Aired February 17, 2010 - 15:00:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


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CHRISTIANE AMANPOUR, CNN ANCHOR: Tonight, Venezuela is running out of money, not to mention power and water. So is the Chavez revolution running out of steam?

Good evening, everyone. I'm Christiane Amanpour, and welcome to our program.

The latest problem for Hugo Chavez is a worsening energy crisis. Just this month, the Venezuelan president even made plans to impose a partial state of emergency. Analysts are saying that Venezuela's economy is in freefall. Oil production is sinking, while inflation is soaring.

Chavez does remain a Bolivarian hero to many, but the escalating crisis is also fueling political opposition. The fiery Chavez seems to be facing a perfect storm, as Juan Carlos Lopez of CNN Espanol now reports.

(BEGIN VIDEOTAPE)

JUAN CARLOS LOPEZ, CNN CORRESPONDENT (voice-over): Caracas, capital of one of the most oil-rich nations in the world, and yet increasingly hit by the electrical blackouts sweeping Venezuela.

Sonia Rauseo uses candles for light and blames the government of Venezuelan President Hugo Chavez.

SONIA RAUSEO, HOUSEWIFE (through translator): We are not responsible for the inefficiencies of this government that did not do a good job with the maintenance of the electrical grid. Why do I have to pay for a charge in my bill for a service that I'm not receiving and that I am not consuming?

LOPEZ: The government blames droughts for crippling hydroelectric plants. And Mr. Chavez says often that his government is helping the poor.

HUGO CHAVEZ, PRESIDENT OF VENEZUELA (through translator): If you reduce your consumption by 10 percent or 20 percent, then you'll get a discount of 25 percent.

LOPEZ: But Mr. Chavez has also invested heavily in other countries, winning influence by selling oil at reduced prices in Central America, the Caribbean, and even to low-income Americans, thumbing his nose at the U.S.

And analysts say Chavez has not cleaned up the system.

ADAM ISACSON, CENTER FOR INTERNATIONAL POLICY: A lot of it is problems that go back from before Chavez, longstanding problems with corruption, longstanding problems with disinvestment, lack of accountability in the government. That was when Venezuela was run by the center and the center-right. Now that it's run by the left, you have similar constituencies being bought off.

LOPEZ: Blackouts aren't the only problem. Rationing of water, high inflation, unemployment, and crime, also growing frustration with Mr. Chavez's tightening political control and increasing ties to Cuba are undercutting his popularity.

JOHANNA MENDELSON FORMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: In the last few months, the repression has gotten worse. The presence of Cuban advisers, the influence of the Cuban intelligence service to even oversee people who were once partisans of Chavez is very troubling to people.

LOPEZ: With legislative elections in September and opposition trying to combine forces and polls showing popular support slipping below 50 percent, the once all-powerful Hugo Chavez seems vulnerable for the first time since he took power 11 years ago.

But Hugo Chavez has proven himself resilient before.

FORMAN: Right now, the opposition has a steep hill to climb in spite of Chavez's vulnerabilities, because they didn't participate in the past elections, and so they don't have a lot of base. They've also been highly disorganized, and polling data consistently shows that Chavez, in spite of these problems, gets a solid 30 percent of support.

LOPEZ: All this makes it difficult to predict what could happen if a powerful president loses ground and sees his revolution at risk.

Juan Carlos Lopez, CNN, Washington.

(END VIDEOTAPE)

AMANPOUR: Joining me now is the Venezuelan ambassador to the United States, Bernardo Alvarez.

Ambassador, thank you so much for joining us on this program.

BERNARDO ALVAREZ HERRERA, VENEZUELAN AMBASSADOR TO THE U.S.: Thank you for having us.

AMANPOUR: You just heard that report from Caracas talking about the unprecedented economic crisis in your country right now and the plummeting levels of satisfaction, should we say. What is President Chavez going to do to redress this problem, for instance, the soaring crime, the insecurity that is affecting many people there right now?

ALVAREZ: Well, first, you know, when you see the situation in Venezuela these days, it's far from being, as the report said, the worst situation in the last decade of Venezuela. If you say -- if you talk about economic growth, if you talk about social inequality, if you talk about inflation, employment, et cetera, the situation is not what has been presented.

AMANPOUR: But do you--

ALVAREZ: Just to give you an example--

AMANPOUR: So you don't -- you don't agree that the -- that the -- that the economy is sort of failing right now and the inflation is soaring?

ALVAREZ: No, no--

(CROSSTALK)

AMANPOUR: Inflation is soaring, isn't it?

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ALVAREZ: No, but the thing is, you -- we expect the growing -- the growth in Venezuela is expected to be 4.4 percent from now to 2011. And when you take into account that we have gone through a very difficult crisis all over the world -- I mean, Latin America and particularly Venezuela is doing quite well.

