Venezuela: Economic war or government errors? Marta Harnecker on the crisis's context

Chavistas march against right-wing attacks in September.
Chavistas march against right-wing attacks in September.
Monday, December 5, 2016

The government of Hugo Chavez, who was first elected in 1998, helped lead the Bolivarian revolutionary process that made impressive social gains by redistributing oil wealth and promoting participatory democracy.

Since Chavez’s death in 2013, the Bolivarian government led by President Nicolas Maduro has faced mounting problems. In recent times, a worsening economic crisis has undermined the revolution’s gains and, along with political gains by the counter-revolutionary opposition, has raised questions about the survival of the revolution.

The government has blamed the economic problems on an economic war being waged by powerful capitalist interests determined to sabotage the revolution. Others, both critics and supporters of the revolution, have pointed to government errors.

Marta Harnecker is a Chilean-born socialist activist who has worked in Venezuela as an advisor to Chavez and has experienced the revolution firsthand. Below, she looks at the context of Venezuela’s problems and assesses the role of the economic war and government mistakes. Translated by Rachael Boothroyd, it is abridged from Links International Journal of Socialist Renewal.

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1. When Chavez triumphed in the presidential elections of 1998, the neoliberal capitalist model was already falling apart. The dilemma was to either reform the neoliberal capitalist model, with changes such as a greater concern for social issues, but still oriented towards the same profit seeking motive, or to seek to build another model.

2. Chavez chose the latter option. He decided to rescue the word socialism, despite its historical negative connotations. He called it socialism of the 21st century to differentiate it from the Soviet socialism of the 20th century. He warned it must not “make the same errors of the past”; the “Stalinist deviation” that had bureaucratised the Soviet Union or the “state capitalism” that emphasised state property and not the participation of the workers in directing enterprises.

3. Chavez conceived of socialism as an economic system centred on the human being and not profit, with a diverse, anti-consumerist culture. Such socialism would be endowed with a real and profound democracy, where the people assume an active role.

This characteristic distances it from other proposals for democratic socialism. For Chavez, the participation of the people in all spheres was what would allow them to develop as human beings.

4. However, this would have remained as mere words had he not promoted the creation of adequate spaces where participatory processes could develop. That is why his initiative to create the communal councils (small self-managed territories), the workers’ councils, the student councils and the campesino rural workers councils was so important. These sought to progressively build a genuine collective structure that could create a new form of decentralised state, with the communes as its fundamental cells.

5. Chavez sought to win the people’s hearts and minds to the new project for society. He was clear that this objective would not be achieved through words, but practice: by creating opportunities for people to progressively deepen their knowledge of the project through their participation in building it.

This is why he warned: “Beware of sectarianism, there are people … who don’t participate in politics, that don’t belong to any party, well, that doesn’t matter, welcome aboard. In fact, if anyone from the opposition lives there, call them up. Let them work and be useful. The homeland belongs to everyone, it is necessary to open up spaces for people, and you yourselves will see how people start to transform themselves through their practice…”

6. One of the historic achievements of the Bolivarian revolutionary process was to call a Constituent Assembly and approve a new constitution that changed the rules of the political game, putting obstacles in the way of neoliberalism. It opposed the large-landed estates and the privatisation of Venezuela’s state oil company, in favour of the small-scale fisherpeople weakened by transnational fishing companies and the propagation of micro-credit cooperatives. It opposed the privatisation of education in favour of free education, and opposed the privatisation of social security.

The constitution also advocates for the rights of indigenous peoples, the right to free access to information, and defends a participatory model.

7. For Chavez, the art of politics was to make the impossible possible, but not through sheer voluntarism. By taking reality as his starting point, he sought to create the conditions for changing reality itself, through building a correlation of forces favourable for change.

Chavez understood that to make possible what seemed impossible, it was also necessary to alter the correlation of forces internationally. He worked to achieve this, understanding that agreements among the top leadership were insufficient for building political strength and that the main goal was to build social strength.

8. It is impossible to understand the Venezuelan process without weighing up the global context. After the defeat of socialism in the Eastern bloc, an extremely negative correlation of forces existed for progressive forces. The United States became the primary military power in the world with no counterweight. The situation was very different when the Cuban Revolution triumphed in 1959 or during Salvador Allende’s Popular Unity government in Chile in the early 1970s.

International struggle

9. Chavez knew he could not carry out a social revolution in isolation given this global correlation of forces. He worked to build international forces to support the Bolivarian process. He promoted South American and Caribbean integration projects, orientated towards solidarity.

Chavez pushed the Organisation of Petroleum Exporting Countries (OPEC) and moved closer to other poles of global power such as India, Russia and China. He embraced links to other forums of emerging nations, such as the Group of 15 and South–South Cooperation, the Group of 77 and the Non-Aligned Movement.

In the Southern Cone, Chavez sought an alliance with Brazil to oppose the Free Trade Area of the Americas (FTAA) and to gain full membership of the Common Market of the South (Mercosur).

