In the mid-1990s, Venezuela was the world's second-largest oil exporter and the largest source for U.S. oil. About 75% of its export earnings, 25% of GDP, and nearly half of all government revenues came from petroleum. But with oil prices at under US $10 a barrel, Venezuelan foreign indebtedness has grown to US $36 billion, and nearly 40% of the budget is devoted to meeting debt service obligations during the 1990s. Higher oil prices should have benefited Venezuela, but labor conflicts with the state-owned petroleum company and Chávez's confrontational policies with foreign investors and creditors has made Venezuela's foreign debt soar and revenues from oil production decline.
Because of the international disapproval of Chávez's decision to push for a constitutional assembly in 1999, Chávez's stance in the eyes of the world community in 2003 is not very good. The custom-made Constitution and Chávez's occasional attacks on capitalism and the United States have also generated tensions with the U.S. government and the international democratic community. Although Chávez had been denied a visa to enter the United States prior to his election because of his participation in the 1992 coup attempt, Chávez acknowledges that improved relations with the United States would likely help his country's economic situation. However, he knows his support within Venezuela depends in part on his public opposition to U.S. domination in international politics.
Chávez has sought support from Fidel Castro, the Cuban dictator, and has visited other dictators around the world to show his solidarity against what he terms unfair attacks by the United States. Early in his presidency, Chávez made it clear that he welcomed foreign investors from every part of the world, and he embarked on long international trips in 1999, with visits to China, Malaysia, Singapore, Japan, the Philippines, Spain, and France. His international image remains tainted by his close ties to Cuba's Fidel Castro and Organization of Petroleum Exporting Countries (OPEC) partners Libya and Iraq.
His rejection of electoral democracy and his embrace of participatory, hyperdemocracy have created tensions at home and abroad. Four years after attaining power, Chávez has gone from a social democratic stance to a stand against what he sees as U.S. imperialism. The erratic response of the U.S. government to the failed attempt by the military to topple Chávez in 2002 has made matters worse. The United States did not directly condemn the coup nor did it ask for the return of Chávez to his democratically elected post. In the end, Chávez came back to power, but relations with the United States were even worse than they were before the coup attempt. As he struggles to hold on to power, Chávez must rebuild relations with the United States and neighboring Latin American democracies. By adhering to the Constitution and respecting the rights of the opposition, by distancing himself from non-elected leaders of the world, and by letting his diplomats do the talking on international affairs, President Chávez may be able to improve his relations with the United States and the international community. Yet, he might find it difficult to do that because his support within Venezuela partially depends on maintaining an anti-United States discourse in international affairs.