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IW 04

Latin America

Venezuela: 21st Century Socialism?


The oil boom does not immunizes Venezuela against convulsions and crisis. Nor are the actions that Chavez´ government take the result of any established ideological plan. The bosses’ lock-out of 2002/3 has signified the bankruptcy of social relations that worsens as time goes by.

One of the epicenters of this crisis takes place in the agricultural sector. The parasitic nature of Venezuelan capitalism could be measured by the fact, with Venezuela possessing such rich land, it imports 70% of its food. The capitalists have lived off the country's oil. The farmland remains mainly unproductive. Seventy five percent of the land is in the hands of 5 percent of the owners. Agricultural production employs only 5 percent of the inhabitants.

Chavez has announced a limited land reform which only authorizes the expropriation of under-exploited estates of more than 5,000 hectares only when its owners could not give proof of property ownership. Even though there is a very limited universe of exploitation, at present there is a small quantity of land assigned and none expropriated. The brake on reforms has unleashed land occupations and the corresponding reaction from the landowners that have hired ¨sicarios¨ (hired murders) or count on the collaboration of a part of the local state bureaucracy. The union of the peasants in the Conferencia Campesina , sponsored by the Frente Nacional Campesino Ezequiel Zamora has already adopted a set of fighting resolutions.

Industrial bankruptcy is equally important The English weekly The Economist says that 40% of the 11.000 industrial companies have gone bankrupt since Chavez became president, but in fact it is the result of the lock-out of three years ago. At the end of those 64 days of paralysis the companies faced the obligation of paying the workers wages and paying back its debts or had to ask for loans without being able to count on production incomes or liquid assets.

The situation of the companies paralyzed, inactive and bankrupted is under discussion. Chavez denounced that there are 700 companies closed and 1,149 companies under investigation.

In the opening of the Encuentro Lationamericano de Empresas Recuperasas (Latin-American Encounter of Regained Companies), Chavez announced the expropriation of two companies: the steel manufacturer Sideroca and a sugar mill. Two months earlier the paper manufacturer Invepal and the valve producer Inveval had been expropriated.

In the above mentioned cases, the expropriation decree gives compensation to the owners and transfers 51% of the company shares to the State and 49% to a cooperative made up of its workers. The Venezuelan state has already paid out several million dollars. The workers have to buy their part with a percentage of the production. The wages of the Venezuelan workers are extremely low. The average wage does not reach 440,000 bolivares (about 200 dollars). The regained companies are not the exception.

“Co-administration”, during its short existence, has generated conflicts between the state bureaucracy and the workers, especially at Inveval. In spite of a decree stating that management should be kept for the workers, in fact it is in the state officials hands, and they are the ones that appoint managers and take the important decisions.

In the emerging conflicts, the demand for the companies to be expropriated and for a co-administrative committee to be set up arose (Polar Group, the second largest local conglomerate, the transnational Heinz, which owns a tomatoes processor, and Parmalat which owns two plants, among others).

Even though the state-workers co-administration has being loudly publicized, the government has chosen this option only as an exception and it takes place only after other options are dismissed. The main idea is to furnish a kind of worker-private co-administration. The private companies which work in this way are granted low rate loans, its debts with the State are being refinanced and they are given privileged treatment in regard to the purchases to the State, as well as generous tax exemptions. This advantages explain why Fedecamaras (Venezuelan Industrial Union) has hailed the co-administration initiative and why numerous capitalists have enlisted in order to receive its benefits.

The co-administration works as a form of transition towards other stages of private capitalist accumulation, post lock out. Of course it does not guarantee that Venezuela will be able to emerge from its industrial bankruptcy. As has already occurred in the past, it can only favor the flight of capitals or financing speculation.

As the crisis worsens, Chavez has began to talk about the “revolution within the revolution” and the “21st century socialism” but up to now it has not emerged from the shadows of a rescue of capital through subsidies and the aforementioned co-administration. The measures taken by Chavez to recover the Venezuelan State's capacity for decision regarding the utilization of its oil resources are limited by this social horizon. On the other hand, oil income circulates cash through the Venezuelan banking system, which are 100% foreign-owned and which have accumulated 50% of the public debt. The government is paying its debt on time, drawing an average 8% of the GDP. A fall in international hydrocarbon prices would be enough to knock over this entire financing scheme.

Moreover, the big capitalist groups are only narrowly or exceptionally affected by the measures of state interventionism. In strategic areas such as oil or the petrochemical sector, the so-called oil opening is being emphasized. That is, the association with international oil cartels, specially in the Orinoco basin, where one of the biggest deposits in the world is concentrated. In another branch of industry, the iron and steel sector, Techint has been rescued by the State. In the last five years, Sidor has been paying the state a ridiculous price for the iron it purchased.

The different measures the government takes to set a course for the economy are undermined by the liberty enjoyed by capital. The foreign exchange rate and price controls lose ground because of the black market and price hikes. Inflation skyrocketed to a yearly 23% while wages and salaries remain frozen. Perhaps nothing shows better the limitations of this nationalistic political experience than the freezing of wages. In this context, the role of the “misiones” (missions: a campaign involving the massive mobilization of people and resources directed towards the shanty towns in order to alphabetize and provide health and social welfare plans) are limited to relieving the most extreme aspects of poverty.

Capital tries to impose its law on this recovery plan. Invepal workers have seen the start up of the production delayed because the Banco de Venezuela, which belongs to a foreign group, kept paper pulp financing frozen. Maize producers kept more than half of the production paralyzed to blackmail the government in an attempt to obtain a rise in the maximum price of flour.

Chavez intends to overcome this conflict by seeking an association of the State with private capital, or by accentuating the government tutelage on private sector activity or by combining both. He is trying to reach a consensus where what really exists is a conflict of interests.

But, there is no hesitation in the relationship with the working class. In different state owned companies, especially in oil industry, and in the private sector also there was an important experience of workers administration during the 2002 lockout. The workers did not allow production to stop, and kept the Puerto la Cruz and El Palito refineries working. They took over from the managers committed to the conspiracy. At present, the officials are trying to gain back total control over strategic industries,

The government started up PDVSA reorganization and transferred the managers involved in the coup, but they broke up workers control as well, restoring the managerial hierarchy with managers appointed by the government. When at the beginning of 2005, the new Board of Directors took control of the refinery, a right-wing escalation began. There was a campaign of dismissals, arbitrary transfers, black listing and persecution of activists, and the managers who at the time resisted the coup are being transferred.

The subject of bank nationalization, the monopoly of foreign trade, non payment of the foreign debt, a social project led by workers to fight misery in our countries, together with workers administration and control, is gaining an unusual and enormous importance and in an increasing way are forming part of the daily discussion and debate of the Latin American peoples.

Pablo Heller