levels of verification, and delays in the 
process.
    Fifth, there were changes in the procedures during the 
verification, which I will not go into here but some of which 
is in my written testimony.
    Sixth, there were incomplete or vague instructions in the 
beginning, some slowness to the decisionmaking, in part due to 
the political nature, that resulted in the need to come out 
with clarifying instructions throughout the process.
    And seventh, the negotiations over the reparos process 
itself, which was the correction period that happened at the 
end of May. These negotiations occurred at the urging of the 
international observers to help to get a consensus among the 
political parties and the National Electoral Council on 
procedures to conclude that signature collection and 
verification process.
    So the overall conclusions that we drew, the Carter Center 
and the OAS, about the process to date include the following.
    The first phase, which was the signature collection, is 
that the signatures were collected in an atmosphere mostly free 
of violence in which the citizens who wished had the 
opportunity to sign, though there was some confusion on the 
exact procedures to use, leading to some more of the confusion 
during the verification.
    On the second stage, which was the verification process, it 
was very complex, multiple levels of review, unclear rules that 
were inconsistently applied, multiple delays, and a concern for 
detecting fraud at times seeming to override a concern to 
recognize the good faith of the signers.
    The third period, the correction or reparo period--oh, my 
goodness, that time went fast.
    Senator Coleman. Can you finish?
    Dr. McCoy. Let me finish quickly. Let me move to this.
    For the future, moving to the recall referendum on August 
15, I want to say there are three very important things to 
recognize in terms of the progress. It is very significant and 
positive that all of the Venezuelan actors are participating 
now in a democratic and constitutional process to resolve their 
differences. Second, both sides are ready to engage in the 
campaign and try to win. Third, if the result is decisive and 
the process is transparent, I am convinced both sides will 
accept the results.
    The concern is going to be if it is a very close result, 
both sides will be tempted to argue that there is fraud or 
manipulation affecting the outcome. Therefore, it is absolutely 
crucial that the greatest transparency possible is provided in 
the process to raise the confidence among Venezuelans in the 
results. During the questions, I could go into what I see as 
the measures needed.
    [The prepared statement of Dr. McCoy follows:]

                Prepared Statement of Dr. Jennifer McCoy

                THE VENEZUELA RECALL REFERENDUM PROCESS

    Mr. Chairman, thank you for the invitation to testify before this 
subcommittee. I have studied Venezuela as a scholar for twenty years, 
and have been involved in Venezuela with The Carter Center since 1998, 
when we observed the 1998 and 2000 elections. Since June of 2002, I 
have been leading the Carter Center's efforts to facilitate dialogue 
between the government and opposition, and to monitor the recall 
referendum effort begun in November 2003.

                                OVERVIEW

    After the short-lived ouster of President Hugo Chavez in April 
2002, the government of Venezuela invited former President Jimmy Carter 
to facilitate a dialogue between the government and the opposition 
forces. We formed a Tripartite Working Group of the OAS, UNDP, and 
Carter Center which sponsored a national Table of Negotiations and 
Accords from November 2002-May 2003. Facilitated by Secretary General 
of the OAS Cesar Gaviria, and assisted by The Carter Center and UNDP, 
the Table produced an agreement in May 2003 which, among other things, 
recognized that the constitutional provision for recall referenda on 
elected officials could be a mechanism to help solve the bitter 
political divisions of the country.
    In May of 2003, the country lacked a functioning electoral agency 
(CNE) and the National Assembly proved unable to forge a supermajority 
to name a new directorate. The supreme court stepped in to do so, and a 
brand new CNE board was sworn in on August 27, 2003, acclaimed by all 
the parties. One of their first tasks was to rule on the signatures 
that had been presented a week earlier by the opposition Coordinadora 
Democratica for a recall of the president. The CNE disavowed those 
signatures and set to work to devise a set of regulations for this new 
procedure in Venezuela. The resulting regulations called for signatures 
to be collected in a 2-stage process during the last two weekends of 
November--the first weekend for the national legislators (deputies) 
sought to be recalled by the government, and the second weekend for the 
deputies and the president sought to be recalled by the opposition. The 
CNE invited the OAS and The Carter Center to observe the process, and 
those two organizations formed a joint mission with two chiefs of 
mission, and joint statements, throughout.
    The signatures collected in those two weekends were presented to 
the CNE for verification (after being organized, photocopied, etc by 
the political parties) by December 19. The CNE took a break for 
Christmas and began signature verification January 13, 2004. The CNE 
announced preliminary results on March 2, with signatures in three 
categories: valid, ``observed'', and invalid. The announcement 
indicated the opposition had not yet gathered sufficient valid 
signatures to trigger a presidential recall, but that there would be a 
correction period (reparos) in which nearly 1.2 million signers could 
appear again to confirm their signatures. The reparo period occurred at 
the end of May, and on June 3, the CNE announced that there would be a 
recall vote on the president's mandate (subsequently scheduled for 
August 15, 2004), and nine opposition deputies.
    The recall vote is scheduled four days before constitutional 
trigger date of August 19. If the recall occurs before August 19 and if 
sufficient votes in favor of recall are cast, then there should be an 
election to choose a person to fulfill the remainder of the President's 
term in office (which ends January 2007). The number of votes to recall 
an official must fulfill two conditions: a) be at least one more than 
the absolute number of votes by which the official was elected in the 
first place, in this case 3.7 million; and b) be more than the No votes 
cast in the recall. This election, if needed, is likely to occur about 
October 15, 2004. If the recall referendum occurs after August 19, and 
the president is recalled, then the Vice President fulfills the term.

                ASSESSMENT OF THE RECALL PROCESS TO DATE

    The process has taken much longer than expected and has had some 
controversies, due to a number of factors:

          a) Unprecedented nature of the process, novice CNE, lack of a 
        law to regulate the process. This is the first country of which 
        I am aware in which a recall of an elected president has been 
        attempted (Iceland has the provision, but may have never 
        implemented it). The presidential recall referendum was 
        introduced into the 1999 constitution and had not yet been used 
        in Venezuela. The CNE directors were new and had to first 
        devise a regulation to govern the process, since the National 
        Assembly had not yet drafted and approved a law to implement 
        the constitutional provision. All of these factors led to a 
        steep learning curve, some ad hoc adaptation along the way, and 
        creation of new rules as the process developed and new wrinkles 
        were discovered.

          b) Politically-polarized nature of the process. The stakes 
        are extremely high for all sides. The President, of course, 
        would prefer to stay in office. The opposition has been trying 
        for at least two years to remove the President from office, 
        through massive protest marches, calls for resignation, 
        proposed constitutional amendments, a two-month national oil 
        strike, and the April 2002 military removal from office. The 
        deep polarization of the country meant that the normal 
        compromise and give and take of democratic processes was not 
        happening. Instead, the point of contact between the opposing 
        sides was centered within the 5-person CNE as it struggled to 
        negotiate acceptable compromises on the procedures of the 
        process, under intense pressure from all sides.

          c) Hybrid nature of the process. Part of the political 
        compromise reached over the procedures was the hybrid nature of 
        the signature collection process. It was neither a completely 
        private affair, conducted by the political parties, nor a 
        completely official affair, controlled by the CNE. This hybrid 
        nature led to subsequent confusion and controversy during the 
        verification period.

          d) Cumbersome mechanisms of control and verification 
        procedures. The distrust between the parties and the desire to 
        prevent fraudulent signatures (which the government suspected 
        from previous signature collection efforts) produced a complex 
        set of procedures designed to protect against fraud. These 
        procedures, both in the collection process and the subsequent 
        verification, provided for some checks which the CNE did not 
        have the capacity, in reality, to implement--such as 
        verification of thumbprints and signatures (neither of them 
        digitalized in the signature collection nor in the national 
        identity card system).

          e) Changes in procedures during the verification. One 
        slowdown came after the CNE discovered that some signature 
        sheets apparently showed the same handwriting for all of the 
        signer data on that sheet, and in some cases even for the 
        signatures themselves. This discovery produced a new criterion 
        in the middle of the verification process to put into 
        ``observation'' all of those signature lines which appeared to 
        have similar handwriting as at least one other line on the same 
        sheet. This required a second round of verification of the 
        names that had already been reviewed, and resulted in some one 
        million names being questioned under the ``similar 
        handwriting'' criteria. This group became the bulk of the names 
        that would go to the correction period in late May, for signers 
        to confirm that in fact they had signed the petitions and it 
        was not fraud.

          f) Incomplete or vague instructions; slow decision-making; 
        insufficient training during the verification. The CNE board at 
        points, took a long time to make decisions and issue 
        instructions for verification, and many of those instructions 
        were vague or incomplete, requiring further instructions. The 
        CNE did try to address some of the delays by enlarging the 
        teams of verifiers, but the various levels and teams of 
        verifiers were not always sufficiently trained on the first 
        attempt. The end result was that the verification phase was 
        supposed to take 30 days, and in reality took 120 days 
        (depending on which dates one uses).

          g) Negotiations over the Reparo process. At the urging of the 
        international observers, the CNE entered into discussions with 
        the political parties in an attempt to devise mutually 
        satisfactory rules for the correction (reparos) period (which 
        had not previously been specified). These negotiations took 
        several weeks, but were important in gaining the acceptance of 
        the opposition Coordinadora Democratic to participate in the 
        reparos at all, and in generating clearer rules than had been 
        generated for the earlier phases of the process.

    Conclusions about the Signature Collection, Verification and 
Correction Stages: The signature collections were conducted in an 
atmosphere mostly free of violence, with citizens who so wished having 
the opportunity to sign, though with some confusion on the exact 
procedures. The verification process was complex, with multiple levels 
of review, unclear rules inconsistently applied, multiple delays, and 
with a concern for detecting fraud overriding a concern to recognize 
the good faith of the signers. The correction (reparo) period was 
conducted in an atmosphere mostly free of violence, with citizens who 
so wished having the opportunity, for the most part, to confirm their 
signatures or remove their names, and with mostly clear and transparent 
procedures.
progress and concerns about the upcoming recall vote of august 15, 2004
Progress:
    First, it is very significant and positive that all of the 
Venezuelan actors are participating in a democratic and constitutional 
process to resolve their differences. After trying a number of 
strategies, ranging from civil disobedience to general strikes, the 
opposition is now focusing on the recall referendum. The referendum 
will help to clear the air regarding the questions raised about the 
president's mandate.
    Second, both sides are ready to engage in the campaign and try to 
win. Both have named a campaign command group; both are engaging in the 
effort to turn out as many of their supporters as possible.
    Third, if the result is decisive and the process transparent, both 
sides will accept the results. If the president loses, I expect he will 
accept his loss and go on to the presidential election (either running 
himself if allowed by the supreme court, or supporting another 
candidate.) If the opposition loses, I expect the parties will focus on 
the upcoming governor and mayor elections (September 26) and the 
National Assembly elections in 2005.
Concerns:
    If the results of the recall referendum are close, both sides will 
be tempted to argue that fraud or manipulation affected the outcome. 
Therefore, the greatest transparency possible is needed in order to 
raise confidence among Venezuelans in the results.
    The measures that could help to assure transparency and raise 
confidence include:

   Audit of the voter's list (REP).

   Public simulations to test the new touchscreen voting 
        machines.

   Audit of a sample of the paper receipts from the voting 
        machines immediately after the close of the polls.

   Professional, neutral international observers with full 
        access to the entire process--reparation, vote, tabulation, 
        resolution of challenges.

   Election workers chosen by lottery and trained sufficiently 
        well and early.

   Voter education on the process and the new machines.

   Clear rules on which national identity cards will be 
        accepted (some confusion during the reparos resulted in some 
        citizens being turned away.)

   Clear media regulations to ensure equal access by both sides 
        for paid advertising, and equitable and balanced news coverage 
        of both sides.

   Climate of respect and tolerance, particularly within the 
        public and private news media and among the two campaigns.

                      BEYOND THE RECALL REFERENDUM

    We should not lose sight of the fact that the referendum itself 
will not solve the underlying divisions within Venezuela society. It 
will help to resolve the question as to the level of confidence that 
the Venezuelan people have in the government of Hugo Chavez at this 
moment, and it will provide for the citizens to express their will in 
this unprecedented exercise of participatory democracy. But it will not 
resolve the fundamental differences with regard to the future direction 
of the country.
    Resolving those differences will take a renewed effort of dialogue 
and direct communication among political and social actors to 
understand one another's grievance. It will take a concerted effort at 
social reconciliation to heal the trauma that divides cities, 
neighborhoods and even families. It will take a long time to overcome 
the personal hurt and fear that has arisen as a result of some 
government supporters being driven out of their homes and not able to 
enter restaurants or public places without ``cacerolas'' and 
harassment, and opposition members who fear persecution or even 
violence from gangs of motorcyclists or ``hordes' of poor people 
descending from the mountains to defend their revolutions.
    Resolving those differences will also require a concerted national 
effort to devise a consensus plan to tackle the serious poverty 
problem, which has resulted in the alarming social dislocation of a 
society moving from a 25% rate of poverty in the 1970s to a 75% poverty 
rate two decades later and the discourse of the haves vs. the have-nots 
in the current political debate.
    Finally, resolving those differences will require restoring checks 
and balances in government, and guaranteeing apolitical space for 
whoever loses an election, so that a losing party need not fear 
recrimination, vengeance, or a loss of voice and rights in a winner-
take-all political system, and knows it will have a chance to run 
again.

    Senator Coleman. Thank you very, very much, Dr. McCoy.
    Mr. Vivanco, before you begin your testimony, Senator 
Nelson has another commitment. I know that he had a question 
for Dr. McCoy. So what I will do is, Senator Nelson, why do you 
not proceed with the questioning, and then we will go with Mr. 
Vivanco's testimony after that.
    Senator Nelson. Dr. McCoy, I sent part of our staff down 
there to Venezuela to see how things are going and got back a 
report that I would like for you to comment on, that with the 
issuing of the national ID cards, that some members of the 
military and other government organizations are confiscating 
these cards from opposition voters to keep them from voting, 
and that others who are trying to get registered are being 
harassed so as not to be registered. Do you think this is 
serious and how would the Carter Center monitor this to make 
sure that that is not happening to see that there is a free and 
fair election?
    Dr. McCoy. We have not had reports about confiscation of 
national ID cards in this current period we are talking about, 
leading up to the vote. Monitoring any form of intimidation or 
harassment is extremely difficult. What we do is ask for 
reports and ask for the compilation of as much concrete 
evidence as possible from those who are making the complaint. 
We also turn those over to proper authorities as well because 
we do not have the capacity to investigate. But any kind of 
harassment or intimidation we denounce.
    Senator Nelson. You have clearly seen the newspaper reports 
about the question of the new voting machines. What, if 
anything, will the Carter organization do as you try to monitor 
the fairness of these elections? And mind you, I come from a 
State that is very sensitive about the accuracy of voting 
machines.
    Dr. McCoy. Well, my State of Georgia is the first State in 
the country to use voting machines throughout the State, and I 
was very happy with them in the last process that I 
participated in.
    On these particular machines, the Smartmatic machines, I 
personally went with an entire team, including an engineer and 
a statistician, some technical people on our team, to receive a 
full presentation of the machine. I have been trying to check 
into them as much as possible. We were very impressed with the 
presentation we received, the security measures that were shown 
to us, and the functioning of the machine that we witnessed.
    However, just as in the United States, the same 
controversies and concerns about the black box of the computer 
exists in Venezuela, those questions. So a very important 
process is having the paper trail, the paper receipts, which 
are provided by these machines. It is my understanding that the 
National Electoral Council has decided to carry out an audit on 
the evening of the vote, after the vote is completed, of a 
sample of the machines that would count the paper trails and 
compare those with the results, which is definitely our 
recommendation. That I think is very important to bring 
confidence and transparency to the process.
    Senator Nelson. Well, if Venezuela pulls that off, the 
State of Florida is not even doing that with a paper trail. So 
maybe Venezuela will teach Florida something.
    Dr. McCoy. I hope so.
    Senator Nelson. Thank you, Mr. Chairman.
    Senator Coleman. Thank you, Senator Nelson. Thank you, Dr. 
McCoy.
    Mr. Vivanco.

  STATEMENT OF JOSE M. VIVANCO, EXECUTIVE DIRECTOR, AMERICAS 
                  DIVISION, HUMAN RIGHTS WATCH

    Mr. Vivanco. Thank you, Mr. Chairman. I would like to 
submit for the record my written testimony.
    Senator Coleman. Without objection.
    Mr. Vivanco. Venezuela is one of the most politically 
polarized countries in the hemisphere. It has been in the state 
of almost perpetual political crisis for some time now. 
Opponents of President Hugo Chavez have sought to remove him 
from office on several occasions, through an aborted coup 
d'etat in 2002 and through a costly general strike in 2003. 
Fortunately, the government and the opposition have since 
agreed to address Venezuela's political disagreements within 
the framework of the constitution and the rule of law. In 
August, the country will hold a national referendum to 
determine whether or not President Chavez should remain in 
office.
    This agreement has been an important achievement for 
Venezuela. And it underscores the point that I want to stress 
at the outset of my testimony: Venezuela today is a democracy. 
It might be an imperfect democracy, a fragile democracy, but it 
is nonetheless a democracy.
    Human Rights Watch has sought to provide an objective and 
impartial perspective on human rights developments in Venezuela 
at a time when political tensions have encouraged some to 
exaggerate or misrepresent the country's problems.
    One issue we have focused on is freedom of the press, not 
because it is absent in Venezuela, but because it is a central 
point of contention in the ongoing political crisis. Until now, 
the government of President Chavez has largely respected press 
freedom even in the face of a strident and well-resourced 
opposition press. Indeed, as part of the often heated and 
acrimonious debate between supporters of the government and its 
opponents, the press has been able to express strong views 
without restriction.
    At the same time, however, many journalists working for 
media that support the opposition have been victims of 
aggression and intimidation by government supporters. And, to a 
lesser degree, journalists working for media sympathetic to the 
government have also been subject to acts of intimidation. 
Moreover, the government's respect for press freedom could be 
threatened by draft legislation introduced last year that would 
impose stringent and detailed controls over radio and 
television broadcasts, greatly limiting what could be aired 
during normal viewing hours. Fortunately, the National Assembly 
has not moved to pass the legislation which still requires a 
final debate and vote.
    A second issue and the main subject of my remarks today 
entails threats to the independence of the country's judiciary. 
Over the past year, President Chavez and his allies have taken 
steps to control Venezuela's judicial branch. These steps 
undercut the separation of powers and the independence of 
judges. They violate basic principles of Venezuela's 
constitution and international human rights law, and they 
represent the most serious threat to Venezuela's fragile 
democracy since the 2002 coup.
    The most brazen of these steps is a law passed last month 
that expands the Supreme court from 20 to 32 members. The new 
law allows Chavez's governing coalition to use its slim 
majority in the legislature to obtain an overwhelming majority 
of seats on the supreme court. The law also allows his 
coalition to nullify the appointments of sitting justices based 
on extremely subjective criteria. In short, Chavez's supporters 
can now both pack and purge the country's highest court.
    It is this court that may ultimately determine the outcome 
of the recall referendum scheduled for August 15. It will have 
to decide whether Chavez, should he lose the recall, can run 
again in the subsequent election, and it will have to resolve 
any legal challenges that arise from the recall vote itself, 
which is expected to be hotly contested. Pro-Chavez legislators 
have already announced their intention to name the new justices 
by next month, in time for the referendum.
    Such a political takeover of the supreme court will also 
compound damage already being done to judicial independence by 
the court itself. The supreme court has summarily fired several 
lower court judges after they decided politically controversial 
issues, and it has failed to grant 80 percent of the country's 
judges security of tenure, which is an essential ingredient of 
judicial independence.
    President Chavez's supporters in the legislative and 
judicial branches have sought to assuage concerns about the 
court-packing law by insisting that those wielding authority 
over judges and justices will show restraint and respect for 
the rule of law. Such assurances are beside the point, however. 
A rule of law that relies on the self-restraint of those with 
power is not in fact the rule of law.
    Chavez supporters justify the court-packing law largely as 
a response to pro-opposition rulings in a deeply divided court 
such as a highly questionable one that absolved military 
officers who participated in the 2002 coup. They also point to 
the failure of lower court judges to address allegedly illegal 
activities carried out as part of the general strike in 2003 
that cost the country billions of dollars in oil revenue and 
did enormous harm to the economy. It may be true that some 
judges have let opposition members off the hook after they 
sought to undermine the rule of law. But Chavez and his 
supporters should now be taking steps to strengthen the 
judiciary. Instead they are rigging the system to favor their 
own interests.
    Whether the current crisis is resolved peacefully and 
lawfully will depend in large part on the country's judiciary. 
It is the courts that must ultimately determine whether 
decisions by the country's electoral authorities are valid, as 
well as whether the actions of Chavez supporters and opponents 
in the streets are legally permissible.
    It is not too late for Venezuela to reverse course. 
President Chavez's governing coalition in the National Assembly 
could still suspend implementation of the new law. And the 
supreme court could strike down, on constitutional grounds, the 
provisions of the court-packing law that subject the court to 
political domination by the governing coalition.
    Senator Dodd. Are you getting close to the end there?
    Mr. Vivanco. I am close. Just three more paragraphs.
    Senator Dodd. As long as it was not written like Ulysses, 
we will be fine.
    Mr. Vivanco. The international community should do all it 
can to encourage Venezuela to protect and strengthen judicial 
independence. Unfortunately, however, the ability of the United 
States to advocate for democracy in Venezuela was severely hurt 
in 2002 when the Bush administration chose to blame Chavez for 
his own ouster rather than unequivocally denouncing the coup. 
In addition, the Abu Ghraib prison scandal has undermined the 
administration's moral authority when it comes to promoting the 
rule of law abroad.
    If the United States is to have a positive influence in 
Venezuela today, it will have to be through the sort of 
multilateral diplomacy that the Bush administration endorsed 
when it signed the Inter-American Democratic Charter in 2001. 
The Democratic Charter authorized the OAS to respond actively 
to threats to democracy in the region, ranging from coup 
d'etats to government policies that undermine the democratic 
process, and it identifies judicial independence as an 
essential component of a democratic system.
    When the United States, Venezuela, and other countries in 
the hemisphere signed the Democratic Charter in 2001, the 
committed themselves to work together to defend democracy in 
the region and to respond to emerging threats before serious 
harm is done to a country's democratic institutions. Today 
Venezuela faces such a threat and the international community 
should engage with the Venezuelan Government to address it.
    Thanks a lot.
    [The prepared statement of Mr. Vivanco follows:]

