Democracy Lab

The Military's Still in Charge

Why reform in Burma is only skin-deep.

Since ex-general Thein Sein assumed the presidency in March 2011, foreign observers have generally appeared optimistic that Burma is on its way toward some kind of liberal democracy. The only snag seems to be the ongoing conflict with ethnic rebels in Kachin, Burma's northernmost state, which has been explained as local commanders acting with "an unusual degree of autonomy." Either that, or people question the president's ability to control the military during the country's democratic reform. Some foreign analysts have argued, however, that the outside world needs to support Thein Sein's "reformist" government against so-called "military hardliners." 

According to this narrative, neither Thein Sein nor the military are held responsible for the brutal suppression of the Kachins, which has not come to an end despite a tentative peace agreement reached in the state capital of Myitkyina in May 2013. In fact, the two sides only agreed to undertake efforts to achieve "de-escalation and cessation of hostilities" and "to hold a political dialogue." No firm commitments were made concerning when and where such talks would take place.

This decades-long civil war reached its height in January 2013 with the inclusion of massive artillery barrages supported by airstrikes from helicopter gunships and fighter jets. It defies logic that such a large-scale offensive could have been launched by some local commanders or, as the Washington-based Center for Strategic and International Studies claims, that "a minority of the military" is acting "as a spoiler" to the democratization process. This assessment reflects a lack of understanding of the Burmese military's command structure as well as of its relationship with Thein Sein's government.

It is too often forgotten that Thein Sein came to power through the State Peace and Development Council (SPDC), the name for Burma's military regime. The SPDC seized power in 1988 and was officially dissolved in March 2011 when Thein Sein assumed the presidency. Thein Sein was heavily involved with the junta government. His positions included general of the Burmese army, first secretary of SPDC, and later prime minister (a position he held up until he became president).

At no stage in his career did Thein Sein display any political independence or initiative. He was a loyal soldier, hand-picked by then-SPDC chairman and prime minister, Than Shwe. Thein Sein always said and did what he was told.

For instance, in the summer of 2010, while serving as prime minister, Thein Sein received a delegation from North Korea. He was quoted praising the military advancements of the Korean people under Kim Jong Il and advocating the strengthening of the countries' friendship. In those days, Burma was not shy to admit its friendly relations with North Korea.

The cooperation continues today, only in secret. A Burmese businessman who recently met Thein Sein in private described him as "indecisive, just repeating what's been said in official announcements, saying what he has been told to say."

So, who is telling Thein Sein what to say? According to sources familiar with high-level Burmese military thinking, Thein Sein was selected because he had "no ambitions" and would not pose a threat to Than Shwe, who slipped from public view into supposed retirement.

In June 2010, Than Shwe picked his trusted colleague, Min Aung Hlaing, to become head of the armed forces. Min Aung Hlaing was another soldier who could be trusted not to turn against his former mentor; he, too, is not known for being an independent thinker.

Both President Thein Sein and Senior General Min Aung Hlaing owe their positions to Than Shwe. Than Shwe remains a powerful player behind the scenes and, according to military insiders, still has the final say in matters concerning security.

Burma's power structure with the military at its apex has not changed. It would therefore be incorrect to talk about a transitioning political system. It is more important now than ever to understand what is really happening in Burma and how change may or may not come about.

The country's constitution was drafted by a military-appointed body and was adopted after a rigged referendum in May 2008. The referendum was held when Cyclone Nargis hit the country, which caused widespread destruction in parts of the country near the coast. Officially, 92.48 percent of eligible voters voted in favor of the new constitution, which came into effect after a general election in November 2010.

That election was also blatantly rigged and thoroughly fraudulent. Even the regime's own announcements demonstrated this. State-run media had to correct previous reports that stated that 102.09 percent of Pegu Division had turned out to vote. The correct figure, the announcement said, should have been 99.57 percent. Likewise, in a township in western Rakhine State, 104.28 percent of the electorate were said to have voted; that number was later adjusted to 71.74 percent.

The Irrawaddy (a Thailand-based newsmagazine run by Burmese exiles) quoted a Rangoon businessman as saying that the military's Union Solidarity and Development Party (USDP) "won in two constituencies where the elections had been cancelled in Kachin State -- the USDP not only won across the country, but also in areas where the elections were not held." A well-placed source in Rangoon said that he and many of his friends had voted for one of the pro-democracy parties that took part in the election. Its win in their township was confirmed when the local votes were counted. But then, a number of "advance votes" were dumped into the constituency, reversing the initial result. Similar cases of fraud were reported all over the country.

