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Federations Magazine Article
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Decline of federalism in Venezuela

Ei g h t y e a r s i n t o h i s
“Bo l i v a r i an Re vo lut i on,”
President Hugo Chávez has
been making changes that chip
away at federalism in Venezuela, which
in 1811 became the first federal country in
Latin America.
What the Chávez government has
undone is much of a legacy of two centuries
of federalism in Venezuela.
After the federal Constitution of 1811,
there was a swing toward centralization
due to the Spanish legacy of hierarchical
and authoritarian political structure, and
centralized control of mineral resources.
By the end of the 19th century, a highly
centralized system of government had
been imposed and Venezuela was federal
in name only.
A new constitution in 1961 allowed for
decentralization, but little was done until
1989, during a deep political and economic
crisis, when the necessar y
consensus was reached. This consensus
permitted the reform of the central government
with the goal of reviving the
federal nature of the country through
political, administrative and economic
The first major reform provided for
direct, secret and universal elections to
elect state governors. In addition, new
provisions created the position of mayor
and established direct voting for mayors.
A new law provided the legal underpinning
for transferring powers, services
and resources. Then, in 1993 and 1996,
additional laws were enacted with the
aim of ensuring that intergovernmental
transfers were sufficient for the subnational
governments to carry out their new
In September 2007, new constitutional
changes were given second
reading in the National Assembly to
Decline of federalism in Venezuela
President Chávez’s revolution has no room for a strong federal system
Christi Rangel Guerrero is a professor at Venezuela’s University of the Andes, project
coordinator for the Ibero-American Center for Provincial and Local Studies, and editor in chief
of Provincia magazine.
v ene z uela
OCTOBER | NOVEMBER 2007 Federations
Venezuelan President Hugo Chávez explains the world to school children in the town of Maturin in September. His “missions” in areas of
education, health and welfare make up a parallel system of service delivery that is challenging the existing order.
remove the limit on the number of times
a president can run for re-election. These
changes, which also give the government
power to expropriate private property
without judicial approval, will go to a
public referendum if approved on third
Venezuela’s Senate, which previously
had to approve constitutional amendments,
was abolished in 1999 when a new
constitution was adopted by a constitutional
convention where 80 per cent of
the delegates were supporters of
President Chávez.
A new centralism
In June 2007, invoking a presidential
decree, Chávez created the
Central Planning Commission. The
commission represents a significant
change to the country’s
economic system. The creation of
the central commission appears to
clash even with Chávez’s own 1999
Constitution, which states that the
“Bolivarian Republic of Venezuela
is a decentralized Federal State.”
In the past eight years, laws
passed under the new Constitution
have promoted a new centralism.
This was done by imposing regulations
applicable to all levels of
government with regard to procurement,
government operations,
public administration, land transportation
and transit, tourism and
A further centralizing step was
accomplished by changing laws
related to public budgeting to
reduce the transfer of revenues
from the central government to the
states. Neighbourhood organizations
called communal councils,
whose makeup and financing
depend on the Presidency, were created
with powers of public management that
deal with state and municipal matters.
The Chávez government’s constitutional
provision requires the adoption of
laws to implement the new federal system
and to increase decentralization.
Effects of the participatory
democracy program
Since 1999, Chávez has been introducing
a political program that he says favours
“participatory democracy.” To this end,
he began imposing a centralized
approach to government service delivery
that sidestepped the existing federal system.
The president created what he
called “missions” in the areas of welfare,
health and education through a system
of parallel off-budget funding. This strategy
increased his political influence
among many in the states and municipalities.
At the same time, these actions
minimized the power and functions of
all agencies of subnational representation,
amid an aggressive campaign to
discredit them. Some of the methods he
used were to:
• Create parallel national structures for
providing public services within the
jurisdiction of states and municipalities.
• Reverse the process of transferring
• Administer the main sources of public
revenues so as to limit the actions of dissident
subnational representatives.
• Create off-budget funds that evade controls
and increase discretionary action
in centralized public spending.
An example of the last point is the
expansion of control over communications,
such as radio and television
stations and the Internet, which was
done in the name of defending the system
of “direct democracy,” thereby
eliminating intermediaries between the
president and the people.
These central government practices
are taking place in a country with very
weak political parties and a fragmented
electorate, whose pro-federal elements
were accused of taking extreme stances.
In a general strike in 2002, many state
and municipal governments with opposition
leaders closed their government
offices in the struggle to change the people
in power at the national level. While
most of these leaders took part in democratic
and peaceful protests, some
also participated in an unsuccessful
coup against Chávez in 2002.
In addition, the deep political
polarization between those who
favour and those who oppose the
president’s program has left little
room for discussion of the consequences
of the re-centralization
process and its impact on efficient
public management and the democratic
Centralizing effects
The new Constitution brought in by
Chávez in 1999 did include aspects
of decentralization that already had
constitutional status. However, it
did not further the transformations
needed to entrench federalism
more deeply, such as increasing the
taxation powers of the states or ceding
additional powers and services
to them. Instead, the Constitution
showed a reversal of the trend
toward expanding the federal system
• Eliminating the Senate, a chamber
that represented geographic areas.
