Venezuela's Crisis: A Canadian View
Posted: Wednesday, December 18, 2002
by Yves Engler
As Venezuela's political crisis moves further into its third week, the intensity is rising by the day.
On Tuesday the US State Department warned of a possible "violent eruption."
Over the past couple of days, the anti-Chavez forces have brought hundreds of thousands into the streets and have blockaded the major highways into Caracas, leading to clashes with the police.
Opposition demonstrators also are considering a march on the Presidential Palace itself. The last time they tried, 19 people were killed and hundreds were wounded. On the other side, thousands of Chavez supporters have taken to the streets daily.
The ongoing turmoil stretches back to before April 11 when Chavez was ousted and returned to office within forty-eight hours. His return was thanks to a split within the army as well as the massive popular support that put Chavez in power in the first place ... he was elected in 1998 and again in 2000 with nearly 60% of the vote.
Today's conflict which, in large part is between the wealthy light-skinned elite and the dark-skinned poor. Nearly 80% of the population lives in poverty and there is a strong correlation between poverty and dark skin. Chavez, who is of black and indigenous origins, has concentrated on improving the living conditions of the poor ... his policies have included land redistribution for poor farmers, title to the self-built homes in the barrios (poor neighborhoods), steady increases in the minimum wage and of public sector salaries, and the enrolment of over one million previously excluded students in school.
This is not to say that Chavez does not have his faults.
... he has at times been overly dismissive of his critics. Rather, than noting their criticism he has preferred to denounce them as part of the corrupt oligarchy ... as a result he has antagonized some of the progressive forces in Venezuela.
However, for a President under such intense attack (especially in Latin America with its history of authoritarianism) he has displayed a strong commitment to electoral democracy and all it entails.
The anti-Chavez opposition is a mixed group with both the major business and elite trade union federation supporting the ongoing 'strike/lockout.' Another major player in the opposition is the private media ... for some time, independent sources and Chavez supporters have condemned the private media for their bias, however, now even the English-language corporate media is reporting on it.
On December 17, Cox news service said "several private TV stations are indisputable, proud players in the opposition movement" while the Financial Times claimed "the country's privately-owned channels, and the media barons who control them, have become an integral part of the relentless campaign to force him [Chavez] to resign (Dec 17 both)."
What is being termed a general strike by the opposition has been little more than a strike-lockout by a few big businesses since early on.
Nevertheless, much of the oil industry is involved and in a country where oil provides 80% of exports and 50% of government revenues its production is crucial to the economy (Forbes online Dec 17) ... estimates vary, but most say oil output is down to less than a quarter of its regular rate.
This reduction in Venezuelan output is one reason for the increase in world prices.
Still, oil purchasers (the US government for example) would be happy to see Chavez overthrown. According to Canada's Globe and Mail "he [Chavez] is among the staunchest advocates of OPEC quota discipline, and an anomaly among Venezuelan leaders. Any successor would be likely to revert to the historical Venezuelan habit of expansive cheating on OPEC quotas, putting downward pressure on the price of the oil (G&M Dec 17)." Besides the current disruption in supply, oil purchasers are fearful that the ongoing disruption could lead to equipment damage resulting in a long-term drop in Venezuela production capabilities.
The international ramifications of the crisis are already starting to manifest themselves.
Venezuelan oil exports have dropped significantly causing prices to rise sharply. Two Canadian companies have already been affected. Petro-Canada's refinery in Montreal was forced to buy alternative crude supplies and Falconbridge Ltd. Operations' in the Dominican Republic have been scaled back due to a lack of oil.
Likely, many other companies are also feeling the pinch.
In Venezuela, on December 16, SIDOR, Venezuela's largest steelmaker, said it had been forced to halt production because of a shortage of gas caused by the stoppage. The Venezuelan Guayana Corporation (CVG) ... the country's only producer of alumina ... suspended output for the same reason (Economist.com Dec 17).
Nevertheless, a number of recent developments have further supported the Chavez government.
On Friday, the Bush administration clearly siding with the opposition, requested Chavez call an election early next year (this would contravene the constitution).