               Prepared Statement of Jose Miguel Vivanco

    Mr. Chairman, Members of the Committee:
    Thank you for your invitation to address the committee regarding 
the human rights situation in Venezuela. I know the committee is most 
interested in an exchange of views, so my remarks will be brief. I 
would like to submit, for the record, my written testimony.
    Venezuela is one of the most politically polarized countries in the 
hemisphere. It has been in a state of almost perpetual political crisis 
for some time now. Opponents of President Hugo Chavez have sought to 
remove him from office on several occasions--through an aborted coup 
d'etat in 2002 and through a costly general strike in 2003. 
Fortunately, the government and the opposition have since agreed to 
address Venezuela's political disagreements within the framework of the 
Constitution and the rule of law. In August, the country will hold a 
national referendum to determine whether or not President Chavez should 
remain in office.
    This agreement has been an important achievement for Venezuela. And 
it underscores the point that I want to stress at the outset of my 
testimony: Venezuela today is a democracy. It may be an imperfect 
democracy, a fragile democracy--but it is, nonetheless, a democraoy.
    The principle concern of the international commumty with regards to 
Venezuela should be to help the country strengthen its democratic 
institutions and ensure that it does not suffer another rupture of its 
constitutional order, as occurred during the 2002 coup.
    Human Rights Watch has sought to provide an objective and impartial 
perspective on human rights developments in Venezuela at a time when 
political tensions have encouraged some to exaggerate or misrepresent 
the country's problems.
    One issue we have focused on is freedom of the press--not because 
it is absent in Venezuela, but because it is a central point of 
contention in the ongoing political crisis. Until now, the government 
of President Chavez has largely respected press freedom even in the 
face of a strident and well-resourced opposition press. Indeed, as part 
of the often heated and acrimonious debate between supporters of the 
government and its opponents, the press has been able to express strong 
views without restriction.
    At the same time, however, many journalists working for media that 
support the opposition have been victims of aggression and intimidation 
by government supporters. And, to a lesser degree, journalists working 
for media sympathetic to the government have also been subject to acts 
of intimidation. Moreover, the government's respect for press freedoms 
could be threatened by draft legislation introduced last year that 
would impose stringent and detailed controls over radio and television 
broadcasts, greatly limiting what could be aired during normal viewing 
hours. Fortunately the National Assembly has not moved to pass the 
legislation, which still requires a final debate and vote.
    Another issue we have addressed is abusive practices by state 
security forces. In March of this year, in the midst of the most 
serious unrest since the 2002 coup, we received credible reports that 
National Guard and police officers beat and tortured people who were 
detained during the recent protests in Caracas and other Venezuelan 
cities. The abuses allegedly committed appeared to enjoy official 
approval at some level of command in the forces responsible for them.
    A third issue--and the main subject of my remarks today--entails 
threats to the independence of the country's judiciary. Over the past 
year, President Chavez and his allies have taken steps to control 
Venezuela's judicial branch. These steps undercut the separation of 
powers and the independence of judges. They violate basic principles of 
Venezuela's constitution and international human rights law. And they 
represent the most serious threat to Venezuela's fragile democracy 
since the 2002 coup.
    The most brazen of these steps is a law passed last month that 
expands the Supreme Court from twenty to thirty-two members. The new 
law allows Chavez's governing coalition to use its slim majority in the 
legislature to obtain an overwhelming majority of seats on the Supreme 
Court. The law also allows his coalition to nullify the appointments of 
sitting justices based on extremely subjective criteria. In short, 
Chavez's supporters can now both pack and purge the country's highest 
court.
    It is this court that may ultimately determine the outcome of the 
recall referendum scheduled for August 15. It will have to decide 
whether Chavez, should he lose the recall, can run again in the 
subsequent election. And it will have to resolve any legal challenges 
that arise from the recall vote itself, which is expected to be hotly 
contested. Pro-Chavez legislators have already announced their 
intention to name the new justices by next month, in time for the 
referendum.
    Such a political takeover of the Supreme Court will also compound 
damage already being done to judicial independence by the Court itself. 
The Supreme Court has summarily fired several lower-court judges after 
they decided politically controversial cases. And it has failed to 
grant 80 percent of the country's judges security of tenure, which is 
an essential ingredient of judicial independence.
    President Chavez's supporters in the legislative and judicial 
branches have sought to assuage concerns about the court-packing law by 
insisting that those wielding authority over judges and justices will 
show restraint and respect for the rule of law. Such assurances are 
beside the point, however. A rule of law that relies on the self-
restraint of those with power is not, in fact, the rule of law.
    Chavez supporters justify the court-packing law largely as a 
response to pro-opposition rulings in a deeply divided court, such as a 
highly questionable one that absolved military officers who 
participated in the 2002 coup. They also point to the failure of lower 
court judges to address allegedly illegal activities carried out as 
part of the general strike in 2003 that cost the country billions of 
dollars in oil revenue and did enormous harm to the economy. It may be 
true that some judges have let opposition members off the hook after 
they sought to undermine the rule of law. But Chavez and his supporters 
should now be taking steps to strengthen the judiciary. Instead they 
are rigging the system to favor their own interests.
    We have seen similar efforts before elsewhere in the region. During 
the 1990s, President Carlos Menem severely undermined the rule of law 
by packing Argentina's Supreme Court with his allies. In Peru, 
President Alberto Fujimori went even further in controlling the courts, 
through mass firings and the denial of tenure to judges. Venezuela is 
currently pursuing both a court-packing scheme, similar to that of 
Menem, and an assault on judicial independence, similar in spirit (if 
not in scope) to that of Fujimori. As the experiences of Argentina and 
Peru demonstrate, these efforts do not bode well for Venezuela's 
democracy.
    What makes the developments in Venezuela especially alarming is 
their potential impact on the country's already volatile political 
situation. Whether the current crisis is resolved peacefully and 
lawfully will depend in large part on the country's judiciary. It is 
the courts that must ultimately determine whether decisions by the 
country's electoral authorities are valid--as well as whether the 
actions of Chavez's supporters and opponents, in the streets and 
elsewhere, are legally permissible. It is, in other words, the courts 
that must ultimately ensure that the political conflict does not result 
in the trampling of people's freedom of expression and association, due 
process guarantees, and other basic human rights. To do so effectively, 
it is imperative that judges and justices be able to act with the 
independence and impartiality that are mandated by both the Venezuelan 
constitution and international human rights law.
    It is not too late for Venezuela to reverse course. President 
Chavez's governing coalition in the National Assembly could still 
suspend implementation of the new law before any permanent damage is 
done. And the Supreme Court could strike down, on constitutional 
grounds, the provisions of the court-packing law that subject the court 
to political domination by the governing coalition.
    The international community should do all it can to encourage 
Venezuela to protect and strengthen judicial independence. 
Unfortunately, however, the ability of the United States to advocate 
for democracy in Venezuela was severely hurt in 2002 when the Bush 
administration chose to blame Chavez for his own ouster rather than 
unequivocally denouncing the coup. In addition, the Abu Ghraib prison 
scandal has undermined the administration's moral authority when it 
comes to promoting the rule of law abroad.
    If the United States is to have a positive influence in Venezuela 
today it will have to be through the sort of multilateral diplomacy 
that the Bush administration endorsed when it signed the Inter-American 
Democratic Charter in 2001. The Democratic Charter authorizes the OAS 
to respond actively to threats to democracy in the region, ranging from 
coup d'etats to government policies that undermine the democratic 
process, and it identifies judicial independence as an essential 
component of a democratic system.
    During Venezuela's 2002 coup, the Charter was crucial in mobilizing 
member states to join the chorus of condemnation that helped restore 
President Chavez to office. The OAS should now use its authority under 
Article 18 of the Charter to press the Venezuelan government to suspend 
implementation of the court-packing law. The OAS should also offer to 
mediate Venezuelan efforts to reach a consensus on how to strengthen 
the independence of the judiciary.
    International lending agencies could also have a positive influence 
on the situation in Venezuela. The World Bank and the Inter-American 
Development Bank have supported projects aimed at improving the 
administration ofjustice in Venezuela--from training prosecutors and 
police to developing court infrastructure. The most urgent improvement 
needed now is the strengthening of judicial independence and autonomy. 
Without that, other improvements may only help a fundamentally flawed 
system function more efficiently. To encourage progress where it is 
most needed, all future international assistance aimed at improving the 
Venezuelan justice system should be made contingent upon Venezuela 
taking immediate and concrete steps to shore up the independence of its 
judges and the autonomy of its highest court.
    When the United States, Venezuela, and other countries in the 
hemisphere signed the Democratic Charter in 2001, they committed 
themselves to work together to defend democracy in the region and to 
respond to emerging threats before serious harm is done to a country's 
democratic institutions. Today Venezuela faces such a threat, and the 
international community should engage with the Venezuelan government to 
address it.

                                 ______
                                 

          [Human Rights Watch--June 2004, Vol. 16, No. 3 (B)]

                        Rigging the Rule of Law:

             Judicial Independence Under Siege in Venezuela

                               I. SUMMARY

    When Venezuelan President Hugo Chavez Frias faced a coup d'etat in 
April 2002, advocates of democracy in Venezuela and abroad roundly 
condemned the assault on the country's constitutional order. Today 
Venezuela faces another constitutional crisis that could severely 
impair its already fragile democracy. This time, though, the threat 
comes from the government itself.
    Over the past year, President Chavez and his allies have taken 
steps to control the country's judicial branch, undermining the 
separation of powers and the independence of the judiciary in ways that 
violate basic principles of Venezuela's constitution and international 
human rights law.
    The most brazen of these steps is a law passed last month that 
expands the Supreme Court (Tribunal Supremo de Justicia) from twenty to 
thirty-two members. The National Assembly will choose the new justices 
by a simple majority vote. With the new Organic Law of the Supreme 
Court (Ley Organica del Tribunal Supremo de Justicia, LOTSJ), the 
governing coalition will be able to use its slim majority in the 
legislature to obtain an overwhelming majority of seats on the Supreme 
Court. It will also have the power to nuffify existing justices' 
appointments to the bench. It will, in short, be able to both pack and 
purge the country's highest court.
    A political takeover of the Supreme Court will only compound the 
damage already done to judicial independence by policies pursued by the 
Court itself. The Supreme Court, which has administrative control over 
the judiciary, has suspended a program that would reduce the large 
number of judges who do not have security of tenure. It has fired 
judges after they decided politically controversial cases. And it has 
allowed the country's second highest court to shut down by failing to 
resolve the legal appeals of its dismissed judges. Depriving judges of 
the security of tenure and allowing them to be summarily fired or 
prevented from exercising their due process rights violates basic 
principles of the Venezuelan constitution and international human 
rights law.
    Human Rights Watch conducted research in Venezuela in May 2004, 
interviewing current and former judges and justices, justice officials, 
jurists, legislators, journalists and foreign observers about the legal 
and practical implications of these practices, as well as the 
justifications that might exist for pursuing them.
    The president of the Supreme Court, the attorney general and a pro-
Chavez legislator all sought to assuage our concerns about diminishing 
judicial independence by insisting that those wielding authority over 
judges and justices would show restraint and respect for the rule of 
law. Such assurances are beside the point, however. A rule of law that 
relies on the self-restraint of those with power is not in fact the 
rule of law.
    Several officials stressed the need to understand the attitude of 
President Chavez's opponents, many of whom--they argued--are unwilling 
to engage in meaningful compromise or subject themselves to the rule of 
law. They insisted that judges and even Supreme Court justices decide 
cases based on their political convictions rather than the dictates of 
the law. As examples they cited the Supreme Court's failure to convict 
alleged participants in the 2002 coup and the failure of lower court 
judges to address allegedly illegal activities carried out as part of 
the general strike in 2003 that cost the country billions of dollars in 
oil revenue and did enormous harm to the economy.
    It is true that some sectors of the opposition have subverted the 
rule of law in their efforts to bring down President Chavez. It might 
also be true that some opposition judges allow their political 
convictions to interfere with their application of the law. But rather 
than take steps to strengthen the rule of law, Chavez's allies and 
supporters have instead moved to rig the system to favor their own 
interests.
    We have seen similar efforts before elsewhere in the region. During 
the 1990s, President Carlos Menem in Argentina and President Alberto 
Fujimori in Peru succeeded in remaking their judiciaries to serve their 
own interests. The changes ensured their influence over the courts and 
contributed to a climate of lawlessness that would facilitate the forms 
of corruption for which both former presidents face criminal charges 
today.
    What makes the developments in Venezuela even more alarming is 
their potential impact on the country's already explosive political 
situation. Tensions have been mounting for months as President Chavez's 
opponents have sought a recall referendum to end his presidency. When 
the country's National Electoral Council (CNE) disqualified hundreds of 
thousands of signatures on a petition to authorize the referendum, 
thousands of people joined street protests, which culminated in violent 
confrontations with state security forces that left thirteen people 
dead, scores wounded, and hundreds more in police detention.
    Whether the current crisis is resolved peacefully and lawfully will 
depend in large part on the country's judiciary. It is the courts that 
must ultimately determine whether the CNE's decisions are valid--as 
well as whether the actions of Chavez's supporters and opponents, in 
the streets and elsewhere, are legally permissible. It is, in other 
words, the courts that must ultimately ensure that the political 
conflict does not result in the trampling of people's freedom of 
expression and association, due process guarantees, and other basic 
human rights. To do so effectivdy, it is imperative that judges and 
justices be able to act with the independence and impartiality that are 
mandated by the Venezuelan constitution and international human rights 
law.

Main Recommendations
    The future of Venezuela's judiciary is now largely in the hands of 
its highest court. To salvage the autonomy of the judicial branch, the 
Supreme Court should strike down, on constitutional grounds, the 
provisions of the court-packing law that subject the court to the 
political agenda of the governing coalition. To promote the 
independence of judges, the Supreme Court, in its administrative 
capacity, should reactivate the suspended program that would create 
judgeships with security of tenure and ensure full and prompt due 
process for judges facing dismissal, especially those accused of 
mishandling politically sensitive cases.
    The international community can help. In recent years, the World 
Bank and the Inter-American Development Bank have supported projects 
aimed at improving the administration of justice in Venezuela--from 
training prosecutors and police to developing court infrastructure. The 
most urgent improvement needed now is the strengthening of judicial 
independence and autonomy. Without that, other improvements may only 
help a fundamentally flawed system function more efficiently. To 
encourage progress where it is most needed, all future international 
assistance aimed at improving the Venezuelan justice system should be 
made contingent upon Venezuela taking immediate and concrete steps to 
shore up the independence of its judges and the autonomy of its highest 
court.
    The Organization of American States (OAS) also has a vital role to 
play. The Inter-American Democratic Charter, signed in 2001 by foreign 
ministers of Venezuela and thirty-three other democracies, authorizes 
the OAS to respond actively to threats to the democratic order of its 
member states. It was this commitment to defending democracy that led 
the OAS to denounce the aborted coup against President Chavez in April 
2002. Today Venezuela's democratic order is threatened in a different 
way, as the judiciary's increasing vulnerability to political 
manipulation undermines the country's rule of law. Unless concrete 
steps are taken immediately in Venezuela to reverse this course, the 
secretary general of the OAS should use his authority under Article 18 
of the Charter to take actions, with the prior consent of the 
Venezuelan government, to assess the situation and possibly seek a 
collective response from the OAS.
    The ultimate responsibility for the crisis in Venezuela's judiciary 
lies with President Chavez and his governing coalition. To prevent 
further erosion of the country's separation of powers, the president 
should instruct his supporters in the National Assembly to suspend 
implementation of the new court-packing law immediately and promote 
legislation that would modify those provisions that undermine the 
independence of the judiciary. The president should also be prepared to 
welcome and collaborate actively with the secretary general of the OAS, 
should the organization seek ways to help Venezuela address the crisis 
facing its judiciary.

            II. INTERNATIONAL NORMS ON JUDICIAL INDEPENDENCE

The OAS and the Inter-American Democratic Charter
    Democracy is indispensable for human rights, and an independent 
judiciary is indispensable for democracy. The thirty-four foreign 
ministers of the Organization of American States (OAS) recognized these 
propositions when they adopted the Inter-American Democratic Charter in 
2001.\1\ The Charter defines the ``[e]ssential elements of 
representative democracy'' to indude ``access to and the exercise of 
power in accordance with the rule of law'' and ``the separation of 
powers and independence of the branches of government.'' \2\
---------------------------------------------------------------------------
    \1\ Art. 7, Inter-American Democratic Charter. ``Democracy is 
indispensable for the effective exercise of fundamental freedoms and 
human rights in their universality, indivisibility and interdependence, 
embodied in the respective constitutions of states and in Inter-
American and international human rights instruments.''
    \2\ Art. 3, Inter-American Democratic Charter. ``Essential elements 
of representative democracy include, inter alia, respect for human 
rights and fundamental freedoms, access to and the exercise of power in 
accordance with the rule of law, the holding of periodic, free, and 
fair elections based on secret balloting and universal suffrage as an 
expression of the sovereignty of the people, the pluralistic system of 
political parties and organizations, and the separation of powers and 
independence of the branches of govemment.'' (Emphasis added.)
---------------------------------------------------------------------------
    The Inter-American Commission on Human Rights emphasized this link 
between judicial independence and democratic rule of law in its 2003 
report on Venezuela:

          The observance of rights and freedoms in a democracy requires 
        a legal and institutional order in which the laws prevail over 
        the will of the rulers, and in which there is judicial review 
        of the constitutionality and legality of the acts of public 
        power, i.e., it presupposes respect for the rule of law. 
        Judiciaries are established to ensure compliance with laws; 
        they are dearly the fundamental organs for preventing the abuse 
        of power and protecting human rights. To fulfill this function, 
        they must be independent and impartial.\3\
---------------------------------------------------------------------------
    \3\ lnter-American Commission on Human Rights, Report on the 
Situation of Human Rights In Venezuela, December 29, 2003, paras. 150-
1.

    It is important to note that the definition of democracy found in 
the Inter-American Charter and in the findings of the Inter-American 
Commission was informed in large part by recent history. During the 
1990s, several countries in the region saw democratically-elected 
presidents pursue policies that undermined the separation of powers and 
rule of law, and thereby degraded their own democracies. In Argentina, 
President Carlos Menem pushed a court-backing law through congress in 
1990, expanding the Supreme Court from five to nine members, and 
managed to get the new openings filled by his allies. The move assured 
him an ``automatic majority''--as it came to be known in Argentina--
that ruled regularly in his favor, often using highly dubious legal 
reasoning.
    In Peru, President Alberto Fujimori undercut the independence of 
the country's judges through mass firings and the denial of tenure, as 
well as the passage of laws that circumvented constitutional provisions 
aimed at guaranteeing judicial autonomy and restricting executive 
power. Fujimori justified these policies as efforts to combat 
corruption and inefficiency. But what he succeeded in doing--to an even 
greater extent than Menem--was to ensure his own influence over the 
courts. The resulting climate of lawlessness in both countries 
facilitated the forms of corruption for which both former presidents 
face criminal charges today.
    Venezuela is currently pursuing both a court-packing scheme, 
similar to that of Menem, and an assault on judicial independence, 
similar in spirit (if not in scope) to that of Fujimori. As the 
experiences of Argentina and Peru demonstrate, these efforts do not 
bode well for Venezuela's democracy.
International Human Rights Treaties
    In addition to its commitment to democracy under the Inter-American 
Charter, Venezuela is party to human rights treaties--including the 
International Covenant on Civil and Political Rights and the American 
Convention on Human Rights--that require it to safeguard the 
independence of its judiciary.\4\ What that obligation entails is made 
dear by a series of ``basic principles'' on the independence of the 
judiciary endorsed by the United Nations General Assembly.\5\ These 
principles indude:
---------------------------------------------------------------------------
    \4\ The American Convention on Human Rights (provides that: ``Every 
person has the right to a hearing, with due guarantees and within a 
reasonable time, by a competent, independent, and impartial tribunal, 
previously established by law, In the substantiation of any accusation 
of a criminal nature made against him or for the determination of his 
rights and obligations of (. . .) any other nature.'' (Emphasis added.) 
The International Covenant on Civil and Political Rights (art. 14, 
para. 1) also indicates the importance of the independence of the 
judiciary by establishing that ``All persons shall be equal before the 
courts and tribunals. In the determination of any criminal charge 
against him, or of his rights and obligations in a suit at law, 
everyone shall be entitled to a fair and public hearing by a competent, 
independent and impartial tribunal established by law. . . . (Emphasis 
added.)
    \5\ Basic Principles on the Independence of the Judiciary, endorsed 
by United Nations General Assembly resolutions 40/32 of 29 November 
1985 and 40/146 of 13 December 1985.

   Any method of judicial selection shall safeguard against 
        judicial appointments for improper motives.\6\
---------------------------------------------------------------------------
    \6\ Ibid., art. 10.

   The term of office of judges, their independence, security, 
        adequate remuneration, conditions of service, pensions and the 
        age of retirement shall be adequately secured by law.\7\
---------------------------------------------------------------------------
    \7\ Ibid., art. 11.

   Judges, whether appointed or elected, shall have guaranteed 
        tenure until a mandatory retirement age or the condusion of 
        their term of office, where such exists.\8\
---------------------------------------------------------------------------
    \8\ Ibid., art. 12.

   A charge or complaint made against a judge in his/her 
        judicial and professional capacity shall be processed 
        expeditiously and fairly under an appropriate procedure. The 
        judge shall have the right to a fair hearing. . . .\9\
---------------------------------------------------------------------------
    \9\ Ibid., art. 17.

   Judges shall be subject to suspension or removal only for 
        reasons of incapacity or behaviour that renders them unfit to 
        discharge their duties.\10\
---------------------------------------------------------------------------
    \10\ Ibid., art. 18.

   All disciplinary, suspension or removal proceedings shall be 
        determined in accordance with established standards of judicial 
        conduct.\11\
---------------------------------------------------------------------------
    \11\ Ibid., art. 19.

    As this report shows, Venezuela is currently in contravention of 
all of these principles. In doing so, it undermines its rule of law and 
severely degrades its democracy.

                            III. BACKGROUND

The Judiciary's Disreputable Past
    When President Chavez became president in 1999, he inherited a 
judiciary that had been plagued for years by influence-peddling, 
political interference, and, above all, corruption. In interviews with 
Human Rights Watch, lawyers from across the political spectrum 
described a system in which justice had often been for sale to the 
highest bidder. Attorney General Isaias Rodriguez recalled how the 
country's top administrative court in the past actually established set 
fees for resolving different kinds of cases.\12\
---------------------------------------------------------------------------
    \12\ Human Rights Watch interview with Attorney General Isaias 
Rodriguez, Caracas, May 14, 2004.
---------------------------------------------------------------------------
    A 1996 report on the Venezuelan justice system by the Lawyer's 
Committee for Human Rights painted a grim portrait of the judiciary:

          Rather than serving the constitutional role of defender of 
        the rule of law and protector of the human rights of Venezuelan 
        citizens against the government, the courts had often become 
        highly politicized adjuncts of the parties. They were 
        manipulated by groups of lawyers, judges, political and 
        business actors for private economic gain. And court procedures 
        had become so slow, cumbersome and unreliable that disputants 
        avoided them at all costs.\13\
---------------------------------------------------------------------------
    \13\ ``Halfway to Reform: The Wodd Bank and the Venezuelan Justice 
System,'' A Joint Report by The Lawyers Committee for Human Rights and 
The Venezuelan Program for Human Rights Education and Action, 1996, 
available at http://www.humanrightsfirst.org/pubs/descriptions/
halfway.htm.

    In terms of public credibility, the system was bankrupt. A 1998 
survey by the United Nations Development Program found that only 0.8 
percent of the population had confidence in the judiciary.\14\ That 
distrust translated into public outrage, and in the presidential 
election of that year, candidates across the political spectrum--
including Hugo Chavez Frias--promised to clean up the system.
---------------------------------------------------------------------------
    \14\ United Nations Development Program, Justicia y gobemabilidad. 
Venezuela: una reforma judicial en marcha. Caracas: Editorial Nueva 
Sociedad, 1998, p. 143. Cited in Tribunal Supremo de Justicia, 
Direccion Ejecutiva de la Magistratura, Unidad Coordinadora del 
Proyecto de Modernizacion del Poder Judicial, ``Proyecto pars la Mejora 
de la Administracion de Justicia en el Contexto de la Resolucion de 
Conflictos en Venezueia,'' p.8.
---------------------------------------------------------------------------
Declaring a Judicial Emergency
    Once in office, President Chavez launched an ambitious effort to 
reform the Venezuelan state that included holding a referendum to 
convene a National Constituent Assembly, which then drafted a new 
constitution that went into effect in December 1999. Due to the 
overwhelming public consensus that judicial reform was needed, the 
Chavez administration initially found support for its efforts in this 
area even among its political adversaries.
    One of the first acts of the National Constituent Assembly was to 
declare that the judiciary was in a state of emergency. It suspended 
the tenure of judges and created an emergency commission which it 
empowered to suspend judges who faced seven or more complaints or any 
type of criminal investigation, or who showed signs of wealth 
incommensurate with their salaried income. In the following months, the 
emergency commission removed hundreds of judges from their posts.\15\
---------------------------------------------------------------------------
    \15\ Tribunal Supremo de Justicia, Direccion Ejecutiva de la 
Magistratura, Unidad Coordinadora del Proyecto de Modernizacion del 
Poder Judicial, ``Proyecto pars la Mejora de la Administracion de 
Justicia en el Contexto de Ia Resolucion de Conflictos en Venezuela,'' 
p. 23.
---------------------------------------------------------------------------
Political Polarization under Chavez
    The consensus around judicial reforms has largely dissolved as the 
country has grown increasingly polarized in response to President 
Chavez's policies and style of governance. Over the past three years 
the mounting political tensions have erupted into violence on several 
occasions and there have been three concerted efforts by sectors of the 
opposition to remove President Chavez from office: an aborted coup 
d'etat in April 2002, a national strike that lasted from December 2002 
through February 2003 (and had an enormously negative impact on the 
country's economy), and a petition drive held in December 2003 to 
authorize a referendum.
    The polarization, which pervades Venezuelan society, has found its 
way into the Supreme Court as well. All twenty sitting justices were 
selected by the National Constituent Assembly in March 2000 through a 
2/3 majority vote, which would suggest they had support from people 
across the political spectrum. Today, however, it is common wisdom 
within the legal community that the Court is deeply divided between 
opponents and allies of President Chavez. It is an even, ten-ten split, 
with each camp controlling some of the Court's six chambers. The 
opposition camp is said to have a majority of seats in the electoral 
chamber. The pro-Chavez camp has a majority in the constitutional 
chamber, as well as on the six-member Judicial Commission that handles 
many of the Court's administrative affairs. Supreme Court President 
Ivan Rincon Urdaneta, who is a member of both the constitutional 
chamber and the Judicial Commission, is viewed as an ally of President 
Chavez.

