Crippled by a General Strike Since December

Venezuela’s Critical Divide

Monday 3 February 2003, by Olik VALERA

PHOTO: THE ECONOMIST

Since the 1970s, Venezuela’s middle and elite classes have been profiting from the nation’s lucrative oil industry. Chavez’s government put an end to this through a series of social and economic reforms. This was one of the factors that sparked the current insurrection, which Venezuela’s affluent have been waging against the government in the name of democracy.

"We will keep protesting until Chavez goes!" says Maria-Carmen, a 19-year-old Venezuelan student from the tony Caracas neighbourhood of La Florida. She believes Chavez wants to turn Venezuela into a new Cuba. "We’ll fight for this cause until the end," she adds.

While peasants and workers all over Latin America are taking to the streets to demand their rights, the Venezuelan revolt is supported by the more comfortable classes unhappy with the current government.

But despite Chavez’s social reforms, more and more underprivileged people are voicing their dismay and joining an increasingly fragmented opposition, which does not represent the entire country.

Democracy or dictatorship?

According to his opponents, Chavez is a "tyrant" and his government a "dictatorship." Yet ex-colonel Hugo Chavez ascended to the presidency democratically. He won the support of the country’s underprivileged, exasperated by the flagrant corruption of previous governments. Eighty percent of Venezuelans live in poverty. In a country rich in both human and natural resources, the gap between rich and poor is expanding.

Chavez came to power in 1998 with 56 percent of the vote and immediately went to work on political reforms. After the election of the National Assembly, he instituted a new constitution which won 71 percent support in a 1999 referendum. And so the Bolivarian Republic of Venezuela was born, inspired by the name and the libertarian doctrine of legendary Simon Bolivar, 19th century liberator of Latin America.

Soon came a series of social reforms benefiting the lower tiers of society, and the adoption of harsh new laws for the middle classes, specifically new tax measures aimed at curbing the government’s financial laissez-faire attitude. The government’s fiscal and social policies brought about positive change. The Bolivarian revolution established thousands of new schools, subsidized housing, micro-credit projects and free medical care for the poorest Venezuelans.

With or against Chavez

At the end of 2001 Chavez approved a new series of revolutionary reforms that included the Petroleum Bill. The new laws were met with stiff resistance from the middle class and business leaders, who regarded them as seizures, statist or even communist measures that constituted an attack on their freedom and free enterprise as a whole.
Chavez, however, has never adhered to Marxism-Leninism. He favours capitalism with a human face. As he said in his first presidential address: "Our intent is neither statist nor neoliberal. We seek the perfect medium; the state as much as necessary, and the market as much as possible."
It wasn’t long before the labour unions, led by the Venezuelan Confederation of Trade Unions, united with business leaders, represented by Fedecamaras, Venezuela’s chamber of commerce. With the help of the mainstream media and opposing political parties, they formed an unusual, but powerful, alliance. But if this alliance originally wanted to change the socio-economic policy of the government, it now seeks Chavez’s removal.

This opposition has accused Chavez of setting the poor against the rich. "In fact, the polarization of Venezuela is anything but that," according to Soraya Benitez, a Venezuelan-born singer who has based her career in Quebec for several years. "Certainly there has always been a split between classes," explains Soraya, "but today the rift is characterized above all by a person’s position on Chavez’s policies. You’re either for him or against him."

On December 10th, 2001, the first general strike paralyzed the capital, beginning the descent into pressure tactics that - along with the economic crisis that resulted in part from the political instability - produced the climate of chaos necessary to strike a decisive blow against the Bolivarian government. And so came the failed coup attempt of April 11th, 2002.

The stakes: oil

Most observers agree that it is the oil industry, and the political context within which the industry is allowed to operate, that is at the heart of this conflict. Oil production is dominated by Petroleos de Venezuela (PDVSA) - on paper, a state-owned company. In fact, PDVSA is an autonomous public entity, which has been riddled by corruption for decades.

The Petroleum Bill that was part of Chavez’s wave of revolutionary laws was engineered to reestablish control of PDVSA while reducing the profits of Venezuela’s foreign partners: Shell, Exxon-Mobil, and others. The law made the government the major shareholder of every oil company, given that oil is Venezuela’s primary resource.
These reforms upset foreign investors, especially those in the U.S. Venezuela is the third-largest provider of oil to Americans. Equally displeased were many of Venezuela’s elite, who stood to lose the most after Pedro Carmona - then president of Fedecamaras and the man behind the April 11th coup - privatized the industry.

The crisis continues

Venezuela has been paralyzed by a general strike which becan last December 2nd. PDVSA joined the strike, dropping Venezuela’s petroleum production to critical levels and forcing the country to import fuel. Losses due to the work stoppages have topped $4 billion.

This strike - really a management-organized lockout - is not limited to large corporations and wealthy areas. It extends into medium-sized and small businesses and permeates even the poorest areas of the country. Even if most underprivileged people support Chavez, political polarization is just as severe in their communities as it is elsewhere in the country. Corruption has been replaced by political patronage and poor fiscal management, more the result of economic irresponsibility than of a newer, more subtle kind of corruption.

If the opposition strategy is clear - snuff out the Venezuelan economy in order to oust Chavez or force early elections - the government’s plan is not. The government may accept an August 2003 referendum on Chavez’s presidency, as the constitution permits. Several countries, including Brazil and its new president Lula, have rallied themselves on Venezuela’s side, demonstrating their solidarity with president Chavez. They are seeking to find a democratic solution to the current crisis that paralyzes the Venezuelan state.

In a country that has all the economic means to be a prosperous nation, the future is less certain than ever.
Olik Valera, special collaboration


Translation: Andrew Elkin

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