The USDP is the successor to the Union Solidarity and Development Association (USDA), which was set up by the junta government in September 1993. Among USDA membership were Than Shwe and Thein Sein. The association, which claimed to have 24 million members, became a party in March 2010, with Thein Sein as its leader, in order to take part in the November 2010 elections. It secured a solid majority in both houses of the new bicameral parliament. Even of the seats it did not win, a quarter of all seats in both houses are directly appointed by the military and selected from serving military officers. 

With a new constitution in place, and a parliament it could control, Burma's ruling military elite felt that it could embark on a reform program to enhance its severely tarnished international reputation. It hoped to improve relations with the West in order to counterbalance its heavy dependence on China, which, according to internal documents from the Burmese army made available to me, was causing "a national crisis." Thus opposition leader Aung San Suu Kyi was released from house arrest shortly after the election, hundreds of political prisoners were set free, and the media was allowed to operate amazingly freely after decades of rigid censorship.

In April 2012, Aung San Suu Kyi's party, the National League for Democracy (NLD), took part in a by-election to fill seats left vacant after USDP delegates were appointed ministers and deputy ministers. According to the new constitution, cabinet members cannot both sit in the Parliament and be members of a political party. The NLD won 43 of the 44 seats the party contested. Aung San Suu Kyi became a member of parliament -- but her party is in control of only 7 percent of all seats.

Critics say her performance, and that of the NLD, has been entirely disappointing. They have not acted as an opposition, questioning official policies and presenting alternatives. Instead, they have trudged after the government, asked a few questions but offered nothing new. Khun Htun Oo, a prominent leader of the Shan people, one of Burma's many ethnic minorities, said that Aung San Suu Kyi had been "neutralized" by the government, and as such, "can no longer speak for the people." Her silence over the war in Kachin has caused not only criticism but also widespread condemnation, especially from Kachin community groups who feel betrayed.

To the satisfaction of Burma's rulers, Aung San Suu Kyi has morphed from a once fiery opposition leader into an avid supporter of their new order. In her most recent praise for the military, speaking at the East-West Center in Honolulu in January 2013, Aung San Suu Kyi said: "I've often been criticized for saying that I'm fond of the Burmese Army, but I can't help it, it's the truth."

Such statements have been widely perceived as insensitive and have cost Aung San Suu Kyi support among Burma's ethnic minorities, many of which looked to her for inspiration during the darkest days of military rule. As Aung San Suu Kyi spoke in Hawaii, thousands of Kachins, mostly women and children, were hunkered down in newly dug bunkers near the Kachin rebel headquarters while the army and air force ramped up their indiscriminate bombardment.

There is actually little Aung San Suu Kyi can do about the dominant role of the military. The first chapter of the 2008 constitution states that the "Defense Services" shall "be able to participate in the national political leadership role of the State." And it does so by holding 25 percent of all seats in the national parliament. The charter lays out complicated rules for constitutional amendments, which effectively give the military veto power over any proposed changes to the present power structure. Minor constitutional changes may be considered by if 20 percent of MPs submit a bill. However, a tangle of 104 clauses mean that major charter changes cannot be made without the prior approval of more than 75 percent of all MPs, after which a nationwide referendum must be held where more than half of all eligible voters cast ballots.

This complicated procedure, coupled with Burma's record of holding bogus referendums (the first, held for the 1974 constitution was as lacking in credibility as the one held in 2008) make it virtually impossible to change those clauses. This legally perpetuates the military's indirect hold on power.

As for the MPs-to-be, constitutional safeguards are already in place to make sure they don't cause any trouble after they are elected. Article 396 of the new constitution ensures that the Union Election Commission (which is indirectly controlled by the military through personal contacts and) can be dismissed for "misbehavior." And, if the "democratic" situation gets really out of hand, Article 413 gives the president the right, "if necessary," to hand over executive as well as judicial powers to the commander-in-chief of the armed forces.

It gets even trickier at the local level: Burma's seven regions and seven states all have their own assemblies. There, one-third of all elected seats are reserved for the military, and local assemblies are subjected to perhaps the most curious of clauses in the 2008 Constitution. Number 183 reads: "The resolutions and proceedings of the Region and State Hluttaw [assemblies] shall not be annulled, notwithstanding the acts of some person who was not entitled to do so sat or voted or took part in the proceedings are later discovered." 

