Venezuela: Petro-‘Socialism’ in its Labyrinth

Economic crisis, product shortages, and polarization paint a scenario in which the continuity of the Bolivarian movement is at stake. So is the sovereignty of a country that dared to challenge its dependence on a superpower that considers the Caribbean a “closed sea to which the United States holds the key.”

Source: Americas Program, April 20, 2014

Economic crisis, product shortages, and polarization paint a scenario in which the continuity of the Bolivarian movement is at stake. So is the sovereignty of a country that dared to challenge its dependence on a superpower that considers the Caribbean a “closed sea to which the United States holds the key.”

Filling a 70-liter tank with gasoline costs half the price of a half-liter bottle of mineral water. It costs about the same as a single cigarette: five bolos (bolívares fuertes). The last week of March, the parallel dollar was at 52 bolívares, or 9 times the official rate. Several weeks earlier it had reached the staggering exchange rate of 100 bolivares.

This price distortion emerges out of a deformed economy that no longer functions as a traditional capitalist economy (dominated by private monopolies) and appears to be halfway between that and an economy called socialist (state monopoly), with the tensions and contradictions such a transition implies. In short, the economy is the scene of an acute class struggle in the most traditional sense of the term.

One of the obvious distortions can be felt walking through the many neighborhoods of a city of one and a half million residents like Barquisimeto, the capital of the western state of Lara. In poor neighborhoods, there are lines in front of stores and supermarkets almost daily; in upper middle class neighborhoods like Fundalara, there are no lines and stores seem well supplied. Families leave the stores with small bags of food, while in the popular neighborhoods housewives tote large sacks to feed the numerous members of their families.

The main difference is that, as the lines form in the poor neighborhoods, in the upper-class districts student stage demonstrations waving the Venezuelan flag, without anyone bothering them and even with the occasional applause, or honk of support. In the last week of March, the impression was that the lines and the protests were both diminishing.

Catastrophic equilibrium

The image of a society split almost in half, extremely polarized, seems closest to reality. The election that gave President Nicolás Maduro the presidency almost a year ago showed reflected both facts, with only 1.5% separating Maduro and the opposition candidate Henrique Capriles.

The division can also be interpreted in terms of  territory to help explain the current situation. The opposition won the states of Zulia, Táchira, and Mérida, among others. This is the region bordering Colombia, where protests helped carve out a “liberated zone” during the month of February, as in the capital of Táchira, San Cristóbal. There, the public university was set on fire by protesters with (at least) the complicity of state and municipal authorities linked to the opposition.

The government denounced the alleged participation of Colombian paramilitaries (allied with former Colombian President Álvaro Uribe) in the protests and, particularly, the selective harassment of loyal chavistas. The opposition, in turn, claims that protestors are being detained and mistreated. Both claims seem plausible, although there is no hard evidence to validate them.

Two facts seem evident: government repression resulted in the death of several protesters, and both the opposition and pro-Chavez groups use firearms. Journalist Aram Aharoninan, former director of Telesur, says that of the 40 deaths between Feb. 12 and late March, 22 were “targeted killings of pro-government supporters, carried out ​​by Colombian paramilitary forces allied with the Venezuelan bourgeoisie” (Rebelion, April 1, 2014). The Attorney General’s Office released data when the death toll reached 31, disclosing that 143 policemen were among the 461 injured in the demonstrations. Several uniformed officers were killed. Of the nearly 2,000 detentions, only 168 remain behind bars, according to the government.

In February, the violence escalated and there was an attempt at negotiation. The escalation was led by the ultraright and its leaders, Leopoldo López and Deputy Corina Machado. The Democratic Unity Roundtable (Mesa de la Unidad Democrática, MUD) headed by Capriles did not join in, and instead Capriles insisted that “the only road is the electoral road.”

The ultraright’s offensive took a turn when government forces burst forward, in particular the motorized forces, thousands of militants on motorbikes that are one of the most active organized forces of the government. To attack them, the opposition strung cables at neck-height across roads.

Even President Maduro publicly supported the emergence of the motorbikers, bemoaning the fact that five of them had been killed by snipers. “This ongoing coup, though already blocked, is still hurting the people. It has permitted the emergence of the motorbikers acting for the good of the country. Now you are visible, you will no longer be stigmatized. The motorbikers will act, making peace, and at this moment are defeating a coup” (El Nacional, March 13, 2014).