• Establishing that national laws
define the organization and operation
of state legislatures (Article 162).
• Stating that national power is inherent
in organizing municipalities (Article
• Making centralized management controls
a concurrent power of national and
state governments (Article 165).
• Concentrating power in the Presidency
of the Republic (Article 236).
• Establishing an upper limit on the proportion
of regular revenues transferred
from the national government to states
[please turn to page 30]
Venezuelan soldiers guard the transmitter of Radio
Caracas TV in Maracaibo after taking control of the station
in May 2007. President Chávez refused to renew the
station’s license.
OCTOBER | NOVEMBER 2007 Federations
REUTERS/Isaac Urrutia
bel gium [from page 3] vene zuela [from page 25]
Missing: political unity over social
In August, the Fondation Roi Baudouin, a
Brussels-based charity established in
1976 to work for justice, democracy and
respect for diversity, sent a special report
to the presidents of all political parties,
reinforcing the climate of disillusionment.
Its authors, Michel Roland, of
Université Libre de Bruxelles, and Jan De
Maeseneer, of Ghent University, highlight
the essentially inequitable nature of
the health care system. They conclude
that depending on a person’s ranking on
the income scale, on average, she or he
may die five years earlier than another of
higher rank. They add that on average,
those with a lower level of education may
experience 25 fewer years of good health
than well-educated citizens.
Belgians are not equal when it comes
to health. And the Fondation, which
claims that the Belgian government is
indifferent about this inequity, has submitted
concrete proposals to the
government coalition negotiators to create
a federal body to combat inequalities
in the health care system, enhance primary
care and step up preventive efforts.
Reforms require the financial means
to carry them out, and these means are
not lacking in Belgium. Since 2005, the
centrally managed pool of pensions,
health and disability insurance, unemployment
and family allowances has
posted surpluses. To date, this money
has been used to pay off debts and to bolster
the Fonds de Vieillissement (Aging
Fund), created in 2001 to cover the costs
generated by the growing number of
senior citizens. Other steps are expected.
Economics professor Deschamps
advocates broadening responsibilities
for the regions and increased co-operation
between the federal government
and the constituent units.
“Co-operation here is still piecemeal,
in contrast to countries like Germany,
where federalism is really entering a
phase of maturity.”
What is needed is a maturity that
requires imagination, Cantillon said. “In
Flanders, people see separation as the
cure-all. At the other end of the country,
people feel continually under threat. This
situation puts social security on the line.
It prevents us from coming up with more
constructive solutions.”
OCTOBER | NOVEMBER 2007 Federations
A mural in Caracas portrays Fidel Castro and Hugo Chávez. The legend reads “Cuba and
Venezuela: the two countries are brothers.”
REUTERS/Jorge Silva
and municipal i t ies through the
“Constitutional Transfer”.
• Granting authority to the central government
to establish limits on state and
municipal taxation powers (Article 156).
Essentially, with the inauguration of
Hugo Chávez as president in 1999, the
processes of decentralization and federalism
were reversed. Chávez could not
turn back the clock and prevent the
achievements of the previous decade
from influencing the Constitution
adopted in December 1999.
However, according to constitutional
expert Allan Brewer-Carias, the 1999 cons
t i tut ional text cont radict s the
Constitution’s initial intent, and “covers
with a democratic veil a highly centralized
and authoritarian system in which
powers can be concentrated, which has
in fact happened.” Defenders of the
Chávez government have a different
interpretation, such as that of Member of
Parliament and constitutional scholar
Carlos Escarrá. According to Mr. Escarrá
the Constitution of 1999 is in the process
of being reformed in order to, among
other objectives consolidate the “peoples’
power.” He added that the
government hopes to deepen the dispersed
decentralization proposed by
President Chávez.
The future of federalism
The presence of a federal structure
enabled the Venezuelan opposition to
rally around the only serious opposition
candidate for president, Manuel Rosales,
the governor of Zulia State, in 2006.
Governors and mayors have been elected
by coalitions opposing the president’s
program. They are against presidential
Legal Decree No. 5841, which creates a
mandatory system of centralized planning
for all government entities,
including states and municipalities.
As for finances, all the states depend
on intergovernmental transfers from the
national government. The national government
has used its administrative tools
to slow or deny payments, but the transfer
that accounts for most of the money,
called the Constitutional Transfer, is subject
to less discretionary action. This gives
the states some autonomy in spending,
and transfers have grown in real terms
with the increase in the national government’s
budget, although less so than the
central government’s finances. This condition,
combined with the fact that the
majority of Venezuelans approved of the
changes that took place after decentralization,
may have protected state
government finances so far. Also,
Venezuelans typically associate their cultural
values and individual rights with
their geographic location. Most people
did not believe that political decentralization
could be reversed.
The efforts on the part of President
Chávez to impede the states’ autonomous
actions demonstrate that, to date,
even a weakened federalism represents
an obstacle to his other goals that require
an increasing concentration of power in
the central government. The current situation
is one of uncertainty for those who
defend Venezuela’s federal model.