VENEZUELA: Chavez government promotes transformation



In response to the revolutionary process unfolding in Venezuela, the country's capitalist oligarchy, supported by the US government, has wielded its economic power in the form of sabotage.

Through an alliance with corrupt trade union leaders, Venezuelan big business staged a series of "strikes" after radical President Hugo Chavez introduced a series of reforms in 2001 to redistribute wealth to the poor.

These culminated in two coup attempts. The first, on April 11, 2002, succeeded in overthrowing the government only to be reversed by a civilian-military uprising within 48 hours. In the second, Venezuela's capitalists, in league with corrupt trade union leaders and pro-oligarchy managers within the state oil corporation, hoped to trigger a coup by launching an extended economic shutdown in December 2002.

While they received little support from the military brass (which was purged after the first attempt), the bosses' strike caused enormous economic damage. It shut down the oil industry and sabotaged its infrastructure, costing the government US$8 billion in lost revenue.

The Venezuelan ruling class has sent enormous amounts of capital out of the economy, in the hope that the rising unemployment and social turmoil would demoralise the urban and rural poor and the working class, which provide the base of support for the government.

The Venezuelan people and the Chavez government have responded to this economic sabotage in a number of ways. The blue-collar petroleum workers' union and the Bolivarian Circles — the grassroots bodies that are organising people throughout the country to support the Bolivarian Revolution launched by Chavez — organised workers restart oil production and succeeded in normalising production levels.


Venezuela is making economic progress on other fronts as well. reported on April 7 that the Chavez government announced that it would invest US$836 million to secure a stable food supply for the population. According to August 17, the Venezuelan government has signed a barter agreement with Argentina's government, exchanging oil for beef and wheat.

With the support of the government, workers have formed agricultural, fishing and other cooperatives which have not only increased the food supply but also decreased the populations's dependence on Venezuelan big business. At the same time, unemployment is being lowered and local communities empowered.

According to September 27 (<>), most economic indicators tabulated by the ministry of planning, such as employment and inflation, are improving.

If it were not for the bosses' sabotage, they would be much better. For example, unemployment, which had reached a low of 11% in December 2001, climbed to more than 20% by March 2003, as a result of the 2002-03 employer-sponsored strike and capital flight. Slowly but steadily, the unemployment rate has declined to 17.8% in August. It is expected to drop to the pre-December 2002 level of 15% by the end of the year.

Despite the progress, around half of the Venezuela's working class still must survive in the insecure "informal sector" and the country's public health and social security systems are in advanced decay. Poverty and illiteracy remain rife.

According to the October 17, the Chavez government is planning an ambitious 2004 budget, based on conservative estimates of country's oil revenue and a predicted economic growth for the year of 6.5%. It has promised a 30% pay increase for all government employees. Thirty-eight per cent of the total budget will be dedicated to social programs. Debt service will constitute 27% of the budget and the budget deficit will be 2.7% of GNP.

A key contributor to Venezuela's economic recovery has been the government's policy of imposing foreign exchange controls, which means business must go through the government to gain access to capital. This has slowed the rate of capital flight, increased currency reserves and forced businesses to pay tax if they want access to dollars. It has also boosted domestic production and reduced dependence on imports.

The Venezuelan government has so far avoided the usual embargos and sanctions imposed on left-wing governments by the United States. This is because Venezuela's revolutionary process has maintained a constitutional shell, providing little justification for US aggression. Another reason is that Venezuela is the United States' third-largest supplier of oil, supplying 15% of its needs. Also, because the Venezuelan government has been very diligent in paying its debts, foreign investors have not been scared away. According to, there has been a 200% increase in foreign investment in Venezuela between 2002 and 2003.

Third way?

However, this does not mean that the Venezuelan government has discovered a "Third way" to gradually improve the lives of Venezuela's millions of poor people, while remaining within the framework of a capitalist economy. The eradication of Venezuela's social ills will require an economic and social transformation. There is growing evidence that the Chavez government is moving in this direction.

The defeat of the oil managers in December-January was the equivalent of renationalising the oil industry. This is very significant as oil revenue, according to government statistics, contributes around 50% of the government's income and generates around 33% of Venezuela's GNP.

According to October 13 edition of the US socialist weekly Militant, dozens of factories this year have been taken over by workers, providing powerful proof that workers can run society independently of the capitalist class.

It seems the Chavez government has taken note. According to a leaked document published in the October 4 El Universal Newspaper, the ruling Fifth Republic Movement (MVR) is considering a "constituent assembly" in the oil industry, which would place Venezuela's key industry under a form of workers' self-management.

Another example of government-sponsored self-management is the land reform program, which has, reports the October 13, resulted in 60,000 families joining cooperatives or participating in community assemblies to gain access to land and technical and financial assistance.

At its inaugural congress in August, the pro-Bolivarian Revolution trade union federation, the National Union of Workers (UNT), called on the Chavez government to nationalise the banks, and bankrupt companies, and put them under workers' control.

From Green Left Weekly, October 29, 2003.
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