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A L L I A N C E ! A Revolutionary Communist Quarterly
2004: Volume 2: Issue 4
We have written on Chavez before (Chavez, Hugo, National bourgeois at: Alliance January 2003.) However the topic of Chavez’s class affiliation is controversial and his rise to power uncovered two diverging viewpoints in today’s left movement:
Firstly a skepticism that in the 21st century, there can be any “true” revolutionary national democratic bourgeoisie;
And Secondly that Hugo Chavez is a socialist as distinct from a national revolutionary bourgeoisie.
The first viewpoint consists of rejecting any view of Chavez as being in any way progressive; while the second states that Chavez is a socialist revolutionary.
Unfortunately, at least in the view of Alliance - both are wrong.
The first is ultra-leftist while the second confuses reformism with revolutionary positions. This article will focus on what we believe, is an ultra-leftist view – that there can be no gains from the bourgeoisie, in the 21st century.
The Ultra-Left Position
This was summarized in a recent exchange on the e-list ‘rebel youth’, as follows:
“Dear Friends, How could any national
bourgeoisie be revolutionary in this century and truly struggle against
imperialism -especially USA?”
In this instance the revulsion inspired by a most vicious imperialism – the USA – is turned into a sense that the USA does indeed control all that happens in the developing world. We will argue that this is quite wrong.
If not, how can SB explain the repeated attempts of USA imperialism to unseat Chavez? These events cannot be questioned. Just recently for instance, the CIA was plotting to blow Chavez up in the air. And it is otherwise strange that the Prosecutor (Danilo Anderson) who was investigating the attempted anti-Chavez coup of April 2002 was killed in terrorist car-bomb attack on November 19 2004.
And in the referendum against Chavez, it
was the USA
who sponsored the resistance:
”Súmate is one of the main organizations behind
15 recall referendum against President Chavez. They organized the
collecting the 2.4 million required signatures, audited the voter
this purpose, and handled many of the legal issues that arose around
referendum. According to recently obtained documents, Súmate received
$54,000 from the National Endowment for Democracy (NED) and another
from the US Agency for International Development (USAID) for this work.
to Súmate and its U.S. government funders, this was supposed to be non-
partisan democracy-building work. To anyone in Venezuela, though, it is
that Súmate is part of the opposition that is dedicated
to removing Chávez from office.”
Gregory Wilpert -
Venezuelanalysis.com: “Venezuela's "Bolivarian Revolution" Continues,
Despite U.S. Resistance”; Jan 01, 2005
For the time being, Chavez victory at the Referendum will ensure no immediate further USA attacks will come. But this is largely a matter of time:
” While both sides have
said that they hope that relations will improve, it is likely that Bush
continue to covertly support Chavez's opposition, while at the same
time take a
more pragmatic approach of overtly engaging the country that is one of
U.S.'s largest oil suppliers with the largest oil reserves in the
Hemisphere. This strategy has recently become public, as documents
obtained through the Freedom of
(available at http://www.venezuelafoia.info/)
prove that the U.S. government, via the National
for Democracy and USAID,
been funding Venezuelan opposition organizations to the tune of $5
million per year.
Also, the recent discovery of CIA documents that show that the CIA knew
planning for the April 2002 coup, even while the Bush administration
that it was no coup, demonstrate a clear pattern of U.S. intervention
Gregory Wilpert - Venezuelanalysis.com: “Venezuela's "Bolivarian Revolution" Continues, Despite U.S. Resistance”; Jan 01, 2005
To really see Chavez class role, we must
within the history of his country.
We will argue that the agenda of Chavez is the same as that of his Venezuelan predecessors who tried to limit USA imperialism exploitation of Venezuela’s resources, in particular of oil.
We will define national capitalists as those (particularly those involved in industry) whose interests and advancement are frustrated by the dominating foreign power and who therefore have an objective interest in ending foreign domination.
We will define comprador capitalists as: those capitalists (involved particularly in finance and commerce) who are dependent upon the dominating foreign power and have an objective interest in supporting it.
The viewpoint that national capitalists
effective challenge today to imperialists actually has a long history
But no doubt it has become ‘re-vitalized’ by the so-called ‘globalization of capital’.
Whether knowingly or un-knowingly, the
embodied in the first error, takes as its theoretical background the view offered by Nicos Poulantzas.
Poulantzas argued that the national
so tied into ‘dependency’ that it is no longer truly a ‘national’
class, although it is not fully a ‘comprador’ class.
Poulantzas defines the national capitalist class as:
”That fraction of the indigenous bourgeoisie which, on the basis of a certain type and degree of contradictions with
foreign imperialist capital, occupies a relatively autonomous place in the ideological and political structure, and exhibits
in this way a characteristic unity… I do not mean that the economic contradictions between foreign capital and indigenous
capital do not play a determining role in defining the national bourgeoisie, simply that this in itself is not enough.”
and the comprador class as:
“that fraction of the bourgeoisie which
does not have
its own base for capital accumulation, which acts in some way or
other as a simple intermediary of foreign imperialist capital... which is thus triply subordinated – economically, politically,
and ideologically – to foreign capital”;
Ibid p. 71
For Poulantzas, because of the increased
capital in the ‘globalized’ era, the national bourgeoisie is ‘less of a
than before. He coined the term “internal bourgeoisie”:
“The imperialist stage ever since its
been marked by a tendency towards an international interpenetration
of capital… What is necessary then, is to introduce a new concept enabling us to analyze the concrete situation,
at least that of the bourgeoisie of the imperialist metropolises in their relationship with American capital.
Provisionally... I shall use the term ‘internal bourgeoisie’. This bourgeoisie which exists alongside sectors that are
genuinely ‘comprador’, no longer possess the structural characteristics of a national bourgeoisies, though the extent
of this... varies from one imperialist formation to another. As a result of the reproduction of American capital actually
within these formations, it is firstly, implicated by multiple ties of dependence in the international division of labour and
in the international concentration of capital under the domination of American capital, and this can so far as to take the
form of a transfer of part of the surplus-value it produces to the profit of the latter; secondly what is more, is affected, as
a result of the induced reproduction of the political and ideological conditions of this dependence, by dissolution effects
on its political and ideological autonomy vis-à-vis American capital.”
Poulantzas N, Classes in Contemporary Capitalism; London 1976; p. 70; 72.
We will not here undertake a detailed critique of Poulantzas’ views. On other aspects of his class analysis of modern society, we already have published critiques [See Definitions of Class at http://www.allianceml.com/AllianceIssues/ALLIANCE24-CLASS97.html].
However we will note that a large part of
revision of the notion of the national bourgeoisie takes place within
assessment of the
‘national’ capitalists of the European Economic Community (Later the European Union).
This paradigm we contend is a false one - since what Poulantzas is discussing here are inter-imperialist contradictions.
He is not discussing the contradictions between an imperialist bourgeoisie and a national bourgeoisie of a colonized or neocolonial state.
For the current purpose, we outline why Chavez story actually disproves the Poulantzas revision, in practice.
We outline briefly the formation of the
national bourgeoisie; the role of oil in the economy; how the
bourgeoisie failed to form an effective cartel to withstand USA and UK imperialist oil companies; and their attempts and failure to
enact a meaningful land reform.
We argue that all of this - remains the
legacy of the stalled national bourgeoisie of Venezuela.
We argue that this is the legacy that Chavez is attempting to fulfill. For the part of Alliance we support this attempt.
But we believe that it neither is socialist, nor can it succeed without a Marxist-Leninist party to carry through the agenda.
Once conquered by the Spanish Hapsburg monarchy, following the voyages of Christopher Columbus and Amerigo Vespucci, Venezuela became a colony of Spain. But largely because it was a land devoid of silver and gold, the Spanish tended to disregard it, and it was a “backwater”. It is very telling that it was only in 1776 that the Spanish created governing Venezuelan bodies, such as the Real Audiencia de Caracas [Michelena JAS ‘The Illusion of Democracy in Dependent Nations”; Cambridge Mass; 1971; p. 36].
With a central vacuum, rural power bases grew up around landlords. Their main crops were cocoa, coffee and indigo. These were grown on large land holdings, or latifundia, largely owned by criollos (South American born Spanish whites) and run by African slaves and indigenous Indians. Local militia was paid by Spain to maintain order, and these developed into local strong men (Caudillos).