                         IV. DISPOSABLE JUDGES

Provisional Judgeships
    Venezuela denies its judges one of the most basic safeguards of 
judicial independence: security of tenure. While this problem existed 
long before President Chavez came to office, it has become particularly 
acute as the country has become politically polarized over the last few 
years. The vast majority of the country's judges hold provisional or 
temporary appointments. The tenuousness of their postings makes them 
more vulnerable to external pressures aimed at influencing their 
application of the law.
    The Venezuelan constitution safeguards judicial independence by 
requiring that judges be selected through public competitions and 
removed only through legally sanctioned procedures.\16\ The 
constitution requires that these procedures provide the judges with due 
process (including the right to be heard).\17\ The laws regulating the 
procedures for removal require that it be motivated by misconduct on 
the part of the judge.\18\
---------------------------------------------------------------------------
    \16\ Art. 255, Constitution of the Bolivanan Republic of Venezuela. 
``Appointment to a judicial position and the promotion of judges shall 
be carried out by means of public competitions, to ensure the 
capability and excellence of the participants and those selected by the 
juries of the judicial circuits, in such manner and on such terms as 
may be established by law. The appointment and swearing in of judges 
shall be the responsibility of the Supreme Court of Justice. Citizen 
participation in the process of selecting and designating judges shall 
be guaranteed by law. Judges may only be removed or suspended from 
office through the procedures expressly provided for by Iaw.'' 
(Emphasis added.)
    \17\ Art. 49, Constitution of the Bolivarian Republic of Venezuela. 
``Due process will be provided in all judicial and administrative 
proceedings; consequently. . . . 2) Every person has the right to be 
heard in any type of proceeding, with the proper guarantees and within 
a reasonable time determined bylaw, by a competent, independent and 
impartial tribunal established previously. . . .''
    \18\ Art. 3, Ley de Carrera Judicial (1998): ``Judges will have the 
benefit of security of tenure in the fulfillment of their office. 
Consequently, they will only be subject to removal or suspension in the 
exercise of their function in the situations and through the process 
determined by this law.'' Art. 40: ``Without prejudice to the criminal 
and civil penalties that might be applicable, judges will be dismissed 
from their posts, after receiving due process, for the following 
causes: . . .'' (The article then lists types of conduct that provide 
cause for dismissal.)
---------------------------------------------------------------------------
    Yet only 20 percent of the country's 1732 judges currently hold 
permanent appointments and enjoy the rights established in the 
constitution. The remaining 80 percent hold positions as 
``provisional'' judges (52 percent), ``temporary'' judges (26 percent), 
or other non-permanent postings (2 percent).\19\ The provisional judges 
hold their posts until a public competition is held to select the 
judges who will fill them on a permanent basis. Temporary judges are 
appointed to fill temporary openings, such as those created when a 
sitting judge takes a parental or sick leave.
---------------------------------------------------------------------------
    \19\ lnformation provided through e-mail correspondence with 
Executive Director of the Magistracy, Supreme Tribunal of Justice, 
Ricardo Jimenez Dan, May 20, 2004.
---------------------------------------------------------------------------
    The Judicial Commission of the Supreme Court, made up of six 
justices including the Supreme Court president, is in charge of 
appointing and removing these non-tenured judges. The commission 
maintains that it can summarily dismiss temporary judges, without cause 
and without the due process protections afforded permanent judges.\20\ 
Provisional judges, by contrast, are entitled to the same security of 
tenure as permanent judges, at least until the public competition are 
held to fill their posts. Yet, as described below, the Judicial 
Commission has also summarily fired provisional judges.
---------------------------------------------------------------------------
    \20\ The Judicial Commission of the Supreme Court has asserted this 
authority explicitly in written responses to appeals filed by judges it 
has summarily fired. See note 37 below.
---------------------------------------------------------------------------
    International human rights monitors have repeatedly criticized 
Venezuela's reliance on provisional judges. In 2001, the United Nations 
Human Rights Committee expressed its concern that, under the current 
system, Venezuelan judges could be removed for merely fulfilling their 
judicial duties.\21\ In 2003, the Inter-American Commission on Human 
Rights echoed this concern, observing that ``having a high percentage 
of provisional judges has a serious detrimental impact on citizens' 
right to proper justice and on the judges' right to stability in their 
positions as a guarantee of judicial independence and autonomy.'' \22\
---------------------------------------------------------------------------
    \21\ Concluding observations by the Human Rights Committee: 
Venezuela. 26/04/2001. ``An extended reform process threatens the 
independence of the judiciary, given the possibility that judges could 
be removed as a result of the performance of their duties, thus 
infringing art. 2, paragraph 3, and art. 14 of the Covenant.''
    \22\ Inter-American Commission on Human Rights, ``Report on the 
Situation of Human Rights in Venezuela,'' December 29, 2003, paras. 
159-177.
---------------------------------------------------------------------------
    Venezuelan justice officials, judges and jurists of all political 
stripes also acknowledge the problem. In interviews with Human Rights 
Watch, the Supreme Court president, other Supreme Court justices, the 
attorney general, the ombudsman, and current and former judges all 
conceded that the prevalence of provisional and temporary appointments 
undermines judicial independence.
    A major obstacle toward translating this consensus into real change 
has been, ironically, the constitutional requirement that judges be 
selected through public competitions. When the constitution came into 
effect in 1999 there were already a large number of provisional judges 
in the country. Figures from 1997 show only 40 percent of judges 
holding permanent appointments.\23\ The number of provisional judges 
increased considerably after the judicial emergency declared in 1999 
led to large numbers of dismissals. (And it has increased further since 
then as the judiciary has opened new courts in an effort to increase 
access to justice.) Turning this large--and growing--number of 
provisional judgeships into permanent ones requires holding public 
competitions for each one.
---------------------------------------------------------------------------
    \23\ Tribunal Supremo de Justicia, Direccion Ejecutiva de la 
Magistratura, Unidad Coordinadora del Proyecto de Modernizacion del 
Poder Judicial, ``Proyecto pars la Mejora de la Administracion de 
Justicia en el Contexto de la Resolucion de Conflictos en Venezuela,'' 
p. 22.
---------------------------------------------------------------------------
    Toward that end, the judiciary launched a program of public 
competitions for judgeships in November 2000. It was the most ambitious 
program of its sort that Venezuela had seen, and produced over 200 
permanent judges over the next two years.\24\ This addressed only a 
fraction of the provisional judgeships, however, and in order to make a 
real difference, the program should have been expanded and accelerated.
---------------------------------------------------------------------------
    \24\ Ibid, p. 23.
---------------------------------------------------------------------------
    Instead, in March 2003, the program was suspended. Human Rights 
Watch received contradictory explanations for what prompted the 
suspension. Supreme Court President Ivan Rincon Urdaneta said it was 
because the evaluation system had broken down due to a variety of 
factors, including efforts by powerful law firms to control some 
evaluation committees and the decision of numerous evaluators to 
abandon the program.\25\ Others involved in the program dispute this 
account. Rene Molina, a former Inspector General of the Judiciary who 
helped design the competition program, insists that the ``double-
blind'' procedure for selecting evaluators and administering the 
competitions made it virtually impossible for special interests to take 
over the committees.\26\ (Molina further recalled receiving pressure 
from government officials to rig the competitions in favor of specific 
candidates.) The Network of Watchers (Red de Veedores), a 
nongovernmental organization that monitored the program, did report 
instances of possible collusion between participants and jurors and 
various administrative irregularities, but nothing that would justify 
suspending the program.\27\
---------------------------------------------------------------------------
    \25\ Human Rights Watch Interview with Supreme Court President Ivan 
Rincon Urdaneta, Caracas, May 13, 2004.
    \26\ Human Rights Watch interview with Rene Molina, Caracas, May 
14, 2004.
    \27\ Red de Veedores, ``Poder Judicial y Sistema de Justicia en 
Venezuela 2002-3.'' Available at http//veedores.org/nodos/veejudicial/
informes/observacionpoderjudicial.htm.
---------------------------------------------------------------------------
    Critics of the government have suggested that the real motive for 
suspending the program was the desire of Judicial Commission members to 
continue naming and removing judges at their own discretion. Whatever 
the true motive might be, the outcome has been precisely that the 
Judicial Commission continues to exercise virtually unchecked authority 
to appoint and remove judges.
Judges Summarily Fired
    The danger of denying judges secure tenure was apparent earlier 
this year when three judges were summarily fired after releasing people 
detained during anti-government protests. The fixings occurred on March 
2, when Venezuela was in the midst of the most serious unrest it had 
seen since the attempted coup against the government in April 2002. An 
opposition demonstration on February 27 had turned violent as civilians 
clashed with units of the National Guard in central Caracas. Street 
protests and confrontations continued through the next week, leaving 
thirteen people dead and over 100 wounded. Government forces detained 
hundreds of people and, after violently abusing some of them, sought 
court orders for their prolonged detention pending prosecution.
    Three Caracas judges who received such cases were Miguel Luna, 
Petra Jimenez and Maria Trastoy. Luna received the case of two detained 
opposition legislators on Saturday, February 28; Jimenez received the 
case of a detained man on Monday, March1; and Trastoy received the case 
of six other detainees at the end of that same day.
    All three judges ruled that the public prosecutors had not 
presented sufficient evidence to warrant ongoing detention of the 
suspects and ordered their immediate and unconditional release.\28\ 
Their rulings would all be upheld subsequently by appellate courts.\29\
---------------------------------------------------------------------------
    \28\ Human Rights Watch telephone interviews with Maria Trastoy and 
Miguel Luna, May 18, 2004.
    \29\ Ibid. Corte de Apelaciones del Circuito Judicial Penal de la 
Circunscripcion Judicial del Area Metropolitana de Caracas Sala Quinta, 
Actuacion No. SA-5-04-1442, Caracas, April 12, 2004 (upholding ruling 
by Petra Jimenez). Corte de Apelaciones del Circuito Judicial Penal de 
la Circunscripcion Judicial del Area Metropolitana de Caracas Sala 
Quinta Accidental, Actuacion No. SA-5-04-1436, Caracas, AprIl 14, 2004 
(upholding ruling by Maria Trastoy).
---------------------------------------------------------------------------
    All three were dismissed from their posts on Tuesday, March 2. They 
received notices from the Supreme Court President Ivan Rincon Urdaneta 
informing them that the Supreme Court's Judicial Commission had decided 
that morning to nullify their appointments ``due to observations that 
were presented before this office.'' \30\ The notices did not reveal 
what the ``observations'' had been, nor why they might have warranted 
their dismissal.
---------------------------------------------------------------------------
    \30\ (``. . . en razon de las observaciones que fueron formuladas 
por ante este Despacho.'') Tribunal Supremo de Justicia, Sala Plena, 
Documents No. TPE-04-0231, Caracas, March 2, 2004 (notification to 
Maria del Carmen Tratoy Hombre); Tribunal Supremo de Justicia, Sala 
Plena, Oficio No. TPE-04-0231, Caracas. March 2, 2004 (notification to 
Petra Margarita Jimenez Ortega).
---------------------------------------------------------------------------
    When asked about the three judges, Rincon told Human Rights Watch 
that they had been temporary judges, who had been in their posts for a 
short period, and were not entitled to the administrative procedures 
afforded permanent and provisional judges. He insisted, however, that 
this did not mean that they had been denied their due process rights, 
as they were entitled to challenge the decision through an ``appeal for 
reconsideration'' (recurso de reconsideracion) to the Commission. Only 
one of the judges had chosen to do so, he said, and that one had been 
reinstated. The other two had chosen instead to take their claims to 
the press. He said they were working with an opposition political party 
and were ``just doing politics.'' \31\
---------------------------------------------------------------------------
    \31\ Rights Watch interview with Supreme Court President Ivan 
Rincon Urdaneta, Caracas, May 13, 2004.
---------------------------------------------------------------------------
    Rincon's account was inaccurate on several levels. None of the 
judges had temporary appointments. Two were provisional judges and 
therefore, by his own admission, entitled to the normal disciplinary 
procedure.\32\ The third judge, Petra Jimenez, who had an appointment 
as a ``special substitute'' (suplente especial), had been serving as a 
judge continuously for almost three years.
---------------------------------------------------------------------------
    \32\ Tribunal Suprenio de Justicia, Direccion Ejecutiva de la 
Magistratura, ``Designacion del Martes, 02 de Marzo de 2004.'' 
Available at http//www.tsj.gov.ve/designaciones/
designacion.asp?fecha_id=93.
---------------------------------------------------------------------------
    All three judges did in fact challenge their dismissals through 
``appeals for reconsideration'' to the Judicial Commission. One of 
them, Luna, was indeed reinstated, (though he has since been summarily 
fired once again.) The other two, Trastoy and Jimenez, report receiving 
no response to their appeals.\33\
---------------------------------------------------------------------------
    \33\ Human Rights Watch telephone interview with Maria Trastoy, May 
18, 2004.
---------------------------------------------------------------------------
    The recourse provided by the appeal process does not change the 
fact that these judges were fired without a hearing. They may be able 
to present a defense, ex post facto, through the appeals process. 
However, this right to appeal is largely meaningless so long as they 
are not informed of the reasons for their dismissals (since it requires 
them to guess the charges they must defend themselves against)--and so 
long as the commission maintains that its decision is entirely 
discretionary.
    Human Rights Watch obtained a copy of a ruling issued by the 
Judicial Commission in response to an ``appeal for reconsideration'' 
submitted by another judge who had been summarily fired under 
questionable circumstances. Mercedes Chocron was removed from her post 
as a temporary judge in January 2003 after she attempted to carry a 
judicial inspection of a military base where a general was being held 
on charges of alleged crimes committed in the context of anti-
government activity. (The purpose of the inspection was to ensure that 
the government was complying with precautionary measures ordered by the 
Inter-American Commission on Human Rights.) The Judicial Commission's 
ruling did not address the reasons for Chocron's dismissal but merely 
provided a legal basis for its claim to complete discretion in removing 
temporary judges, arguing that this faculty has ``no substantive limit 
whatsoever'' and that its reasons ``cannot be questioned or subject to 
review.'' \34\
---------------------------------------------------------------------------
    \34\ Comision Judicial, El Tribunal Supremo de Justicia, Magistrado 
Ponente: Luis Martinez Hernandez, Exp. No. CJ-2003-0015, 16 de junio de 
2003): ``Given that the petitioner does not enjoy security of tenure 
[estabilidad] in her post, it Is evident that the [Judiclal Commission] 
. . . can freely revoke [her] appointment, which entails the exercise 
of a broad and discretional faculty for which there is no substantive 
limit whatsoever, since she is not protected by the limits of security 
of tenure of a judicial officer. From this perspective the revocation 
of the appointment of the petitioner established by the Judicial 
Commission cannot be considered a disciplinary act, that is, it does 
not consist of the application of a penalty based on an offense, but 
rather it consists of an action based on discretionary concerns; 
concerns which, consequently, cannot be questioned or subjected to 
review.'' (Emphasis added.)
---------------------------------------------------------------------------
Second Highest Court Shut Down
    The problem of due process for dismissed judges is not limited to 
those who are summarily fired by the Judicial Commission. In one case 
from 2003, a court was effectively shut down after its judges were 
dismissed and the Supreme Court neglected to review their appeals.
    Under existing procedures, permanent and provisional judges may be 
dismissed by an administrative body within the judicial branch, known 
as the Commission of Functioning and Restructuring of the Justice 
System, based on charges brought by the Inspector General of the 
Judiciary. The judges have an opportunity to defend their record before 
the commission. They are allowed five days to prepare their written 
defense, and the commission ten days to make its determination.\35\ 
(The commission sometimes grants the judges more than their allotted 
time, and itself often takes more than its allotted time.) The judges 
may appeal the commission's decision to the Supreme Court, but in 
contrast with the hasty dismissal proceedings, the appeal process can 
drag out indefinitely, leaving the dismissed judges in limbo and the 
validity of their dismissals in doubt.\36\ The resulting uncertainty is 
especially problematic when it involves judges who have handled 
controversial cases.
---------------------------------------------------------------------------
    \35\ Human Rights Watch interview with member of Commission of 
Functioning and Restructuring of the Justice System, Laurence Quijada, 
Caracas, May 13, 2004.
    \36\ One provisional judge, Luis Enrique Ortega Ruiz, filed an 
appeal in September 2002 and has yet to receive a response over a year 
and a half later, Another provisional judge, Maria Cristina Reveron, 
who filed an appeal in April 2002, has yet to receive a response over 
two years later.
---------------------------------------------------------------------------
    The most notorious case of this sort is that of three judges who 
were dismissed from the First Administrative Court (Corte Primera de lo 
Contencioso Administrativo, CPCA) in October 2003. The CPCA is the 
second highest court in Venezuela and has national jurisdiction over 
cases involving challenges to administrative actions by the government 
(with the exception of those taken by cabinet-level officials, which 
are reviewed directly by the Supreme Court). In the year prior to their 
dismissal, the CPCA judges had granted numerous appeals challenging 
policies and programs of the Chavez government. In several cases the 
court ruled on behalf of municipal governments (run by opposition 
mayors) who challenged military interference with their own police 
forces. In another notable case, in August 2003, it ruled that hundreds 
of Cuban doctors sent by the Cuban government to work as volunteers in 
poor communities could not practice medicine in Venezuela without being 
certified by the Venezuelan medical association.\37\
---------------------------------------------------------------------------
    \37\ ``Corte Venezuela ordena dejar de ejercer medicos Cuba en 
Caracas,'' Reuters, August 21, 2003.
---------------------------------------------------------------------------
    President Chavez publidy denounced the court and its judges on 
several occasions. After the August 2003 decision on the Cuban doctors, 
for instance, he referred to them as ``judges who shouldn't be 
judges,'' and said:

          I'm not telling them what I'd like to because we're in front 
        of the country. But the people are saying it. Go take you're 
        decision where you want, you can carry it out in your home if 
        you want . . . Do you think the Venezuelan people are going to 
        pay attention to an unconstitutional decision, well they're not 
        going to pay attention to it.\38\
---------------------------------------------------------------------------
    \38\ Unofficial transcript of radio and televisIon program, ``Alo 
Presidente,'' No. 161, Aug. 24, 2003, pp. 22-24.

    In September, in a highly unusual move, members of the Directorate 
of Services of Intelligence and Prevention (DISIP) arrested the driver 
of one of the judges as he was delivering a court document to someone 
outside the courthouse. The driver's action violated regulations on the 
handling of court documents, though the Supreme Court would rule (after 
the driver had spent 35 days in jail) that he had not committed a crime 
and order his release.\39\ Two days after the arrest, President Chavez 
spoke out against the court, reportedly calling its chief judge a 
``criminal.'' \40\ Three days later, a public prosecutor accompanied by 
police, reportedly armed with high-power weapons, conducted a surprise 
search of the CPCA courthouse.
---------------------------------------------------------------------------
    \39\ Human Rights Watch interview with Supreme Court Justice Blanca 
Rosa Marmol de Leon, Caracas, May 13, 2004.
    \40\ Unofficial transcript of address by President Chavez, 
September 20. 2003.
---------------------------------------------------------------------------
    Two weeks later, the Inspector General of the Judiciary submitted a 
recommendation to the Commission of Functioning and Restructuring of 
the Judicial System that the five CPCA judges be dismissed on the basis 
of an entirely unrelated issue: a determination by the Supreme Court 
the previous May that that the CPCA had committed an ``inexcusable 
error'' in a decision rendered in 2002. After reviewing the charge and 
the judges' defense, the commission ordered the dismissal of four of 
the judges (the fifth had already retired and therefore was not subject 
to sanction).\41\
---------------------------------------------------------------------------
    \41\ Gaceta Ofidal de la Republica Bolivariana de Venezuela, 
Caracas, November 4, 2003, p. 330, 848.
---------------------------------------------------------------------------
    Three of the judges appealed the decision to the Supreme Court, 
filing two appeals the following month. Venezuelan law obligated the 
Supreme Court to respond to each type of appeal within specified 
periods of time. A ``hierarchical appeal'' (recurso jerarquico), which 
they filed on November 13, warranted a ruling within 90 days.\42\ And 
the ``nullification appeal'' (recurso de nulidad) filed on November 27 
warranted a ruling within three days.\43\
---------------------------------------------------------------------------
    \42\ Art. 91, Ley Organica de Procedimientos Administrativos.
    \43\ Art. 10, Codigo de Procedimiento Civil.
---------------------------------------------------------------------------
    Over half a year later, the Supreme Court has failed to rule on 
either of the appeals. When asked why not, Supreme Court President Ivan 
Rincon Urdaneta told Human Rights Watch that it was because these cases 
were ``not a high priority.'' \44\
---------------------------------------------------------------------------
    \44\ Human Rights Watch interview with Supreme Court President Ivan 
Rincon Urdaneta, Caracas, May 13, 2004.
---------------------------------------------------------------------------
    There are several reasons, however, why the Supreme Court should 
consider these appeals to be of highest priority. First is the simple 
matter of the due process rights of the dismissed judges. A second is 
the fact that, lacking a quorum of judges, the country's second highest 
court has ceased to function, leaving a huge backload of unresolved 
cases (by one estimate as many as 2000 cases, all involving challenges 
to administrative actions by the government). While Supreme Court 
President Rincon said the Court intends to fill the vacancies with new 
judges, they have yet to do so after over half a year. Moreover, it is 
unclear what would happen to the new appointees if the dismissed judges 
were to win their appeals.
    A final reason the appeals should be treated as high priority is 
the extremely controversial nature of the case--and specifically the 
perception created by President Chavez's public comments, as well as 
the unusually aggressive police actions against the CPCA, that the 
dismissal reflected the will of the executive rather than the 
application of the law. This perception, which was shared by many of 
the people Human Rights Watch interviewed, has only been reinforced by 
the Supreme Court's failure to review the legality of the dismissals.

