Venezuela: The struggle for industry to serve people

August 29, 2008

On August 27, Venezuelan President Hugo Chavez announced the end of negotiations with former owners Ternium over the nationalisation of the Sidor steel factory, stating that the government would "take over all the companies that it has here", insisting Ternium "can leave".

Speaking during a televised broadcast, he argued that the reason behind the decision was the fact that Ternium "did not recognise our sovereignty".

"The deadline for reaching an agreement has expired, we will move ahead and pay them what it really costs, more over it will not be all in one go as they wanted. No, we will pay them at a pace that we can pay them."

Until the April 9 decision to nationalise Sidor, the Ternium consortium, whose biggest shareholder is the Italian-Argentine transnational Techint, had 60% control of one of the largest steel factories in Latin America, located in the industrial state of Bolivar.

Having seemingly reached an agreement on a settled price the previous week, Chavez stated that Ternium had tried to impose unacceptable conditions — including the passing of a law giving the transnational immunity from any possible future lawsuits as a consequence of abuses committed by Ternium against the Sidor workforce.

The decision to nationalise Sidor came on the back off a 15-month-long dispute between the workers and the transnational over a collective contract.

Having intervened in order to help reach a resolution, Venezuelan Vice-President Ramon Carrizalez declared that negotiations with Sidor's management were no longer possible, due to its "coloniser attitude" and "barbarous exploitation".

"This is a government that protects workers and will never take the side of a transnational company", Carrizalez insisted as he announced the government's decision to take Sidor over.

Nationalisation push

During the August 27 live broadcast, Chavez stood alongside business owners from the cement industry, with whom the government has also been in negotiation since the April 3 announcement of its intention to nationalise the three largest cement companies that control 90% of the sector.

While the government had reached agreements to buy out the majority of shares from the French company, Lafarge, and the Swiss company, Holcim, negotiations had stalled with the largest company, the Mexican-owned Cemex.

On August 18, with the negotiation period having expired, the government announced it was going to expropriate Cemex and ordered the takeover of its installations.

By law, there is a 60 days period starting from the declaration of intent to expropriate in which the two parties can reach an agreement. While Cemex is asking for US$1.3 billion, the government has stated it will not pay more than $650 million.

However, Chavez said that unlike the case of Ternium, there were positive signs that an agreement could be reached.

Chavez also used the broadcast to explain a new law approved in the first round of discussion by the National Assembly that gives the state 60% control of the distribution of petrol from the state oil company, PDVSA, to public and private service stations.

Negotiations will now begin with the seven largest companies, among them Texaco and BP, and 650 other transport firms. The remaining 40% will remain in the hands of cooperatives and small private owners.

Energy minister Rafael Ramirez also announced that the government was looking at similar measures in regards to the distribution of LPG gas cylinders.

Last month, Chavez announced plans to nationalise Spanish-owned Banco de Venezuela, which almost doubles the state's control of the financial sector from its previous 10%.

Reversing neoliberalism

Together with the announcements made earlier this year to recuperate control of over 30% of milk production and food distribution, and last year's decision to take majority control of the oilfields in the Orinoco Belt, these moves are part of a second wave of nationalisations, focused on industries related to production.

The first wave, initiated at the start of 2007, was directed at basic services — telecommunications and electricity — to guarantee access to all Venezuelans.

According the August 25 El Universal, since the beginning of last year 11 industries have passed over into state hands.

While pro-capitalist governments privatised a number of important industries during the 1990s (including Sidor, part of the electrical sector and telecommunications company CANTV), they always had their eyes set on the big prize — PDVSA.

However, Chavez';s election in 1998 halted such privatisation plans.

Since then the government, backed by the majority of the population, has worked towards rolling back neoliberalism.

Unsurprisingly, the first major showdown was a result of government attempts to gain full control over the nominally state-owned PDVSA.

Fierce resistance by the parasitic capitalist class, accustomed to leeching off the rent produced by PDVSA, led to a military coup that briefly overthrew Chavez in April 2002 and a shutdown of the oil industry by the pro-capitalist management in December 2002.

Both attempts by the capitalist class to bring down Chavez were carried out in alliance with the corrupt trade union bureaucracy of the Confederation of Venezuelan Workers (CTV).

During more than two months of intense struggle caused by the shutdown, oil workers alongside the poor communities and the armed forces, reopened PDVSA and restarted it under workers' control.

This victory was crucial in ensuring that the government could begin to redirect PDVSA's profits away from the capitalists and towards funding the social missions that provide, among other things, free health care and education. The missions also helped organise the Chavista grassroots.

Publicly declaring in January 2005 that he had become convinced that his project for national liberation and the eradication of poverty could not be achieved within the bounds of capitalism, Chavez argued for the need to move towards a "new socialism of the 21st century".

That same month, he announced the nationalisation of the Venepal paper factory, whose workers had been fighting to reopen it after the boss shutdown operations during the December 2002 lockout.

Renamed Invepal, the factory was handed over to the workers as a joint state-worker cooperative. Since then, a number of other smaller factories that had been shut down and then taken-over by their workers have been nationalised.