In simple language, a group of imposters could enter the local assemblies, sit there, and vote, and nothing can be done about it, even if they were not elected. The purpose of the clause is to prevent local assemblies from passing decisions and regulations that would give them more rights and jeopardize the centralized structure of the state. Through the clause, these efforts can be thwarted by blocking elected local assemblypersons from voting and instead sending in "some persons" to vote in their place. 

A Burmese lawyer argues that the new setup is based on Than Shwe's calculations. Previous Burmese dictators made the mistake of handing off power and not maintaining a proper legacy. When he stepped aside in 2010, Than Shwe took a different path in order to protect himself and his children and grandchildren. He created four centers of power: the military, the central government, the de facto ruling USDP, and parliament. Parliament is the only center of power in which some token opposition is tolerated. 

Of those four power centers, the military remains the most important. Apart from its special powers, it also controls the National Defense and Security Council, which acts above the government. Thein Sein may be its chairman, but that is irrelevant. Five of its 11 members are serving military officers and another five are former officers. Only one is an actual civilian. The military is not under Thein Sein's command, but under that of Min Aung Hlaing who, in turn, reports to his mentor Than Shwe.

What Burma has today is a military government and power structure with a quasi-civilian facade. Opposition parties and freedom of expression are tolerated within the confines of what the military can manage and control. It is highly unlikely that the military would allow the NLD to assume power even if it wins in the 2015 elections. It may, however, be able to appoint some ministers in the government. But, according to the constitution, these ministers and deputy ministers would have to resign from their parliamentary posts and even their respective political parties once assuming cabinet posts. The NLD will thus be "tamed" and become part of the established order.

The pervasive reach of the military doesn't just extend to the formal branches of power. It has its hands in Burma's supposedly "freed" society as well. The media may be freer than ever before under military rule, but more sophisticated methods have replaced old censorship rules. In January and February, the website of the Eleven Media group, the country's largest privately-owned publishing company, was hacked and pictures and other material were deleted. Eleven Media was the first domestic news group to report objectively about the war in Kachin State. One of its journalists, who traveled to the war zone in Kachin, was kept under visible surveillance, a method frequently used to intimidate people. The email accounts of several journalists, both Burmese and foreign, have been hacked by the military. Burma's dreaded secret police, known among the public as "M.I." or "Military Intelligence," is alive and well. And Burma's most draconian press law, the 1962 Printers and Publishers Registration Law, which was introduced after the first military takeover, has not been revoked. 

Though the 1962 law is not currently being enforced, in May 2013 the Committee to Protect Journalists published a report that states that the media environment in the country remains repressive despite recent liberalizations. In June, Time magazine was banned for carrying a story about a controversial Buddhist monk, U Wirathu, whose sermons allegedly encouraged mobs to attack the country's Muslim minority.

At the same time, the military has retained its powerful position in the economy and economic development through its two vast holding companies, the Union of Myanmar Economic Holdings (UMEH) and the Myanmar Economic Corporation (MEC). UMEH, founded in 1990, is run by the Burmese military. The Directorate of Defense Procurement, the body that oversees Burma's purchases of military equipment from abroad, owns 40 percent of the shares while active and veteran military personnel control the remaining 60 percent. According to a Reuters special report, UMEH "enjoys unrivaled access to import permits and monopolies." And according to Sean Turnell, an expert on the Burmese economy at Australia's Macquaire University, "for years, ex-dictator Than Shwe controlled the profits." MEC was founded in 1997 and is a far more secretive organization operated under the Directorate of Defense Procurement with interests in heavy industries and IT ventures.

While this new system suits Than Shwe and his immediate underlings, it may not work in the long run, and it is in this context that future conflicts could emerge. The man to watch is ex-General Thura Shwe Mann, number three in the former SPDC and now parliamentary speaker. He has reportedly forged an informal alliance with Aung San Suu Kyi against Thein Sein, but that may be a temporary arrangement as sources who are familiar with the process say that he will dump her when she is no longer needed to boost his popularity. On the other hand, military insiders assert that Shwe Mann is not popular with the regional commanders. He is seen as "too ambitious" and could pose a threat to the established order. 