                 V. SEPARATION OF POWERS UNDER ASSAULT

    The National Assembly passed a law in May 2004 that severely 
undermines the independence of the country's judicial branch. The new 
Organic Law of the Supreme Court (Ley Organica del Tribunal Supremo de 
Justicia) changes the composition of the country's highest court, as 
well as its relationship to the other branches of government.
    The manner in which the law was passed was highly questionable. The 
Venezuelan constitution seeks to safeguard the autonomy of state 
institutions--including the judiciary--by requiring a 2/3 majority vote 
to approve any modification of the legislation (known as ``organic 
laws'') that govern their structure and operation.\45\ The National 
Assembly appears to have violated this provision with the passage of 
the new law. The governing coalition disregarded the requirement that 
such laws must be passed with a super-majority of 2/3, passing instead 
with a simple majority. Moreover, that majority engaged in irregular 
parliamentary maneuvers, which appear to violate the spirit and perhaps 
even the letter of the constitution, such as making substantive changes 
to the law's text after it had been voted on, and fusing multiple 
articles to avoid a full discussion of each one.
---------------------------------------------------------------------------
    \45\ Art. 203, Constitution of the Bolivarian Republic of 
Venezuela.
---------------------------------------------------------------------------
Power to pack the court
    The new court-packing law increases the Supreme Court from twenty 
to thirty-two justices, adding two justices to each of the court's six 
chambers.\46\ The new justices can be designated with a simple majority 
vote of the National Assembly: a nominee who fails to receive a 2/3 
majority in the first three votes can be designated by a simple 
majority on the fourth vote.\47\ In contrast, the twenty current 
members of the Supreme Court also received at least a 2/3 majority 
confirmation vote.\48\
---------------------------------------------------------------------------
    \46\ Art. 2, Ley Organica del Tribunal Supremo de Justicia.
    \47\ Art. 8, Ley Organica del Tribunal Supremo de Justicia.
    \48\ While there is disagreement among Venezuelan jurists as to 
whether this 2/3 majority was or is actually required by the former or 
current Constitution, most agreed that Supreme Court nominees generally 
did receive such a vote.
---------------------------------------------------------------------------
    Proponents of the law have justified this increase as a measure for 
alleviating the justices' current workload.\49\ This justification is 
dubious, at best. The four justices (as well as one ex-justice) who 
spoke to Human Rights Watch all agreed that only two or three of the 
chambers have any difficulty keeping up with their caseloads (the 
constitutional chamber and the ``political administrative'' 
chamber).\50\ According to Supreme Court President Ivan Rincon 
Urdaneta, the only justification for increasing the number of justices 
in the other chambers is to help them handle administrative tasks. 
However, it is not difficult to imagine other means to alleviate the 
administrative responsibilities of the justices by delegating the work 
to their staff. Nor, for that matter, is it difficult to imagine ways 
to alleviate the caseload of those chambers with more cases, such as 
assigning them more clerks or creating adjunct tribunals to handle 
cases in which the jurisprudence is already clearly established.
---------------------------------------------------------------------------
    \49\ Human Rights Watch telephone interview with National Assembly 
member Calixto Ortega, May 6, 2004. Human Rights Watch interview with 
Supreme Court President Ivan Rincon Urdaneta, Caracas, May 13, 2004.
    \50\ Human Rights Watch interviews with Supreme Court President 
Ivan Rincon Urdaneta, Caracas, May 13, 2004, Juan Rafael Perdomo, 
Caracas, May 13, 2004, Supreme Court Justice Blanca Rosa Marmol, 
Caracas, May 13, 2004, Supreme Court Justice Carlos Martini, Caracas, 
May 14, 2004. Human Rights Watch telephone interview with former 
Supreme Court Justice Carlos Escarra, May 16, 2004.
---------------------------------------------------------------------------
    Whatever the justification, however, the impact of the increase on 
the judiciary's independence is unmistakable. It will allow the 
majority coalition in the National Assembly to radically alter the 
balance of power within the country's highest court, ensuring that each 
of its chambers is controlled by justices sympathetic to its own 
political agenda.
Power to purge the court
    The Venezuelan Constitution seeks to guarantee the independence of 
justices by granting them a single twelve-year term and establishing an 
impeachment process that requires a 2/3 majority vote by the National 
Assembly, after the ``citizen branch'' (which consists of the attorney 
general, the ombudsman, and the comptroller) has determined that the 
justice has committed a ``serious offense'' (falta grave).\51\
---------------------------------------------------------------------------
    \51\ Articles 264-5, Constitution of the Bolivarian Republic of 
Venezuela. Article 265 states: ``Supreme Court Justices will be subject 
to removal by the National Assembly by a super-majority of two-thirds 
of its members, after a hearing is granted the affected party, in cases 
of serious offenses found by the Citizen Branch, in accordance with the 
law.''
---------------------------------------------------------------------------
    The new law eliminates this guarantee. While the impeachment of 
justices still requires a 2/3 majority vote, the law creates two new 
mechanisms for removing justices that do not share this requirement. 
One entails suspending justices pending an impeachment vote, the other 
entails nullifying their appointments.
    The first mechanism is found in a new provision which establishes 
that, when the ``citizen branch'' determines that a justice has 
committed a serious offense, and unanimously recommends the justice's 
dismissal, then the justice will be automatically suspended pending an 
impeachment vote by the National Assembly.\52\ The law requires that 
the president of the assembly call for a hearing and an impeachment 
vote within ten days. However, such deadlines are habitually 
disregarded by the assembly, and there is no effective mechanism for 
enforcing them. Consequently, if the president of the assembly chooses 
not to bring the issue to a vote, the justice could remain suspended 
indefinitely.
---------------------------------------------------------------------------
    \52\ Art. 23, Number 3, Ley Organica del Tribunal Supremo de 
Justicia. ``Supreme Court Justices will be subject to suspension or 
removal from their responsibilities, in cases of serious offenses, by 
the National Assembly, following the petition and determination of 
offenses by the Citizen Branch. In case of removal, the [decision] must 
be approved by a super majority of two thirds (2/3) of the members of 
the National Assembly, following a hearing for the Justice. At the 
moment that the Citizen Branch determines that an offense is serious 
and unanimously seeks removal, the Justice will be suspended from his 
or her post, until the definitive decision of the National Assembly. 
Likewise, [the Justice] will be suspended If the Supreme Court declares 
that there are grounds to prosecute him or her; in which case, this 
measure is different from the suspension sanction established by the 
Organic Law of the Citizen Branch.''
---------------------------------------------------------------------------
    The definition of ``serious offense'' for justices is broad and 
indudes highly subjective categories such as ``threaten or damage 
public ethics or administrative morale'' and ``made decisions that 
threaten or damage the interests of the Nation.'' \53\
---------------------------------------------------------------------------
    \53\ Art. 11, Ley Organica del Poder Ciudadano. ``The following are 
considered a serious offense on the part of Supreme Court Justices: 1. 
When they attempt to harm [atenten], threaten, or damage the public 
ethics and the administrative morale established in the present law. . 
. . 4. When they adopt decisions that attempt to harm [atenten] or 
damage the interests of the Nation.''
---------------------------------------------------------------------------
    The National Assembly has also bestowed upon itself the power to 
nullify justices' appointments by a simple majority vote in one of 
three circumstances: the justice provided false information at the time 
of his or her selection to the court; the justice's ``public attitude . 
. . undermines the majesty or prestige of the Supreme Court'' or of any 
of its members; or the justice ``undermines the functioning'' of the 
judiciary.\54\
---------------------------------------------------------------------------
    \54\ Art. 23, Number 4, Ley Organica del Tribunal Supremo de 
Justicia: The National Assembly, by a simple majority, will be able to 
annul the administrative act by which a Justice is appointed, principal 
or substitute, when this person has supplied false information at the 
time and for the purposes of his or her nomination, which prevented or 
distorted the fulfillment of the requirements established in this law 
and in the Constitution of the Bolivarian Republic of Venezuela; or 
when the public attitude of these, which [sic.] aims to harm [atente 
contra] the majesty or prestige of the Supreme Court, of any one of its 
Chambers, of the Justices of Judicial Branch [sic.]; or when it aims to 
harm [atente contra] the functioning of the Supreme Court, one of its 
Chambers, or the Judicial Branch.'' (Emphasis added.)
---------------------------------------------------------------------------
    This provision is a clear ploy to circumvent the constitutional 
requirement that justices can be removed with a 2/3 majority vote of 
the National Assembly. Calling this action the ``nullification of 
appointment'' cannot disguise the fact that it entails firing the 
justice.
    What makes the provision particularly dangerous is the fact that 
two of the three criteria for ``nullification'' are entirely subjective 
and will, therefore, allow the assembly's majority to persecute 
justices identified with the political opposition. In fact, one member 
of the governing party of President Chavez, Iris Valera, has explicitly 
acknowledged this as the law's intent, saying ``the 10 coup-backing 
justices (magistrados golpistas) who supported the de facto government 
of Pedro Carmona Estanda, should be off the Supreme Court and the new 
law passed in the National Assembly will achieve this goal.'' \55\
---------------------------------------------------------------------------
    \55\ National Assembly member Iris Varela, quoted by government 
news agency, Venpres, May 3, 2004. (``[L]os 10 magistrados golpistas 
que apoyaron al gobierno de facto de Pedro Carmona Estanga, deben 
quedar fuera del Tribunal Supremo de Justicia y la nueva Ley aprobada 
en la Asamblea Nacional, servira para lograr ese proposito.'')
---------------------------------------------------------------------------
Implications for the referendum
    The packing and purging provisions of the new law--which would be 
objectionable under any circumstances--are particularly troubling given 
the current political context.
    The prime target of any packing and purging efforts is likely to be 
the electoral chamber of the Supreme Court that, under the Venezuelan 
constitution, has jurisdiction over all legal disputes surrounding 
electoral activity. The chamber currently contains two members (out of 
three) who are identified with the opposition and voted to order the 
CNE to count the disqualified signatures on the referendum petition. By 
appointing two new justices to the chamber, the governing coalition 
will be able to tip the balance its own way. (The electoral chamber 
handles the fewest cases and, by all accounts has the least need for 
additional justices--which may explain the insistence on expanding the 
number of justices in all the court's chambers.)
    Simultaneously, justices who fall into disfavor with the governing 
coalition could be subject to removal. The attorney general has already 
opened investigations into the electoral chamber's handling of the 
referendum case. It is unclear whether or not the suspension provision 
of the new law would be applicable should the ``citizen branch'' 
determine that the justices had committed a ``serious offense.'' The 
attorney general told Human Rights Watch that he believed that the new 
sanction could not be applied retroactively.\56\ In any case, the fact 
that the justices are under investigation for their rulings on the 
referendum issues sends a clear message that they will face similar 
scrutiny--and possible sanction--for any future decisions on this 
controversial topic.
---------------------------------------------------------------------------
    \56\ Human Rights Watch Interview with Attorney General Isaias 
Rodriguez, Caracas, May 14, 2004.
---------------------------------------------------------------------------
                          VI. RECOMMENDATIONS

To President Hugo Chavez Frias:
    It is critically important that the issues here not be reduced to 
partisan wrangling and that the criticisms offered here not be 
mischaracterized as partisan attack. Human Rights Watch does not take a 
stand on the political conflict currently underway in Venezuela. When 
sectors of the opposition launched a coup d'etat in April 2002, we 
denounced their actions forcefully--just as we denounce any actions 
that jeopardize respect for fundamental human rights anywhere in the 
world, regardless of the political persuasion of their perpetrators.
    Today the gravest threat to human rights in Venezuela is the 
potential political takeover of the Supreme Court made possible by the 
new court-packing law. It is not too late, however, for Venezuela to 
reverse course and salvage the independence and autonomy of its 
judiciary. Toward that end, the president should:

   instruct his supporters within the National Assembly to 
        suspend implementation of the new court-packing law 
        immediately;

   promote legislation that would modify those provisions of 
        the new law that undermine the independence of the judiciary;

   collaborate actively with the secretary general of the OAS, 
        should the organization seek ways to help Venezuela address the 
        crisis facing its judiciary (as described below).
To the Supreme Court:
    The Venezuelan Supreme Court still has an opportunity to fix the 
aspects of the court-packing law that threaten its autonomy. Since the 
law was passed last month, the court has received several appeals that 
challenge the constitutionality of its most harmful provisions. The 
Supreme Court should:

   act quickly to review these appeals, paying particularly 
        close attention to the provisions of the court-packing law that 
        allow for justices to be removed or suspended without the 2/3 
        majority vote required by article 265 of the Constitution.

    The Supreme Court should take steps to strengthen the independence 
of judges. Specifically, it should:

   reactivate the program of public competitions for selecting 
        permanent judges;

   cease from dismissing judges without cause and without due 
        process, regardless of the nature of their appointment;

   make it a priority to provide a prompt and impartial review 
        of the appeals from judges who have been dismissed after 
        handling controversial cases.

To international lending agencies:
    The World Bank and the Inter-American Development Bank can play a 
significant role in strengthening Venezuela's justice system, as is 
clear from their involvement in the country to date. The Inter-American 
Development Bank provided a loan for $75 million in 2001 for projects 
in the Attorney General's Office and Ministry of the Interior and 
Justice aimed at improving the efficiency, professionalism and equity 
of the criminal justice system.
    The World Bank has supported the Venezuelan judiciary in recent 
years with a $30 million loan for a project (authorized in 1993 and 
completed after multiple delays in 2003) that aimed to modernize the 
infrastructure of the judiciary, as well as a $4.7 million loan for a 
project (authorized in 1997 and completed in 2000) that aimed to 
improve the functioning of the Supreme Court. The Venezuelan judiciary 
has since developed a proposal for a third loan from the Bank.
    The most pressing issue facing the Venezuelan justice system now is 
the threats to its independence and autonomy. Until these threats are 
addressed, improvements in other areas may only help a fundamentally 
flawed system function more efficiently.
    Therefore, international lending agencies interested in supporting 
the Venezuelan judiciary should:

   direct aid toward efforts to strengthen the independence of 
        its judges and autonomy of its courts.

   suspend all future assistance for justice sector projects 
        until Venezuela takes concrete steps to address the threats to 
        judicial independence documented in this report.

To the Organization of American States:
    The Inter-American Democratic Charter, adopted by the thirty-four 
foreign ministers of the OAS in 2001, recognizes that ``one of the 
purposes of the OAS is to promote and consolidate representative 
democracy,'' and reasserts the proposition (originally articulated in 
the Declaration of Managua for the Promotion of Democracy and 
Development) that the organization's mission is not limited to the 
defense of democracy wherever its fundamental values and principles 
have collapsed, but also calls for ongoing and creative work to 
consolidate democracy as well as a continuing effort to prevent and 
anticipate the very causes of the problems that affect the democratic 
system of government.\57\
---------------------------------------------------------------------------
    \57\ Preamble, Inter-American Democratic Charter.
---------------------------------------------------------------------------
    Toward that end, article 18 of the Charter establishes that 
``[W]hen situations arise in a member state that may affect the 
development of its democratic political institutional process or the 
legitimate exercise of power,'' the secretary general and the Permanent 
Council of the OAS may take steps to investigate and respond to the 
situation, ``with prior consent of the government concerned.'' \58\
    The current crisis facing the Venezuelan judiciary threatens to 
have a profoundly negative affect on the country's democracy. Unless 
Venezuelan government takes concrete steps immediately to reverse this 
course, the secretary general of the OAS:

   should use his authority under Article 18 of the Charter to 
        engage with the Venezuelan government to address the threats to 
        its judicial independence that affect the country's democratic 
        system of government.

------------
    \58\ Art. 18, Inter-American Democratic Charter. ``When situations 
arise in a member state that may affect the development of its 
democratic political institutional process or the legitimate exercise 
of power, the secretary general or the Permanent Council may, with 
prior consent of the government concerned, arrange for visits or other 
actions in order to analyze the situation. The secretary general will 
submit a report to the Permanent Council, which will undertake a 
collective assessment of the situation and, where necessary, may adopt 
decisions for the preservation of the democratic system and its 
strengthening?
    The Inter-American Charter also authorizes the OAS to act without 
obtaining prior consent of the member state [i]n the event of an 
unconstitutional alteration of the constitutional regime that senously 
impairs the democratic order'' of that state (art. 20). Under such 
circumstances the secretary general or any other member state ``may 
request the immediate convocation of the Permanent Council to undert ke 
a collective assessment of the situation and to take such decisions as 
it deems appropriate.''

    Senator Dodd [presiding]. Thank you very, very much. The 
chairman will be back briefly here. This is not a coup that has 
occurred here.
    Mr. Diaz, thank you.

STATEMENT OF MIGUEL DIAZ, DIRECTOR, AMERICAS PROGRAM (MERCOSUR/
 SOUTH AMERICA), CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

    Mr. Diaz. I would also like to submit for the record my 
written testimony.
    Senator Dodd. Certainly.
    Mr. Diaz. Chairman Coleman and Ranking Member Dodd, I 
commend you for calling this timely hearing on a subject of 
such importance, namely, the state of democracy in Venezuela 
and the threat posed by the government of Hugo Chavez to 
Venezuela, to its neighbors, and to the United States.
    In my view, Venezuela's democracy, never in great shape to 
begin with, finds itself now in intensive care. That is because 
over the past 5-plus year that Hugo Chavez has been in power, 
the government has weakened the foundations of Venezuela's 
democracy by systematically hacking away at the institutional 
checks on Chavez's authority. The nongovernmental institutional 
checks on government authority have also come under fire, in 
many cases literally.
    It is also a government that has never seriously pursued a 
democratic discourse with the opposition, irresponsibly 
painting with one brush stroke most of those who oppose it as 
traitors and worse. In recent months, the Chavez government has 
crossed over the line by selectively arresting opposition 
leaders, torturing some members of the opposition, according to 
human rights organizations, and encouraging, if not directing, 
its squads of Bolivarian Circles to beat up Members of Congress 
and intimidate voters, all with impunity.
    In sum, Chavez is an anachronism, a return to a dark past 
that many thought Latin America had overcome. It is a 
government that lies shamelessly, with the lies getting more 
and more preposterous by the day, including lies about the 
United States and our role in Venezuela. Misery and 
unprecedented strife is what Chavez has brought to Venezuela.
    However, I do recognize that Chavez is the byproduct of 
Venezuela's dysfunctional democratic history and that he has 
succeeded in giving hope to many who have been marginalized 
politically and economically in the past. Nonetheless, in 
practice, he has done little to improve their lives. In fact, 
the rate of poverty growth has accelerated over the 5 years he 
has been in power. Chavez may even be sincere about addressing 
the many injustices present within the country, but to me what 
makes Hugo Chavez a tragic figure is that he had the unique 
opportunity, upon his election, of building a consensus to 
enable Venezuela to start fresh. But he squandered this 
opportunity, instead choosing the politics of resentment and 
deceit that goes by the name of the Bolivarian Revolution.
    We have seen this story before. History has taught us that 
not all who come to power through elections are democrats. How 
to deal with the wolves that hide in the sheep's clothing of 
democracy, I am afraid, is a question that as a matter of 
policy we as a country have not been able to adequately answer.
    The good news is that Venezuelans have before them the 
opportunity to resolve the question of Chavez in a 
constitutional, democratic, and peaceful manner. I believe the 
majority of Venezuelans, on both sides of the political divide, 
want such a resolution. By the millions, Chavez's foes have 
doggedly latched onto the electoral option in pursuit of a 
referendum on the President's tenure, and despite the many 
legal, quasi-legal and outright reprehensible obstacles put in 
their way by the government and its supporters, they have 
finally reached this goal. Based on the polls that I have seen, 
it looks like Chavez's mandate will be revoked on August 15, 
assuming the votes are faithfully tallied.
    It is also a relief to see that Chavez's message of 
resentment, class warfare, and crass populism has not resonated 
with the vast majority of Latin Americans who still put their 
trust in the democratic process. Chavez's Bolivarian model is 
not seen as a worthy imitation by Latin America's mainstream 
political right or political left. Chavez himself is generally 
held in low esteem, regarded as boorish, and at best 
incompetent. However, I would not be so dismissive of him. I 
believe that he poses a grave threat, now more than ever, and 
the community of democracies should take him more seriously 
than it has up to now.
    There are a number of reasons why I believe this to be the 
case. Although Chavez's message of resentment does not appeal 
to Latin America's democratic majority, his message does 
resonate with many of the Latin Americans who are losing faith 
in democracy's ability to deliver a better quality of life. 
According to polls, the percentage of those who are often 
called anti-systemic has been rising with the contraction of 
opportunities for economic advancement and the deterioration of 
democratic governance.
    What makes Chavez frightfully dangerous is that, thanks to 
oil, he has a financial wherewithal to support many of the 
anti-systemic forces that are festering throughout the region. 
Chavez has been reportedly sponsoring forces of questionable 
democratic credentials in Bolivia and Ecuador, two countries 
that are faltering in their commitment to democracy, where the 
balance could be tipped by this kind of intervention. Chavez is 
the primary financial support for Castro's government to the 
tune of about 78,000 barrels of oil a day, undercutting the 
Bush administration's attempt to isolate and ultimately 
dislodge that evil regime.
    With regards to the United States, Chavez has thus far been 
more of a nuisance and less of a real and imminent threat. Now, 
this could all change if Chavez decides to disrupt the 
legitimacy of the referendum. Disturbingly, there are 
indications that that is exactly what he has up his sleeve. If 
Chavez does not allow for an on-time, fair, and transparent 
execution of the referendum, the consequences for the U.S. 
could be serious. For starters, there is the risk that it could 
trigger an outburst of violence--some even fear a civil war--
that could potentially drag the U.S. in. The humanitarian and 
economic repercussions that such an eventuality could occasion 
in terms of refugees flocking to our shores and disruptions of 
U.S. business interests are substantial. Moreover, if Chavez is 
able to get away with cheating his way into staying in power, 
it may encourage others in the region to follow in his 
footsteps.
    Do I have 2 minutes?
    Senator Dodd. You do.
    Mr. Diaz. Thank you.
    In closing, let me offer some thoughts on what the U.S. 
Government and the U.S. Congress, in particular, could do to 
avert such an eventuality. As I see it, the basic question that 
the U.S. Congress has to answer is whether it is prepared to 
make an investment now to ensure that the upcoming referendum 
process is transparent and credible to both sides. If the U.S. 
Government is not prepared to make this investment, it risks 
having to contend with the previously described consequences of 
what could result without such engagement.
    Although ultimately, the well-being of Venezuela's 
democracy rests with Venezuelans themselves, the international 
community can make an important contribution in assuring that 
the referendum is conducted in a proper fashion. In preparation 
for this defining exercise, I would argue that the level of 
international engagement in Venezuela must be ratcheted up 
substantially and this must begin now, as the National 
Electoral Council is already taking steps that put in doubt its 
capacity and commitment to do a fair accounting of the votes.
    It is also important to put the electoral authorities on 
notice that the eyes of the world are upon them and that they 
will be accountable to the international community for any 
attempt to alter the vote, no matter for which side. The right 
to vote is a human right and those who violate that sacrosanct 
privilege are human right violators. The moral burden to live 
up to the high calling of assuring a free and fair vote should 
be even greater considering the likelihood that any perception 
of wrongdoing will result in bloodshed. What is important is 
not that elections take place, but assuring that the 
environment in which they take place is unfettered. After all, 
Cuba has elections too, but we know they do not make Cuba a 
democracy.
    In engaging itself in the issue, the modus operandi of the 
United States at all times should be to work in tandem with the 
international community. It can do so through the Group of 
Friends, through the OAS, and other multilateral mechanisms 
available.
    Last and most importantly, the United States has to do 
more, much more, to assure that the circumstances that led to 
the rise to power of someone like Hugo Chavez are addressed, 
not just in Venezuela, but throughout the region. Throughout 
Latin America, not enough jobs are being created to put food on 
the table for too many families. Personal insecurity is 
rampant, and the political machinery in many countries is 
dysfunctional and rife with corruption. I cannot blame the many 
who see Chavez as a savior. They are desperate and deserve 
better than the snake oil than Chavez has provided them. 
Washington must be more a part of the solution to the troubles 
that afflict the region. Democratic institutions need to be 
fortified, and in some cases rebuilt entirely. New options for 
economic growth need to be explored, and more attention has to 
be given to the staggering income inequality that plagues the 
entire region. It will not be cheap and it may entail crossing 
some interests within our own borders, but in the long term it 
will be in the interest of both the United States and Latin 
America.
    Thank you for your attention.
    [The prepared statement of Mr. Diaz follows:]