“Caudillo is a Spanish (caudilho in Portuguese) word designating "a politico-military leader at the head of an authoritative power". The related caudillismo is a cultural phenomenon that first appeared during the early 19th century in revolutionary South America, as a type of militia leader with a charismatic personality and enough of a populist program of generic future reforms to gain broad sympathy, at least at the outset, among the common people.
Effectively Caudillismo depends on a personality cult.”
The caudillos were given privileges by the Spanish which only later after Independence, grew into a considerable power. At first they were subordinate to the criollos:
“The root of caudillismo lies in Spanish colonial policy of supplementing small cadres of professional, full-time soldiers with large militia forces recruited from local populations to maintain public order. Militiamen held civilian occupations but assembled at regular times for drill and inspection. Their salary from the Crown was a token; their recompense was in prestige, primarily because of the fuero militar ("military privilege"), that exempted them from certain taxes and obligatory community work assignments (compare the feudal corvée), and more significantly, exempted them from criminal or civil prosecution. Away from colonial capitals, the militias were at the service of the criollo landowners.”
When the criollo latifundia-owners themselves began to resist the rule of the Spanish Bourbon monarchs, they were initially a force only by themselves.
For at first the masses resisted the anti-Spanish moves.
This was because:
“Although 25% of the population labeled white may have controlled power and privilege, by the late 18th century they ... saw their social position weakened from above and attacked form below. Blacks slaves and free, appeared to be losing the traditional respect of the elite... the Spanish metropolitan authorities gave little encouragement to the whites in their exclusivist pretensions and in some instances even supported the blacks bid for social improvement………..
Most blacks recognized that any improvements in their condition had occurred … had come principally from Spain and Spanish official, not from the Creole landlords who so jealously guarded their privileges.”
Editors JD Martz, DJ Myers “Venezuela – the Democratic Experience”; p. 10-11; New York; 1986.
An example of this patronage by the Spanish authorities was the law “Gracias al Sacar” whereby pardos (black-white mixed descent, also known as mulatos) could become legally white by payment of a sum of money (Michelena; p.40).
Finally, the masses were brought into the Independence struggle by false promises of land.
The Criollo distrust of the masses is in fact reflected in Bolivar’s Constitutional views [See this issue Alliance].
After the Independence movements led by Simon Bolivar, San Martin and Antonio Jose de Sucre, Spain was ejected from South America in 1824, when a small period of true independence was initiated. But very soon, regional vigilante elements, originally Spanish Caudillo-militiamen - engaged in a fierce rivalry for power. Venezuela was therefore for a period in an intense flux, and the regional rivalries erupted. The age of ‘Caudilloism’ had begun. Eventually one regional section won over the others, and the ‘caudillo’ was transformed into the ‘president’. President Juan Gomez later called his own regime “Democratic Caeserism” [Lindqvist S; Land and Power in South America; Harmondsworth 1973; p.139], exemplifying the modernization of the term ‘caudillo’.
The term President was now the modern, preferred one.
During the chaos of the war of independence a fragmentation of the latifundia had taken place. The Spanish colonists, recognizing that a significant portion of the independence leaders were criollos, had fomented the pardos to rise against their white overlords. Some lands were seized. In this way, a small scale primitive land reform was performed.
In response the independence forces also promised a land reform, and issued “land bonds” to the soldiery recruited. These however were not honored and over the period of the period of the Caudillos (up to 1908) the peasantry was never actually given land – but was always promised it. They formed the backbone of the armies of the warring Caudillos.
Post independence, most of the rural population lived as conuqueros – or switheners, or migratory squatters. These obtained their meager living by subsistence farming on the burnt-off forest lands. As land concentration took hold, most were driven into servitude and corvee labour. Payment was as indentured land, or in sugar-cane spirit. Around the latifundia, it is true there were so called minfundia (small or medium sized farms that supported a peasant family).
But these were few, and were too small to generate anything more than a purely subsistence level of life [Herman DL “Agriculture”: In Martz & Meyers Ibid; p. 329.]. Moreover as land concentration got more intense, these were absorbed by the rich, into their latifundia. In total, the land tenure was regressive:
“This type of land tenure system is an obstacle to development. Economically the land is not used efficiently because the latifundia are either excessively labor-intensive or modern technology is practically non-existent. Furthermore the average agricultural tenant and laborer have so little money income that they have almost no purchasing power and cannot contribute to the consumer market. Socially the system gives rise to rigid social stratification... Culturally the peasants comprise a subculture dependent upon the protection of the latifundistas.”
Herman Ibid p. 330.
Immediately post-independence, agriculture concentrated upon the export of only one crop - coffee. During this period:
“Landowners pledged their properties to commercial houses in exchange for the credit they needed to produce the coffee... Those supplying credit had little interest in Venezuela except for the planter’s ability to pay his debts and provide sufficient quantities of coffee”:
Martz and Meyers Ibid; Ibid; p. 14.
For a while the inefficient latifundia production could still generate enough profits. But a crash in the international coffee market occurred around 1840, largely due to over-production in the colonies. This had immediate effects on Venezuela:
“Venezuela... controlled neither the terms not the conditions of its participation in North American trade. When a shift in the world commodity market in the later 1930’s-40’s brought the price of coffee down, Venezuelan coffee growers often found themselves unable to pay their debts or escape form the consequences of their over-extension... the local elite serving as intermediaries for international trade found itself enforcing foreclosures and debt procedures... as in the landowning elite”; Martz & Meyers; Ibid p. 15.
Civil war erupted at the end of which the Caudillos took control. Under the rule of one of them, Antonio Guzman Blanco (1863-1889), the comprador commercial classes attempted to consolidate a more efficient latifundia economy. When Juan Vicente Gomez came to power (1908), latifundia concentration was intensified. This was as Gomez and his small elite enriched themselves, and engendered an enormous further concentration of land ownership.
Gomez was immensely avaricious. By his death he had acquired more than 8 million hectares (larger than Holland and Denmark together) [Lindqvist Ibid; p. 140]. His henchmen followed suit:
“Land concentration occurred swiftly and reached fantastic proportions. About 5% of Venezuela’s landowners acquired 78% of the land, while only 10% of the rural population owned any at all.”
Lindqvist Ibid p. 140.
By the 1935 point, land holdings were concentrated into either ‘Government’ or openly private hands. Credit offered by the government agency – the Agricultural and Livestock Bank (BAP) established in 1928 accentuated the impoverishment of the minfundistas. Land in the Government agencies books, was eventually transferred to the latifundistas:
“The first national Agricultural Census of 1937 indicated that 4.4 % of the latifundistas held 78% of the land and 95% of the minifundistas held 22%… Due to a high percentage of foreclosures, the government became a major landowner holding approximately 25% of the arable land by 1945. By the end of the Gomez period, the latifundistas and cattle ranchers of the Llanos dominated the rural area””
Herman Ibid p. 331-332.
By the 1930’s the rural poor formed a mass of landless indentured labour. By 1940 there were 500 peasant syndicates with 100,000 members. They presented the call “Land to those who till it” [Lindqvist Ibid p. 141.
But the land concentration became rapidly largely un-productive, with the intensified dependence on one commodity – oil.
For the entire 20th century, Venezuela has been a comprador state.
By 1902, this resulted in a comprador trading relationship with Germany and Britain, dependent on the then coffee trade. But the state consistently reneged on debts amounting to 21,421,798 bolivars of a total fiscal state income of 31,650,000 bolivars in 1901 [cited Michelena Ibid p. 51] to these countries. This had already led to the 1899 seizure of Guyana and then La Guajira (part of Venenezulan territory) by Great Britain; in farcical court proceedings where a US Supreme Court judge supposedly represented Venezuela [Michelena Ibid p. 52].
But a much more serious portent for the future came in 1908, when the then Caudillo (President Cipriano Castro) was faced with a joint British German naval expedition off the coasts. Both Britain and Germany were intent on using the pretext of loan repayment in order to establish South American colonies of their own. Castro appealed to Theodore Roosevelt to intercede, and the USA navy enforced the Monroe Doctrine.
Originally promulgated in 1823, the Monroe Doctrine had stated in no uncertain terms that no European power had any jurisdiction in South America. Using this crisis, the USA warned off the European powers, in order to then ensure the accession to power of their comprador forces. From herein on Venezuela was led by a comprador bourgeoisie in hock to the USA.
