Venezuela Behind the Smokescreen

[ChangoLoa]

* Demonised on the one side by Western governments and corporate media, uncritically acclaimed on the other by certain left-wing organizations, an adequate account of Chavez and Venezuela’s current political situation is difficult to find. Accusations alleging a "Communist dictatorship" should simply be dismissed as misinformed, sensationalist and ideological devices. Chavez’s claims of leading a democratic and progressive transition towards an egalitarian society however, are deceptive. Using a few examples, I will try to illustrate the intricate Venezuelan map, a combination of some positive social reforms and worrying tendencies of centralization of power, cult to personality and corruption.

- Social reforms and the economy

Venezuela has historically been an extremely unequal society and the social programmes initiated by the Bolivarian Revolution (named after the anti-Spanish liberator Simon Bolivar) have been better news for the poor. These include literacy programmes for millions of children and adults, the creation of thousands of primary medical units in the poorest neighbourhoods, subsidies for basic foodstuffs, programmes of substituting slum huts for houses, the widespread availability of micro-credits... As a result of these and many others, between 1999 and 2005 severe poverty was reduced from 42,8% to 33,9%.

These programmes are largely financed through oil money, which has finally started to slowly trickle down to the poor especially after the “nationalisation” of the oil industry. I say “nationalisation” but in reality I am talking about mixed business ventures with multinationals, of which the government has a slightly larger cut. Both parties are satisfied with the deal. The multinationals are guaranteed profits, albeit smaller than before, whilst Chavez can claim that now the oil belongs to the people. These manoeuvres are just one example illustrating the centrality of populism above real results. After all, as Business Week points out, Chavez is “not so bad for business.”

Redistributing the profits from Venezuela’s vast natural resources and taking advantage of the latest boom in oil prices has a great potential. Under Chavez however, despite all the grandiloquent speeches, this potential is not being fully realized. Why? Mismanagement and corruption are rampant at all levels. Venezuela is one of the poorest performers in Latin America in all corruption indices and is way down at #138 in the 2006 Transparency International Corruption Perceptions Index together with Niger, one point under Ethiopia and one point above Sierra Leone. I find it hard to believe that corruption is revolutionary. With 500 billion dollars of petrol income, general public hospitals are in a precarious state whilst military spending has skyrocketed. Even though Chavez has displaced the traditional crooked elites from power, a new class is starting to settle in at the top, what some people are already starting to call the Boli-bourgeoisie.

- The issue of democracy

Despite leading a failed coup in 1992, Chavez has won a succession of democratic elections since 1998. Attempting to close the divide between the rich and the poor is also a democratic plus (a notion that is unfortunately being forgotten in the West). In spite of the international media distortions, no TV channel has been closed. RCTV, a TV station linked to the 2002 coup, has not had its license renewed to broadcast through the limited number of public wavelengths, it is however fully functional through cable TV (the complexity of the issue deserves a separate article). Much of Venezuela´s media; newspapers, radios and TV channels (only 1 channel on free, public wavelengths though) continue to have a critical stance against Chavez.

The government has also embarked on various projects to increase citizen’s participation in state decisions. For example, the Communal Councils, which are democratic neighbourhood community organizations that can administer public funds to improve services, infrastructure and cultural spaces in their local areas. Also, by collecting the signatures of 20% of the number of people who voted in the last election you can trigger a referendum on whether or not to recall the president.

These policies however, are often contradicted by contravening policy tendencies. The increased strength and importance of the presidency undermines the idea of the participatory policies. For example, the Communal Councils funds are handed out from government institutions whose directors are handpicked by Chavez. Consequently, these Councils, which are meant to be part of civil society, become dependent on and conditioned by a paternal state. Chavez often uses the ideas of the iconic Italian Marxist thinker Antonio Gramsci to explain his policies. Conversely though, Gramsci’s ideas about civil society absorbing the state seem to have been inverted by Chavez to be about civil society being absorbed by the state! The idea of the recall referendum has also suffered a blow. It so happens that one of Chavez’s ministers got a hold of the list of people that had signed for the recall referendum that took place in 2004. What are the now the famous “Tascón Lists”, were placed on a website for all to see, violating the right of secrecy. Moreover, the list has been used, amongst other things, to obstruct the signatories from accessing jobs as civil servants.

- The lack of pluralism on the left

The “you are either with me or against me” paradigm has been imposed. What started as a coalition of progressive military men and left-wing parties is now being united in a single party, the United Socialist Party of Venezuela, under the nascent personality cult of Chavez. Dissidence and criticism from other sectors of the left has been discredited and dismissed as treason or sell-out to the oligarchs. For example, the Anarchist and Libertarian Socialist groups in Venezuela have been accused of complicity with the C.I.A! Consequently, healthy debate and the circulation of different ideas and opinions has been severely damaged. This phenomenon is largely a result of the polarization in the Venezuelan political scene. It is a reaction to the intense criticism and attack by the Venezuelan elites and multinational companies that culminated in economic sabotage and an attempted coup in 2002. However, there is no justification for this persistent, closed and authoritarian stance.