                   Prepared Statement of Miguel Diaz

   THE THREAT TO DEMOCRACY IN VENEZUELA AND ITS IMPLICATIONS FOR THE 
                      REGION AND THE UNITED STATES

    Chairman Coleman and ranking member Senator Dodd, I commend you for 
calling this timely hearing on a subject of such importance, namely, 
the state of democracy in Venezuela and the threat posed by the 
government of Hugo Chavez to Venezuela, to its neighbors, and to the 
United States. I am grateful for the opportunity to contribute to these 
deliberations. Let me underscore that my comments represent my views 
only and not those of the Center for Strategic International Studies, 
the organization I work for as Director of the South America Project.
    In my view, Venezuela's democracy--never in great shape to begin 
with--finds itself now in intensive care. That is because over the past 
five-plus years that Hugo Chavez has been in power, the government has 
weakened the foundations of Venezuela's democracy by systematically 
hacking away at the institutional checks on Chavez's authority. Next on 
the block is the judiciary, which he is about to hijack by stacking the 
Supreme Court with 12 additional pro-Chavez judges. The non-
governmental institutional checks on governmental authority have also 
come under fire, in many cases literally. The latter include the labor 
unions, the press, and even the church.
    It is also a government that has never seriously pursued a 
democratic discourse with the opposition, irresponsibly painting with 
one brush stroke most of those who oppose it as traitors and even 
worse. In recent months, the Chavez government has crossed over the 
line by selectively arresting opposition leaders, torturing some 
members of the opposition (according to human rights organizations) and 
encouraging, if not directing, its squads of Bolivarian Circles to beat 
up members of Congress and intimidate voters--all with impunity. This 
is a president who comes from the same mould as the likes of Zimbabwe's 
Robert Mugabe, whom Chavez described as a ``warrior for freedom'' at a 
recent conference of developing world leaders in Caracas.
    In sum, Chavez is an anachronism, a return to a dark past that many 
thought Latin America had overcome. Let us not forget that Chavez 
initially entered the political scene as the leader of a military coup 
against a democratically elected government. It is a government that 
lies shamelessly, with the lies getting more and more preposterous by 
the day, including lies about the United States and our role in 
Venezuela. Misery and unprecedented strife is what he has brought to 
Venezuela.
    However, I do recognize that Chavez is the byproduct of Venezuela's 
dysfunctional democratic history and that he has succeeded in giving 
hope to many who have been marginalized politically and economically in 
the past. Nonetheless, in practice he has done little to improve their 
lots. In fact, the rate of poverty growth has accelerated over the five 
years he has been in power. According to the U.S. Treasury Department, 
extreme poverty has risen from 21% in 1998 to 33% in 2002. In the same 
period, per capita income has dropped from US$3,800 in 1998 to US$2,800 
in 2003. Chavez may even be sincere about addressing the many 
injustices present within the country, but to me, what makes Hugo 
Chavez a tragic figure is that he had the unique opportunity, upon his 
election, of building a consensus to enable Venezuela to start fresh. 
But he squandered this opportunity, instead, choosing the politics of 
resentment and deceit that goes by the name of the Bolivarian 
Revolution. We have seen this story before. History has taught us that 
not all who come to power through elections are democrats. How to deal 
with the wolves that hide in the sheep's clothing of democracy, I am 
afraid, is a question that as a matter of policy we, as a country, have 
not been able to adequately answer.
    The good news is that Venezuelans have before them the opportunity 
to resolve the question of Chavez in a constitutional, democratic, and 
peaceful manner. I believe the majority of Venezuelans, on both sides 
of the political divide, want such a resolution. By the millions, 
Chavez's foes have doggedly latched onto the electoral option in 
pursuit of a referendum on the president's tenure, and despite the many 
legal, quasi-legal, and outright reprehensible obstacles put in their 
way by the government and its supporters, they have finally reached 
this goal. The referendum has been scheduled for August 15. Based on 
the polls I have seen, it seems they have a good chance to revoke his 
mandate, assuming they are faithfully tallied.
    Moreover, it is a real credit to the opposition that, by-and-large, 
it has purged from its ranks those few who would have preferred to 
resolve this crisis using unconstitutional means. In getting to this 
point, credit also should be given to the OAS and the Carter Center for 
their hard work and persistence in sticking to their commitment to 
monitor the referendum petition process. Without their contribution, I 
am afraid the Chavez government would have truncated the process or 
stolen it outright.
    It is also a relief to see that Chavez's message of resentment, 
class warfare, and crass populism has not resonated with the vast 
majority of Latin Americans who still put their trust in the democratic 
process. Chavez's Bolivarian model is not seen as worthy of imitation 
by Latin America's mainstream political right or political left. Chavez 
himself is generally held in low esteem, regarded as boorish, and at 
best incompetent. However, I would not be so dismissive of him. I 
believe that he poses a grave threat--now more than ever--and the 
community of democracies should take him more seriously than it has up 
to now.
    There are a number of reasons why I believe this to be the case. 
Although Chavez's message of resentment does not appeal to Latin 
America's democratic majority, his message does resonate with many of 
the Latin Americans who are losing faith in democracy's ability to 
deliver a better quality of life. According to the poll, the percentage 
of those who are often called ``anti-systemic'' has been rising in step 
with the contraction of opportunities for economic advancement and the 
deterioration of democratic governance. The percentage of the 
disaffected varies from country to country, with their numbers in the 
Andean countries being dangerously high. That explains why, for 
example, Chavez has a substantial following in Bolivia and has 
practically none in Chile, the latter a country that has been 
successful at building consensus and delivering progress and a real 
reduction in poverty.
    What makes Chavez frightfully dangerous is that thanks to oil he 
has the financial wherewithal to support many of the anti-systemic 
forces that are festering throughout the region. Currently, the 
government has approximately US$24 billion in foreign exchange reserves 
available. Chavez has been sponsoring forces of questionable democratic 
credentials in Bolivia and Ecuador--all countries that are faltering in 
their commitment to democracy, where the balance could be tipped by 
this kind of intervention. Chavez is the primary financial support for 
Castro's government to the tune of about 78,000 barrels of oil a day, 
undercutting the Bush administration's attempt to isolate, and 
ultimately, dislodge that evil regime. Chavez, in turn, is getting an 
army of teachers, doctors, and sports trainers, many of whom are feared 
to be collaborating with the state's increasing repression. It should 
be noted that the U.S. has inadvertently bankrolled much of these 
activities by buying 54% of Venezuela's oil exports.
    There is also a significant amount of anecdotal evidence that 
suggests that the Venezuelan government has been, at least, tolerant of 
the FARC and the ELN by allowing the country to be used by these groups 
as a safe haven. I think it is fair to say that Venezuela has not been 
as cooperative as Colombia's other neighbors in helping to corral these 
terrorist groups.
    With regards to the United States, Chavez has thus far been more of 
a nuisance, and less of a real and imminent threat. For a while now, 
Chavez has been looking to provoke Washington by engaging in name-
calling and blaming us for his troubles, and the Bush Administration's 
Latin American team deserves kudos for not taking his bait. By and 
large, his charges have fallen on deaf ears, as he is internationally 
discredited.
    On the more serious charge that he is hosting Middle East-linked 
terrorist organizations, I have yet to see any solid evidence to that 
effect. The U.S. intelligence services hopefully have a better idea 
than I do of whether these allegations are correct. Just because there 
is a substantial Arab population in Venezuela--much like in other South 
American countries--does not validate our worst fears. On a broader 
diplomatic level, Chavez may be dismissive of some of the regional 
initiatives that we have championed, like FTAA, but he is not alone. 
However, the alternatives he has put on the table have no gotten any 
traction whatsoever in the region either. His uncooperative stance in 
the international arena, like the visit to Saddam Hussein that broke 
the international isolation of that brutal regime, was unhelpful, and 
may have been meant to prick at the U.S., but was in keeping with the 
sovereign right of the country to manage its foreign relations as it 
sees fit.
    Now this could all change if Chavez decides to disrupt the 
legitimacy of the referendum. Disturbingly, there are indications that 
this is exactly what he has up his sleeve. If Chavez does not allow for 
an on time, fair and transparent execution of the referendum, the 
consequences for the U.S. could be serious. For starters, there is the 
risk that it could trigger an outburst of violence (some even fear a 
civil war) that could potentially drag the U.S. in. The humanitarian 
and economic repercussions that such an eventuality could occasion in 
terms of refugees flocking to our shores and disruptions of U.S. 
business interests are substantial. Moreover, if Chavez is able to get 
away with cheating his way into staying in power, it may encourage 
others in the region to follow in his footsteps, negating the hard won 
efforts to keep the region's democracies (albeit with small d) afloat.
    Moving forward, let me close by offering some thoughts on what the 
U.S. government, and the U.S. Congress in particular, could do to avert 
such an eventuality. As I see it, the basic question that the U.S. 
Congress has to answer is whether it is prepared to make an investment 
now to ensure that the upcoming referendum process is transparent and 
credible to both sides. If the U.S. government is not prepared to make 
this investment, it risks having to contend with the previously 
described consequences of what could result without such engagement. 
Venezuelans have shown themselves perseverant in safeguarding their 
democratic rights at the cost of many lives over the past few years. I 
hope the international community is equally committed to the defense of 
those hard-won democratic rights that many in this country take for 
granted.
    Although ultimately, the wellbeing of Venezuela's democracy rests 
with Venezuelans themselves, the international community can make an 
important contribution. I would argue that the level of international 
engagement in Venezuela must be ratcheted up substantially, and this 
must begin now, as the National Electoral Council is already taking 
steps that put in doubt its capacity and commitment to do a fair 
accounting of the votes. Its decision, for example, to use an untested 
electronic voting system of a Boca Raton-based company (Smartmatic) 
partly owned by the Venezuelan government is of concern. I am also 
troubled by the government's efforts to circumscribe the role of the 
OAS and the Carter Center, reports of government raids on independent 
media outlets, and the accelerated naturalization of non-nationals on 
the basis of suspect criteria in order to give them voting rights.
    It is also important to put the electoral authorities on notice 
that the eyes of the world are upon them and that they will be 
accountable to the international community for any attempt to alter the 
vote, no matter for which side. The right to vote is a human right, and 
those who violate that sacrosanct privilege are human rights violators. 
The moral burden to live up to the high calling of assuring a free and 
fair vote should be even greater, considering the likelihood that any 
perception of wrongdoing will result in bloodshed. What is important is 
not that elections take place, but assuring that the environment in 
which they take place is unfettered. After all, Cuba has elections too, 
but we know they don't make Cuba a democracy.
    In engaging itself in this issue, the modus operandi of the U.S. at 
all times should be to work in tandem with the international community. 
It can do so through the Group of Friends, through the OAS, and other 
multilateral mechanisms available. For starters, I believe Congress 
should support the administration in a bipartisan fashion in its 
efforts to assure adequate international monitoring of the referendum. 
It is also important that Washington speaks with one voice on the 
matter, otherwise the Venezuelan government will be apt to exploit 
perceived divisions. If the U.S. Congress chooses to directly engage 
itself as an observer, it should do so in concert with other countries. 
I also believe it is important to try to continue to take the high road 
and not succumb to Chavez's bait to try bilateralize the problem.
    Lastly and most importantly, the U.S. has to do more, much more, to 
assure that the circumstances that led to the rise to power of someone 
like Hugo Chavez are addressed, not just in Venezuela, but throughout 
the region. The problem is bigger than Hugo Chavez. Throughout Latin 
America, not enough jobs are being created to put food on the table for 
too many families, personal insecurity is rampant, and the political 
machinery in many countries is dysfunctional and rife with corruption. 
I cannot blame the many who see Chavez as a savior; they are desperate 
and deserve better than the snake oil that Chavez has provided them. 
Washington must be more a part of the solution to the troubles that 
afflict the region. Democratic institutions needed to be fortified, and 
in some case rebuilt entirely, new options for economic growth need to 
be explored, and more attention has to be given to the staggering 
income inequality that plagues the entire region. It won't be cheap and 
it may entail crossing some interests within our own borders, but in 
the long term it will be in the best interest of both the U.S. and 
Latin America. Thank you for your attention and I look forward to 
answering any questions you may have.

    Senator Coleman [presiding]. Thank you, Mr. Diaz.
    Mr. Tissot.

 STATEMENT OF ROGER TISSOT, DIRECTOR OF MARKETS AND COUNTRIES 
                GROUP, LATIN AMERICA, PFC ENERGY

    Mr. Tissot. Mr. Chairman, thank you for your invitation to 
testify before the subcommittee. I am going to put Venezuela 
into the oil context.
    Simply put, Venezuela matters because of its substantial 
oil reserves, its strategic location and its regional economic 
importance.
    First, in terms of reserves, Venezuela is the Saudi Arabia 
of Latin America. Its reserves are approximately 78 billion 
barrels, just below those of Saudi Arabia, Iran, Iraq, Kuwait, 
and the United Arab Emirates. But Venezuela has more oil than 
Russia which positioned itself as a potential replacement for 
the Middle East.
    Before the oil workers' strike of December 2003, Venezuela 
produced around 3 million barrels per day. The state oil 
company, PDVSA, plans to increase production to reach up to 5 
million barrels per day by 2009. Most of Venezuelan output is 
exported to the United States. Venezuela captures approximately 
12 percent of the U.S. market.
    Venezuela's geographic location is of strategic importance. 
It takes around 4 to 5 days travel by oil tanker from Venezuela 
to the Gulf of Mexico, while oil from the Middle East takes 
around 45 days to arrive to the U.S.
    Most of Venezuela's oil is exported to the Gulf of Mexico 
refineries where PDVSA, through its subsidiary Citgo, has 
ownership in various large refineries. These refineries are 
specifically built to treat heavy crude oil from Venezuela. 
Alternative sources of supply are Mexican Maya crude, which 
suffers from capacity limitations, and the Middle East which 
takes longer to bring.
    So is Venezuela a reliable supplier to the U.S.? There are 
three reasons why we believe it is the case.
    First, economy. Venezuela's economy is critically dependent 
on oil export revenues. While the oil sector accounts for only 
22 percent of the economy, over 70 percent of the budget 
revenues come from oil earnings. Given that budget expenditures 
account for 3 percent of GDP, the indirect dependence on oil is 
even greater. The impact of the oil revenues are marked by the 
impact of the strike which basically resulted in a decline of 
the economy of Venezuela by 10 percent.
    Second, the government of President Hugo Chavez is banking 
on high oil prices and sufficient oil revenues to fund hugely 
expanded social programs. His government sees oil income as the 
means toward achieving political objectives. This is also 
evident in its cooperation with OPEC. As a result, without oil 
exports, the Chavez government will not be able to achieve its 
socioeconomic goals.
    Third, the Government of Venezuela for strategic reasons 
would like to be the energy supplier of choice for the Western 
Hemisphere. Through Citgo, it has substantial assets in the 
United States, which are directly dependent on Venezuelan crude 
oil exports. PDVSA also has substantial agreements with 
specific refiners to process Venezuelan crudes exclusively. A 
stoppage in exports will severely damage these assets.
    So now what about the sustainability of Venezuelan oil and 
gas production and exports? The Venezuelan Government has taken 
a keen interest in expanding its oil and gas sector. President 
Chavez has increasingly called upon foreign direct investment 
in the energy sector. Due to the maturity of Venezuela's main 
basins and their declining productivity, PDVSA reportedly plans 
to spend $38 billion in the 2004-2009 period to increase 
production from 3.4 million barrels to 4.9 million barrels per 
day.
    I should point out that the data provided by PDVSA is not 
credible according to many international sources, and it is 
believed that the production of Venezuela is currently around 
2.4 million barrels per day.
    Since we expect OPEC to successfully keep oil prices around 
$35 a barrel this year, and certainly over $25 a barrel in the 
next several years, the Government of Venezuela and PDVSA will 
have sufficient funds to finance most of these projects. 
Currently the PDVSA budget is designed to operate at a $20 a 
barrel oil, thus providing the development plans a sufficient 
cushion. Certainly there are serious concerns that the fiscal 
stance of the government is excessively expansionary and that a 
sharp fall in oil prices could result in cutbacks in spending, 
possibly even by PDVSA.
    The government also recognizes that PDVSA, particularly 
since the strike in 2003 after which 18,000 workers were fired, 
has critical skill deficiencies, which foreign companies can 
help to overcome. Since the strike, PDVSA has struggled to 
regain productivity levels and there are serious concerns in 
the industry whether it will be able to carry out future 
development plans even if there are sufficient funds available.
    Financial diversions to social programs and the critical 
lack of skills could open up substantial opportunities for 
foreign oil companies. These opportunities are in what is 
called marginal field development, the heavy crude oil, and the 
natural gas or LNG projects.
    Oil and gas expansions are complex exercises. The 
uncertainties in geology, markets, and commodity prices can 
inevitably create delays. This is complicated by negotiations 
between governments and international oil companies. Despite 
this, two issues are clear. First, the Government of Venezuela 
is committed to securing foreign direct investment fairly 
rapidly.
    Senator Coleman. Go ahead and sum up.
    Mr. Tissot. Basically the last comment I would like to 
provide is the following. We believe that Venezuela would like 
to continue being the hemisphere's most important hydrocarbon 
supplier and they will, despite signaling problems and 
political misperceptions, help us overcome the uncertainties 
emanating from the Middle East.
    Thank you.
    [The prepared statement of Mr. Tissot follows:]

                   Prepared Statement of Roger Tissot

Comments on the status of the oil industry in Venezuela and its impact 
on the country's international and domestic politics

                     PUTTING VENEZUELA INTO CONTEXT

    Simply put, Venezuela matters because of its substantial oil 
reserves, its strategic location and its regional economic importance.

   First in terms of reserves, Venezuela is the ``Saudi 
        Arabia'' of Latin America. Its reserves are approximately 78 
        billion barrels, just below those of Saudi Arabia, Iran, Iraq, 
        Kuwait and the United Arab Emirates. But Venezuela has more oil 
        than Russia which positioned itself as a potential replacement 
        for Middle East oil.

    Before the oil workers' strike of December 2003, Venezuela produced 
around 3 million barrels per day (mmbd). The state oil company, PDVSA, 
plans to increase production to reach up to 5 mmbd by 2009. Most of 
Venezuelan output is exported to the United States. Venezuela captures 
approximately 12% of the U.S. market.

   Venezuela's geographic location is of strategic importance. 
        It takes only 4 to 5 days travel by oil tanker from Venezuela 
        to the Gulf of Mexico, while oil from the Middle East takes 
        around 45 days to arrive in the U.S..

   Most of Venezuela's oil is exported to the Gulf of Mexico's 
        refineries where PDVSA, through its subsidiary Citgo, has 
        ownership in various large refineries.\1\ These refineries are 
        specifically built for Venezuelan heavy crudes, alternative 
        sources of supply are the Mexican Maya crude, which suffers 
        from capacity limitations, and Middle Eastern crudes which take 
        longer to import. Venezuela also has a 50% equity interest in 
        Hovensa refinery located in St. Croix, U.S. Virgin Islands.\2\
---------------------------------------------------------------------------
    \1\ Lake Charles (Louisiana) and Corpus Christi (Texas), as well as 
the joint Lyondell-Citgo (Houston, Texas).
    \2\ Amerada Hess owns the other 50%
---------------------------------------------------------------------------
             IS VENEZUELA A RELIABLE SUPPLIER TO THE U.S.?

    There are three reasons that Venezuela is a reliable supplier to 
the U.S. and the Atlantic Basin markets. First, Venezuela's economy is 
critically dependent on oil export revenues. While the oil sector 
accounts for only 22% of Venezuela's economy, over 70% of budget 
revenues come from oil earnings. Given that budget expenditures account 
for 30% of GOP, the indirect dependence on oil is even greater. This 
was clearly evident during the January 2003 oil strike--the decline in 
real GOP during 2003 due to an eight-week oil production stoppage was 
nearly 10%.
    Second, the government of President Hugo Chavez is banking on high 
oil prices and sufficient oil revenues to fund hugely expanded social 
programs. His government sees oil income as the means towards achieving 
political objectives. This is also evident in its cooperation with 
OPEC. As a result, without oil exports the Chavez government will not 
be able to achieve its socio-economic goals.
    Third, the government of Venezuela, for strategic reasons would 
like to be the energy supplier of choice to the Western Hemisphere. 
Through Citgo it has substantial assets in the United States, which are 
directly dependent on Venezuela's crude oil exports. PDVSA also has 
substantial agreements with specific refiners to process Venezuelan 
crudes, exclusively. A stoppage in exports will severely damage these 
assets.
  the sustainability of venezuelan oil and gas production and exports
    The Venezuelan government has taken a keen interest in expanding 
its oil and gas sector. President Chavez has increasingly called upon 
foreign direct investment in the energy sector. Due to the maturity of 
Venezuela's principle basins and their declining productivity, PDVSA 
reportedly plans to spend $38 billion in the 2004-2009 timeframe in 
order to increase production from 3.4 mmb/d \3\ to 4.9 mmb/d.\4\ Other 
key objectives of PDVSA's business plans include:
---------------------------------------------------------------------------
    \3\ Note that as mentioned earlier, PDVSA reported production is 
not credible and numerous oil information sources report oil production 
in Venezuela as being around 2.4 MMBOD.
    \4\ PDVSA 2004-2009 Business Plan.

---------------------------------------------------------------------------
   Aligning PDVSA's goals to the national development plan;

   Strengthening exploration and production activities;

   Strengthening OPEC's position in the world oil markets;

   Improving oil recovery rates;

   Improving the value of Venezuelan crude;

   Re-defining the internationalization strategy of PDVSA; and,

   Using oil investments for local and national development.

    Since we expect OPEC to successfully keep oil prices above $35 a 
barrel this year, and certainly over $25 a barrel in the next several 
years, the government of Venezuela and PDVSA will have sufficient funds 
to finance most of these projects. Currently, the PDVSA budget is 
designed to operate at US$20 a barrel oil, thus providing the 
development plans a sufficient cushion. Certainly there are serious 
concerns that the fiscal stance of the government is excessively 
expansionary and that a sharp fall in oil prices could result in cut 
backs in spending, possibly even by PDVSA. But the government has 
maintained relatively good relations with the international oil 
companies and is planning to engage them in part of the oil and gas 
sector expansion plans.
    The government has also recognizes that PDVSA, particularly since 
the strike in 2003 after which 18,000 workers were fired, has critical 
skill deficiencies, which foreign companies can help overcome. Since 
the strike PDVSA has struggled to regain productivity levels and there 
are serious concerns in the industry whether it will be able to carry 
out future development plans even if there are sufficient funds 
available.
    Financial diversions to social programs and the critical lack of 
skills could open up substantial opportunities for the foreign oil 
companies. These opportunities for the private sector will focus on the 
development of the marginal fields, expected to reach 530,000 b/d of 
production in 2005.\5\ Other investment opportunities include the 
development of the extra heavy crude oil from the Orinoco belt, 
expected to produce around 579,000 b/d from four projects currently in 
operation. These projects tend to offer better terms than the more 
conventional oil producing projects and have received investment from 
the largest of the U.S. energy companies.\6\ Production sharing 
agreements are another option for private companies, although four of 
the ten blocks secured under these arrangements have been returned to 
PDVSA because of lack of commercial discoveries.
---------------------------------------------------------------------------
    \5\ PFC internal estimates.
    \6\ ExxonMobil, ChevronTexaco, and ConocoPhillips.
---------------------------------------------------------------------------
    The government is also pushing for the development of the country's 
vast natural gas resources, estimated to be around 148 trillion cubic 
feet (tcf). The government passed a gas law which is considered fairly 
attractive and interesting for foreign companies. The push for gas 
development is based on an energy substitution strategy aimed at 
reducing domestic crude oil consumption in order to increase oil 
exports. Additional gas production will also be used for Liquified 
Natural Gas (LNG) production so as to diversify exports and increase 
external earnings. Venezuela plans to become a major exporter of LNG to 
the United States and hopes this will be another means of supplementing 
its already large oil exports to its North American customer.
    The two main LNG projects are the ``Mariscal Sucre'' and 
``Plataforma Deltana.'' Mariscal Sucre is a US$2.5-3 billion project 
with PDVSA having a 60% equity share. It involves the development of 10 
tcf of proven gas from offshore Venezuela and the construction of a 
liquefaction facility with a capacity of 4.7 mm tons/year.
    The ``Plataforma Deltana'' project includes the exploration and 
development of four offshore blocks awarded to BP, ChevronTexaco (2 
blocks, one in partnership with ConocoPhillips) and Statoil. PDVSA 
carried the initial phase of the project, which included seismic 
studies and the drilling of four exploratory wells. The gas resources 
of Plataforma Deltana would be commercialized through expansions at 
Mariscal Sucre, a Greenfield LNG project dedicated to those reserves, 
or a potential joint development agreement with Trinidad allowing the 
gas to move to the Atlantic LNG facility.
    Oil and gas expansion plans are complex exercises. The 
uncertainties in geology, markets and commodity prices inevitably 
create delays. This is complicated by negotiations between governments 
and international oil companies. Despite this, two issues are quite 
clear. First, the government of Venezuela is committed to securing 
foreign direct investment fairly rapidly. It feels the competition, 
especially in the gas markets, from far flung producers and would like 
to take advantage of the country's comparative advantages, It also is 
motivated by economic interests, which could be easily served by an 
expanding oil and gas sector.
    Second, Venezuela an attractive target for foreign company 
investment because of the limited number of countries which have its 
vast resources and the even fewer number which are open to foreign 
investment. International oil and gas companies will invest in 
Venezuela and help raise its supplies of crude oil and gas. 
Negotiations will be protracted but in the end there is likely to be 
substantial investment by private companies, many of whom are U.S. 
based, in Venezuela. As a result, Venezuela will remain a critical 
supplier to the Western Hemisphere.
    The role of PDVSA and the government of Venezuela will be very 
important. This role will be enhanced if two requirements are met:

   The message coming out of Venezuela regarding sanctity of 
        supply is totally unambiguous. We strongly believe that 
        Venezuela is committed to being a responsible supplier to the 
        full extent of its capabilities. But doubts persist in the 
        international market and these are reinforced with inflammatory 
        remarks from public officials. This should stop.