This comprador bourgeoisie emerged from a landowning latifundia class, from Tachira (a region of the plains), led by President General Juan Vicente Gomez (1908-35). But in the Gomez years such a super-concentration of wealth in his immediate circle occurred, that this of itself impeded the development of a national bourgeoisie.
Gomez developed a true plutocracy.
After his death, the remaining landowners rapidly shifted to a new
By the beginning of the 20th century, Venezuela was a typical semi-colonial state. It can be described then as:
“Typically underdeveloped. It was essentially a one-product economy from whose export the country derived the major part if its income. Approximately 85% of the work forces was involved in agriculture, and the per capita rate of growth of the economy was almost stationary (0.3%) as it had been since the beginning of the republic’s life and as it continued to be during the first quarter of the 20th century”;
Cited by Michelena; Ibid; p. 49.
Oil was known to the native Indians of Venezuela, who had used it for medicinal purposes. Oil was even mentioned by the chronicles of the Spanish in 1535. But it was only in 1839, that Venezuelans attempted to develop production. The first Venezuelan oil concession was offered in 1878. With the First World War, its economic potential became clearer. Gomez formally invited the foreign companies into Venezuela, while putting no conditions on the foreign oil companies that exploited the oil wealth:
“Gomez... maintained the most liberal oil policy of Latin America... Shell, and later Rockefeller’s Standard Oil as well as other companies invested heavily in Venezuela. Gomez, propped up by their support, kept his promise: he preserved unrestrictive conditions and guaranteed “social peace”... By the late 1930’s, Standard Oil and Shell had come to control 85% of oil extraction in Venezuela (50 and 35% respectively).”
Coronil F; “The Magical State. Nature, Money and Modernity in Venezuela” Chicago 1997; p.76.
By the 1920’s, Venezuela was the world’s biggest oil exporter. With the appalling state of land management, coffee had declined after 1925, in contrast to states such as Brazil and Colombia. In the process of transforming the economy into a completely dependent oil based mono-commodity, the landowners transferred their holdings into new urban-based conglomerates:
“At the outset there developed a system by which the local elite mediated between the government and the coil companies. The government granted land concessions to the local elite landlords, and the elite in turn, sold these concessions to the oil companies at a high rate of profit. … The traditional agrarian oligarchy and the commercial bourgeoisie which had once shared a common interest in export agriculture now became oriented towards activities in urban commerce and real estate based on oil income and was challenged by the new ascendant commercial and manufacturing interests... opened up by the expansion of the oil industry…. The transformation of agricultural lands into urban real estate became a central path to wealth and the basis for the formation of major grupos economicos, which are diversified conglomerates centered on a few families linked... Landowners were quick to adapt and to shift investments to new activities”.
Coronil Ibid p. 79; 87.
As this shift occurred, the emphasis on revenue from agriculture for the state as well as for the landowner rapidly declined. But at the same time, the Gomez plutocracy created effectively a state monopoly on oil relations with the foreign companies. They set up a national body in 1923, called the Compana Venezolana de Petreo SA (CVP) which:
“monopolized all oil concessions and negotiated the sale of these concessions and national reserves to the oil companies”;
Coronil Ibid p. 80.
Revenues were plundered by the Gomez plutocrats.
Some ministers, in particular Minister of Development Gumersindo Torres, argued for stricter control of the foreign companies, for Venezuelan state growth. This was never enacted. Torres was simply ousted in 1922, when he tried to issue tax regulations.
Gomez’s personal monopoly ensured a corrupt system of intermediary companies and bribes for any oil concessions, and more. Accordingly he became one of the wealthiest men on the continent and:
“Took exclusive control of the soap, paper, cotton, milk, butter, and match industries; he became the only meat supplier for the port of Puerto Cabell and other urban markets ... etc”;
Cited Coronil Ibid p. 82.
This plutocracy coupled with corruption,
elite leaders, became known as the gomecismo.
Coupled to that was a brutal dictatorship outlawing any political
Emblem of Accion Democracia Romulo
By the time that Gomez died in 1935, the country was in ferment. In 1928 a student rebellion had been brutally crushed, leaving the Generation of 28 to await a later time. The 28 Generation had agreed about the:
to overcome feudal structures, free Venezuela from the grip of
democratize the political system… and to maximize oil income...”
Coronil Ibid p. 91.
By 1931 the Communist Party had been formed, but they were successfully opposed by the openly bourgeois nationalists led by Romulo Betancourt. The nationalists outlined the Barranquila Plan for a democratic nationalist regime.
The non-communists of the generation of 28 formed the Bloque Nacional Democratico and organised a large scale demonstration that was brutally suppressed on 14 February 1936.
In response, and in order to placate the growing unleashed tide of opinion, the President Lopez Contreras presented a “February Programme” that outlined attempts at reform. These were inadequate however for the now insistent nascent bourgeoisie of Venezuela.
The generation of 28 organised the Moviemento De Organizacion Venezuela (ORVE), which later became the Partido Democratico Nacional PDN), later to become Accion Democratica (AD). All these variously argued for a national movement, as the ORVE’s program proclaimed:
”Under the previous regime there was no national existence. The state served interests opposed to those of the nation. It served the foreign penetration of the nation and provincial caudillos. A group of Caudilllos, seizing the country, subjected Venezuelan honor to powerful foreign interests and made the public administration a tool of foreign plunder”.
Coronil Ibid p. 95.
It was at this time that one of the national bourgeoisie – Arturo Uslar Pietri, coined the phrase:
“sow the oil” – later to be taken up Betancourt:
“If we are to propose a motto for our economic policy, we would suggest the following one, which dramatically sums up the need to invest the wealth produced by the destructive mining system in order to create reproductive and productive agricultural wealth: “sow the oil” (sembrar el petroleo)”; Cited Coronil Ibid p. 105.
Under the tide of national democratic opinion, President Lopez Contreras attempted to level higher taxes on the oil companies. But they sued against this, and won, in the Venezuelan courts. Later, during World War II, President Medina made a plea for intercession with the companies to USA President Roosevelt, who agreed, provided that Venezuela granted “stability” of supply to the USA i.e. monopoly status.
Upon Medina’s agreement to this, the Oil law of 1943 passed, granting USA companies concession for 40 years and simply validating the Gomez oil concessions offered previously. It did increase however, state revenue to a level of royalty of 1: 6 barrels (one for the state, six for the companies). It was hoped that together with other taxes, this would yield about a 50-50 split in oil profits.
However the national bourgeoisie were aiming higher still.
Meanwhile, for their own separate interests, a group of disaffected generals became organised as the Union Patriotica Miltar (UPM), led by Major Marcos Perez Jimenez. They approached the leading democratic militants centered on Betancourt and the AD. Agreement led to a successful coup in October 1945.
The new ruling junta was led by Romulo Betancourt, and organised elections, which were won for the Presidency by the democrat novelist, Romulo Gallegos., standing for the AD. The AD was in power for a short period of 3 years.
However, during this “Treineo” the AD wrought major changes:
“AD legislated wage raises, and subsidies for basic consumer goods... the number of trade unions increased from 215with a membership of almost 25 thousand in 1945 to 1,047 with almost 140-thousand members in 1948; in the rural sector the expansion was from 53 unions with fewer than 4 thousand members in 1945 to over 500 unions with over a 40 thousand members in 1948”
Coronil Ibid p. 135.
This was coupled with other progressive steps that almost exactly parallel the steps being taken today by Chavez. For example Decree 321 aimed to raise and homogenize educational standards.
However the most essential feature that sealed the fate of the first rule of Betancourt and the AD was raising of taxes on the oil companies to parallel the same rates of tax they faced in the USA. This first brought the tax level to 28% and effectively raised the states share from profits of 50% to 58%. But then the Venezuelan state proposed that both royalty and taxes should be added together, to calculate a split of profits at exactly 50-50 – which calculated like this would have cut oil profits and increased state revenue. The companies baulked.
The companies organised a movement of local compradors and the military in a counter-coup.
On the day of the coup, Colonel Adams the US Military Embassy Attaché, was observed in the Presidential Place,
”busily conferring with various military leaders”;
Cited Coronil Ibid p. 147.
The same army officers who had assisted the AD now took power in a simple “coup by telephone”, an easy victory, because the AD did not launch a mass rebellion, fearful of the masses (Coronil Ibid p. 141). A three-man junta took power only to be supplanted by the one-man rule of Jimenez a mere 2 years later.
