Chavez, Oil and Social Justice...

[Peace Patriot]

Oil in Venezuela: The Lesser of Two Evils

By ANTHONY W. PERSAUD, July 13th 2010

Oil, that ever prevalent word in the lexicon of global politics; that black gold that continues to fuel the capitalist vehicle as it gains speed and runs down everything in its path. What happens then, when the largest source of remaining oil on earth is found deep in the heart of the self-declared enemy of unfettered capitalism?

In October of 2009, a U.S. geological survey released a report estimating the amount of technically recoverable oil in the Orinoco belt of Venezuela at 513 billion barrels.(1)

This amount exceeds the most liberal estimates of recoverable oil in both Canada and Saudi Arabia, making it by far the largest source of hydrocarbons in the world. Hugo Chavez, the President of Venezuela, has said that the amount of oil in Venezuela will allow the nation to continue extracting the resource for the next two hundred years. This realization, along with the deepening socialist revolution ongoing for 11 years now, puts Venezuela and its allies in a unique and unprecedented position to fundamentally challenge the global system and to help raise Latin America out of its state of penury and subservience.

It is easy to see that the changes carried out thus far under the banner of the Bolivarian revolution in Venezuela have been quite progressive and certainly exceed the often symbolic gestures made by other left-leaning governments in the region. Be that as it may, the path being taken by Hugo Chavez has not been radical, dictatorial, or communist as so many of his opponents and the mainstream media around the world try to depict. On the contrary, everything Hugo Chavez has done so far has been in line with market principles and arguably far exceeds our own notions of democracy in Canada or the United States. The oil reforms in Venezuela over the last decade are no exception. Despite common misconceptions, Hugo Chavez did not nationalize the oil industry – that was actually done in 1973 with the creation of Petroleos de Venezuela (PDVSA), at a time when the oil industry was booming around the world. The reforms carried out under Chavez have sought to eliminate inefficiencies and corruption within the PDVSA, and still include the private sector - but always as a minority partner. The most important aspect of the energy reforms in Venezuela is that the right of the nation and of the people of Venezuela to benefit from oil has been enshrined in the constitution and in national hydrocarbon laws.(2)

Indeed, social spending has sky-rocketed since Chavez reigned in on the PDVSA, and the benefits of oil are reaching the masses of Venezuela and beyond. In 2004 Venezuela invested 3.7 of its 6.5 billion net oil profits in social missions, and the plan from 2005-2012 has outlined spending of 10 billion per year.(3) In 2007, PDVSA alone spent 14.4 billion on social programs.(4) All of this social spending in Venezuela has meant drastic reductions in the levels of poverty and inequality, improved access to healthcare, huge improvements in education and the battle against illiteracy,(5) and subsidized food programs for the most vulnerable. Although energy profits are being used in such important ways, the notion of profit itself has certainly lost some importance; profit and competition and those other divisive hallmarks of neo-liberal capitalism have been trumped by the notions of cooperation and solidarity, and it is this that truly separates the energy policy of Venezuela and the ideals of the Bolivarian revolution apart from traditional capitalist principles and the practices of the North. Through programs like PetroCaribe and PetroAmerica, Venezuela has been providing subsidized oil to some of the region’s poorest nations.(6) Fair trade deals have seen Venezuela trade oil for much needed doctors from Cuba, or oil for food and goods with Argentina, Brazil, and Uruguay.(7)

The utilization of a natural resource for the benefit of those people who are affected by its exploitation does not seem like such a far-fetched scenario, yet it has taken huge strides and tremendous efforts from the people of Venezuela to realize this dream. The people of Venezuela have had to mobilize first to overcome a coup d’etat attempt in 2002 carried out by the economic elites and backed by the U.S, and then an oil industry lockout in 2003 carried out by disgruntled managers within PDVSA which temporarily crippled the economy.

It is no coincidence that the U.S. and Canada have been upping their vilification of Venezuela over the last few years, perhaps paving the way towards a justification for yet another foreign intervention in the global south. Venezuela is no military threat, especially with a U.S. funded and militarily occupied Columbia right next door. Rather, Venezuela is a moral and ideological threat, obstinately checking U.S. and Canadian imperial ambitions and setting an example of the good that can be done with oil money.