Shwe Mann may or may not succeed, but there will be more conflicts and power struggles within the ruling military elite. It is there -- and not in the parliament or even the government -- that the future of Burma lies. Than Shwe has just turned 80 and is reportedly not in good health. It remains to be seen if the power structure he has created will survive him. Optimists argue that the passing of Than Shwe could herald in a new, even more open era in which the military may even fade into the background. Skeptics, however, remember that foreign observers and Burmese alike used to say the same thing about the old strongman Ne Win -- and that the military has managed to remain in power in one shape or another. The only thing that is clear is that despite all the hype, Burma's "reform program" is only skin-deep and designed to preserve the military's grip on power, not undermine it.

Ye Aung Thu/AFP/Getty Images

Democracy Lab

The House That Chavez Built

Hugo Chávez subordinated the needs of Venezuela’s economy to the imperative of keeping himself in power. Now the job of cleaning up falls to his successor.

Love him or hate him, Hugo Chávez was a savvy politician -- a point that one might see as ironically confirmed by the timing of his death. For the Venezuelan president leaves the scene at the peak of his political career, but just in time to miss what is likely to be a severe economic downturn. This downturn might have permanently blackened his legacy had he remained alive. It is, in any case, entirely of his making. 

Politically, Chávez died at a moment of sky-high popularity among his supporters, in part because of his own ability to portray himself, over the last two years, as a true martyr, a man willing to sacrifice his health and his life for his country, his movement, and his people. At the same time he bolstered his reputation abroad through his lavish dispensation of foreign aid and trade. The Chávez administration's spending on South-to-South aid in proportion to gross national income, for example, is second only to that of Saudi Arabia. Within Latin America, he learned late in his career that he could develop good relations even with countries on the opposite side of the political spectrum (Colombia, Chile, and Mexico) simply by becoming a leading importer of their goods. Learning to contain his criticisms of other Latin American leaders, as he did also late in his career, also helped. 

So should his designated successor, Vice President Nicolás Maduro, actually manage to assume the presidency, he will find himself commanding a remarkable store of political capital. Yet Maduro (or whoever else ends up following in Chávez's wake) will also inherit one of the most dysfunctional economies in the Americas -- and just as the bill for the deceased leader's policies comes due. 

By now it's widely understood that excessive dependence on commodity exports can distort an economy in fundamental ways. One manifestation of this principle is what has come to be known as "Dutch Disease" (named after the problems faced by the Netherlands as it reaped a windfall from North Sea oil in the 1970s). Dutch Disease occurs when a country that is excessively dependent on commodity exports experiences a price boom. The sudden inflow of foreign currency raises the demand for local currency, yielding an uncompetitive exchange rate. This overvalued exchange rate, if unaddressed, can kill the country's other exports as well as stimulating an avalanche of imports, which can hurt domestic producers. 

There is no question that Venezuela under Chávez came to experience one of the worst cases of Dutch Disease in the world. The Chávez government deliberately maintained an overvalued exchange rate during the oil boom that began at the end of 2003. Although there have been periodic devaluations (five in the last nine years), these were never deep enough. Because of this persistent overvaluation, Venezuela's trading sector became increasingly distorted. Exports of fuels boomed, but by 2008 exports of everything else had collapsed. Meanwhile, imports have flooded the country on an unprecedented scale, to a greater extent than even during the free-trade years of the early 1990s. 

All this would have been bad enough on its own. But Chávez's response to Dutch Disease exacerbated Venezuela's economic ills. Instead of, for example, squirreling away some of the country's oil windfall profits in a rainy day fund, as a way of minimizing their impact on the rest of the economy, Chávez chose instead to spend lavishly on his constituents, creating the basis for the broad electoral coalition that kept him in power for so long. To the poor, he gave a vast array of social services, spanning doctors from Cuba, college degrees at newly created universities, free appliances, and even new homes. To the rich, he gave preferential access to exchange rates and hefty government contracts, all of which multiplied the fortunes of many wealthy Venezuelans. This overspending had a clear electoral bent. For the 2012 presidential election, according to the Venezuelan think tank Ecoanalítica, the government spent twice as much than it did for the 2006 presidential election. 

This lavish spending wrecked Venezuela's fiscal health. According to Barclay's, Venezuela's fiscal deficit went from 2.8 percent of GDP in 2007 to almost 16 percent in 2012. In addition, public sector debt has ballooned. Even the state-owned oil company, awash with cash, has increased its debt.

All of this stands in stark contrast to other petro-states around the world, who during the same boom period registered either huge fiscal surpluses or small deficits. Even the worst-performing economies of Europe (Greece, Spain, and Iceland) have deficits no higher than 7-8 percent of GDP, which look quite moderate in comparison to Venezuela's. The resulting situation is so extraordinary, indeed, that we might be better off referring to this set of phenomena as a uniquely Venezuelan syndrome: "Venezuelan Disease." 