Naturally the Jimenez government opened the doors of Venezuela to the USA and provided favorable conditions (See Coronil Ibid p. 180-183). ‘Time’ magazine proclaimed:
“One place where US businessmen abroad can still flourish in a climate of high-riding free enterprise is the oil-boom republic of Venezuela”; Coronil Ibid; p. 183.
In 1952 the signing of the US-Venezuelan Commercial Treaty ensured that local national business did not erect tariffs (Coronil Ibid p.188). The rampant comprador forces inevitably created business opposition leading business leader secretly met with the AD in exile and with the leaders of the major alternative party – the Christian Democrats, or Partido Social Cristiano Copei (COPEI) – in 1957. Opposition mounted to growing mass poverty. A mass strike was faced down. But then the higher echelons of the military turned absent Jimenez and forced his hasty departure from office in January 1958. After a short interim government presided over by Rear Admiral Larrazabal, elections were held.
In the lead up to the elections, all parties signed the “Reconciliation Pact Between Labour and Capital (El Avenimiento obrero patronal) “. This included the openly revisionist Browderite Communist Party.
The other three main parties [AD, COPEI and the Union Republicana Democratica (URD)] signed the ‘Pact of Punto Fijo’, which agreed to accept the results of elections, and where each party accepted a Minimum Government Programme and Declaration of Principles. There was to be in effect, a coalition government.
This effectively was a temporary alliance of all national and comprador capital which:
“Defined a project of capitalist development, sponsored by a reformist democratic state and with the active participation of local and foreign capital”; Coronil; Ibid p. 219.
The AD won by a wide margin, and Romulo Betancourt was in power a second time. Again – how to tame the Oil Companies was his agenda. Having learnt from previous experience, he was to attempt a back door – using as many allies a he could.
While the influence of the Communist Party was profound, it was not able to challenge either the AD or the COPEI. Both had agreed to collaborate as we saw. What this marked was an agreement by both the compradors and the nationalists, that collaboration was needed to build a viable state, given the immense poverty engendered under Gomez and Jimenez.
Although the overall programme of the AD was nationalist, it was neither anti-capitalist nor was it overtly anti-USA. The Betancourt government was a coalition one, of forces from the AD, COPEI, and the URD. The URD left the coalition in 1960, over the Government’s refusal to support Fidel Castro more overtly against the USA. This illustrates that the government tried hard to maintain its good relations with the USA. For example, by refusing to support Fidel Castro as after Castro’s revolution in Cuba, he began out of necessity to court the USSR. After all the USA had spurned Castro’s overtures.
Despite the coalition status the government largely devolved onto the AD. It is true that Betancourt and his government tried very hard to limit the oil company supremacy. The real architect of the oil policy was the minister of oil, Juan Pablo Perez Alfonso.
But while nationalists, they refrained from all-out battle with the USA. For instance, they recognized the power of the USA and wished to obtain better bargaining conditions, by asking for “preferential treatment”.
“Once in office the Betancourt government declared its policy to be that of Perez Alfonso’s “Petroleum Pentagon” Which consisted of five basic principles: (1) no more concessions to foreign companies, (2) uncompromising defense of prices, (3) A quest for preferential treatment form the US, (4) Creation of a national oil company (5) promotion of an organisation of petroleum exporting countries”:
Martz JD in Martz & Meyers Ibid; p. 245.
Furthermore, the AD polices on foreign concession only applied to oil companies. They specifically sought outside investment for instance, in other industries:
“Betancourt’s regime did not discourage further foreign investment except in the oil industry. Rather it sought to encourage the establishment of branches of foreign manufacturing companies in the country, feeling that these would be in “nationalized’ in the sense of being run by Venezuelans and having Venezuelan capital invested in them”;
Robert J. Alexander “The Venezuelan Democratic revolution”; Rutgers 1964; p.8.
“The Betancourt regime also sought to encourage private enterprise both domestic and foreign, to play a major part in the process of economic development… The economic policy of the Venezuelan democratic regime after 1959 was fundamentally nationalistic. Although in no sense xenophobic or extreme, the Betancourt policy of nationalism was nevertheless real. It was reflected in the decision of the President and his associates that the country’s basic manufacturing industries a- iron and steel, petrochemicals and aluminum – should be in the hands of firms in which the Venezuelan government has a majority interest”;
Alexander “The Venezuelan Democratic revolution” Ibid p. 68.
But although wanting national industrial development, Betancourt, in fact advocated only a limited industrialization:
”In July 1932, he asserted that he was not proposing that Venezuela become “another England”, nor that he was advocating that industrialization be carried through the “realization of plans of four years a la Nazi or five-year plans a la Soviet”. He went on to argue that our destiny is fixed by geography and history, And in the great division made in modern times by economics between machine countries and rural countries, Venezuela is and will be placed with the latter; predominantly agricultural countries, exporters of raw materials, purchasers from the machine countries of the utensils required to modernize production and to make their existence more comfortable”;
Robert J. Alexander, “Romulo Betancourt and Transformation of Venezuela”; New Jersey 1982; p. 145.
So although Betancourt wished to increase oil revenues for the Venezuelan state, Betancourt was not willing to clearly separate from foreign capital:
“Betancourt clearly laid down the lines of the oil policy he was to ... follow in office… He laid particular stress on the need for getting the possible return for Venezuela from the exploitation of its oil, the need to begin to establish a national oil industry, and the need to “sow petroleum”, that , use income form it in order to develop other parts of the economy. In ‘Ahora’, on April 25 1939, he summed up his point of view: “The Mexican formula of nationalization cannot be suggested presently in Venezuela. Not even the most intransigent nationalists consider viable or opportune at this moment a decree on nationalization… the concrete objectives put forth by the social forces interested in rescuing petroleum for Venezuela, are in this historical moment , the following: real increase in government income and of the material advantages obtained by the government and the native worker of the industry… and the beginning of the Venezuelan exploitation of the industry , parallel to that of foreign capital, and using exclusively national capital, of the state and private interests”;
Robert Alexander; Romulo Betancourt and the Transformation of Venezuela; New Jersey 1982; p. 142.
“Betancourt’s attitude to the oil companies reflected his general attitude toward the role of foreign capital in the Venezuelan economy – that it was needed, but only under conditions satisfactory for Venezuela. He put forth this position succinctly in one of his columns in February 1938, commenting on the move of the Ecuadorian government of imposing higher tax levies on foreign concessionaries he argued for the rectification of the policy of making our national resources available at low prices to colonizing foreign capital.. one can see the slow triumph of the nationalist thesis which denies the necessity of attracting foreign capital for the exploitation of our zones of potential wealth, and which demands instead negotiations with the international trusts of terms favorable to the national economies and under conditions which are never damaging to the sovereignty of our peoples”;
Robert Alexander; Romulo Betancourt and the Transformation of Venezuela; New Jersey 1982; p. 142.
However, he understood the need to carry out a modernisation scheme. This was to consist of firstly, agrarian reform:
“Betancourt argued for agrarian reform – land redistribution in favor of landless peasants and small farmers. … July 1937:
“To proceed to carry out an agrarian reform and develop a peasant policy with a view to creating a system of small landed property in the countryside is for the state not only a requirement of social justice. From the point of view of the national wealth – which any state conscious of its purpose must increase – it is also urgent to modify profoundly the system of agricultural production. Because in Venezuela, as the rest of Latin America, the latifundist system must be liquidated not only because of what it represents as an attack on justice, but also because of its low productivity.”
“He sought to answer the argument that land distribution to peasants was uneconomical: “It is undoubtedly true that modern and scientific cultivation of the land does not go along with minfundia, that is, the parcel. But it also true – as an ancient said in a sentence whose justice has resisted the war of the ages – that the sweat of the slave irrigates the land but does not make it fecund. And he who cultivates the land for the benefit of others feels himself a slave of the land and not a beneficiary of it.”
Robert Alexander; Romulo Betancourt and the Transformation of Venezuela; New Jersey 1982; p. 143.
“Betancourt also laid stress on agricultural development ... that resources generated by the oil industry should be invested in other parts of the economy, he lamented the failure of the Gomez regime to pay any attention to agriculture, and urged a variety of programmers to develop the rural sector, and particularly, to make Venezuela less dependent on imports of agricultural products and, indeed a larger exporter of them”;
Ibid; p. 144.