(my emphasis)

(MORE)

http://riseupglobal.blogspot.com/2010/02/oil-in-venezuela-best-of-two-evils.html

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I offer this article as a refreshing relief from the tireless (and tiresome) rantings and disinformation of the rightwing posters here at DU who can't find enough evil words with which to describe Hugo Chavez ("Adolph Hitler" being the latest). It is difficult to find reasonable commentary on the leftist democracy revolution in Venezuela and throughout Latin America. It is virtually non-existent in the entire corporate-run western press. You have to seek out alternative sources. This article is especially well-written and thoughtful and well-documented with footnotes. It addresses a subject that I've often thought about, but have never quite brought into focus--the irony that oil, the fuel of the monstrous U.S. corporate/war machine, is being used for social justice in Venezuela and, increasingly, in other Latin American countries--by Chavez allies such as Lula da Silva in Brazil, Evo Morales in Bolivia (more the gas resource, in that case), and Rafael Correa in Ecuador. Meanwhile, we have horrid events like the BP spill, instructing us all, once again, of the perils to Planet Earth of our dependence on this product.

Anthony Persaud brings deep political understanding to the problem of oil--especially in his discussion of the relentless hostility of the U.S. and Canadian governments to Chavez and the Bolivarian Revolution. Our northern governments are basically run by Exxon Mobil & brethren, even to their hijacking of our militaries for a corporate oil war. Oil is used to make the rich ever richer and ever more powerful. Southern governments are following the opposite path--using oil to spread the wealth and to empower the poor majority. The seething hatred of Chavez--used as a bogeyman and punching bag for what is, in truth, a seething hatred of, and fear of, the poor majority and of democracy itself--exhibited in the corporate-run media, and by the U.S. and Canadian governments, becomes more understandable as a symptom of our loss of democracy, when you grasp the main architecture of this conflict, as Persaud lays it out.

[naaman fletcher]

1. market principles?

On the contrary, everything Hugo Chavez has done so far has been in line with market principles

Let's not overdo it here. There is nothing in line with market principles about nationalizing industries. Of course, I am not a market purist, and many of you are for outright government economic controls so my point is not to debate which is better, but there is no need lie like the author does and say that everything that has been done is in line with market principles.

[bherrera]

2. This article is wrong

I received a very interesting report from a Venezuelan friend about Venezuela's oil industry today, which is very much opens one's eyes, and shows the neo-fascist tendencies of the Chavez government.

The Chavez regime has evolved the oil industry commercial apparatus to one where the oil operations are carried out by corporations, in which the state owns a majority share, but large multinational corporations (BP, Total, Chevron, Statoil, ENI, and others) own the minority share and also have unique voting rights, such that when there are major decisions to be made, the corporation or joint venture can not act unless the foreign multinational is in full agreement. Thus the operations are carried out with profit in mind, and they are guided by these multinationals - at least in theory.

What has been happening is very interesting, these joint venture corporations are not investing as much as they were expected to invest, because the foreigners are holding their approval votes to make sure the profits are high. They require these high profits because they consider Venezuela a very risky country, due to the erratic nature of the autocrat Chavez. The country's high risk perception is noted in the high interest rate paid by Venezuela's and the state oil company's debt, which ranges between 14 and 17 percent. Therefore the foreigners who are entering into these joint ventures are expressing the need to receive at least a 15 % profit, and PDVSA has agreed this is the profit level they should get.

But the plans prepared by PDVSA at the central office do not allow these profits to be achieved, and this means investment is not taking place. Therefore Venezuela's oil sector GDP growth is negative, and oil production, according to the OPEC figures, is much lower now than before. According to the figures released by PDVSA itself, these projects in the Faja del Orinoco require enormous amounts of capital, which they lack. Therefore they need the foreigners' participation and loans. But the foreigners are extracting, or waiting to extract, usurious terms, including the 15 % return rate.

Therefore Venezuela, with all of this oil in the ground, is unable to extract it, because the terms the foreign multinationals demand are so high. This is one reason why the government of Venezuela is borrowing so much money, the GDP is falling, inflation is very high, and other problems are becoming more and more evident, they sit on a mountain of oil, but the system they created is a neo-fascist system, which requires they form alliances with these multinational corporations and give them enormous profits, and a rate of return which is unthinkable in the first world. This is not truly a socialist system, the oil is not really being produced, and the investments do not take place as projected. They have a lot of propaganda, and of course they have their Goebbels to write glowing articles about Venezuela's oil, but reality is very ugly, they are either going to give the power to the multinationals, and enormous profits, or their oil industry will collapse.

There are of course other options, but these guys running Venezuela's economy are, in the end, a bunch of very stupid corrupt fascists, more interested in propaganda and creation of the cult of personality of Mr Chavez, rather than the benefit of the Venezuelan people.