If you go to see in the past in the '80s, the economy of Venezuela grew no more than 2 percent.

AMANPOUR: OK.

ALVAREZ: And if you see, for example, social spending, social spending is 17 percent of GDP. The relation between GDP and debt is 20 percent, and it was 80 percent in the past.

AMANPOUR: Well, let me ask you this, then. You know, obviously, it's a puzzle to many of us who watch, and including many of your own citizens, why then if the economy is as good as you're saying and Venezuela is as oil-rich as it is, why are there these incredible rolling shortages of electricity, shortages of water? I mean, how does that square up, then?

ALVAREZ: Well, let me tell you, there was a recent report by a journalist, a Mexican journalist from Lahornada (ph) who went to Venezuela last week, and he reported that there has been some cots (ph) of energy in Caracas for two hours. And when he said what is happening in other countries in the region, including Mexico City, he say I don't understand why we're presenting the situation of like almost a collapse of the energy -- of energy in Venezuela.

This is not the case. We are facing important problems. We have not had rain. We invested basically in hydroelectricity. Seventy-five percent of electricity come from hydro. And we need to adjust that. So we are facing a challenge, but not the kind of collapse of crisis that it has been presented.

AMANPOUR: So the problem, though, is that not many Venezuelans are convinced by the whole environmental problem, as you call it, the shortages of water. They see, according to the polls, anyway, that there is sort of a lack of infrastructure, a lack of investment, and, for instance, the health care has problems, there's poverty, still something like 60 percent of the total population lives in poverty and more than 20 percent in extreme poverty.

And the polls are showing that, for instance, 26 percent say they might vote for the opposition in the next round of elections. And the government's popularity is falling below 50 percent for amongst the first time.

So what do you think the president has to do to redress this?

ALVAREZ: Well, the thing is, you know, having an acceptance of 50 percent is quite important for a leader. Chavez--

AMANPOUR: Below 50 percent.

ALVAREZ: -- won in '97 with 58 percent, and some of the polls in Venezuela tell you today that the popularity of President Chavez is 58 percent. It's quite important. So it's not to be about to collapse, as -- as people try to present the situation.

So what -- we will have elections, as you -- we have had 14 process of elections, electoral process in Venezuela over the past 10 years. We will have a new one in September. Let's see. We hope that in this time we will have a responsible opposition, that we participate because they did not participate last time, and then this is part of the democratic game.

So Venezuela (inaudible) facing challenges as any other country in the world and in the region--

AMANPOUR: Mr. Ambassador?

ALVAREZ: -- and going through those challenges.

AMANPOUR: You talk about the democratic game. Again, there are many complaints by Venezuelan citizens on basic attacks on basic freedoms, for instance, freedom to speak and freedom of the press. RCTV, the independent media, has been yanked from the cable system. Before that, it was yanked from regular television. And people are not happy about that. Why is that happening?

ALVAREZ: Well, the thing is -- you -- you mentioned -- it's like, for example, with corruption, what happened is the -- is a paradox with that. One is the court of Venezuela charged (ph) somebody who is perceived or seen as close to the government is a purge (ph). And if the court charges somebody who is perceived or seen as close to the opposition, it's a cracking down.

It's like, you know, the expression of damned if you do, damned if you don't.

AMANPOUR: But here's the thing--

ALVAREZ: And the thing is--

AMANPOUR: Again--

ALVAREZ: No, the thing is -- for example--

AMANPOUR: Yes, go ahead.

ALVAREZ: No, no, the thing is -- yes, go ahead.

AMANPOUR: Well, I was going to say that -- whatever -- however one might describe it, 78 percent of the Venezuelan people say they disagree with pulling that independent television from -- from the -- from the system. So, again, another question, obviously, about the Cubanization of Venezuelan politics, let's say.

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Again, many Venezuelans are worried about the number and the prominence of Cuban advisers, whether it's in the police, the army, in health care, the intelligence service from Cuba. Why is that necessary in Venezuela today?

ALVAREZ: Well, look, Christiane -- and I would like -- you know, I think you should go there and see with your own eyes, because obviously the reports that you are getting is only one side of the story. What we have in a lot of Cubans in Venezuela is in the medical sector. We have more than 20,000 doctors in Venezuela working in poor neighborhoods.

And even in the past presidential election, the candidate from the opposition, he said that he was going to keep the doctors because those doctors are loved by the population. This is a number of Cubans that we have there.

We have long cooperation, a very large cooperation with Cuba in many areas, sport, medicine, in sugar cane, in many other -- in many other areas, and people only concentrate in people that might be helping us -- be helping us in other areas. But the -- the -- the important participation of Cubans in Venezuela is in the medical sector.

AMANPOUR: OK. Well, we can follow that up a little later in all the other sectors, as well, but where do you see the president leading the country over some of these very difficult challenges over the next year or so?