Overspending has two predictable effects. The first, a positive one, is to stimulate job creation. Today, Venezuela's unemployment rate is an impressive 5.9 percent, lower even than that of Germany. The second, more negative, is inflation. In Venezuela, the inflation rate at the end of 2012 surpassed 25 percent, possibly the third-highest in the world (even loftier than that of Zimbabwe and Turkey, to mention just two of the worst inflation-offenders in recent memory). This inflation rate is all the more unusual given the high levels of imports, which tend to put downward pressure on prices. 

Venezuelan Disease involves more than just fiscal profligacy. It also involves misguided responses to inflation. Populist governments tend to make their worst mistakes in dealing with inflation. Governments today, unlike in the 1960s, have learned to worry about inflation because it is one of the quickest ways to expand poverty. Inflation acts as a form of consumption tax that falls heavily on low-income, salaried groups, lowering their purchasing power dramatically. Populist governments in particular panic about inflation precisely because it hurts the very same group they want to court -- namely, low-income workers. But rather than cutting back on spending and introducing productivity-boosting reforms (in order to increase the number of goods that currency units are chasing), populist governments respond to inflation by imposing microeconomic controls. 

They tend to favor three types. Foreign exchange controls try to lower the demand for dollars by restricting access to them. Retail price controls make raising prices illegal. And labor market controls, which aim to protect low-income salaried workers, can range from raising the minimum wage to making it harder for employers to fire employees. Venezuela under Chávez saw all three forms of controls. 

The problem is that these controls end up exacerbating the very same problems they are meant to address. For instance, exchange rate controls accentuate rather than alleviate the demand for dollars; those who hold increasingly undervalued bolívars, the Venezuelan currency, become desperate to get rid of them. 

Price controls, in turn, precipitate a supply crisis. Producers facing price controls for their products, in a country with galloping inflation, soon discover that their costs exceed their allowable retail prices. At this point, production is no longer profitable. Producers must either discontinue that product (which yields scarcity) or switch to importing (which stimulates the demand for dollars, offsetting the government's effort). 

And labor controls produce more inflation and labor scarcity. By imposing an excessive increase in minimum wages, the government is actually increasing rather than decreasing the inflationary pressures on the private sector. And by creating restrictions on firing labor, the government creates labor scarcity. 

This is a vital point. When workers cannot get fired easily based on job performance, they begin to underperform. In Venezuela under Hugo Chávez, the government increasingly restricted the ability of the private sector to fire workers. The latest labor code, for instance, makes it virtually illegal to fire workers for missing work. Venezuela is unusual in that firms need permission from the state to fire workers.  Consequently, absenteeism in the workplace is booming. In February, El Nacional, a Caracas daily, reported from various business chambers that absenteeism is on the rise, currently ranging from 5 to 46 percent depending on sector and firm. 

The key point is that the excessively populist approach of relying on controls results in a microeconomic collapse. The entire economy, whether public or private, experiences a productivity crisis. In the Venezuelan public sector, the most embarrassing example is the oil industry, the government's most important source of cash. The Venezuelan oil industry is in the midst of a schizophrenic episode. On the one hand, levels of proven oil reserves and export prices are at historical highs. But productivity has plummeted. So dismal is the oil sector's situation that Venezuela now needs to import gasoline, and has a hard time finding creditors for its oil company (again, a remarkable thing for a petro-state). 

If oil, the regime's most important milk cow, is in trouble, the rest of the less vital state-owned enterprise is approaching a state of collapse. Ricardo Obuchi and colleagues at the Institute for Advanced Studies in Administration (IESA) in Caracas have been tracking the performance of state-owned companies, with alarming reports. For instance, cement production, whose sector was nationalized in 2008, is producing scarcity levels of up to 70 percent. Ten states thus far have reported severe electricity blackouts this year. 

In the private sector, the most conspicuous sign of microeconomic ailments is consumer goods scarcity. This problem is so acute that the Central Bank even keeps tabs on the issue by publishing a scarcity index. In January 2013, the index indicated the highest level of scarcity in four years, with "critical scarcity" in eight basic food products, such as sugar and sunflower oil, and "serious scarcity" in nine others. 