By Monday, however, the Bush administration had backtracked claiming it was a misunderstanding. In fact, they meant a non-binding referendum not an election.
More important, however, was Monday night's Organization of American States (OAS) resolution, which strongly denounced any unconstitutional power grab. Many Latin American governments made it clear to the US that they would not support a coup.
On Tuesday, the US government publicly expressed its agreement with the OAS resolution. In time and depending on US citizen pressure we will find out whether this position is genuine.
Another development on Monday that re-affirmed Chavez' position was when army chief, General Garcia Montoya, called the opposition's tactics "sabotage". This strong public position reduces the likelihood of army intervention.
The US flip flop can be attributed to a number of factors.
First, is the lack of support on the part of the Venezuelan military for a coup. Second, is the strong commitment to electoral democracy on behalf of the surrounding Latin American governments. Third, is the fear of continued increases to the price of oil, especially while an attack against Iraq is looming. Fourth, is the fear that oil disruption could lead to economic instability. Fifth, the political costs within the US for siding against a democratic government only 7 months after being exposed for doing just this. Finally, Chavez' softening line towards the US since April's coup has reduced the degree to which he is a threat to Bush administration interests.
The changing American position is an important development since only 7 months ago the US helped orchestrate the coup.
On April 11, the US State Department was quick to recognize the new "democratic" government ... not only were they quick to recognize the government, their fingerprints could be found all over its ascendancy to power.
According to an August 18th Boston Globe article: "US tax money financed several Chavez opponents, including two organizations prominent in the protests that led up to the coup."
The two groups, money given by the American government through the National Endowment for Democracy Foundation, had sharply risen in the run-up to the coup.
"The International Republican Institute, which has an office in Caracas and is an arm of the US republican Party, grant grew from $50 000 in 2000, to promote youth participation in politics, to $339,998 last year for political party building. On the day of the coup, the institute's president, George A. Folsom, sent news media a fax rejoicing over Chavez' fall."
The article goes on to say that "another institute-sponsored activity, flying Chavez opponents to Washington to meet with US officials, may have accelerated the events leading up to the coup (August 18 Boston Globe)."
This is just a bit that has been reported in the corporate press. Undoubtedly, there is much more about US involvement out there.
The current demands of the opposition are either the removal of Chavez or an election in early 2003. Both would be unconstitutional. According to the constitution, to remove Chavez the opposition needs only to wait until August, half-way through his term when a binding referendum can be held.
There appears to be two major reasons why the opposition wants an election in early 2003 instead of waiting the full 8 months.
First, the Venezuelan economy is in a tailspin ... prior to the current crisis economists expected GDP to drop 6% this year. Like all politicians Chavez' support is tied to the economy. The economy, however, will probably start to grow next year.
As the US prepares to attack Iraq, oil prices are expected to increase (they already have) ... higher oil prices add to the Venezuelan treasury, which allows the government to increase funding for social programs and public works.
Furthermore, the main reason for Venezuela's economic decline is that this year, according to the Financial Times "investment has fallen by 14% and billions of dollars are being shipped abroad. (Dec 5)"
In effect, capitalists are striking.
The rich don't like Chavez' policies of redistribution and thus are using their money to demonstrate opposition to them. Our current age of 'globalization' has further liberalized financial market, facilitating this. Nevertheless, like any strike it cannot last forever.
The second reason, according to Hans Dieterich, for the pro-coup haste. is the entrance in vigor of various important laws that come into effect on January 1, 2003, that touch vital interests of the economic elite: Among them, the Land Law that affects not just the large plantation owners in the country but also real estate speculators and vacant lots in urban zones.
The Hydrocarbon law is even more important because it will permit the dismantling of the meta-State of the petroleum business PDVSA, the corrupt oil group that controls the economic life of the country and that is an integral part of the New World Energy Order of George Bush.
Today, only 20% of the income of this mega-company goes to the State ... 80% goes to "operating costs" that enrich secret accounts of the beneficiaries of this economic cancer.
Yves Engler is Vice President Communications for the Concordia Student Union and has traveled extensively throughout Venezuela.