   The market requires total transparency regarding Venezuela's 
        production output levels. This would also go a long way in 
        allaying uncertainties in the oil markets. Unrealistic 
        estimates are easy to detect because of ``mirror statistics'' 
        and reduce the credibility of the oil producer.

    Venezuelas key role as the hemisphere's critical oil producer is 
not just an issue for the immediate future, it has an important role to 
play over the medium to long term as well. Here again two requirements 
are necessary:

   Venezuela needs to provide more clarity on its fiscal 
        policies. Venezuela's fiscal policies over the last several 
        years have raised some concern in the International financial 
        and investment world. Beyond concerns for macroeconomic 
        stability, the oil and gas industry is concerned that not only 
        will there not be enough money to maintain current capacity, 
        but there will be a problem with expanding capacity to meet the 
        regional demand requirements of the future. Clearly the 
        government has shown a willingness to engage foreign companies 
        to invest in expanding capacity as we noted above. We at PFC 
        Energy have always dismissed talk that the government had a 
        phobia about foreign investment.

   Venezuela needs to provide more flexibility in terms of the 
        investment regime--specifically, the legal framework 
        surrounding the oil sector. We think showing greater 
        flexibility up front will enhance the long-term position of the 
        government and its contribution to the region's energy 
        security.

    Let me reiterate that we believe the Venezuelans want very much to 
play the role of being the hemisphere's most important hydrocarbon 
supplier. And, they will--despite signaling problems and 
misperceptions--help us overcome the uncertainties emanating from the 
Middle East.

    Senator Coleman. Thank you very much, Mr. Tissot.
    Dr. Weisbrot.

    STATEMENT OF DR. MARK WEISBROT, CO-DIRECTOR, CENTER FOR 
                  ECONOMIC AND POLICY RESEARCH

    Dr. Weisbrot. Thank you, Mr. Chairman, Senator Dodd. Thanks 
for the invitation. I would like to enter my written remarks 
into the record.
    Senator Coleman. Without objection.
    Dr. Weisbrot. Thank you.
    First, I want to say there have been a lot of allegations 
raised here, and I am happy to answer a lot of them. I think 
most of them are without substance and can be refuted very 
quickly.
    The Center for Economic and Policy Research is an 
independent, nonpartisan institute. We do not receive any 
funding from governments, political parties, or corporations. 
We are funded primarily by foundations, large and small, as 
well as some individual contributions from U.S. citizens.
    On the subject of this hearing, the state of democracy in 
Venezuela, there is much public confusion, and I am glad that 
Mr. Vivanco has helped set the record straight by stating very 
clearly that Venezuela is a democracy, which you do not hear 
much here. As Jimmy Carter said on a visit there: ``I believe 
that freedom of speech is as alive in Venezuela as it is in any 
other country I've visited.''
    And the same can be said for freedom of the press, 
assembly, association, and other civil liberties. Anyone who 
calls the Venezuelan Government authoritarian is in need of a 
dictionary, or perhaps needs to see the place. I was there 
during the oil strike in December 2002 and witnessed the 
government's response to the destruction of its economy by less 
than 1 percent of the labor force, the management and some of 
the workers in the oil industry. They were striking not for 
better wages or benefits, but to overthrow the government. Even 
in the United States, which has perhaps the strongest tradition 
of protecting civil liberties in the world, a strike of this 
nature would be illegal. In this country, the leaders would be 
subject to court injunctions ordering them back to work and 
jailed if they refused. This did not happen in Venezuela. The 
strike lasted for 64 days and sent the economy into a deep 
recession.
    It is true that there are human rights abuses in Venezuela. 
But these are not different from those in the rest of Latin 
America and I have not heard any reputable human rights 
organization argue that they have worsened under the 5 years of 
Chavez's government. Nor have they argued that the government 
has engaged in any systematic repression of political dissent.
    What then are the major threats to democracy in Venezuela? 
The attention here has focused on the Venezuelan Government. 
But some of these threats are from other places, including 
Washington. Our government has funded and continues to fund 
organizations headed by people who are leaders of the military 
coup of April 2002. These leaders have received and some 
continue to receive funds from the U.S. Congress through the 
National Endowment for Democracy. These are people who signed 
the actual coup decree of April 12, 2002 and this decree 
overthrew the elected President and Vice President, abolished 
the General Assembly, the supreme court, and the constitution, 
and established a dictatorship. And I have the documents right 
here. They were obtained from the Freedom of Information Act, 
including the contract between the NED and these individuals.
    Should these people and their organizations be funded by 
U.S. taxpayers' dollars? Is this the proper function of the 
National Endowment for Democracy? These are questions that I 
think the U.S. Congress should ask. I think that most Americans 
would be against such funding if they were aware of it.
    The NED is also funding a group mentioned here today called 
Sumate that led the signature drive to recall the President of 
Venezuela. We do not allow foreign financing of electoral 
campaigns in the United States. Clearly we should not insist on 
violating the laws of other countries and their sovereignty and 
democracy in ways that we would not permit here.
    Our government also undermines democracy in Venezuela by 
disregarding the rule of law in that country and encouraging 
the opposition to do the same. It must be recalled that the 
Bush administration alone in this hemisphere initially endorsed 
the military coup in April of 2002. There was strong 
circumstantial evidence that our government gave prior approval 
or possibly even more support than this, in addition to the 
documented stepped-up NED funding to opposition groups in the 
months prior to the coup. Senator Dodd asked for an 
investigation, and the State Department's Office of the 
Inspector General found that ``U.S. warnings to the opposition 
of non-recognition of a coup-installed government, economic 
actions, and other concrete punitive actions were few and far 
between.''
    But the administration made no attempt to repair relations 
with the elected government after it was restored. Rather it 
went on to tacitly endorse the oil strike, in spite of the fact 
that it was preparing for a war in the Middle East, likely to 
reduce oil supplies at the time. In December 2002, the White 
House supported the opposition's unconstitutional demand for 
early elections.
    I will not go through the statements that Roger Noriega has 
made recently because that has already been addressed earlier, 
but this is another example of taking sides in disrespect for 
the rule of law and the constitutional process in Venezuela.
    These are very powerful signals to an opposition that 
clearly has some very strong anti-democratic leadership. 
Although the focus here is on the Government of Venezuela as a 
threat to democracy, it is worth recalling that the opposition 
only agreed in May of 2003 to pursue an electoral strategy 
after all extra-legal means of overthrowing the government, 
including a military coup and several oil strikes, had been 
exhausted.
    The most powerful opposition leaders have not expressed any 
regret for these strategies, but on the contrary have continued 
to state openly they will respect the results of the referendum 
process only if they win. By contrast, the government has 
consistently maintained that it will abide by the results and, 
as you know, has done so.
    Other arguments have been put forth to portray the Chavez 
government as anti-democratic, but they are not very 
convincing. Clearly Venezuela is nothing like Cuba, although 
Mr. Chavez does have friendly relations with Fidel Castro. It 
is not clear why this should be a reason for such bad relations 
with the United States. The President of Brazil, Lula da Silva, 
and his party have deeper and longer-standing relations with 
Castro and Cuba than Venezuela. The Bush administration and 
Brazil have agreed to disagree on this issue, and that seems to 
be the end of this dispute.
    Most recently, Venezuela's General Assembly passed a law 
that Mr. Vivanco mentioned allowing the government to add 12 
new judges to the supreme court. This would certainly alter the 
balance of the court, which now has 20 judges, in favor of the 
government. But this is also a supreme court that decided that 
the people who carried out the military coup of 2002 could not 
be prosecuted. In the United States, I am pretty sure that our 
Congress would use its power to impeach a supreme court that 
made such a ruling. And of course, the judiciary has never been 
independent in Venezuela, less so under previous governments 
than the present one. It will not make much progress in that 
direction so long as the country remains deeply polarized.
    This polarization is a very serious problem and----
    Senator Coleman. Dr. Weisbrot, would you summarize your 
testimony, please?
    Dr. Weisbrot. OK. I have only three sentences left.
    Senator Coleman. Thank you.
    Dr. Weisbrot. Chavez is a polarizing figure who has 
contributed to the problem. But Congress should not make it 
worse by allowing our government to take sides. We should 
normalize our relations with Venezuela, which is a democracy 
and has never posed any threat to U.S. security. It has reached 
out several times to our government since the coup, only to be 
rebuffed. The first step would be to stop funding the recall 
effort and people who have participated in a military coup 
against Venezuela's elected government.
    Thank you.
    [The prepared statement of Dr. Weisbrot follows:]

                Prepared Statement of Dr. Mark Weisbrot

    Thank you, Mr. Chairman, and members of the Committee for inviting 
me to present these facts and views. The Center for Economic and Policy 
Research is an independent, non-partisan policy institute. We are 
funded primarily by foundations, large and small, as well as some 
individual contributions from U.S. citizens. We do not receive any 
funding from governments, political parties, or corporations.
    On the subject of this hearing ``The State of Democracy in 
Venezuela,'' there is much public confusion. To set the record 
straight: Venezuela is a democracy, as much as any country in Latin 
America today. As Jimmy Carter said on a visit there: ``I believe that 
freedom of speech is as alive in Venezuela as it is in any other 
country I've visited.''
    The same is true for freedom of the press, assembly, association, 
and other civil liberties. Anyone who calls the Venezuelan government 
``authoritarian'' is in need of a dictionary, or perhaps needs to see 
the place. I was there during the oil strike in December 2002 and 
witnessed the government's response to the destruction of its economy 
by less than one percent of the labor force--the management and some of 
the workers in the oil industry. They were not striking for better 
wages or benefits, but to overthrow the government. Even in the United 
States, which has perhaps the strongest tradition of protecting civil 
liberties in the world, a strike of this nature would be illegal. Here 
the leaders would have been subject to court injunctions ordering them 
back to work, and jailed if they refused. This did not happen in 
Venezuela. The strike lasted for 64 days and sent the economy into a 
deep recession.
    It is true that there are human rights abuses in Venezuela. But 
these are not different from those in the rest of Latin America, and I 
have not heard any reputable human rights organization argue that they 
have worsened under the five years of Chavez' government. Nor have they 
argued that the government has engaged in any systematic repression of 
political dissent.
    What, then, are the major threats to democracy in Venezuela? The 
attention here has focused on the Venezuelan government. It is of 
course true, as Americans have long recognized, that any government can 
become repressive if its citizens are not vigilant. But Venezuelan 
democracy faces other challenges.
    Some are from Washington. Our government has funded, and continues 
to fund, organizations headed by people who were leaders of the 
military coup of April 2002. These leaders have received, and some 
continue to receive, funds from the United States Congress through the 
National Endowment for Democracy. These are people who signed the 
actual coup decree of April 12, 2002, that overthrew the elected 
President and Vice President, and abolished the General Assembly, the 
Supreme Court and the constitution, and established a dictatorship.
    Should these people, and their organizations, be funded by U.S. 
taxpayers' dollars? Is this the proper function of the National 
Endowment for Democracy? These are questions that Congress should ask. 
I think that most Americans would be against such funding if they were 
aware of it.
    The NED is also funding a group--called Sumate--that led the 
signature drive to recall the President of Venezuela. We do not allow 
foreign financing of electoral campaigns in the United States. Clearly 
we should not insist on violating the laws of other countries, and 
their sovereignty and democracy, in ways that we would not permit here.
    Our government also undermines democracy in Venezuela by 
disregarding the rule of law in that country, and encouraging the 
opposition to do the same. It must be recalled that the Bush 
Administration, alone in this hemisphere, initially endorsed the 
military coup in April 2002. There was strong circumstantial evidence 
that our government gave prior approval or possibly even more support 
than this, in addition to the stepped-up NED funding to opposition 
groups in the months prior to the coup. Senator Dodd asked for an 
investigation, and the State Department's Office of the Inspector 
General found that ``U.S. warnings [to the opposition] . . . of non-
recognition of a coup-installed government, economic actions, and other 
concrete punitive actions were few and far between.''
    But the Administration made no attempt to repair relations with the 
elected government after it was restored. Rather it went on to tacitly 
endorse the oil strike--in spite of the fact that it was preparing for 
a war in the Middle East, likely to reduce oil supplies, at the time. 
In December 2002 the White House supported the opposition's 
unconstitutional demand for early elections.
    More recently, the Administration has made a number of statements 
that have encouraged the opposition not to respect constitutional 
processes. Before the results of the signature gathering process were 
decided last month, Roger F. Noriega, Assistant Secretary of State for 
Western Hemisphere Affairs, declared that the ``the requisite number of 
people supported the petition'' and warned of ``dire consequences'' if 
Venezuela's National Electoral Council did not arrive at the same 
conclusion.
    These are very powerful signals to an opposition that clearly has 
some very strong anti-democratic leadership. Although the focus here is 
on the government of Venezuela as a threat to democracy, it is worth 
recalling that the opposition only agreed in May of 2003 to pursue an 
electoral strategy after all extra-legal means of overthrowing the 
government--including a military coup and several oil strikes--had been 
exhausted.
    The most powerful opposition leaders have not expressed any regret 
for these strategies, but on the contrary, have continued to state 
openly that they will only respect the results of the referendum 
process if they win. By contrast, the government has consistently 
maintained that it will abide by the results, and has done so.
    A Los Angeles Times reporter interviewed one of the country's most 
respected pollsters, from the firm DataAnalysis, Jose Antonio Gil. The 
firm's polls are often cited in the U.S. press. According to the L.A. 
Times, he could ``see only one way out of the political crisis 
surrounding President Hugo Chavez. `He has to be killed,' he said, 
using his finger to stab the table in his office . . . `He has to be 
killed.'1A''
    It is hard to imagine an opposition of this type in the United 
States--they would probably be labeled ``terrorist'' here--but these 
are the people with whom our government has aligned itself. It is also 
difficult to conceive of a media like Venezuela's, if you have never 
seen it. Imagine ABC, NBC, CBS, CNN, Fox News and the cable channels, 
USA Today and most major newspapers, as well as most radio--all 
controlled, in terms of their daily content, by the most fiercely 
partisan opponents of the government. They have also abandoned the 
norms of modern journalism, becoming organs of a movement to de-
legitimize the government. Two months ago one of Venezuela's most 
influential newspapers actually used a doctored version of a New York 
Times article to allege that the Chavez government was implicated in 
the Madrid terrorist bombing. (See Appendix 1). But the media has never 
been censored by the Chavez government.
    Other arguments have been put forth to portray the Chavez 
government as anti-democratic, but they are not very convincing. 
Clearly Venezuela is nothing like Cuba, although Mr. Chavez does have 
friendly relations with Fidel Castro. It is not clear why this should 
be a reason for such bad relations with the United States. The 
President of Brazil, Lula da Silva, and his party have deeper and 
longer-standing relations with Castro and Cuba. The Bush Administration 
and Brazil have agreed to disagree on this issue, and that seems to be 
the end of this dispute.
    Most recently, Venezuela's General Assembly passed a law allowing 
the government to add 12 new judges to the Supreme Court, which 
currently has 20 judges. This would certainly alter the balance of the 
court in favor of the government. But this is also a Supreme Court that 
decided that the people who carried out the military coup of 2002 could 
not be prosecuted. In the United States, I am pretty sure that our 
Congress would use its power to impeach a Supreme Court that made such 
a ruling. And of course, the judiciary has never been independent in 
Venezuela--less so under previous governments than presently. It will 
not make much progress in that direction so long as the country remains 
deeply polarized.
    This polarization is a very serious problem, and of course Chavez 
is a polarizing figure who has contributed to the problem. But Congress 
should not make it worse by allowing our government to take sides. We 
should normalize our relations with Venezuela, which is a democracy and 
has never posed any threat to U.S. security; it has reached out several 
times to our government since the coup--only to be rebuffed. The first 
step would be to stop funding the recall effort and people who have 
participated in a military coup against Venezuela's elected government.

                              *    *    *

                               Appendix 1

                  MEDIA FALLS SHORT ON IRAQ, VENEZUELA

                           (By Mark Weisbrot)

    Distributed to newspapers by Knight-Ridder/Tribune Information 
                         Services--June 6, 2004

       http://www.cepr.net/columns/weisbrot/media%20venezuela.htm

    Last week the New York Times published an 1100-word note ``From the 
Editors'' criticizing its own reporting on the build-up to the Iraq war 
and the early stages of the occupation. On Sunday the newspaper's 
Public Editor went further, citing ``flawed journalism'' and stories 
that ``pushed Pentagon assertions so aggressively you could almost 
sense epaulets sprouting on the shoulders of editors.''
    This kind of self-criticism is important, because the media played 
an important role in convincing the American public--and probably the 
Congress as well--that the war was justified. Unfortunately, these 
kinds of mistakes are not limited to the New York Times--or to 
reporting on Iraq.
    Venezuela is a case in point. The Bush administration has been 
pushing for ``regime change'' in Venezuela for years now, painting a 
false and exaggerated picture of the reality there. As in the case of 
Iraq's alleged weapons of mass destruction and links to Al-Qaeda, the 
Administration has gotten a lot of help from the media.
    Reporting on Venezuela relies overwhelmingly on opposition sources, 
many of them about as reliable as Ahmed Chalabi. Although there are any 
number of scholars and academics--both Venezuelan and international--
who could offer coherent arguments on the other side, their arguments 
almost never appear. For balance, we usually get at most a poor person 
on the street describing why he likes Venezuelan President Hugo Chavez, 
or a sound bite from Chavez himself denouncing ``imperialist 
intervention.''
    Opposition allegations are repeated constantly, often without 
rebuttal, and sometimes reported as facts. At the same time, some of 
the most vital information is hardly reported or not reported at all. 
For example, the opposition's efforts to recall President Chavez hit a 
snag in March when more than 800,000 signatures for the recall were 
invalidated. These signatures were not thrown out but were sent to a 
``repair process,'' currently being tallied, in which signers would get 
a second chance to claim invalidated signatures.
    The opposition accused President Chavez of trying to illegitimately 
deny the people's right to a referendum, and the press here has 
overwhelmingly echoed this theme. But some vital facts were omitted 
from the story: the disputed signatures were in violation of the 
electoral rules, and could legitimately have been thrown out 
altogether. Furthermore, these rules--requiring signers to fill out 
their own name, address and other information--were well-known to 
organizers on both sides and publicized in advance of the signature 
gathering process.\1\ These rules are also common in the United States, 
including California.
    But readers of the U.S. and international press would not know 
this. And few would know that the members of Venezuela's National 
Electoral Commission--which is supervising the election--was appointed 
by the Supreme Court, with opposition leaders applauding the 
appointments.\2\
    Even worse than most news stories on Venezuela are the editorials 
of major newspapers, where factual errors have become commonplace. The 
Washington Post has accused Chavez of holding political prisoners and 
having ``muzzled the press,''1A1A\3\ and referred to the Electoral 
Commission as ``Mr. Chavez' appointees.''1A\4\ All of these allegations 
are incontestably false.
    According to the U.S. State Department, ``There [are] no reports of 
political prisoners in Venezuela.''1A\5\ And far from being 
``muzzled,'' the press in Venezuela is one of the most furiously 
partisan anti-government medias in the entire world. Two months ago one 
of Venezuela's most influential newspapers actually used a doctored 
version of a New York Times' article to allege that the Chavez 
government was implicated in the Madrid terrorist bombing!1A\6\ But the 
media has never been censored by the Chavez government.\7\
    To be sure, President Chavez has made himself an easy target by 
slinging a lot of fiery rhetoric and accusations at President Bush and 
Washington. But even these diplomatic blunders could use some context: 
the Bush Administration did, after all, endorse a military coup against 
Chavez two years ago.\8\ And the U.S. continues to fund his political 
opponents, including leaders of the failed coup and organizers of the 
recall effort.\9\ Imagine what Mr. Bush might say about the French 
President and government if they did those things to him.
    Of course Venezuela has rarely been front page news, unlike Iraq. 
But our government's involvement there has already caused considerable 
damage and could well push the country to civil war--especially if our 
media continues to go along for the ride.

                                 NOTES

    \1\ CNE Circular Number 16, dated 25 November 2003: ``In the case 
that the signer is illiterate, blind, or of very advanced age, the 
signature collection agent should write the first and last names of the 
signer, their identification number and date of birth in the 
corresponding spaces of each of them, and have the signer stamp their 
fingerprint in the space provided, and note proof of the condition in 
the space provided.''
    The fact that the signer was otherwise required to fill out his/her 
own information was well known to the parties and publicized in 
advance, with TV commercials, and that forms filled out by people other 
than the signers were invalid was also confirmed by Fernando Jaramillo, 
Chief of Staff of the Organization of American States and Head of OAS 
Mission to Venezuela, in an interview on April 21, 2004.
    \2\ ``The five new members of the council represent a cross-section 
of Venezuela's political landscape, allaying concerns on both sides 
that the deck would be stacked as the country readies for a recall vote 
. . . Henry Romas Allup, a prominent opposition voice from the 
Democratic Action party, said the Supreme Court's decision represents a 
``final blow to the government.'' (Pals, Dow Jones Newswire, 27/9/03)
    After the Council made decisions unfavorable to the opposition, 
some U.S. newspapers began referring to it as ``government-
controlled.'' (See, e.g., Miami Herald, ``Chavez's rivals need one 
thing: a viable leader,'' February 17, 2004)
    \3\ ``Eyes on Mr. Chavez,'' editorial, Washington Post, December 
13, 2003.
    \4\ ``Mr. Chavez's Claim,'' Editorial, Washington Post, May 26, 
2004.
    \5\ U.S. Department of State, ``Country Reports on Human Rights 
Practices--2003: Venezuela,'' Released by the Bureau of Democracy, 
Human Rights, and Labor, February 25, 2004, http://weisbrot-
columns.c.topica.com/maaci1Vaa7hQ1beQvrSbafp
NFx/
    \6\ For the original article, see Tim Golden and Don Van Natta Jr., 
``Bombings in Madrid: The Suspects; Carnage Yields Conflicting Clues As 
Officials Search for Culprits,'' The New York Times, March 12, 2004. 
For the altered version, see Marianella Salazar, ``Politica: Artilleria 
de Oficio,'' El Nacional (Venezuela) March 24, 2004.
    \7\ ``There are few obvious limits on free expression in Venezuela. 
The country's print and audio-visual media operate without 
restrictions. Most are strongly opposed to President Chavez and express 
their criticism in unequivocal and often strident terms.'' Human Rights 
Watch, ``Venezuela: Caught in the Crossfire: Freedom of Expression in 
Venezuela,'' May 2003.
    \8\ Peter Slevin, ``Chavez Provoked His Removal, U.S. Officials 
Say; Administration Expresses Guarded Optimism About Interim Regime, 
Calls for Quick Elections,'' Washington Post, April 13, 2002.
    \9\ See Bart Jones, ``Tension in Venezuela; Activist eyes groups' 
funding; Brooklyn lawyer says U.S. government funds are aiding those 
trying to overthrow president,'' Newsday, April 4, 2004.
    The FOIA documents are posted at http://weisbrot-
columns.c.topica.com/maaci1Vaa7hQ2beQvrSbafpNFx/
    Several leaders of organizations that received funds from the U.S. 
Congressionally-financed National Endowment for Democracy (NED) 
actually signed the decree that established the coup government in 
April 2002, and abolished Venezuela's General Assembly, Supreme Court, 
Constitution, and other democratic institutions. Some are still 
receiving funds from NED.