ALVAREZ: In the -- we had had a major challenge with the financial system, because last year, there was a lot of private bankers that went out of the compensation, and we have to intervene. We have been able to solve that problem. Ninety-five percent of the accounts or saving accounts or current account holders, they have guaranteed their money. We have recuperated all those banks, and they're working normally. So we have gone through this process of the financial situation.

Regarding energy, we are even going to invest more than $1 billion this year, and we are incorporating 4,000 megawatts. And we have a lesson that we have learned, and the lesson is that we have to become less dependent of hydroelectricity. We are having a lot of help from Brazil. They had the same problem two years ago.

AMANPOUR: OK.

ALVAREZ: And they are helping us minimizing consumption to get through this crisis.

AMANPOUR: Ambassador--

ALVAREZ: And then we are preparing ourselves for the elections in -- the parliamentary elections in September in a normal situation (ph).

AMANPOUR: And everybody will be paying close attention. Ambassador Alvarez, thank you very much, indeed, for joining us from Washington today.

ALVAREZ: Thank you, Christiane. Bye-bye.

AMANPOUR: Bye-bye.

And next, can President Chavez deflect blame for his country's economic troubles? That's when we return.

(COMMERCIAL BREAK)

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(BEGIN VIDEO CLIP)

(UNKNOWN): He attended "Alo Presidente" nervous, but determined. Gathering his courage, he tried to tell the president that most of the residents of Federico Quiroz (ph) would not agree to relocate and if he, the president, had been told otherwise, he had been deceived.

The president barely heard him out. He couldn't have been deceived. There was no way. Where did he get that idea?

NELSON MORA, COMMUNITY ORGANIZER (through translator): At that moment, I felt bad. I closed my eyes and felt tears. And I said, "My god, why does the president treat me like this, the commander-in-chief, the leader of this process?"

(UNKNOWN): I suspect, he said, that Nelson Mora might be defending other interests. In other words, he was an infiltrator because here he was attacking and throwing stones at everybody, at "Alo Presidente," at Chavez, at the ministers, everyone.

(END VIDEO CLIP)

AMANPOUR: That was a clip from the documentary "The Hugo Chavez Show" produced by Ofra Bikel for the "Frontline" program on PBS. It shows the TV show "Alo Presidente," where President Chavez addresses his countrymen.

And joining me now from Caracas is the opposition politician and democracy activist Leopoldo Lopez. He's been banned from running for office. And here in the studio with me is Michael Shifter, director at the Inter-American Dialogue.

Gentlemen, thank you both very much for joining me. Let me ask you first, Mr. Lopez: Is there any chance whatsoever that the opposition can make any kind of showing in the upcoming elections? We've heard that the opposition is fragmented and doesn't really have a solid footing right now.

LEOPOLDO LOPEZ, VENEZUELAN DEMOCRACY ACTIVIST: Well, to answer that question, one needs to be in context of what's happening in Venezuela. We don't have a normal democracy. We don't have fair play in an electoral process.

The government has progressively taken over the media in order to present messages. The government has progressively taken over different ways of presenting an alternative. And as you said in the clipping, those that are not with the government or share the views of the government are presented as enemies of the republic.

So a government that has control of all the powers of the military, all the petro dollars that are used for campaign without control, that's no fair play for an electoral process.

AMANPOUR: OK.

LOPEZ: However, one needs to say that we have already won elections. We won in 2007 a national election, and we won again in the year 2008. So, yes, we can win if we present the right candidates and if we go knowing that this is David against Goliath, because that's what the show for an election in Venezuela going to be, David against Goliath, or if we have a precise take of this elections, yes, we can win.

AMANPOUR: Mr. Shifter, can David versus Goliath win? And how do you square the fact that Hugo Chavez does remain very popular, despite some of the crackdowns that Mr. Lopez is describing?

MICHAEL SHIFTER, VICE PRESIDENT, INTER-AMERICAN DIALOGUE: Well, Chavez is popular because he has an emotional bond with a lot of Venezuelans, and he put his finger on a legitimate grievance in Venezuela, inequality and justice. The problem is, he can't solve the problem. He can't deliver results.

AMANPOUR: Why not?

SHIFTER: So people -- because of the model of governance. He's the only one who makes decisions. He has -- his style has been one of confrontation. There's greater polarization in Venezuela than ever before. Both sides are at each other, and you can't manage an economy, you can't bring a society together if you have that level of confrontation, and that is the -- that, I think, is the core failing of Hugo Chavez.

So he has the bond. He's put his finger on a -- on a grievance. He has the oil money. But there's been a lost opportunity. The results speak for themselves.

