On Dec. 2, Venezuelan President Hugo Chavez can tip the world into a recession.
On that day, if Venezuelan citizens pass the dozens of constitutional amendments on the ballot, Chavez will essentially be granted dictatorial powers -- an elected strongman reminiscent of Spain's Franco, Italy's Mussolini and Orwell's Big Brother. The day could easily deteriorate into one of violence, martial law and suspension of oil production, the latter calculated to inflict maximum damage on the U.S. economy.
With the price of oil hovering near $100 a barrel and markets skittish because of the sub-prime housing crisis (not to mention the stability of U.S. banks, the U.S. trade deficit, the weak dollar and deteriorating domestic consumer confidence), such a move on Chavez's part would go a long way in triggering a recession. An oil crisis during the Christmas season -- with its 40% share of annual retail sales -- would be especially detrimental in the U.S.
Rising oil prices have caused global recessions in the past. The Saudis and other oil-producing countries have tried to increase output to offset rising costs. But working against stability and for high oil prices are Chavez and Iran's Mahmoud Ahmadinejad, who are in a strategic alliance to push up the price of oil.
Oil economists calculate that on a supply-and-demand basis alone, the price of oil would be about $50; the remaining $45 in the current price is a political premium caused by uncertainty in the Israeli-Palestinian conflict, Iran's suspected nuclear plans, the wars in Iraq and Afghanistan and social unrest in Pakistan, Nigeria and Venezuela. But where the world sees a threat, Ahmadinejad and Chavez see opportunity: Civil discord lines their pockets.
In Chavez's eyes, a world economic crisis would prove that capitalism is a failure and the U.S.' "evil empire" is historically over. Chavez's Bolivarian socialist economic order would supposedly move to the forefront. For his part, Ahmadinejad can use world chaos to gain hegemonic strength in the Middle East. The two, working in cahoots, could then reach out to partners in Syria and elsewhere in the region.
Chavez is a brilliant military strategist who has reportedly spent or committed $110 billion since 2004 (an amount equivalent in today's dollars to what the U.S. spent in the Marshall Plan after World War II) in political investments in the Americas and elsewhere. His plan is to spread the revolution against capitalism and the United States. So far, he has a string of victories to show for it. Bolivia, Ecuador and Nicaragua are already in his camp; Argentina owes him $5 billion, and his candidates came within 1% of winning elections in Mexico and Costa Rica in 2006.