                                 ______
                                 

                A Split Screen in Strike-Torn Venezuela

                           (By Mark Weisbrot)

           Published in the Washington Post--January 12, 2003

  http://www.washingtonpost.com/wp-dyn/articles/A41444-2003Jan11.html

    Walking around Caracas late last month during Venezuela's ongoing 
protests, I was surprised by what I saw. My expectations had been 
shaped by persistent U.S. media coverage of the nationwide strike 
called by the opposition, which seeks President Hugo Chavez's ouster. 
Yet in most of the city, where poor and working-class people live, 
there were few signs of the strike. Streets were crowded with holiday 
shoppers, metro trains and buses were running normally, and shops were 
open for business. Only in the eastern, wealthier neighborhoods of the 
capital were businesses mostly closed.
    This is clearly an oil strike, not a ``general strike,'' as it is 
often described. At the state-owned oil company, PDVSA, which controls 
the industry, management is leading the strike because it is at odds 
with the Chavez government. And while Venezuela depends on oil for 80 
percent of its export earnings and half its national budget, the 
industry's workers represent a tiny fraction of the labor force. 
Outside the oil industry, it is hard to find workers who are actually 
on strike. Some have been locked out from their jobs, as business 
owners--including big foreign corporations such as McDonald's and 
FedEx--have closed their doors in support of the opposition.
    Most Americans seem to believe that the Chavez government is a 
dictatorship, and one of the most repressive governments in Latin 
America. But these impressions are false.
    Not only was Chavez democratically elected, his government is 
probably one of the least repressive in Latin America. This, too, is 
easy to see in Caracas. While army troops are deployed to protect 
Miraflores (the presidential compound), there is little military or 
police presence in most of the capital, which is particularly striking 
in such a tense and volatile political situation. No one seems the 
least bit afraid of the national government, and despite the 
seriousness of this latest effort to topple it, no one has been 
arrested for political activities.
    Chavez has been reluctant to use state power to break the strike, 
despite the enormous damage to the economy. In the United States, a 
strike of this sort--one that caused massive damage to the economy, or 
one where public or private workers were making political demands--
would be declared illegal. Its participants could be fired, and its 
leaders--if they persisted in the strike--imprisoned under a court 
injunction. In Venezuela, the issue has yet to be decided. The supreme 
court last month ordered PDVSA employees back to work until it rules on 
the strike's legality.
    To anyone who has been in Venezuela lately, opposition charges that 
Chavez is ``turning the country into a Castro-communist 
dictatorship''--repeated so often that millions of Americans apparently 
now believe them--are absurd on their face.
    If any leaders have a penchant for dictatorship in Venezuela, it is 
the opposition's. On April 12 they carried out a military coup against 
the elected government. They installed the head of the business 
federation as president and dissolved the legislature and the supreme 
court, until mass protests and military officers reversed the coup two 
days later.
    Military officers stand in Altamira Plaza and openly call for 
another coup. It is hard to think of another country where this could 
happen. The government's efforts to prosecute leaders of the coup were 
canceled when the court dismissed the charges in August. Despite the 
anger of his supporters, some of whom lost friends and relatives last 
year during the two days of the coup government, Chavez respected the 
decision of the court.
    The opposition controls the private media, and to watch TV in 
Caracas is truly an Orwellian experience. The five private TV stations 
(there is one state-owned channel) that reach most Venezuelans play 
continuous anti-Chavez propaganda. But it is worse than that: They are 
also shamelessly dishonest. For example, on Dec. 6 an apparently 
deranged gunman fired on a crowd of opposition demonstrators, killing 
three and injuring dozens. Although there was no evidence linking the 
government to the crime, the television news creators--armed with 
footage of bloody bodies and grieving relatives--went to work 
immediately to convince the public that Chavez was responsible. Soon 
after the shooting, they were broadcasting grainy video clips allegedly 
showing the assailant attending a pro-Chavez rally.
    Now consider how people in Caracas's barrios see the opposition, a 
view rarely heard in the United States: Led by representatives of the 
corrupt old order, the opposition is trying to overthrow a government 
that has won three elections and two referendums since 1998. Its coup 
failed partly because hundreds of thousands of people risked their 
lives by taking to the streets to defend democracy. So now it is 
crippling the economy with an oil strike. The upper classes are simply 
attempting to gain through economic sabotage what they could not and--
given the intense rivalry and hatred among opposition groups and 
leaders--still cannot win at the ballot box.
    From the other side of the class divide, the conflict is also seen 
as a struggle over who will control and benefit from the nation's oil 
riches. Over the last quarter-century PDVSA has swelled to a $50 
billion a year enterprise, while the income of the average Venezuelan 
has declined and poverty has increased more than anywhere in Latin 
America. Billions of dollars of the oil company's revenue could instead 
be used to finance health care and education for millions of 
Venezuelans.
    Now add Washington to the mix: The United States, alone in the 
Americas, supported the coup, and before then it increased its 
financial support of the opposition. Washington shares PDVSA 
executives' goals of increasing oil production, busting OPEC quotas and 
even selling off the company to private foreign investors. So it is not 
surprising that the whole conflict is seen in much of Latin America as 
just another case of Washington trying to overthrow an independent, 
democratically elected government.
    This view from the barrios seems plausible. The polarization of 
Venezuelan society along class and racial lines is apparent in the 
demonstrations themselves. The pro-government marches are filled with 
poor and working-class people who are noticeably darker--descendants of 
the country's indigenous people and African slaves--than the more 
expensively dressed upper classes of the opposition. Supporters of the 
opposition that I spoke with dismissed these differences, insisting 
that Chavez's followers were simply ``ignorant,'' and were being 
manipulated by a ``demagogue.''
    But for many, Chavez is the best, and possibly last, hope not only 
for social and economic betterment, but for democracy itself. At the 
pro-government demonstrations, people carry pocket-size copies of the 
country's 1999 constitution, and vendors hawk them to the crowds. 
Leaders of the various non-governmental organizations that I met with, 
who helped draft the constitution, have different reasons for revering 
it: women's groups, for example, because of its anti-discrimination 
articles; and indigenous leaders because it is the first to recognize 
their people's rights. But all see themselves as defending 
constitutional democracy and civil liberties against what they describe 
as ``the threat of fascism'' from the opposition.
    This threat is very real. Opposition leaders have made no apologies 
for the April coup, nor for the arrest and killing of scores of 
civilians during the two days of illegal government. They continue to 
stand up on television and appeal for another coup--which, given the 
depth of Chavez's support, would have to be bloody in order to hold 
power.
    Where does the U.S. government now stand on the question of 
democracy in Venezuela? The Bush administration joined the opposition 
in taking advantage of the Dec. 6 shootings to call for early 
elections, which would violate the Venezuelan constitution. The 
administration reversed itself the next week, but despite paying lip 
service to the negotiations mediated by the OAS, it has done nothing to 
encourage its allies in the opposition to seek a constitutional or even 
a peaceful solution.
    Sixteen members of Congress sent a letter to Bush last month, 
asking him to state clearly that the United States would not have 
normal diplomatic relations with a coup-installed government in 
Venezuela. But despite its apprehension about disruption of Venezuelan 
oil supplies on the eve of a probable war against Iraq, the Bush 
administration is not yet ready to give up any of its options for 
``regime change'' in Caracas. And--not surprisingly--neither is the 
Venezuelan opposition.

    Senator Coleman. Thank you.
    We certainly have had a wide variety of opinion on this 
panel.
    Let me just start with Dr. Weisbrot. Are you not at all 
troubled by the indictment of Sumate's Alejandro Plaz and Maria 
Corina Machado?
    Dr. Weisbrot. You know, I am troubled that it is a treason 
charge. I do not know. It is very hard to get accurate 
information. I am not troubled that the government would, as 
our government, declare that funding from foreign sources in an 
electoral campaign is illegal. That is true of most countries 
in the world.
    Senator Coleman. Are you inferring that somehow here we 
would infer that was treason?
    Dr. Weisbrot. No. Again, if in fact she is ever arrested or 
prosecuted for treason, that would be a terrible thing because 
that is indeed an extremely harsh and unjustified charge for 
someone who receives foreign financing. I would encourage the 
government, of course, to make sure--the government, by the 
way, is not a dictatorship. The government does not control all 
the judges and prosecutors and everybody who might do something 
like this.
    So I would encourage the government to use all of its 
political pressures to stop anything like that from happening, 
and I am willing to bet anybody here that nothing like that 
will happen. There are all levels of incompetence in any 
government, and in this case there is a lot of anger and there 
is a lot of polarization. So somebody has decided to 
investigate this person for treason. But the real charge is 
simply--and the one that we in the United States should be 
concerned about because it is our tax dollars--is that she has 
received funding for an electoral campaign from a foreign 
government.
    Senator Coleman. I would think some of us would have some 
disagreement regarding concerns about the National Endowment 
for Democracy and their efforts to promote small ``d'' 
democracy.
    But let me ask Mr. Vivanco. Dr. Weisbrot is not troubled by 
the efforts to stack the court. I think, in reflecting on Dr. 
McCoy's comment, the key here is to have two things in order to 
heal the division. One is full transparency in the electoral 
process, and should, as Dr. McCoy indicated, the process be 
close that any review process also have the perception of being 
fair. Can you address the impact on that if there were to be a 
close election, if in fact the court were to be expanded from 
20 to 32 judges with the sense that it is being stacked?
    Mr. Vivanco. Your question addressed essentially two 
points. One is that if the Venezuelan political establishment--
in other words, if the assembly decided by broad consensus to 
change the structure of one of the powers of a state, in this 
case, the supreme court, which is supposed to represent an 
independent power of the state, according to President Chavez's 
constitution, they need to get at least a two-thirds majority 
vote. If they want to remove judges, according to the same 
constitution, article 265, I guess, requires the same number of 
votes, a two-thirds majority. Otherwise you cannot do it.
    That was not a problem 2, 3 years or maybe 4 years ago when 
President Chavez was incredibly popular and he had those votes 
in the assembly. But today in the assembly he has a very slim 
majority of only five votes, and with those five votes he has 
managed to pass a law that will allow him and his coalition in 
Congress essentially, as I said before, to purge and to appoint 
new members of the supreme court. It will be a completely 
different supreme court with 32 members. Today it is 20 members 
and that may have also implications for the referendum. This in 
itself is a violation of the principle of the rule of law, 
which is that we are governed and the permanent rules that you 
cannot just change when you happen to be at that period a 
little bit more popular than the opposition.
    So in terms of the rule of law, it is a tremendous setback 
for Venezuelan democracy. I hope that the government will think 
this through and it still is possible to delay the 
implementation of this law.
    On the other hand, what concerns is is what the members of 
the government coalition told us when we were researching this 
issue in the assembly that they are planning to pack the court 
in July before the referendum. So if this referendum becomes a 
very close one, close to call today--nobody knows who is going 
to win the referendum on August 15--it is perfectly likely that 
the result is going to be essentially discussed--I am not sure 
decided, but discussed--the whole issue of the electoral 
process, by the court, exactly what has happened in the United 
States during the last Presidential elections.
    Senator Coleman. Dr. McCoy, do you want to add anything to 
that?
    Dr. McCoy. Well, just a couple of things. First, there is a 
rather lengthy procedure to name new supreme court justices. So 
it will take some time. I would be surprised if it happens 
perhaps as fast as predicted.
    Second, under the current court there is somewhat of a 
debate between two of the chambers, the electoral chamber and 
the constitutional chamber, over who controls the questions and 
the appeals and the challenges on the recall process. So that 
has not yet been resolved and that will be ongoing if the 
current chamber stays as it is.
    Just a third comment I would make. My understanding, though 
I am not a legal expert on the laws of Venezuela, is that 
historically it has been a 51 percent majority required to name 
supreme court justices and that that continues under the 
current situation, that the constitution specifies a two-thirds 
vote to remove them, but not to name them, although in my 
opinion it is always more stable for a democracy to have the 
broadest consensus possible in naming such important positions.
    Dr. Weisbrot. I can address this too, if you would like.
    Senator Coleman. I think I have got your perspective. Let 
me just move on. My time is up. So I want to go to one other 
issue.
    Clearly there is a concern about packing of the court. So I 
think we have to understand that. Again, the general principle 
here for all--and this is not a debate--is that, one, we have 
got a democracy, accept that. We have a process that has to be 
accepted, and then we have got to make sure that if this 
process is close, that there is transparency in the election 
process, and then in any review of the election process there 
is credibility. So I do not think we need to discuss it 
anymore, but I think that is the general concept.
    Senator Dodd.
    Senator Dodd. Well, thanks, Mr. Chairman. We are short on 
time here, which makes it difficult. But thank you all very 
much for your presence here today and your participation.
    Let me, if I can, very quickly with you, Dr. McCoy. I would 
like to go back. I had a short exchange with Secretary Noriega, 
and to an audience here in the United States, it may have 
seemed like a relatively innocuous thing, the press accounts 
here. But I gather this was a fairly big story in Venezuela, 
the statements that were made by Secretary Noriega. Is that 
correct?
    Dr. McCoy. Yes.
    Senator Dodd. Was it a fairly big story?
    Dr. McCoy. The statement you are referring to of May 26?
    Senator Dodd. Yes.
    Dr. McCoy. Yes, it was.
    Senator Dodd. To what extent did those remarks cause 
President Carter and Secretary General Gaviria any concern?
    Dr. McCoy. Well, I was in the country at the time; they 
were not. What it did was raise questions to me. The press and 
the government raised questions to me about what would be our 
response and would I condemn such a statement. I stated that 
our normal experience is that other governments will wait for 
results of an election before making a pronouncement, but in 
this case and in most cases we do not comment on particular 
statements of individual government representatives and our 
position is--what I have always tried to make clear is that the 
Carter Center is an independent organization.
    Senator Dodd. I understand that. Did President Carter and 
Secretary Gaviria approach U.S. administration officials about 
the remarks?
    Dr. McCoy. Not publicly. They may have privately.
    Senator Dodd. And the statement issued by Secretary Powell 
on the 27th. Did that reduce the tensions caused by the public 
statements by Mr. Noriega?
    Dr. McCoy. In my perception it did, yes.
    Senator Dodd. Let me ask you this. What is your opinion 
about whether or not the opposition and the Chavez government 
will respect the outcome of the referendum?
    Dr. McCoy. I think that the important thing is that it be a 
transparent process. If the results are clear and decisive, I 
have no doubt that both sides will accept the outcome. But I 
think the chances are it will be a very close result, and there 
I think there will be a great temptation among some of the 
followers on both sides to fear or to suspect manipulation of 
the results. That is why in my testimony I said the 
transparency is extremely important and steps to raise 
confidence like the audit of the paper trail of the voting 
machines, like an audit of the voters' list, like having 
international observers, and including having, for example, 
regulations for media to have equal access for both sides to 
advertising and monitoring of the media. That is one thing, I 
think as you mentioned, Senator Dodd, that we are currently 
working on. There are ongoing discussions on that issue.
    Senator Dodd. I gather President Carter facilitated a 
meeting between Gustavo Cisneros and President Chavez. Let me 
say for the record here I know Gustavo Cisneros. I have a lot 
of respect for him. He is an interesting man. He has a very 
healthy and wonderful perspective on Latin America that I have 
always found interesting.
    My point I want to get at here is he also may have some 
strong feelings. And the question I have for you is to what 
extent does the Carter Center believe that there is an 
independent press in Venezuela. We have heard others comment on 
it here, but to the extent that the people of Venezuela have an 
opportunity to hear different voices through the media outlets 
in that country.
    Dr. McCoy. I think one of our concerns is that the media on 
both sides have taken a political role so that there is a clear 
political stance or bias from both the public stations and the 
private stations so that the people may, in fact, be missing 
some more neutral or impartial sources. But clearly there is 
freedom that we see coming out of both sets of media, the 
public and the private, to express views.
    Senator Dodd. Would you describe the private media as 
independent?
    Dr. McCoy. Independent, yes.
    Senator Dodd. You addressed the issue of the voting 
machines. By the way, thank you for your comments about 
Georgia. We are getting a lot of complaints about electronic 
voting, and I think Georgia proved how successful electronic 
voting can actually be. So I appreciate your bringing that up.
    I want to just underscore the points that Mr. Vivanco made 
about the courts, and the chairman made reference to it. I 
think our own Constitution is instructive. The Constitution of 
the United States left up to the Congress to determine the size 
of the court, who would sit on it, and the meetings and so 
forth. This is not unprecedented. In fact, it has worked rather 
well for us. But I do think it is a strong and worthwhile 
suggestion that any efforts to fill that court prior to the 
referendum I think would be a huge mistake, and my hope is that 
they will hear those concerns being raised.
    Last, just on the Venezuelan oil issue, let me ask any of 
you very quickly here. How would you describe or characterize 
Venezuelan cooperation in the oil sector? Has it been a 
reliable supplier to the United States? And how would a 
disruption in Venezuelan oil supplies impact U.S. oil and gas 
prices?
    Mr. Tissot. Venezuela, as I presented in my statement, 
continues to be a reliable supplier. Despite the political 
rhetoric that we hear, Venezuela cannot survive without oil 
exports, and its natural market is the United States. There are 
substantial U.S. foreign companies investing in Venezuela and 
expanding their investment in that country.
    Senator Dodd. Can I interrupt you for 1 second, by the way, 
and tell you a rumor I have heard? And that is, that the 
collection of revenues from the oil sales, a large percentage 
of it, is not being reinvested in order to maintain the 
infrastructure of the oil industry and that the money is not 
being stolen, but it is just being set aside for other 
purposes, and that there is a deterioration going on in the 
infrastructure of the oil production and gas production. Is 
there any truth to that?
    Mr. Tissot. The 2004-2009 PDVSA budget includes a $5 
million investment which $1.2 million to $2 million are going 
to be allocated for social spending, which has nothing to do 
with oil investment. So I would agree with you.
    The comment to that is PDVSA is the company who would be 
impacted. Foreign companies are expected to make the 
difference.
    Senator Dodd. Does anybody else want to comment on the oil 
issue?
    Dr. Weisbrot. Sure. I think it has been a reliable 
supplier. The only cutoff in recent memory has been during the 
oil strike in December 2002 through February 2003. At that time 
it did not have as much impact on oil or gasoline prices here, 
but it would have a much larger impact now as world supplies 
are a lot tighter than they were then.
    Senator Dodd. I was unclear earlier when the question was 
raised about whether or not the OAS and the Carter Center are 
going to be invited to participate as observers in all of this. 
Have you been invited?
    Dr. McCoy. The National Electoral Council just approved 
yesterday the regulations for the international observers, and 
I believe it will be approved perhaps formally tomorrow, which 
says that the invitations now will come from the foreign 
ministry. So we have not received a specific invitation from 
the foreign ministry, but we certainly received indications 
that we should be expecting one.
    Senator Dodd. And also OAS?
    Dr. McCoy. OAS as well and some other organizations as 
well.
    Senator Dodd. Well, I hope that would be the case. If out 
of this hearing in a public setting--obviously, the chairman 
can speak for himself, but I would urge that those responsible 
in Venezuela extend that invitation. I think it would be very, 
very important for everyone's concerns in the end that there 
are people like yourselves and the OAS to be there to observe 
the process. That will say a lot to many of us about the 
intentions of those who want to have an outcome here that will 
be credible.
    I am sorry about the time. But your testimony was all very 
helpful, and I appreciate it.
    Senator Coleman. We have to go vote.
    I want to do just one followup, if I can.
    And I agree wholeheartedly with Senator Dodd's remarks. I 
hope out of this public discussion, that the message is clear 
that the more we can do to raise the level of confidence in the 
transparency of this process, the better it is for all 
concerned.
    I guess, Mr. Diaz, one question to you. Do you foresee the 
Group of Friends playing any role in this process, in the 
electoral process?
    Mr. Diaz. The Group of Friends is being driven in many ways 
by Brazil, and I understand that Lula is very concerned about 
the recent developments in Venezuela. I do think that they 
could play a more significant role than they have played up to 
now, but I think their moment has yet to arrive basically. They 
have to make themselves heard on August 15. I think that is the 
critical day for them to assert themselves.
    Senator Coleman. Hopefully that message will be heard too.
    I want to thank you all for your testimony. The hearing 
record will be held open for 10 days.
    This hearing is now adjourned.
    [Whereupon, at 4:17 p.m., the subcommittee adjourned, to 
reconvene subject to the call of the Chair.]
                              ----------                              


            Responses to Additional Questions for the Record


     Responses of Hon. Roger F. Noriega and Hon. John F. Maisto to 
  Additional Questions for the Record Submitted by Senator Richard G. 
                                 Lugar

    Question 1. The Organization of American States (OAS) observation 
team prepared a report of what they observed during the signature 
verification and ``reparo'' stages of the recall referendum process. 
Why has that report not been made public? Is it true that the OAS has 
dismantled the technical team that spent months in Venezuela observing 
the process? If so, why?

    Answer. OAS Secretary General Gaviria has decided that the OAS will 
release a complete report on its observation effort in Venezuela only 
after the recall process is finished. He believes that issuing an 
interim report would achieve little and could complicate the OAS's 
capacity to carry out its role in Venezuela through the August 15 
recall referendum and beyond.
    The OAS observation team in Venezuela for the signature 
verification and ``reparo'' process was designed to be agile, flexible 
and cost-efficient, with the ability to anticipate and respond to 
requirements as they arose. The ``reparo'' process was not an election 
with voting machines, electronic tabulation processes and other 
technical observation requirements, but rather a verification of 
signatures of a smaller universe of constituents than a general 
referendum or election. The. OAS had approximately 120 observers for 
the May 27-31 ``reparo'' process.

    Question 2. Has the Venezuelan Government asked the OAS and the 
Carter Center to provide election observers for the recall referendum 
on August 15, 2004?

    Answer. The OAS Secretary General and Carter Center have received 
oral invitations from Venezuela's National Electoral Council to observe 
the August 15, 2004, recall referendum. The OAS and Carter Center are 
now discussing the terms under which they will observe with the 
National Electoral Council. The OAS Secretary General and Carter Center 
are preparing to field an election observation mission for the August 
15 recall referendum.

    Question 3. If not, what is the U.S. OAS and Department of State 
doing to ensure that OAS and Carter Center international election 
observers are allowed to observe the recall referendum on August 15, 
2004?