Although most of Chavez’s supporters come from the poor, by no means is he the “leader” of the working classes. The purpose of the state in the last instance is to protect a status-quo accorded in the upper echelons of the political pyramid. It will always be a step behind grassroots social and working-class movements, no matter what its representatives claim. For example, sticking to the available statistics, from the 1st of July to the 30th of November of 2006, 26 demonstrations were obstructed and repressed. 71 cases of injuries from beatings, asphyxiation, rubber bullets or live ammunition were consequently reported. These included demonstrations of miners of El Callao against the Chinese multinational company Jin Yan, citizens protesting because of the lack of drinkable water in a neighbourhood of the city of Barinas, the eviction of a hundred poor peasant families that had squatted land in a new neighbourhood called Bolivarian Paradise in Guanare, etc. In the words of the anarchist thinker Mikhail Bakunin, “when the people are being beaten with a stick, they are not much happier if it is called “the People’s Stick.”

- What then?

Despite the issues raised above, current events in Venezuela should not be dismissed or ignored. For the first time, Venezuelan peasants and working-classes are becoming actively involved in the public and political life they were traditionally apathetic towards and marginalized from. Consciousness about the illegitimacy of capitalism’s unequal property relations and class system is growing and being acted upon. However, going around shouting “Viva La Revolución!” without knowing the facts, is a mistake. History has taught us that when politicians claim to be in favour of socialism it does not mean they are necessarily pursuing socialist policies. Instead, we should stay informed and keep a critical outlook. We should be against US imperialist involvement and the Venezuelan elites undemocratic tendencies. We should applaud positive social reforms and support those that are attempting to democratise the participatory mechanisms that have been put in place. We should also show solidarity to left wing and democratic dissidents that are challenging the revolution’s greatest enemy within. That is no-more than the bureaucratic and autocratic instincts of the Bolivarian political class and Chavez himself.

----------------------------------------------------

Poverty Rates in Venezuela. Getting the Numbers Right, Center for Economic and Policy Research, Washington DC, May 2006.

Dossier “Chavez, not so bad for business”, Business Week, New York, 21/06/2007

Uzcátegui, Rafael,“Repression against popular protests increases in 2006”,El Libertario #49, February-March 07.



"El Libertario" webpage: http://www.nodo50.org/ellibertario/english.html

[ChangoLoa]

1. Advisory

This is not MY point of view. I put this to show an opinion that I consider different from the traditional approaches concerning the actual situation of Venezuela that foreign readers have access to.

:eyes:

[Billy Burnett]

2. Viva La Revolución!

That is my point of view.

[Braulio]

4. Raul is waiting for his brother to die

To move away from communism. He'll have to play a careful balancing act, because Cuba gets a lot of freebies from Venezuela, but it sure looks like with Fidel gone, Raul is going to let loose, and go capitalist Chinese style. This will eventually loosen the communist oligarchy's hold on the steering wheel, and hopefully allow Cuba to transition to a more sensible system, as the nations in Eastern Europe have been doing.

[Billy Burnett]

5. I'm sure that Cubans are looking forward to manning sweatshops and laying waste to Cuba.

Not!


China has flipped to fascism. Cubans aren't going to go "China".

[ChangoLoa]

8. Chávez voices admiration for China

In a notice to President Hu Jintao on the 60th anniversary of the proclamation of the Chinese republic, the Venezuelan head of state said that the Asian giant could count on Venezuela as a friend

World Affairs
The Bolivarian revolution admires the "libertarian legacy of the beloved People's Republic of China," said President Hugo Chávez on Thursday.

In a notice to President Hu Jintao on the 60th anniversary of the proclamation of the Chinese republic, the Venezuelan head of state said that the Asian giant could count on Venezuela as a friend, and "on us, who are heading for socialism."

"In the name of the revolutionary spirit which unites us, we congratulate the honorable Chinese people and celebrate together with them their iron will to emerge as a free, sovereign nation. Let us celebrate this heroic people's victory. The Chinese people has stood up!," the letter read.

"This glorious day which inspires world revolutions arouses my endless admiration," he added.

[Braulio]

9. China or bust

Communist regimes are eventually led by cadres interested in taking care of number one. Cuba is just one more stale communist regimes whose leaders are focused on leaving something to their children. And I mean THEIR children, not ALL children. This means evolution to a fascist-like regime such as China's is the norm, unless the population manages to overcome their power, as they did in most Eastern European nations.

Whatever the Cuban people want, it's unlikely they'll get. Alas, they have been kept isolated from the world, living in a society with state controlled media, the internet blocked, and no freedom of expression or association, so they lack the information to make a good choice.

It's evident China's economy is growing very fast since they decided to abandon communism and move to this "fascist capitalism" they have adopted. The system also allows the high communist leadership to enrich itself. So this is probably what the Cubans under Raul will do.