10. Together with other Latin American presidents, Chavez helped defeat the US’s FTAA project, putting forward an alternative proposal for integration: the Bolivarian Alliance for the Peoples of Our America (ALBA). He embraced relations with Cuba, supplying the island with oil under special payment conditions in exchange for services and doctors.

Chavez’s government financed “Mission Miracle”, which restored the sight of millions of Latin Americans on low income. He established an agreement to provide 11 Central American and Caribbean countries with oil under preferential contracts as a gesture of cooperation.

11. Chavez played a key role in creating spaces for presidents across the region to come together, such as the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC), in spite of the fact that they had different economic perspectives. The key objective was to get them to come together without the US. The creation of the Bank of the South and the ALBA Bank are also orientated towards this rationale.

12. As he understood that it was impossible to build political strength without building social forces, he supported initiatives for spaces where social movements from across the region could come together, alongside these government gatherings.

13. The creation of the Latin America-wide media outlet Telesur was also thanks to his inspiration — a fundamental initiative to confront the media war that the progressive governments in Latin American would inevitably have to face.

14. Although there are some setbacks in the region, nobody can be in doubt that there are a million miles between the Latin America that Chavez took on and the one that he left us with.

Economic war

15. Taking advantage of the huge leadership vacuum left by Chavez’s death, attacks against the Bolivarian revolutionary process have escalated, both inside and outside the country. As it would be very difficult to attempt another coup against President Maduro — who has tried to be consistent with the legacy of Chavez — the economic war initiated during the preceding period has greatly intensified.

One of the objectives of the counter-revolutionary offensive has been to affect the system for accessing basic foodstuffs at subsidised prices. This system has been promoted since 2003 through Mission Mercal, with significant results in guaranteeing the right to food.

16. A similar economic war took place in Chile to destabilise Allende’s socialist government. Let us remember the measures applied in that country immediately after Allende’s election: a run on the banks; black marketeering on the dollar; the shutting down of some industries; a blockade on importing needed materials; blocking the government’s attempts to modify the unfair taxation system in parliament; denying approval for budgetary resources to promote social programs; a campaign to create fear among foreign investors and local business people, leading to a productive standstill in the medium term.

17. This plan was fully backed by the US administration of Richard Nixon and by multinational consortiums. The economic siege meant: the cutting of credits; blocking the renegotiation of foreign debt; an embargo on the goods produced by expropriated companies; and the promotion of the image of Chile as a bankrupt country, to besiege it even more financially.

The Allende government, which did not want to affect the bargaining power of the workers, had no alternative but to raise the amount of cash in circulation, knowing that this would have a strong impact on inflation. At the same time, the US government offensive prevented it from importing the food needed to keep up with the purchasing power won under the Allende’s government by the popular classes. Hoarding worsened day after day.

Reactionary forces pushed speculation, hoarding and the black market while the press they controlled unleashed a systematic campaign to exaggerate shortages and make them the focal point of their attacks. To this, they added cacerolazos (protests involving banging on pots and pans), street demonstrations, transport stoppages, copper sector strikes and demonstrations against soldiers that supported the government.

Inflation and shortages

18. In Venezuela, two key strategies have been applied to create discontent: induced inflation and orchestrated shortages. Venezuelan economist Pasqualina Curcio says this is achieved, partly, through the manipulation of the exchange rate on the parallel and illegal market. This symptomatically increases exponentially in the months prior to elections. It is also partly achieved through manipulating mechanisms for distributing essential goods to create artificial shortages.

19. According to Curcio, these strategies are viable because of the characteristics of Venezuela’s economy, which has a “concentration of production, imports and the distribution of goods and services in very few hands”. Three percent of registered economic enterprises in the country control foreign currency for imports, meanwhile there is also a “high dependence on imports”.

20. These import monopolies do not produce goods. They make extraordinary profit through the price difference between what they buy abroad and what they sell inside the country by setting the prices of the goods they import (basic necessities, among them food and necessary items for production and transport) in an oligopolistic manner using the parallel exchange rate, which is 14.5 times higher than the real value of the goods calculated in national currency.

Great economic power has been accumulated in this way, which has translated into political influence.

21. This not only raises the prices of essential goods, it also works against capitalist sectors that produce goods for everyday use (capitalist agriculturists and manufacturing industrialists).

Obliged to buy primary materials and other goods used in the production process at the price set by these importer monopolies, they have to sell their products at increasingly higher prices to maintain profits. As the population’s purchasing power becomes severely cut due to the existing inflation rate, people have found themselves obliged to prioritise buying items such as food, medicine and transport, restricting the purchases of other, less essential items, affecting their profitability.

22. Curcio explains that the practice of orchestrating shortages — which begun in 2003 affecting a handful of products — became generalised in 2013. The absence of certain products in the national market bears no relation to production or import levels. The enemies of the process create artificial shortages by failing to stock the items in sufficient quantities.