    Answer. We have repeatedly underscored the importance of 
international observation to the credibility of the recall process in 
our public statements. In addition, the Department of State has 
maintained fluid, senior-level diplomatic contact with the Group of 
Friends of the OAS Secretary General's Mission in Venezuela, and other 
interested international partners in support of the OAS and Carter 
Center observation missions. Our diplomatic efforts have been 
accompanied by public statements from international bodies, including 
the Friends Group and the European Union, in support of OAS and Carter 
Center observation.

    Question 4. Is the U.S. Embassy in Venezuela adequately staffed to 
deal with a potential crisis leading up to or as a result of the August 
15, 2004 recall referendum?

    Answer. Embassy Caracas reports that it is sufficiently well-
staffed to respond to any problems resulting from the referendum. 
Embassy Caracas recently lost its press attache and faces a several 
month gap in filling the position. Additionally, the Department is 
considering a request to add permanently a mid-level officer position 
in the political section, given the increase in workload generated by 
Venezuela's governance issues.

    Question 5. Does the Bureau of Western Hemisphere Affairs at the 
Department of State have enough staff to cover Venezuela? How many 
staff covers Venezuela issues at the Department?.

    Answer. Venezuela is a priority concern for the Bureau of Western 
Hemisphere Affairs. Western Hemisphere Affairs Assistant Secretary 
Roger F. Noriega and Deputy Assistant Secretary Peter DeShazo are 
actively engaged in Venezuela issues. Similarly, the Director and 
Deputy Director of the Bureau's Office of Andean Affairs devote a 
significant amount of time coordinating policy within the Executive 
Branch. Day-to-day developments are covered by one mid-level Foreign 
Service Officer who serves as Venezuela Desk Officer. That officer is 
supported by a Regional Affairs Officer, who works almost exclusively 
on Venezuela. The United States Delegation to the Organization of 
American States (USOAS), headed by Ambassador John F. Maisto, former 
U.S. Ambassador to Venezuela, works very closely with the Desk and the 
OAS in support of our policy objectives.
    All of these Western Hemisphere Affairs officers are supported by 
the issue specific expertise of a wide-range of Department of State 
offices assigned to functional bureaus within the Department, who work 
on energy, human rights, trade, political-military, and other 
portfolios dealing with Venezuela. Western Hemisphere Affairs believes 
this staffing pattern is sufficient to manage Venezuela policy.

    Question 6. Individuals and organizations that have received 
funding from the National Endowment for Democracy (NED) for totally 
legitimate and transparent activities in support of both democracy and 
the May 2002 Agreement have been prosecuted; what has been the State 
Department's position in this regard and how has it been communicated 
to the Government of Venezuela?

    Answer. We are concerned by the politically-motivated 
investigations into individuals and civil society organizations whose 
only ``crime'' appears to be receiving support from the National 
Endowment for Democracy (NED) for legitimate activities. NED is an 
independent, private organization that enjoys wide bipartisan support 
for its work to help strengthen democratic institutions around the 
world. We have expressed our concern to the Government, underscoring 
that such actions are unacceptable in a democratic society.
    We have consistently urged the Friends of the Organization of 
American States (OAS) Secretary General's Mission for Venezuela to make 
public statements decrying the unwarranted persecution of democratic 
organizations by the Government of Venezuela. In his April 22 briefing 
to the Human Rights Caucus, the Director of the Office for the 
Promotion of Human Rights and Democracy in the Department's Bureau of 
Democracy, Human Rights and Labor, Robert P. Jackson, noted our ``grave 
concern [about] a rising number of threats and intimidation directed at 
non-governmental human rights defenders by government representatives 
and supporters' as well as the Government's harsh rhetoric against 
``labor groups, the Catholic Church, and pro-democracy institutions 
such as the National Endowment for Democracy.'' The United States will 
continue to speak out against the targeting of peaceful, civil society 
organizations for political purposes in Venezuela.

    Question 7. What is the State Department's position on the 
indictment of Sumate's Alejandro Plaz and Maria Corina Machado? What is 
the Department doing to bring attention to this issue?

    Answer. We are concerned by what appear to be politically-motivated 
investigations against the leaders of the civic, electoral non-
governmental organization (NGO) Sumate, Alejandro Plaz and Maria Corina 
Machado. While it is our understanding that formal charges have not 
been presented in their case, Plaz and Machado are being investigated 
for allegedly ``conspiring'' against the Government by receiving a 
grant from the National Endowment for Democracy (NED) for electoral 
observation and voter education activities.
    As is well known, NED is an independent, private organization that 
enjoys wide bipartisan support for its work to help strengthen 
democratic institutions around the world. The Venezuelan government's 
efforts against Sumate are intended to intimidate and dissuade citizen 
participation in the referendum process. Such actions are unacceptable, 
in a democratic society.
    Assistant Secretary for Western Hemisphere Affairs Roger F. Noriega 
met with Machado on July 9 to commend her and her colleagues' courage 
in the face of continued Government harassment and to reiterate our 
support for their commitment to a peaceful, democratic solution to the 
ongoing conflict. The Department will continue to support Sumate's 
democratic activities in Venezuela and to signal to authorities in 
Caracas the Administration's intent to monitor Sumate's fate carefully. 
We have expressed our concern to the Venezuelan. Government as well as 
publicly. We have also raised our concerns about the. Venezuelan 
Government's actions against Sumate with international human rights 
organizations and the media.

    Question 8. While a great deal of emphasis has been placed on an 
electoral solution to the Venezuelan crisis it would seem that little 
or no time has been spent analyzing the issue of current and future 
governability. Could you please outline your top areas of concern with 
regards to Venezuela in a post or no referendum scenario?

    Answer. We are deeply engaged with the OAS, Carter Center and our 
hemispheric partners in supporting national reconciliation in 
Venezuela. Achieving a constitutional, democratic, peaceful and 
electoral solution to the current impasse will be a key first step 
toward allowing Venezuelans to take on the serious economic and social 
challenges the country faces. Venezuelans must ensure that all 
citizens--not just a privileged few--benefit from the fruits of 
democracy, free trade and enterprise. This will involve addressing 
economic issues--stimulating economic growth, job creation and 
increased opportunity; social issues--fostering national 
reconciliation, greater social inclusion and personal security; and 
core governance issues--promoting effective, transparent government, 
strong democratic institutions and respect for human rights and the 
rule of law.
    Overcoming the current crisis will empower Venezuelans to focus on 
these very important issues. The United States, along with our 
international partners, stands ready to assist their efforts.

    Question 9. Could you explain what your posture would be in 
response to a possible President Chavez victory in the recall 
referendum of August 15, 2004?

    Answer. Unfettered and effective international observation, led by 
the Organization of American States and the Carter Center, will be key 
to ensuring the fairness and credibility of the August 15 recall 
referendum. As Secretary Powell has stated, the United States, along 
with our international partners, will accept the results of a fair, 
open, internationally-certified election, which respects the sovereign 
expression of Venezuelan citizens, whatever the outcome.
    If President Chavez prevails in a fair recall referendum, where 
international observers are granted full access, we will seek to work 
together on those areas where cooperation has been good--
counternarcotics and energy--and to improve cooperation in that area 
where the record is mixed: counterterrorism. Much will depend on the 
posture adopted by the Venezuelan Government. Our bilateral relations 
in a range of areas have suffered due to unilateral actions taken by 
the Chavez Government. Regardless of the winner of the referendum, if 
the process is free and fair, strengthening democratic institutions, 
respect for the rule of law and human rights, and cooperation on 
counternarcotics and regional security issues will remain the anchors 
of U.S. policy in Venezuela.

    Question 10. The new Organic Law of the Supreme Court, which 
expands the number of Supreme Court justices from 20 to 32, allows 
President Chavez's governing coalition to use its slim majority in the 
legislature to obtain an overwhelming majority of seats on the Supreme 
Court. The law also allows his coalition to nullify the appointments of 
sitting justices. In short, Chavez's supporters now can purge and pack 
the country's highest court. What is the Department's opinion of this 
law?
    Answer. A strong, independent judiciary is an essential element of 
democratic governance. Any steps to diminish judicial autonomy or the 
separation of powers undermine democracy. Accordingly, the United 
States is seriously concerned about the implications of the new Organic 
Law of the Supreme Court. We share the concerns expressed by Human 
Rights Watch and other non-governmental organizations, which have 
documented the deleterious effects the legislation could have on 
judicial independence and democracy in general in Venezuela.
    As noted, among the law's major provisions are the expansion of the 
Supreme Court from 20 to 32 justices and the empowerment of the 
National Assembly to appoint and suspend judges by a simple majority 
vote. Already, the pro-Government coalition in the legislature, which 
spearheaded passage of the law, has suspended the Supreme Court Vice-
President. As Human Rights Watch has noted, the pro-Government 
legislative majority is quickly moving to name new justices and to 
remove those not viewed as sympathetic to the Government. We are 
bringing this issue to the attention of our international partners and 
will continue to follow it closely.

    Question 11. Does the new Organic Law of the Supreme Court violate 
the basic principles of Venezuela's constitution and international 
human rights law? If so, what can the Department of State and OAS do to 
highlight the fact that this law is an attempt to control Venezuela's 
judicial branch, undermine the separation of powers and the 
independence of the judiciary?

    Answer. The United States is seriously concerned about the new 
Organic Law of the Supreme Court, recently passed by the pro-Government 
coalition in the National Assembly. A number of human rights 
organizations have voiced their own concerns. In a 24-page report 
issued on June 17, Human Rights Watch noted that the ``Venezuelan 
government is undermining the independence of the country's judiciary 
ahead of a presidential recall referendum that may ultimately be 
decided in the courts.''
    The Report underscores Venezuela's commitments under the Inter-
American Democratic Charter, the International Covenant on Civil and 
Political Rights and the American Convention on Human Rights to 
``safeguard the independence of the judiciary,'' adding that the 
Venezuelan government is presently in ``contravention'' of 
internationally-recognized ``basic principles'' regarding judicial 
independence. In its own report in December 2003, the Inter-American 
Commission on Human Rights underlined problems with judicial 
independence and impartiality, noting that the ``failure to respect the 
constitution fully creates legal insecurity that impedes the 
consolidation of the rule of law.''
    We have raised the issue with our hemispheric and European 
partners, encouraging them to make statements in support of Venezuelan 
democracy and to encourage engagement by their own non-governmental 
organizations (NGOs). The United States will continue to speak out 
forcefully in defense of Venezuela's democratic institutions, including 
a strong, independent judiciary, respect for the separation of powers 
and the rule of law.

    Question 12. Numerous reports point to a massive crisis within the 
Venezuelan military. In private, analysts are beginning to confirm that 
support for Mr. Chavez is less than previously expected by that 
internal infighting, even among pro-government elements, and 
operational decay is probably greater than anticipated. Could you 
please give us your assessment of the current state of the Venezuelan 
Armed Forces and the risk a crisis at its core presents for a 
constitutional solution to the current crisis and for the durability of 
any democratic solution the Venezuelan people might seek?

    Answer. The Venezuelan military, along with civilian law 
enforcement, plays a key role in ensuring domestic security and 
stability. The Venezuelan Armed Forces' tradition of professionalism, 
commitment to democracy and civilian leadership, respect for human 
rights, and loyalty to the constitution must be maintained if a 
durable, peaceful, and democratic solution to the country's political 
crisis is to be achieved.
    The Inter-American Commission on Human Rights and other human 
rights organizations have noted the growing involvement of Venezuelan 
public security forces in internal security matters and partisan 
political processes. This presents a disturbing trend. Similarly 
upsetting are credible reports of human rights abuses by members of the 
National Guard during the February-March 2004 opposition 
demonstrations. Any attempts by the Venezuelan military or security 
forces to limit free speech, assembly, or association would threaten 
the Venezuelan people's efforts to achieve a constitutional solution to 
the current impasse. We will continue to monitor the role and status of 
the Venezuelan Armed Forces closely.

    Question 13. Is Venezuela's military divided along political lines?

    Answer. While the Venezuelan Armed Forces have a strong tradition 
of professionalism and respect for democracy and human rights, under 
President Chavez, it has grown increasingly politicized. We are 
troubled by the Government of Venezuela's use of promotions and 
assignments to reward officers for their political allegiance and its 
efforts to involve the military in partisan political processes.
    In his April 22 briefing to the Human Rights Caucus, the Director 
of the Office for the Promotion of Human Rights and Democracy in the 
Department's Bureau of Democracy, Human Rights and Labor, Robert P. 
Jackson, noted United States concern about the ``increased 
militarization of public administration, including the use of loyalist 
military officers in key political posts and as political candidates . 
. .''
    We, along with the OAS Inter-American Commission on Human Rights, 
have expressed our concerns regarding the use of the Armed Forces in 
political and civil affairs and will continue to monitor the issue 
closely.

    Question 14. Would the military uphold the constitution if 
challenged?

    Answer. The United States has consistently urged the Venezuelan 
Armed Forces to respect a constitutional, democratic, peaceful, and 
electoral solution to the current impasse. We expect and urge the 
Venezuelan military to honor its tradition of respect for democracy, 
human rights and constitutional rule.
    We oppose the use of force and intimidation to thwart the recall 
process as well as any attempts to achieve political objectives through 
violence or other unconstitutional means.

    Question 15. How would you describe U.S./Venezuelan military-to-
military interaction over the years? How would you describe it today?

    Answer. The United States and Venezuela traditionally enjoyed a 
strong military-to-military relationship anchored in a mutual 
commitment to democracy, respect for the rule of law and human rights. 
Our once close relationship has suffered over the past four years, 
largely as a result of unilateral actions by the Venezuelan 
government--including opposition to key U.S. and regional security 
goals, association with dictatorial regimes, and anti-U.S. rhetoric.
    In May 2004 President Chavez expelled U.S. Military Group personnel 
from Venezuelan military headquarters at Fort Tiuna after an almost 
fifty-year presence. In response, the U.S. Government has undertaken a 
review of the Venezuelan government's military presence in the United 
States. That review remains ongoing. The decline of our bilateral 
military relationship may have implications for other areas of 
bilateral cooperation, including on security and counterterrorism.
    Given our historic close ties to Venezuela, especially in terms of 
military-to-military contact, it is our clear preference to return to 
the cooperative, cordial relations we have traditionally shared.

    Question 16. A great deal has been said in public and in private 
about President Chavez's meddling in the affairs of other countries in 
the region. Can you discuss Chavez's influence in the region and 
explain the level of concern these activities elicit among our 
neighbors in the Hemisphere. Please especially discuss alleged meddling 
in Chile, Ecuador, Peru, Bolivia, Brazil, Colombia, Uruguay and El 
Salvador.
    Answer. We have seen reports indicating Venezuelan support for a 
range of political groups in the region, including some engaged in 
subversive or violent activities. To address the question with the 
specificity you have outlined, it would be necessary for the 
Administration to brief you or members of your staff in a classified 
setting.
    We, along with our regional neighbors, are concerned about any 
efforts to undermine democratic governments in the hemisphere. For four 
decades, the United States and Venezuela were allies in a broader 
effort to help democratize the hemisphere, and to spread prosperity and 
economic opportunity. The U.S. has made it clear that we expect the 
Government of Venezuela to comply with and meet all of the obligations 
set forth in the UN anti-terrorism conventions and protocols, the 
Organization of American States' treaties, and other international 
legal instruments which prohibit support for or providing a safe-haven 
to terrorists.

    Question 17. With regard to the Venezuelan political crisis, under 
what circumstances would the U.S. seek to invoke the OAS's Democratic 
Charter?

    Answer. The United States fully supports a constitutional, 
democratic, peaceful, and electoral solution to the current crisis in 
Venezuela in accordance with Organization of American States (OAS) 
Permanent Council Resolution 833. Along with our hemispheric partners, 
we support the recall referendum as the best mechanism to achieve these 
goals consistent with Venezuela's constitution and the Inter-American 
Democratic Charter. We expect this process to be fully carried out in 
good faith by all sides--including the Government of Venezuela, its 
political institutions, and all elements of the democratic opposition.
    If any of the parties compromises this democratic process, 
undermining the constitutional rights of Venezuelan citizens, we will 
consult with our hemispheric partners on the best response. This could 
involve invoking the OAS Inter-American Democratic Charter. Adopted by 
the democratic countries of the hemisphere, including Venezuela, on 
September 11, 2001, the Inter-American Democratic Charter states ``The 
peoples of the Americas have a right to democracy and their governments 
an obligation to promote and defend it.'' Accordingly, any efforts that 
impair the democratic order in a member state must be carefully 
evaluated.

    Question 18. When should we expect a second meeting of Group of 
Friends Foreign Ministers?

    Answer. The Friends of the Organization of American States (OAS) 
Secretary General's Mission for Venezuela have played a key role in 
supporting a constitutional, democratic, peaceful and electoral 
solution to the current political impasse in Venezuela. First launched 
in January 2003, Brazil, Chile, Mexico, Spain, Portugal and the United 
States comprise the Group of Friends. Brazil has carried out an 
important function as the Group's chair and coordinator.
    The Friends' Foreign Ministers gathered at an initial meeting in 
January 2003. While there is no Friends' Foreign Ministers meeting 
planned at this time, we are in regular contact with our Friends' 
counterparts. During the recent reparos process, the Friends issued 
statements in support of the process.

    Question 19. What is the current position of Secretary Powell with 
regards to the manner in which this important group of countries should 
participate in the search for a solution to this grave crisis?

    Answer. Secretary Powell strongly supports the efforts of the Group 
of Friends of the Organization of American States (OAS) Secretary 
General's Mission for Venezuela to ensure a constitutional, democratic, 
peaceful and electoral solution to the current political situation. At 
the OAS General Assembly meeting in Quito this past June, Secretary 
Powell met with his Brazilian counterpart and with OAS Secretary 
General Gaviria. In his public remarks, the Secretary underscored the 
important role to be played by the democratic nations of the Americas 
when fellow democracies suffer setbacks.
    We are in regular contact with Brazil, the Group's chair, and with 
the other Friends' countries, as well as OAS Secretary General Gaviria. 
As evidenced by Brazilian Foreign Minister Celso Amorim's June 17 
comments in Sao Paulo, Brazil shares our support for the important work 
of the OAS and Carter Center missions in advancing the goals of OAS 
Permanent Council Resolution 833.
    Since the inception of the Friends Group in January 2003, we have 
worked closely with members to issue statements and to coordinate 
Friends' meetings in Washington and Caracas. In the weeks and months 
ahead, we will continue to work together to support a credible and 
transparent recall process..

    Question 20. What is the Group of Friends role regarding the recall 
referendum? How many times has the Group met since it was organized? 
Does it intend to meet before the recall referendum?

    Answer. The Group of Friends was established in January 2003 to 
support the efforts of the Organization of America States (OAS) 
Secretary General to advance a constitutional, democratic, peaceful and 
electoral solution to the political impasse in Venezuela, in accordance 
with OAS Permanent Council Resolution 833. As noted in our statements, 
the Friends support the constitutionally-provided recall referendum as 
the best mechanism to achieve the goals of Resolution 833. The Friends 
have advocated a fair, open, transparent recall process, which allows 
international observers the access necessary to carry out their 
functions. The Friends fully support the ongoing efforts of the OAS and 
Carter Center missions in ensuring a fair, credible recall referendum.
    The Group of Friends Foreign Ministers met in January 2003 when the 
Group was first launched. Since then, the Senior Representatives of the 
Group of Friends or the Friends Permanent Representatives to the OAS 
have formally met four times: March 2003, May 2003, March 2004, and 
July 7, 2004. The member countries remain in regular contact.

    Question 21. Could you discuss the level of involvement of the 
Cuban Government in the internal affairs of Venezuela?

    Answer. We are aware of the presence in Venezuela of large numbers 
of Cuban teachers, doctors and sports trainers participating in various 
Venezuelan Government programs. While we obviously support efforts to 
help needy people everywhere learn to read and write and receive 
healthcare, we are concerned about the increasingly close ties between 
the Venezuelan and Cuban Governments. We hope these ties are limited to 
such programs.
    We are seriously concerned about reports indicating the presence of 
Cuban intelligence personnel in Venezuela. To address this last issue 
with greater specificity, it would be necessary for the administration 
to brief you or members of your staff in a classified \1\ setting.
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    \1\ An additional response of classified information was 
subsequently provided.
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    The Castro regime has a long, disturbing and often bloody history 
of subverting democratically-elected governments throughout the 
hemisphere, including through support for terrorist groups. We have 
expressed our concern about such close ties to the sole non-democratic 
government in the hemisphere at the highest level of the Venezuelan 
Government. We will continue to monitor this situation closely.

    Question 22. Could you describe Venezuela's current role within the 
Organization for Petroleum Exporting Countries (OPEC)?

    Answer. Venezuela is one of ten members of OPEC. Due to its limited 
ability to produce at or above its own production quota, Venezuela has 
not been publicly supportive of overall increased oil production by the 
group. Venezuela was once considered a price moderate but is now viewed 
as a price hawk.

    Question 23. Venezuela is reportedly producing close to 2.5 million 
barrels per day of oil: could you please comment what the likely impact 
would have been on gas prices at the pump if Petroleos de Venezuela had 
maintained its goal of reaching 6 million barrels of capacity by 2006?

    Answer. Venezuela's goal of reaching 6 million barrels per day by 
2006 would require substantial foreign investment. Venezuela was not 
receiving that level of investment even before President Chavez assumed 
office. Since Venezuela is an OPEC member, other OPEC states would 
likely have sought to adjust their own production so as to minimize the 
impact of larger Venezuelan production on world oil markets. Still, 
world oil market stability would have been greatly advanced had 
Venezuela pursued, during the current Chavez Administration, a more 
aggressive effort to win foreign investment.

    Question 24. Could you describe the importance of gasoline imports 
from Venezuela and its offshore refineries in the supply chain of the 
U.S. market?

    Answer. Venezuela is the third largest oil supplier to the U.S. 
market. The U.S. imports between 12 to 14 percent of its daily 
petroleum and petroleum products needs from Venezuela. Slightly more 
than half of Venezuela's oil exports to the U.S. enter its own U.S.-or 
Caribbean-based refinery chain, led by its flagship, wholly-owned 
subsidiary, Citgo. Venezuela's role in the gasoline market is probably 
most important in that regard. Gasoline exports from Venezuela or the 
its Caribbean-based refinery chain help to balance markets 
predominately on the east coast of the United States. While Venezuela 
is a leading foreign supplier of gasoline, about 90 percent of U.S. 
gasoline consumption is domestically refined.

    Question 25. Are the conditions placed for investment in Venezuela 
oil and gas sector likely to attract foreign capital and technology? If 
they are not attractive what is a worse case scenario for Venezuelan 
supply?

    Answer. Regrettably, Venezuela's hydrocarbons law is not viewed by 
the private sector as globally competitive, and until improvements are 
made, Venezuela is unlikely to attract substantial new oil investment. 
Venezuela's natural gas law is far more competitive, and U.S. and 
foreign firms remain engaged with the Venezuela government to develop 
opportunities in that area.
    Most Venezuelan oil fields are mature and have a steep natural 
decline rate, requiring additional investment just to keep output 
steady. Major foreign investment underway in the heavy oil sector will 
help maintain Venezuelan oil production capability for the short-to 
medium-term, but the country will face a serious erosion of productive 
capacity if the state oil company, or foreign investors, do not greatly 
increase the rate of investment. The worst case scenario would be year-
to-year production declines of upwards of 15 percent should that 
investment not take place.

    Question 26. How beneficial to Cuba is the crude and products 
supply deal they have with Venezuela? Is it similar in terms to other 
deals entered by other producers in the world?

    Answer. Cuba maintains a beneficial energy arrangement with the 
Venezuelan government under President Chavez, which allows the Castro 
regime to receive up to 82,000 barrels of oil per day on preferential 
terms. This arrangement nets more than $800 million in annual savings 
to Cuba. We are concerned about the concessionary terms of an 
agreement, which serves only to help prop up an undemocratic regime.
    It is our understanding that this kind of arrangement is uncommon. 
Few oil producers grant preferential treatment to consumers, 
particularly in tight oil markets.