In actual fact the differences, given the agreed political agenda between the COPEI and the AD were minute:
of the political parties that bore responsibility for Venezuela’s
Revolution – the AD and the COPEI – endorsed a mixed economy of public
private enterprise in which the guiding role is taken by the state...”
Alexander “Venezuela’s Democratic Revolution”; Ibid p. 63.
The AD split to the left due to its vacillations and refusal to attack the USA more centrally. At the same time it was insufficiently supportive of the workers wages in the view of the left-wing. This erupted into conflict over a new contract with eh oil workers in 1960. The split to the left became the Movimiento de Izquierda Revolucionaria (MIR). This moved closer to the CP, but remained separate. (In a subsequent article we will discuss events on the left in Venezuela in more detail). As Betancourt moved more openly to an anti-worker and suppressive regime, he viciously attacked the left opponents. In 1962, the CP and the MIR jointly began a campaign of guerrilla warfare, although not overall achieving only limited success in mobilizing the people.
The COPEI polices were not radically different from those of the AD. They were never outlawed under Jimenez unlike the AD, but they were harassed. Their appeal was towards the adherents of the Church and radical clerics, but also of the military caste, and of the comprador class:
“When AD was in power between 1945-1948, COPEI adherents were the most violent opponents of the regime. At that time they included many of the most conservative elements of Venezuelan political life and the party had a marked clerical tinge... The leaders of the party became firm adherents of a radical interpretation of the social teaching of the Catholic Church…. It was probably the party that was regarded as least noxious by important elements in the officer caste of the armed forces. And in spite of its turn to the left after 1958, the COPEI still have the sympathy of important elements among the industrial and commercial classes.”
Alexander Ibid p. 85-6.
Rather than confront the USA imperialist directly, AD had decided to ally itself with the COPEI and be much more cautious. As part of their caution, they decided to establish an international cooperative of oil producing nations. Chavez comes from a long line of so-called national bourgeoisie whose interests lie in developing the economic base of a colonial or semi-colonial country, to the greatest extent possible; rather than submit to the wish of imperialists to subjugate the colony. These nationalist politicians take this position in tandem with the national capitalist class, whose economic interests demand the cutting of dependent colonial relations. But they are only able to take an uncompromising stand to the imperialists if they are prepared to unleash mass power. AD was not. Chavez to an extent has been forced to adopt this approach.
Chavez and Venezuela are familiar with the prior attempts of their country to break loose from USA control. Their story is that of the colonization of oil-rich states. Their national struggles around oil really start not in Venezuela – but in Iran. The USA imperialists are behaving now – with regards to Chavez – in exactly the same way they had earlier on, reacted to Mussadiq of Iran.
For Mussadiq had the temerity to believe that:
Iranian must administer his own house."
Cited J.A.Bill "The Eagle and the Lion - the tragedy of Iranian -American relations. New York 1988 p.56.
The USA effectively removed Mussadeq for his temerity. This was ‘necessary’, in order to prevent the nationalist Muhammed Mussadiq effecting nationalization of Anglo-Iranian Oil Company (AICO) later the Anglo-Persian Oil Company. When Mussadeq had become Prime Minister of the Majlis (the Iranian Parliament) in April 1951, he inherited a Bill that nationalized AICO. Refusing to rescind the Bill, he was held to ransom by AICO which in a boycott, refused to allow Iran to sell its oil on the international market. Quick results ensued:
"This boycott was effective. Iran's oil export income dropped from more than $400 million in 1950 to less than $2 million in the 2 year period from July 1951 to August 1953.. Musaddiq faced a deteriorating economic and political situation in 1953.. and was forced to rely on the radical left and the communist (revisionist - Editor) Tudeh Party.. on May 28th Musaddiq wrote to President Eisenhower requesting economic aid.. the answer was negative..".
J.A.Bill ibid P.66-7.
The British then persuaded the USA to participate in a putsch, termed Operation Boot by the British and Ajax by the US. The Chief British operative, Major C.M.Woodhouse was conscious of difficulties in getting the US to take part :
"Not wishing to be accused of trying to
Americans to pull British chestnuts out of the fire, I decided to
Communist threat to Iran rather than to need to recover control of the
industry. I argued that even if a settlement of the oil dispute could
negotiated with Musaddiq, which was doubtful, he was still incapable of
resisting a coup by the Tudeh party, if it were backed by Soviet
Therefore he must be removed."
J. A. Bill, Cited, Ibid. p.86.
The USA ‘bought’ the argument. But they proceeded to ensure their – and not British – domination over the state of Iran:
“The 1953 anti- Musaddiq coup resulted in the Shah of Iran being bought back to Iran. He understood fully who had placed him on the Peacock Throne, and remained thereafter much indebted to US imperialism. Musaddiq was treated with relative leniency - he was not killed, but after 3 years in jail, was allowed to return to his home village Ahmadabad under house arrest”; (J.A.Bill Ibid p. 101).
Following this demonstration of USA power, the colonial oil-producing nations decided to form a cartel in 1960 – the so-called OPEC. The inspirer of this more cautious tactic was the national bourgeois representative Alfonso Perez of Venezuela. Alliance has previously discussed so-called “oil crisis” of the 1980’s, and the Gulf Wars of USA imperialism.
Despite the 1948 set-back for the Venezuelan national bourgeoisie, the "50-50 rule" had become a standard in dealings with oil-exporting nations. For instance Aramco (Arabian American Oil Company ) used this formula in Saudi Arabia in 1950. (J.A.Bill, op cit, p. 61). However this still left considerable super-profits for the imperialist owned oil companies.
When they returned to power in 1959, the national bourgeoisie of Venezuela recognized that a key factor in negotiations over the price of oil, was the erosion of Venezuela's selling power by Middle East oil. Oil companies when faced with demands for a fairer distribution of profit simply expanded production from the compliant Middle East.
Some have argued that Perez Alfonzo had:
"Only envisaged an 'entente' and
between a few producing countries to establish, links of solidarity
them, reduce the oil companies ‘capacity for maneuvering and prevent
playing one country off against another."
(Statement in Petroleum Weekly, New York May 1 1959 p. 19. Cited by Pierre Terzian "OPEC: The inside story"; London 1985.)
This seems likely. But Perez Alfonso may have also had a much grander vision than simply trading a better price:
“Venezuela has a great resource in its petroleum, but it is faced with great responsibility. It must not impede its use of this resource to satisfy the needs of other people, but in protecting its own national interest, it must never let the industry become dilapidated. Petroleum is the principal of all indispensable fuels in modern life… Venezuela needs to maintain and even to increase the income it receives from petroleum. With a policy of just participation, the exploitation of present concessions is enough for the country”:
Cited Martz and Myers Ibid; p. 72.
After the national bourgeoisie of Venezuela returned to power in 1959, they took up the cause of combination of the oil producing countries. Under their leadership, a secret agreement known as the Maadi Pact was concluded at the first Oil Arab Congress in Cairo on 16th April 1959. The Agreement between the UAR, Iraq, Venezuela, Kuwait and Saudi Arabia included the following:
"1. Improvement of the oil producing
participation on a reasonable and equitable basis. The consensus of
that said government should tend to at least a 60-40 formula to be on a
with the recent Venezuelan attitude.. and with other countries ..the
structure should be maintained - any change in prices should be
precedent in time and be approved by all parties concerned.
2. Convenience of arriving at an integration of the oil industry-to ensure stable markets to the producer countries avoiding transfers of gains from one phase of the operations to another, affecting the oil revenue of the governments.........
4. Establishment of National Oil Companies that would operate side by side with the existing private companies."
P.Terzian. Ibid , p.27-8.
Perez Alfonso arranged that the USSR would support the OPEC move. This was important because the Oil companies were constantly citing the USSR's tariff policy as a pretext to justify their own decision to cut prices. (P.Terzian, Ibid p.34).
After an initial disbelief, the major oil companies, led by Shell, tested the strength of resistance by announcing cuts in the posted prices of oil that they were prepared to pay. The vigorous resistance they met, along with announcements of a meeting of oil-producer nations at Baghdad in September 1960, induced Shell to withdraw their price cuts. The Financial Times concluded:
effect Shell is.. paying a premium to the Governments of the producing
What the countries particularly objected to was the fact that they were
Cited, Terzian. Ibid. p.53.
However efforts to involve the Middle East nations in an effective combative combination were doomed to failure. This was because combination had to involve some countries that were ruled by comprador bourgeoisie (e.g. Saudi Arabia and Iran.