23. These right-wing strategies to produce economic chaos in Venezuela, bringing the government into disrepute and establishing the basis for its overthrow at elections, are an economic war.

Government weaknesses and corruption

24. Unfortunately, the Venezuelan government has confronted the terrible national and international media campaign with convincing arguments. This has created a tendency whereby important sections of the Venezuelan people and most of those who follow the Bolivarian process from outside the country hold the government, and not the real actors, responsible for the shortages and inflation.

25. These attacks are being carried out on fertile ground due to the weaknesses of the government’s economic policy, which failed to predict the fall in oil prices. This is in addition to an exchange rate policy and a huge pro-importation policy that discouraged national production and left the country increasingly dependent on imports.

But nobody can deny that a sector of the Venezuelan capitalist class and corrupt state bureaucracy are taking advantage of this situation to deepen the crisis and bury the emancipatory Bolivarian project. They are seeking to restore the pre-Chavez Fourth Republic — a paradise for the few, but with suffering and marginalisation for most.

26. Venezuelan intellectual and ex-minister in Maduro’s government Reinaldo Iturriza notes the capitalists see Chavismo as a scourge, “not so much because of its ability to unite discontent, but rather because of its resolute actions against the status quo”. It is also due to the limits it places on economic powers.

27. Iturriza says Chavismo is alive but “absent from much of the analysis on Venezuela”. This omission often arises from a deliberate intention to keep ignoring the historically invisible people who are now the subjects of a process of revolutionary change. Other times, it is due to a blindness in a sector of the left that dismisses a revolution being carried out by real men and women.

Challenges

28. Curcio says the key challenge for the Venezuelan government is to secure efficient state intervention to regulate the monopolies. However, as Iturriza says, a part of the bureaucracy continues to favour these monopolies and banking interests.

29. On the other hand, it is clear that there are opposing interests between the different sectors of Venezuelan capitalists and that is reflected politically. The right-wing opposition is not a homogeneous unity, but has enormous contradictions at its heart.

There is a sector of the opposition that is playing at overthrowing the government, using all the methods within its grasp, especially economic strangulation. The corrupt sectors of the importer state bureaucracy also contributes to this. It is impossible to reach agreements with this sector.

However, there are other sectors with whom it would be possible to reach an agreement if the correct tactics were used — those who are prepared to prioritise the interests of the country.

30. We should be skilful in exploiting these contradictions to advance a coherent process of dialogue, calling on the opposition to search for solutions for the country. It was recently announced that an agreement had been reached between the Venezuelan government and the opposition to invite the Pope to be one of the mediators in the dialogue. This has created hope.

Platform of struggle

31. Another challenge is creating a wide platform of struggle to confront the crisis. The correlation of forces after last December’s parliamentary elections (in which the opposition won control of the National Assembly) is a signal: a battle has been lost, we need to regain our strength to prepare ourselves for future battles to consolidate positions.

32. Another challenge is explaining the difficulties the country faces to the people. There are those who think it is not necessary to tell the people about the problems, because they might get depressed. I believe the opposite. Our people are sufficiently intelligent to understand and to buckle up their belts when needed — if we are capable of clearly explaining to them the origin of the crisis, recognising honestly that the right-wing is taking advantages of the weaknesses and errors.

This must be accompanied by top leaders leading by example: if austerity is asked of the people, the example must come from their leaders.

33. Lastly, just as nobody would blame a recipe for a cake that burned when the oven was turned up too high, Venezuela’s difficulties cannot be used to sustain the argument that history has proven the project of “socialism of the 21st century”, proposed by Chavez, to be unviable.

We need to analyse what we did not do well and what we should not repeat. Many errors are understandable, given that there were no ready-made models and it was necessary “to invent in order not to err” — as Simon Rodriguez, the tutor of South American liberation hero Simon Bolivar, used to say.

<b>Defending the Bolivarian process

34. Venezuela’s revolutionary process was the start of a cycle of change in Latin America. It was the rebirth of hope, it was governing to resolve the problems of the disadvantaged, understanding that it is impossible to resolve the problem of poverty without giving power to the poor. It was the incarnation of solidarity with peoples across the region in economic difficulty.

Today, Venezuela is suffering more that other countries from the global crisis of capitalism and the economic war deployed against it. It deserves our solidarity. It extended far-reaching generosity to the poorest nations and peoples of the world, we should return the favour by forming a defence cordon around the Bolivarian process.

35. To conclude, I believe we can be optimistic. Without a doubt, what Chavez sowed has marked his people, the revolution has made them mature, as I can testify from the years I lived in the country. I believe that people given the chance to study, think, participate, build and make decisions, who grew enormously in their self-esteem and matured as human beings, will defend the process.

36. We should measure the Venezuelan revolutionary process, not by the transformational measures adopted — of which there are many — but rather by the growth of the revolutionary subject. The process may have committed errors and have many weaknesses, but what Chavez achieved with his people, that is something nobody can ever erase.