Bad Economy

In the Abya Yala community outside of Barinas, where lands as dry as they are fertile lay anxiously awaiting the start of the rainy season, Ignacio and Edis detail their non-pesticide process of food production based on the biological control of insects. They produce vegetables and fruits, pigs and poultry that they take to the Co-op of Community Self-Management, part of the giant cooperative supply networks, Cecosesola.

Ignacio, a Uruguayan veterinarian and farmer who has been in Venezuela for eight years, is a member of a nearby co-op that is noted for its production of organic yucca. He lives on an agrarian reform co-op, also near the state capital. He says he was amazed that the land can be cultivated 12 months a year, while in Uruguay it is only arable five months out of a year. While continuing to support the [Bolivarian] process, he notes that “the vast majority of agrarian reform beneficiaries do not work the land, and instead are forced to abandon it.”

He knows of what he speaks, and he’s aware that he’s touching a nerve of the Bolivarian economy. His perspective on the ground is reinforced by macro data: 56.2% inflation in 2013, close to a 15% fiscal deficit, the fall of international reserves, major food shortages. The biggest concern is that things are getting worse. Until mid-2013, there had been no food shortages, no lines. Inflation had been falling until 2008, going back up circa 2011. Acute capital flight reflects a structural problem that successive governments have not resolved. It looms bigger since Chavez’s death.

Journalist Modesto Emilio Guerrero, a Venezuelan based in Argentina who supports the Bolivarian movement, wonders how there could be shortages when the government controls 36 % of the food distribution system. He notes that the 240 companies created [in the Bolivarian process] and many others that are nationalized have not increased production. “There are two GDPs in Venezuela, the oil and non-oil. The oil is intact, no problem. The non-oil GDP is the one that is failing, [both] the private economy and the state economy.” (Notas, March 21, 2014)

It is true that the shortage can to some extent be explained by the smuggling of goods with regulated prices into Colombia. But there is much more to it. The private sector is not growing because the bourgeoisie is not investing. But Venezuela has two huge aluminum plants that are not competitive, and the steel plant once owned by Techint saw its productivity decline after it was nationalized in May 2009. “Are you going to blame imperialism?” Guerrero asks, referring to those who only wield that argument to avoid responsibility.

His explanation falls on the side of political culture. Once a representative of the National Union of Workers (Unión Nacional de Trabajadores, founded by Chavez followers in 2003), he states that the inefficiency of these large firms is due to “the union bureaucracy, which effectively protects a type of industry to pay state salaries. The state pays wages so there isn’t social crisis.” He explains that in Techint production was higher when it was owned by the multinational parent company. Nationalized companies are repeating the history of real socialism, that made it so that where radical transformations took place “a poisonous and gangrenous body that is called bureaucracy springs out of the social, revolutionary organism,” which in Venezuela became bourgeois and corrupt.

Sowing Oil

As early as 1936, one of the most highly regarded Latin American intellectuals, Arturo Uslar Pietri, published an article that made ​​history. It was called “Sowing the Oil.” He pointed out two key facts: the oil industry would have an ephemeral character, and also a destructive one. In the first aspect, he seems to have erred. The second hit home like few others.

Oil exploitation spans more than a century, and Venezuela has surpassed Saudi Arabia with the largest hydrocarbon reserves in the world. There is oil for a while. But he also found that the extractive economy destroys a country. “The destructive economy is one that sacrifices the future for the present,” because its productivity “is entirely dependent on factors and influences outside the national economy.”

He argued that the exploitation of subsoil resources could “manage to make Venezuela an unproductive and idle country, a huge oil parasite swimming in a momentary and corrupting abundance and doomed to an imminent and inevitable catastrophe.” The only way to avoid this catastrophic drift would be to promote agriculture and industry, or rather, productive work. Oil is like a mine, and mines do not “produce,” they are exploited. They are wealth, not economy. [This is] in the same vein as Juan Pablo Pérez Alfonzo, a member of the Rómulo Betancourt administration (1959-63), who described oil as “the devil’s excrement.”

Uslar Pietri wrote that “the only wise and redeeming political economy that we should practice, is one that transforms mining profits into agricultural credit, encourages scientific and modern agriculture, cares about farm animals and pastures, restores forests, builds all of the dams and channels necessary to regulate irrigation and the defective water system, mechanizes and industrializes the countryside, establishes cooperatives for certain crops small land holdings for others.”

