This editorial appeared in The Miami Herald.
President Hugo Chavez's victory in Sunday's referendum opens the way for him to become president for life. This is a personal triumph for Mr. Chavez and his party, but it represents a huge setback for the people of Venezuela. Saddled with a president determined at all costs to sustain and consolidate his hold on power, they have growing reason to fear for their country.
Well before the referendum, the international financial community had cast a vote of no confidence in Mr. Chavez because of his bizarre economic program. In December, Standard & Poor's lowered the country's debt-rating outlook to negative from stable. Last month Moody's Investors Service, which rates Venezuela's debt five levels below investment grade at B2, removed it from a rating-increase review.
Of course, practically every country in the world is suffering economically, but Mr. Chavez's mismanagement of Venezuela's oil-rich economy has made matters worse than they should be for his countrymen. According to a Bloomberg analysis, investors demand 18.05 percentage points more in yield on average for Venezuela's dollar bonds than comparable U.S. Treasuries. That is more than four times the yield spread for Brazil's dollar bonds, and greater even than the spread for dollar-denominated bonds sold by Argentina, which defaulted on its debt in 2001.
Meaning: The international community does not trust Mr. Chavez and will probably trust him even less as he continues to eliminate the institutional restraints that limit his authority.
All this is directly related to Mr. Chavez's victory. One reason he won Sunday's vote is the use of bully tactics against opponents. The other big reason: lavish spending designed to curry favor with voters. In the process, the government has become a combination of campaign organization and patronage machine at the service of Mr. Chavez.
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