However, the nationalisations initiated in 2007 marked a qualitative leap in the process of state recuperation of control over strategic sectors.

State planning

These nationalisations have been carried out in accordance with the government's overall economic plan, which seeks state control over strategic industries in order to direct production towards the needs of the Venezuelan nation.

Now under state control, the three cement companies will be merged into the new National Cement Corporation and will integrate its production plans with PDVSA and Sidor — focusing on infrastructure development, creating new industrial centres and push forwarding the government's badly needed housing construction plans.

Also being created is the Steel Corporation of Venezuela, which will manage the whole steel production chain that is now 80% under state control — from primary material to finished products. Production will be directed towards the construction of small and medium companies, the oil industry and housing sector.

And while no specific public statements have been made, it would seem likely that with the nationalisation of Banco de Venezuela, the public banking sector will be reorganised into one single national public bank.

The new Public Administration Law, decreed on July 29 as part of the package of 26 laws issued by Chavez, states that where various state companies exist they should be grouped into one. This can include companies in different industrial sectors that, due to their nature, work together.

With the recent nationalisations, the number of workers in the state sector will increase by 41,400, reaching just over 2 million according to the National Institute of Statistics. This does not include those in the fuel distribution and LPG cylinder distribution sectors, which are slated to come under state control.

This represents a 53.5% increase in the number of public sector workers in the last nine years. Importantly, Chavez has raised the need to eradicate the practice of contracting out labour in the state sector, which will further increase this number.

In the same period, employment in the (formal and informal) private sector grew from 7.3 million to 9.4 million.

Worker and community participation

Almost none of the recent nationalisations can be attributed directly to workers' struggle in favour of such measures, although in many cases labour disputes existed. This was the case with fuel distribution, where unions have been warning that the bosses were trying to manufacture shortages and provoke strikes to undermine the government.

While most of the earlier nationalisations involving small factories did, only in Sidor can it be said that the demand for nationalisation came from the workers.

Even then, the demand was raised only in the last period of the struggle after persistent campaigning by a small nucleus of Sidor workers.

Yet, the future of the nationalised companies depends on the political and organisational capacity of the working class in the running these industries — and the working class currently finds itself in a state of dispersion and fragmentation.

Unofficially, according to an April 27 Ultimas Noticias, no less than 3600 unions exist in Venezuela.

This dispersion is due to numerous factors, but two in particular stand out. Firstly, with the coming to power of Chavez, and the expansion of workers' rights and union freedom, workplaces across the country experienced an explosion of union organising.

In the aftermath of the defeat of the bosses lockout, a majority of the pro-revolution unions came behind the formation of the National Union of Workers (UNT), which rapidly overtook the CTV as the main union confederation.

However, the UNT is plagued by bitter internal disputes. This division has been deepened with the decision earlier this year by two union currents to leave the UNT and form a new union confederation.

Added to this are negative experiences in the some of the cooperative-run factories — such as exploiting contract labour and enriching themselves.

Secondly, actions by sections of the government and state bureaucracy have also worked against the self-organisation of workers and their participation in running state industries.

Under the previous labour minister, Jose Ramon Rivero (who actively worked against the Sidor workers), parallel unionism was promoted in order to favour the union current from which he came and aimed to dampen down labour disputes.

In PDVSA and the state electrical company, workers have faced attacks at the hands of the bureaucracy afraid of losing power if workers take on a greater role in management.

Importantly, the recent nationalisations have come alongside the launch of the April 13 social mission, which is aimed at increasing popular power.

Chavez has stated that part the mission's aim is to transfer control over services to organised communities, in the form of communal councils and communes, and the creation of productive units and factories that will be socially owned and run.

Without the participation of workers and the organised communities in the running of industries and in democratic planning, control of state companies end up being left in the hands of bureaucrats who are more interested in maintaining their share of power and privileges.

Moreover, they restrict the ability of workers to be able to fully develop their creative potential, instead boxing them into their role as simple providers of labour power.

This has created situations such as exists with the nationalised Inveval valve factory, run under workers' management, which has the capacity to produce valves for PDVSA.

However, Inveval has been pushed aside by PDVSA bureaucrats who prefer maintaining contracts with private companies.

Significantly, it was reported on August 28 that Inveval would now become a mixed company, jointly owned by PDVSA, and would directly supply the state oil company with valves

In the electrical sector, despite repeated warnings by the workers, a crisis threatens the industry as power generation and distribution plans have failed to take into consideration increased demand caused by the boom in industrial and housing projects.

Speaking on the eve of this year's May Day demonstrations, Chavez once again repeated his call for the working class to take the lead in the struggle for socialism. "There is no revolution without the workers, and I would add, there is no socialism without the working class", he insisted.

"That is why the working class that the revolution needs has to be very conscious, very united", he said.

"The Bolivarian revolution ... needs to be 'proletarianised' ... the ideology of the proletariat should dominate in all spheres, a transformational, truly revolutionary ideology, and overcome petty bourgeois currents that always end up being ... counter-revolutionary."

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