AMANPOUR: Mr. Lopez, a lost opportunity from a country which really does have a huge amount of wealth, oil wealth, amongst other things. What are the people saying? Are these polls correct that more and more people are disaffected with the -- the state of the economy, the state of the power outages, water shortages, et cetera?

LOPEZ: Well, certainly. Ten years into a government that has failed to commit to its promise of change 10 years ago is enough for Venezuelans to see that this is not the way to bring about change, not only electricity shortage, water, but also a security. I would like to show briefly some figures.

In the year 1998, there were 8,620 homicides. In the year 2009, 19,400 homicides. And that's a change of 125 percent in the amount of Venezuelans that are killed by violence every year here. And that's a reality that the government cannot deny. Not only Venezuelans that are being killed in the streets, but they don't have a shot for justice for the families that are being killed.

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AMANPOUR: Can I ask you a quick--

LOPEZ: So on the one hand, government failure, as Michael Shifter said. I agree with that. But, on the other hand, you have a government that is progressively going against the basic issues that can call a government a democracy, freedom of speech, freedom to unionize, and other basic aspects that define a democracy.

AMANPOUR: Let me ask you, Mr. Shifter -- we briefly touched with Ambassador Alvarez on the issue of Cubanization. Is that as serious a problem as some people inside -- inside Venezuela think?

SHIFTER: Well, the problem with Venezuela, again, is the lack of institutions and lack of capacity. Cuba has a Ministry of Health at least. In Venezuela, the health system is terrible. There are no institutional abilities, and so people are not receiving any benefits.

Clearly, the influence, the effect of Cuba is very, very strong. Cuba needs Venezuela; Venezuela needs Cuba. It gives Chavez a revolutionary carne (ph), his credential, Cuba, and Cubans need the oil and need the money from Venezuela. So there's a mutual need there.

AMANPOUR: But isn't it extraordinary that Cuba, which has a fraction of Venezuela's wealth, is apparently propping up the government so significantly in all the basic services, even in police reform, in the military doctrine?

SHIFTER: Cuba's expertise is in control, and that's what Chavez needs right now, so that's what the Cubans are providing. Venezuela is worried about losing control. The problems are mounting. The decay is deepening. And so the Cubans are coming in to shore them up.

AMANPOUR: Mr. Lopez, I know you sound optimistic. You talk about playing David to Goliath. But how optimistic can you be if there is such a controlled atmosphere in Venezuela? How can even a David play any real role in elections?

LOPEZ: Well, since the time of David -- and we won't be the first society that can overcome a dictator-type government. We won't be the first society to overcome a society that seeks and its hunger is to control all society in the economy, in the media, and in all government aspects.

What we need to do is to organize ourselves. Yes, we have elections, as we had last year and as we will have next year and the year after. But elections is not enough. We need to organize ourselves in unions, community leaders, and especially -- and I would like to underline this -- especially the young. The young--

AMANPOUR: OK.

LOPEZ: -- have brought up new perspective, new hope for Venezuelans. The young people are not with the government, and we need to organize those three big flows of energy, the union leaders, students, and community leaders--

AMANPOUR: Mr. Lopez--

LOPEZ: -- to bring about change in Venezuela. Change will be possible in Venezuela.

AMANPOUR: Mr. Chavez is very charismatic. He has that bond, as Mr. Shifter has talked about. Who is supporting him? Because he still has support.

LOPEZ: Well, when -- when one can talk about the popularity of our government, I would ask the following questions. Is the government popular when it tries to restrict the message that is being presented to Venezuelans? For example, today, the government has presented the possibility to control Internet access. The government also is controlling, as we said, before the economies, nationalizing, statist view of the economy.

AMANPOUR: OK.

LOPEZ: So when we talk about popularity or not, those are measures that are not taken by a popular government, so I will answer that what the government is doing now is basically going away from measures of popular governments to measures of power-hungry-type governments.

AMANPOUR: Mr. Shifter, is that right? Is he shifting from this popular leader to a -- to an autocrat?

SHIFTER: Well, he is. But I think his base wants to be sure that the opposition doesn't want to go back to the pre-Chavez days, because that -- that is also not the alternative. And I think the challenge for Leopoldo Lopez and other members of the opposition is to show that there's a viable alternative, to show that they're forward-looking, and to unify an opposition to present an alternative platform.

That -- that still remains the key challenge. There have been improvements in the opposition, but I think that they really have to focus on that main task.

AMANPOUR: Michael Shifter, Leopoldo Lopez, thank you so much, both of you, for joining me on this program.

And we have a discussion brewing on amanpour.com/facebook. Weigh in on whether you believe Hugo Chavez will be re-elected when his current term ends. That's in about three years.

And next, our "Post-Script." Venezuela is promising to give aid to Haiti, and so is its former colonial master in the form of President Nicolas Sarkozy. We'll tell you why his visit to Haiti is so extraordinary.

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