The Baghdad Meeting in September 10th 1960 started off tense. Both the Venezuelan nationalists and the Iraqi national bourgeoisie led by President Kassem, were in the midst of fending off a coup at home.
Tension rose as it became clear that Iran was blocking agreement on going further than the agreement reached at Maadi. The Irani representative Fuad Ruhani had been given:
"Very precise instructions from my
Terzani , Ibid. p.41.
Suddenly on 14th September the Shah of Iran sent new instructions. This agreed to the creation of a permanent organisation. Moreover, the Shah even had a name for it - The Organisation of the Petroleum Exporting Countries (OPEC).
This about face indicated a new tack on the part of the Oil Companies. They had accepted the inevitability of the cartel. As Perez Alfonso found when he met the directors of the Seven Sisters:
"My impression is that the main companies
recognize that the Baghdad Agreement was necessary, or at least
Theoretically the OPEC countries were in a very strong position controlling 82 % of world crude exports. But ‘The Times’, accurately saw the situation:
"The strength of these producing countries
not as great as might appear - offering two reasons - the surplus of
over demand in the world oil market and the divergent interests of the
countries concerned, some of who wanted to increase production whilst
sought a reduction."
The Times 15 September, 1960. Cited by Terzian p.44.
Irrespective of this, the imperial oil companies decided to emasculate the oil-producers from within. The oil producer nations – or OPEC - were hijacked by pro-imperialist forces. The comprador states of the Middle East, were key to the strategy of the oil companies. Saudi Arabia was and is a reactionary state with elements of mystic Muslim feudalism, but essentially represented USA interests in the Middle East.
As the US Senate Committee on Energy and Natural resources commented:
"The US, by virtue of its commercial
interests 'long standing monopoly over the disposition of Saudi crude,
reinforced by the 1974 conclusion of a "special relationship"
embracing economic and military agreements, is very widely regarded
allies and by Arab and Iranians as having secured preferential and
near-exclusive access to Saudi oil. Given the extraordinary importance
oil production to the world generally, the US relationship is
considered key to
(U.S. Senate: "Access to oil - the USA relationships with Saudi Arabia and Iran." Washington D.C. U.S. Government Printing office, Publication No. 95-70. 1977 (p. xi). Cited by Peter Nore and Terisa Turner in: "Oil and the class struggle"; London; 1980).
At critical times the Saudis refused to allow OPEC to raise prices in accordance with the demand of the more nationalistic of the OPEC countries such as Iraq and Libya. Saudi Crown Prince Fahd has pretentiously revealed his unwillingness to be an effective member of the cartel:
country which possesses the largest oil reserves in the world will not
cause of a weakening in the capacity of humanity to live in stability
prosperity. In view of this lofty aim, commercial considerations cease
and consequently the methods which are used to increase or lower prices
Frankfurter Rundschau. I April 1975. Cited by Mohssen Massarrat. The Energy Crisis p.67. in Oil and the class struggle" Ed. P.Nore and T.Turner. London, 1981.
It is not surprising that for decades:
foreign policy consists largely of
support for Washington in the Middle East";
(Sunday Times, - 5th August 1990. p. 12)
Nor is it surprising that given the membership of nations like Saudi Arabia in OPEC, that OPEC could not reflect the interests of the oil producing national bourgeoisie. As Henry Kissinger commented:
"OPEC was not perceived as a serious
Jack Anderson and James Boyd. "Fiasco. The real story behind the disastrous worldwide energy crisis - Richard Nixon's "Oilgate". 1983. Toronto. p. 163.
In fact as, the manufactured oil crisis of the 1970's shows, OPEC was transformed into an agency that performed objectively in the interests of the USA imperialists. It is in this context that the rise of Chavez must be seen.
Chavez has taken over the mantle of the nationalists from oil producing countries, who are trying to get a ‘fair price’ for their oil.
Following the immediate collapse of the nationalist goals to control the oil output, the Venezuelan state slipped deeper into dependency upon the imperialist world order. The entire agenda for any national development was blocked. The comprador capitalist class alliance with the national bourgeoisie was broken. Both the COPEI and the AD pursued now openly pro-comprador policies.
Although the first AD government had initiated a rural reform, it was stalled. It is true Venezuela was the first South American country to attempt a comprehensive land reform. The mechanisms used were:
To empower the Colonization Institute to distribute land;
Setting up in 1947 agrarian commissions which expropriated all state-owned land and all privately owned land not being cultivated – which then distributed 125,000 hectares to 73,00 peasants;
In 1948 setting up the Land reform Institute which began to expropriate even land already under the plough.
(Sven Lindqvist: “Land and Power in South America”; Harmondsworth; 1979; p.141-3).
These were effectively halted by the Jimenez take-over. But even after the second AD government, land reform was not effectively completed:
“The 1960 reform- after legalizing the spontaneous land invasions – was a slow integrate process.. to give the poor peasants access to the market economy.. it did not intend to .. overthrow the landed estate owner class. On the contrary, large scale commercial agricultural was strongly encouraged by food tariff sand other price supporting measures as well as by agricultural credits and subsidies… one third of the land reform peasants had received less than 5 hectares. … many smallholdings had been distributed of a size insufficient to support a family.. the land distributed was rarely under the plough. Often the reform peasants had to content themselves with marginal land, nor regarded as profitable by the estate owners.. others had been obliged to become out croppers, breaking fresh ground on the state’s forest reserves.. credits technical aid, road construction had not been distributed equally..”
Lindqvist Ibid pp 146-8.
A survey in 1969 showed that the peasants had only been able to maintain their incomes by resorting to wage labour. Moreover up to 41% of the so-called “landed reform peasants” simply did not exist, but had been ‘lost souls’ made up by businessmen and estate owners to obtain more land or revenue. The net situation in agriculture has remained bleak up to the Chavez rise to power:
“Although the cumulative annual agricultural growth rate of approximately 4.3 per cent over the last 35 years.. is insufficient to satisfy the demand generated by accelerate urbanization, the general rise in income, an average high demographic rate (3-5% annually) augmented by illegal immigration principally form Colombia… Venezuela continues to be characterized by the bimodal pattern of agricultural development consisting of numerous minfundia and the large farms of 50 hectares or more, the latter accounting for most of the cultivated area and production and .. credit.. More than 90% of the agricultural producers go to the official bank for credit because they not have collateral.. Added to these inefficiencies, is increasing agricultural dependency on imported machinery, equipment, seeds, fertilizer, pesticides, technology, and food.. it imports up to 70% of its food”;
D.L.Herman in Martz & Meyers Ibid; 1986; p. 357.
The failure in the oil industry to ensure Venezuelan supremacy, was mirrored by the failures of attempts to build other industries. Perhaps the clearest examples were that of the automobile industry that was supposed to be a part of a regional conglomerate – the Andean Pact, and the farm tractor business. Both ventures were sabotaged by USA capital (Coronil Ibid; pp.237-320).
These collective failures meant an increased dependency upon the USA.
Especially with respect to the International Monetary Fund and its insistence in recent years on so-called “austerity” programmers.
When the AD Presidency of Carlos Andres Perez between 1989-93 lied to the electorate that they would stand up to the International Monetary Fund (IMF) – and then rapidly submitted to IMF demands on the country, a massive rebellion and riots which broke out on 27 February 1989. Police shot and killed over 400. This rebellion is known as the Caracazo.
The capitulations to the IMF were excoriated by Chavez, and were in fact his main impetus for seeking political office. As described by Richard Gott, the extent to which the IMF wished to submerge the Venezuelan state into “neo-liberalism” is evident.
This lengthy quotation is worth citing in full:
“Chavez makes a general complaint against these (IMF) programmers – he always refers to them as 'savage' neo-liberalism – his particular arguments inevitably hark back to the dismal experience of Venezuela during the years after 1989, and his chief target has been the policy turnaround introduced by Perez that had led directly to the Caracazo, and was to lead later, in 1993, to the downfall of Perez himself.
The immediate cause of the Caracas rebellion, noted in the previous chapter, was the rise in the price of petrol, and therefore of bus fares;... Yet the price rise was itself part of a more extensive change in economic policy undertaken by the government earlier in the month, swiftly dubbed el gran viraje, 'the great U-turn'.