Declining productivity and rising scarcity in consumer goods seem to have taken many chavistas by surprise. But they have nonetheless been quick to name a culprit: the private sector. For them, this productivity slump is a sign that the private sector is conspiring against a popular government. This analysis prompts the government to become more belligerent toward the private sector, which in turn, leads to the worst effect of all: capital flight. According to Barclay's, Venezuela has experienced capital flight ranging from 15 to 40 percent of exports every year since 2004, also unusual for petro-states which are, if anything, trying to cope with capital inflows. 

Nicolás Maduro, Venezuela's foreign minister under Chávez's previous term and caretaker of the government during Chávez's last medical leave, has pursued a similar approach. In January he lambasted the private sector for the economic crisis, denouncing "the hate that they have for the Venezuelan people." In the few months that Maduro has been in charge, he has increased price controls on 50 items, and threatened firms and "hoarders" with more audits, more sanctions, more jail terms, and more nationalizations. 

A reader might ask: Given all these ailments, why doesn't the Venezuelan government ease up on populism rather than going for a "deepening" of the model, as Maduro has promised? Many factors account for the persistence of the status quo, but it is worth emphasizing both the economic and political factors sustaining the current policies. 

The economic factor is the combination of large oil export revenues, which provides the cash, and the prospects of occasional devaluations, which can expand the government's revenues. With each devaluation, the government has discovered that, when things get rough financially, there is always a chance of respite, with the stroke of a pen. The government can simply decree a change in the value of the bolívar, and fiscal problems ease for a while. For instance, Venezuela's latest devaluation of 31 percent in February (from 4.30 to 6.30 bolívars to a dollar) is likely to give the government between 3 and 6 percent of GDP in bolívars that it didn't have before. The devaluation will increase inflation significantly, no doubt, but it will ease (though not solve) the state's financing needs, and this helps the government stay its course -- even while deepening the economy's weaknesses and hurting the poor over the medium term. 

The political factor is even more pernicious. It has to do with who gets the blame. In an economy beset by scarcity, inflation, labor absenteeism, capital flight, and under-investment, many citizens attribute these problems to the private sector, rather than the state. They see the state as the only actor that can bring relief, in the form of welfare and more sanctions on businesses. The worse consequence of Venezuelan Disease is how easily it lends itself to misdiagnosis. 

All this confronts the opposition with a difficult predicament. To beat Venezuelan Disease, the opposition faces two challenges: disrupting the economic basis of populist policies (the high oil prices with occasional devaluations), and redirecting blame for mistaken policies to the government, where it belongs. The former challenge is completely beyond the opposition's capacity to influence, while the latter is extremely hard to shape. The opposition must not only point toward the problems in the country, which is easy, but it must also convince the majority that the problem is the state rather than the private sector. Good luck with that. 

And yet, despite this combination of impossible and semi-impossible challenges, the Venezuelan opposition has not done as badly as one would think. Though the opposition suffered a serious defeat of 11 points in the October 7 presidential elections, its candidate, Henrique Capriles, did relatively well. Of the 20 elections that have taken place in Latin America against sitting presidents, only two have been won by the opposition. Among the rest, Capriles has been the largest vote-getter. Electorally speaking, Capriles has been able to mount the most successful opposition force in all of Latin America among politicians running against sitting presidents. 

The reason for this relative success was twofold. First, the opposition maintained unity. Second, Capriles was successful in pinning blame for Venezuelan Disease on the government's policies, though he failed to convince a majority. 

The failure to defeat Chávez is still reverberating through the ranks of the opposition today. Up until 2010, the greatest challenge confronting the anti-Chávez forces was the tendency of their followers to abstain. The opposition fought that challenge successfully, managing to increase its share of the vote in absolute terms. Now the biggest task it faces is to contain its internal frustration. This frustration is fueling arguments for a more hard-line, unforgiving, and ideological approach toward the government. 

The main risk of a more hard-line opposition approach is, of course, contagion. When one side digs in its heels, the other side will do the same. This is a strategy that could easily backfire for the opposition. In an electorate that is dominated by moderates leaning to the left, a situation of extreme belligerence between the poles will likely benefit the pole that is on the left. 

Venezuelans are worrying today about a future without Chávez. But they should worry about the other things that are also missing from their country: price stability, labor productivity, economic diversification, and capital investments. These are the effects of Venezuelan Disease, a perfect example of how too much of a good thing (government overspending and regulation) can produce shortages of many other good things. Hugo Chávez did not get to witness the full effect of Venezuelan Disease. His successor will not be able to escape it. 

Photo by JUAN BARRETO/AFP/Getty Images