[spanza]

6. pas confond coco epi zabricot, camarade

:)

[ChangoLoa]

11. Just funny to see only Chavez wearing red

Raul loves China and since you have been to Cuba you know it.

[Braulio]

3. Clarification

I don't think multinationals and foreign National Oil Companies are satisfied with the JV structure coupled to the new tax regime, as it exists today. This is why they have refused to participate in the Carabobo heavy oil bid round, which has been postponed several times. This in turn induced the Petroleum Ministry to propose changes, which include dropping the oil royalty from 30 to 20 %, and other measures. These measures were badly needed to encourage foreign investment, because oil production is either dropping or stagnant (depending on whose statistics one uses).

There are other issues impacting the potential investor in the Venezuelan oil sector --- PDVSA insists on controlling the JVs, but it lacks the internal expertise to do so properly. And there's significant brain drain taking place - especially engineers and other highly specialized personnel, who can get better paying jobs elsewhere. This means foreign companies face a dilemma, can they trust PDVSA to lead these JVs so they are truly profitable in the future? Will there be sufficient skilled Venezuelans to work in the oil industry and keep things from blowing up?

This is a huge question at this time. And if Venezuela doesn't develop its new fields, production will drop, and this will increase the likelyhood of oil shortages in the medium term. The world is evidently transitioning towards non-hydrocarbon fuels, but it can't do so too fast. Thus the ability of the OPEC nations to maintain and even raise production is key to a safe world economy as it moves into a more sustainable pattern. And this is the problem, OPEC nations haven't shown they are very inclined nor capable to supply the oil.

Interestingly, by allowing production to stagnate, which will lead to ever increasing prices, these OPEC nations which fail to perform are going to be killing their golden goose - they may have a lot of oil left in the ground, but it won't find a market if the world does transition to a more eco-friendly less carbon emitting energy mix.

[spanza]

7. Oil

I think that oil multinationals are indeed scared about the instability of contracts and PDVSA's current management. The decision of firing all of the 20.000 people who took part in the 2002-03 strike had strong adverse effects on the company's expertise and human capital in general. Wether it was necessary is another issue, but I think the government could have dealt with it in a smarter manner, regaining control without penalizing itself so heavily.

The country has a real cluster in that sector and it is not being promoted since oil related industry is typically a scale influenced sector (the more you produce, the lower unit prices go) and our production is at best stagnant. We've been talking about taking it to 6 MBd for the last 10-15 years, but nothing happens. The government doesn't have the money since it doesn't have the political strength/will to limit current spending and rise public investment, even when the oil prices are multiplied by 4, like in 2003-2008.

The level of rentability of oil production in Venezuela is huge. The cost of production is only around 10-15% of the market price (I'll check), so theoretically foreign/private domestic/public investment is profitable very fast. Our oil reserves are huge (some estimations go up to 300 GB which means 300 years with the actual production), even in the cost of their explotation in the Faja would be around 20-25% of the actual price. Things are feasable and if the world economy restarts, prices will probably go back to 90-100 USD again. Ojala...

We could rise the production very fast, keep entering deep into the chinese market and develop the domestic oil related industries* with a wise decreasing protectionist policy (domestic companies have always participated in the sector and they are competitive in many subsectors even with the lack of market)... if we had the money for investing AND the political will to manage these projects in due form. Otherwise, our oil may stay in the ground.


* At the opposite of what people generally think, oil has a huge network of industries (backward and forward linkages) whith usually big scale returns. The multiplier effect of investment in the venezuelan oil sector for the total GDP is important (I r'ber I saw a study but can't find it now... I'll look for it next time)

[Braulio]

10. But Venezuelan oil isn't profitable for foreign investors

The experts explain that Venezuela's oil production is declining. To reverse the decline, they have to invest in new oil fields, and the only significant oil reserve they have to develop is the extra heavy oil in the Orinoco Oil Belt. These heavy oil reserves require a lot of investment and the operating expenses are very high. The question isn't whether it can be developed or not, the question is whether foreign investors find it profitable enough to invest. And thus far they have been voting no, unanimously. NOT one of them has made a tangible move to invest the large sums needed.

As I mentioned before, the government, after repeatedly failing to promote a single project, has decided to improve the terms for the foreign investors, and they announced this recently. The new terms may lead some companies to dip their toes in. However, the question remains, will their business practices allow them to achieve anything? The question will be answered in a few years, but I think the answer is no, they can not achieve much if they do not change.

It's amazing to think how different Latin American nations have evolved in this area. Brazil and Colombia have embraced a vibrant private sector, and encourage private oil companies to explore and produce their oil fields. Both seem to be doing quite well, Brazil in particular will soon overtake Venezuela and Mexico as the largest oil producer in Latin America, and it may eventually rank up there with Iran, Kuwait, and Iraq as far as oil production volumes are concerned. Venezuela and Mexico, married to a statist and inefficient oil sector, are likely to remain static or decline.