The policies of neo-liberalism unleashed on Latin America (and elsewhere) in the 1990s are often and usefully defined as the 'Washington Consensus', a ten-point programme originally devised and codified in 1989 by John Williamson, formerly an IMF adviser in the 1970s. The programme, deemed appropriate in Washington, was directed essentially at countries with large foreign debts, forced on them by international banks in the 1970s and 1980s. Its purpose was to reform the internal economic mechanisms of debtor governments in Latin America (and elsewhere) so that they would be in a position to repay the debts they had incurred, usually from American banks.
Venezuela, with its large accumulation of debt, rashly borrowed at high interest rates by a succession of corrupt and incompetent governments, was a prime target for the reforms of the 'Washington Consensus'. Some reform was clearly necessary if foreign investment was to continue. Yet the specific reforms had a serious downside. While taking into account the requirements of the foreign banks, they effectively ignored the needs of the poorer inhabitants of the debtor countries. In practice, of course, the reforms embraced a far wider agenda than the mere solvency of a handful of international banks.
John Williamson, the codifier of the 'Washington Consensus', explained his terms at a conference on the subject in 1994. He claimed to have identified 'ten areas where policy-makers and scholars in "Washington" could arguably muster a fairly wide consensus as to the character of the policy reforms that debtor countries should pursue'.
Couched in the cool language of imperial economists, his pro-gramme might seem innocuous enough. Yet, in practice, the terms demanded of the debtor countries spelt out a new form of colonialism. The advantages granted to US-based transnational companies under the neo-liberal programme went far beyond a simple policy of debt recovery.
The 'ten areas' of the 'Washington Consensus', defined by Williamson, involved government agreeing to enforce the following reforms:
a guarantee of fiscal discipline, and a curb to budget deficits;
reduction in public expenditure, particularly in the military and in public administration;
tax reform, aiming at the creation of a system with a broad base and with effective enforcement;
financial liberation, with interest rates determined by the market;
competitive exchange rates, to assist export-led growth;
trade liberalization, coupled with the abolition of import licensing
promotion of foreign direct investment;
privatization of state enterprises, leading to efficient management and improved performance;
deregulation of the economy;
protection of property rights.
This was the programme of economic reform that the Perez government felt called upon to adopt in February 1989”.
Richard Gott, “In the Shadow of the Liberator – Hugo Chavez and the transformation of Venezuela”; London 2000; “pp. 52-53.
All these capitulations to the USA machinations led the state into more and worse dependency. An interesting new development was the extent to which this dependency was no longer reflected in just raw material exports from Venezuela, but also in terms of huge outflows of capital.
All this has meant that:
Short term indebtedness to either the International Monetary Fund (IMF) or to imperialist countries directly, increased.
This means a huge portion of total borrowing will go to paying off interests:
“According to estimates made by the Morgan Guaranty Trust Company for 1982, short-term indebtedness accounted for .. 45% of Venezuelan total borrowing; the Philippines 38%, Colombia 32%, Mexico 30%, Peru 29%, South Korea 28%, Nigeria 27%, and Brazil, Argentina, Chile and Turkey all 19%”;
(World Financial Markets June 1983);
Cited Corner P, Mass, Siebel T, Tetzlaff R. “The IMF and the Debt Crisis – A Guide to the Third World’s Dilemmas”; London; p.8).
(ii) As noted above, in turn this distorted the Venezuelan economy by the high debt repayment or “debt servicing ratios” required:
All Developing Countries
(Figures from IMF 1984; Cited Corner P et al Ibid; p. 90).
According to more recent figures, the gross external debt of Venezuela in 1985 of 31 billion, would be zero if there were no capital flight [James Petras & Morris Morley “US Hegemony Under Siege”; London 1990; p. 197].
The total debt of Venezuela was ranked 5th in the world by the year 1984 (Cited Corner P et al; Ibid p. 10).
(iii) As noted above, there was a huge capital flight from the country. The comprador class had used its relationship with foreign capital to invest overseas. In a further twist, this capital flight was then “re-loaned” to the Venezuelan state. The proportion of new loans to the country, formed out of this capital flight fund, was very high. This phenomenon accounted for some $71 thousand million of investment in the developed world from seven countries alone:
Thousands, of millions dollars
New Indebtedness Thousands, of millions dollars
Capital Flight – Its’ proportion of “New Debt” (%)
(Business Week 3 October 1983; Cited Corner P et al Ibid; p. 37)
As a leading businessman in Venezuela, Gustavo Cisnero admitted to the Wall Street Journal in 1994:
“We have reinvented ourselves. Any group who doesn’t in Latin America is lost, gone retired” referring to the group’s new ability to compete in international markets”;
Cited Coronil Ibid p. 382.
The result of all of this was an intense impoverishment of the people.
It is important to realise the extent to which the IMF and imperialism forced the state of Venezuela into accepting an impoverishment of its people. As President Caldera noted in August 1996, of plans of the IMF in March:
”While international capital and the IMF pressured Venezuela to accept these measures.. of an IMF austerity plan” including an immediate 600% increase in the price of gasoline”;
Coronil Ibid; p. 384.
Given the stances of the Chavez government against such capital flight and such foreign indebtedness, it is ultra-leftist not to recognize the progressive nature of the Chavez struggle on behalf of the national bourgeoisie of Venezuela.
We have argued before that the essential character of imperialism as was originally defined by Lenin has not changed, despite the constant fluff of “globalization”.
[See: “Globalization; Do Lenin's Criteria of Imperialism still Hold?” at http://www.allianceml.com/ISML/AllianceParisGlobalNatQuest1999.html].
We acknowledge that the direction of flow of capital has changed –
From ‘classical’ imperialism being an export of capital from the developed world to the developing world;
To ‘neo-imperialism’ – where capital flows from the developing world to the developed world.
[British Neo-Imperialism See http://www.allianceml.com/allianceissues/A2003/Neo_imperialism_FIN.htm].
However, again - the essential nature of imperialism has not changed.
In this situation, the need for the proletariat and peasantry to find even temporary allies remains unchanged. We believe that the position of Marxist-Leninists towards the national liberation struggle remains:
To support the national liberation struggle and its representatives while it genuinely fights against imperialism;
moving forward from the anti-colonial and anti-imperialist struggle into the socialist struggle.
This position has been stated on our web-pages at several places [See for example, Comintern Second Congress; Alliance 5, at: http://www.allianceml.com/AllianceIssues/All-5table.htm].
Chavez’s policies bear more similarities to the Betancourt policies than is generally admitted.
These are generally to ensure some degree of autonomy for his state – especially in oil, while pushing through a land reform.
It would seem that the major tasks as were laid out by Romulo Betancourt are still to be performed.
We argue that each component part of the Chavez programme is a part and parcel of the usual programmers of what is known as the national bourgeoisie.
They are halting, true – but they are progressive. They are not revolutionary:
As Chavez has stated:
“Our project is neither statist nor neo-liberal; we are exploring the middle ground, where the invisible hand of the market joins up with the visible hand of the state; as much state as necessary, and as much market as possible”; Inauguration Speech as President; 2 February 1999; Cited Richard Gott In the Shadow of the Liberator. Hugo Chavez and the Transformation of Venezuela; London 2000; p. 173.
Chavez wants foreign investment:
desperate for foreign investment. He has to steer a difficult and
impossible course, telling his nationalist country what it wants to
making the right kind of reassurances noises that will not frighten the
investors. In this of course he has the warm support of Fidel Castro.
Ambassador in Caracas, Jon Masito spent much of 1999 trying to get the
government to sign the treaty of the promotion and protection of
investment.. He turned out to be knocking on an open door.
cabinet quietly agreed to sign.. A strong element in (his) programme
the encouragement of local investors.. In spite of all the rhetoric,
Chavez in office has turned out to be a pragmatic ruler..”
Gott Ibid p. 173-74.
Foreign investors have been willing to come into Venezuela, even after Chavez’ victory over the attempts to unseat him:
In fact within the state, the comprador and reactionary elements of the bourgeoisie have – for the movement, seen the need to reconcile with him:
“In a bid to jumpstart the national economy and to create jobs, the confederation of Venezuelan industrialists, Conindustria, proposed a strategic alliance with the national government yesterday. The president of Conindustria, Lope Mendoza, met with vice-president Jose Vicente Rangel and agreed to present a plan to reactivate the industrial sector of the country. Mendoza said that her organization is prepared to work with those ministries most related to the industrial sector including Science and Technology, Health, PDVSA, and the Venezuelan Corporation of Guyana.