Astoundingly, he anticipated Chavez’s proposal 70 years later, with whom he agreed in Chavez’s early years. What Uslar Pietri did not anticipate was the new bourgeoisie born in heart of the process, the so-called boli-burguesía.

In reality, things got worse. In 2013, oil accounted for 96% of export value. At a private dinner, a Cabinet member confessed that attempts to create a Bolivarian textile industry by donating thousands of looms and machines to families had an unexpected and inadvertent outcome: They now work as maquilas for multinationals. Millions of bolívares thrown away. Or worse, inadvertently delivered to the “enemy.”

Let’s Talk About Socialism

The economic downturn does not explain everything. But the opposition and the White House rub salt in the wound at every opportunity. Washington seems to be recalling the assertion of Nicholas Spykman (a geopolitical theorist who greatly influenced U.S. foreign policy and became known as “The godfather of containment”), appropriately recalled by Brazilian professor José Luis Fiori, that  the Caribbean countries, including Colombia and Venezuela, are part of a region “where U.S. hegemony cannot be questioned.” (Valor, Jan. 29, 2014)

Spykman considered geography to be the key factor in foreign policy because it is the most permanent, and took pains to divide the planet into zones where the U.S. superpower should carry out different actions. With respect to the Caribbean, he said, “To all intents and purposes [it’s] a closed sea to which the United States holds the keys … this means a position [for these countries] of absolute dependence on the United States.” This explains not only the attitude of the White House toward Cuba, but also the overwhelmingly military reaction to the earthquake in Haiti that led to massive intervention on the island.

It is possible that U.S. government support for the ultraright rebellion in Venezuela is more related to the country’s ties to Russia and China than to a nonexistent move toward socialism. It is worth mentioning that there never was a revolution in the classical and usual sense in Venezuela, but a progressive and peaceful occupation of an “actually existing” state. That is, a reformist process, also in the classical sense.

Socialism, according to its founders, must be based on work and production, not the distribution of extractive revenues, even though this has managed to reduce poverty, improve the lives of the popular sectors and enrich their quality of life. In that sense, the famous “expropriation of the expropriators” doesn’t hold, but is just the restitution of the means taken from producers and cannot be repeated indefinitely. Sowing oil is sowing corruption. Socialism cannot be sown, but must be laboriously built over a long time. On this point, there are no shortcuts.

Venezuela is experiencing a “catastrophic equilibrium,” a term used by Bolivian Vice President Álvaro García Linera to describe a situation in which neither side manages to prevail. Therefore, the most likely path is a pact through which the country can avoid an internal war similar to that of Syria, or a situation of lawlessness like in Libya after the fall of Muammar Gaddafi.

The meeting between the most important businesspeople and the government on Feb. 27, the National Peace Conference, can be considered a first step in that direction. Although leading members of the MUD were not involved, Fedecámaras president Jorge Roig was, and the president of food giant Empresas de Alimentos Polar, Lorenzo Mendoza, says the traditional Venezuelan bourgeoisie is choosing its own path and bows neither to the dictates of the ultra right nor Washington.

The 1958 Puntofijo Pact is the necessary antecedent. The Marcos Pérez Jiménez dictatorship had fallen and the goal was to ensure minimum democratic stability. The leaders of the social democrats (Acción Democrática), the social Christians (Copei), and the center left (Unión Republicana Democrática) signed an agreement on Oct. 31, 1958, aiming to guarantee governability for a half century. The parties agreed to respect the outcome of the elections, govern together based on a program of minimum commonality, and integrate the Cabinet with members of the signatory parties, although the Unión Republicana Democrática withdrew from the pact in 1962. The central issue was to ensure democracy against military uprising.

Now things are more complex. An agreement between the opposition and the government with the support of business leaders should neutralize the ultraright but also the Chavista bases – the collectives from the communes, the motorbikers and all the organized sectors that have emerged since the 2002 coup.

Pruning these sectors – rejected by both the traditional bourgeoisie and the boli-burguesía embedded in the cabinet – from the Bolivarian process would be like putting an end to the process of change to ensure that the new bourgeoisie continue to have privileges. But in view of what happened in Ukraine, where outsiders played an active role in the demonstrations, such an agreement may pave the way for U.S. intervention.

Raul Zibechi is international relations editor at the magazine Brecha in Montevideo, adviser to grassroots organizations and writer of the monthly Zibechi Report of the CIP Americas Program