IV.  POLITICAL ENVIRONMENT

Venezuela held presidential elections in December of 1993 and
President Rafael Caldera began a five-year term of office in
February 1994.  President Caldera represents a coalition of
political factions, distinct from the two parties that had
dominated throughout Venezuela's 40 year democratic history.  He
emerged as the electoral victor in a four-way race with little
more than a 30 percent plurality.

As a result of the 1993 national elections, the congressional
make-up has evolved from a system dominated by two large parties
to a five party system.  This has complicated the legislative
equation.  Congress has repeatedly passed legislation permitting
the President to make key economic and commercial decisions by
decree as a technique to overcome congressional gridlock.

Venezuela has endured a series of political challenges since
early 1992 which have contributed to worsening political risk
assessments by international banking institutions.  Two attempted
military coups were successfully fended off by President Carlos
Andres Perez in 1992, but in 1993 he was constitutionally removed
from office on grounds of misuse of government funds.  The
interim government of Ramon J. Velasquez upheld the country's
democratic institutions and ensured peaceful and democratic
elections in December.  But the interim government was also
largely unable to enact policies to moderate the economic crisis
which the Caldera government inherited.

President Caldera has been slow to spell out policy objectives of
his administration and by May of 1994 there was already a
significant cabinet shake-up.  The current government is less
keen on economic liberalization and more inclined towards statist
"solutions."  This, in turn, has adversely affected international
business perceptions of the Venezuelan investment climate.