Conindustria prioritized jobs, finance, integration and competition.
Mendoza said the company is interested in looking into opportunities with Mercosur and to strengthen small and medium sized companies in Venezuela. The organization wants to build the small and medium business sector into non-traditional exporters and include it in the endogenous development plans of the national government.” Robin Nieto; “Industrialists Propose Alliance with Venezuelan Government”.
Oct 26, 2004 at http://www.venezuelanalysis.com/news.php?newsno=1398
Above we discussed the AD agenda for land reform. This was stalled abruptly with the failure to enact meaningful restrictions on the oil companies. The desperate poverty of the people and the very inefficient land usage by virtue of the small plot sizes owned by families creates a crisis. The objective factor of the land and geography itself, conspires against good agriculture:
“In addition to the land tenure system Venezuela has two other problems, a tropical climate and poor agricultural land. The llanos (plains-ed), which comprise one third of eth country’s landmass and yield the highest percentage of crops are intermittently parched and flooded. Although much of the dry, barren soil can be made productive by irrigation, major projects take at least 20 years as well as considerable investment to attain the desired results. Because of its warm temperatures, the country cannot grow basic feed grain such as soy or wheat, commodities that are essential for agricultural self-sufficiency, ,, Furthermore the country’s geography is only moderately suited to agricultural production and a mere 2% of its land surface is currently devoted to crop raising”;
Herman DL In Martz & Meyers Ibid; p. 330.
Even with the rapid expansion of the oil industry, a large portion of the population 28% in 1968) is still dependent upon agriculture as seen below.
Public Services (A)
Domestic Service (B)
A + B + C
Table adapted from Michelena S; In “The Illusion of Democracy in Dependent Nations “; p. 55.
Original figures compiled from official sources & authorities;
After Chavez survived the referendum vote, he has pledged to push a long overdue land reform through:
“Venezuela land reforms to push on: Supporters of President Chavez celebrate his referendum victory Mr. Chavez's supporters are keen for him to push ahead with reforms Venezuela's President Hugo Chavez, who survived a referendum earlier this month, has vowed to step up controversial agricultural reforms. The government plans to enforce a 2001 land law that allows it to either tax or seize unused land, Mr. Chavez said during his weekly television address.
"We are going after the idle land and will put it to work," he said. ..
Mr. Chavez tried to play down the threat he poses to the landed classes.
"We are not the enemy of the rural estates, we are not going to burn them, we are not going to invade land," he explained.
"in this stage of the revolution, I demand strict application of the constitution and the land law."
However, some workers, impatient for the government to intervene, have already seized land.
The government will assess large estates and look at how best to utilise unused land. The redistribution programme allows for some of it to be given over to peasant cooperatives, which will get state aid to farm the land.
…The government last year said that it planned to hand out as much as 3.7 million acres (1.5 million hectares) to rural workers in the early stages of its programme, the Reuters news agency reported.” http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/business/3612114.stm
Already strides in land reform have been made:
”The more positive developments in Venezuela
Most important of these are the so-called "missions," which are
designed to provide literacy programs to Venezuela's illiterate, free
health care, especially in the remotest and poorest neighborhoods,
financial aid for the poor to
attend a university, subsidized supermarkets in poor neighborhoods, and employment for graduates from the educational missions. Also very important in the Chávez government's efforts to institute greater social justice are the rural land reform program, which has redistributed land to over 100,000 families, and the urban land reform program, which is providing barrio inhabitants with titles to
their self-built homes and terrain.”
Gregory Wilpert - Venezuelanalysis.com: “Venezuela's "Bolivarian Revolution" Continues, Despite U.S. Resistance”; Jan 01, 2005
The Future Prospects
There is little doubt that Chavez is trying to build up allies against the inevitable new attacks from the USA.
He is trying to advance slowly with reforms, while not igniting the mass working class into an overt revolutionary spirit.
At the same time he is trying build regional and international alliances, with potential enemies of the USA.
He recently was visiting China to this end.
Perhaps his most staunch support will come from a combination of the Andean countries, and the former Russian state.
We largely agree with this editorial viewpoint below:
“After Iraq it is oil
led by Hugo Chavez that has become the center for confrontation between
and the Euro Zone. Chavez is dead against America and Euro Zone needs
keep the oil balance - the power symbol in 2005. But this time the
a little different. A new regional and super power coalition of India,
and Brazil is making a huge difference. Russian President is in the zone to pull Brazil
coalition and influence on Chavez for mutual support.
While the whole world is focused on America and the Euro zone for the super power challenges, both these powers are looking small when you combine the powers of the new coalition Putin is building with India, China, Russia and Brazil. Add to that Venezuelan oil that supplies America a substantial crude oil, and now you have the actual scenario of confrontation.
Venezuelan President Hugo Chavez is leveraging his country's oil resources to build new geopolitical relationships with key regional powers like Russia, China, India and Brazil. Northern Andean region is where the new super power coalition is
planning to influence most. It is in the corridor of America and rich with many natural resources. This is the region that America takes it for granted.
For Russian, Chinese and
non-US. oil companies, the Chavez government's oil-based foreign policy
will translate into
profitable investment opportunities in Venezuela in coming years. Brazil, a member of the superpower coalition is a neighbor of
Venezuela, And though Brazil has special relations with America, it has far more interest in Venezuela than any other countries.
According to think tanks, it is not Iran but Venezuela will be the next epicenter of confrontation for oil supremacy. But this time both Euro zone and America will face a real formidable super power coalition - the combined resources of India, China, Russia and Brazil”.
Sudhir Chadda, November 27, 2004
Chavez is far from being a communist.
As he revealed to Tariq Ali, a prominent Trotskyite, he is a social democrat, carrying out a democratic agenda:
“The Bolivarians have been incredibly restrained. When I asked Chavez to explain his own philosophy, he replied:
'I don't believe in the dogmatic postulates of Marxist revolution. I don't accept that we are living in a period of proletarian revolutions. All that must be revised. Reality is telling us that every day. Are we aiming in Venezuela today for the abolition of private property or a classless society? I don't think so. But if I'm told that because of that reality you can't do anything to help the poor, the people who have made this country rich through their labour and never forget that some of it was slave labour, then I say 'We part company'. I will never accept that there can be no redistribution of wealth in society. Our upper classes don't even like paying taxes. That's one reason they hate me. We said 'You must pay your taxes'. I believe it's better to die in battle, rather than hold aloft a very revolutionary and very pure banner, and do nothing ...
That position often strikes me as very convenient, a good excuse ... Try and make your revolution, go into combat, advance a little, even if it's only a millimetre, in the right direction, instead of dreaming about utopias.'
Why has there been such opposition to Chavez?
We agree with this following assessment.
Chavez represents a threat partly for his national tendency, but partly because he threatens to unleash the political drive of the masses:
“The truth of the matter is that despite repeated appeals by Chávez to business not to get involved in politics and to concentrate on developing the country and the economy, the decisive sectors of the capitalist class in Venezuela have responded by organizing military insurrections against the democratically elected government and sabotaging the economy.
Despite the fact that so far the Chávez government and the Bolivarian revolution have not attacked private property rights, the oligarchy (the alliance between capitalists, bankers, landowners and imperialist interests) cannot tolerate the Bolivarian movement, because they understand clearly that the revolutionary movement of the masses poses a direct threat to their domination of the economy and the country as a whole.
The struggle of the Venepal workers is one example of this contradiction. The owners of the company supported the military coup and the bosses’ lockout against the democratically elected government. The workers fought back. Now the owners have declared the factory bankrupt and the workers have occupied the premises and are demanding nationalization under workers’ control. William Izarra has come out in favor of this proposal at a mass meeting he addressed in Venepal.
This conflict, over the control of the economy, will come increasingly to the fore in the next period, and the future of the Bolivarian revolution depends, to a large extent, on how it is resolved. The October 31 elections are an important battle in this war.
October 29, 2004. Jorge Martin ;“Venezuela’s regional and council elections,” http://www.marxist.com/LatinAm/vnz_regional_elec04.htm
Without a Marxist-Leninist party however, the innate militarist in Chavez will not ultimately deliver more than reforms.
Marxist-Leninists inside Venezuela will
support the Chavez movement for these reforms, and enable the masses to
through Chavez’s limits. The masses
push Chavez left, and the Marxist-Leninists must move with them,
- raising the demands for moving from the national democratic
to the full socialist revolution.