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Hugo Chavez faces his demons in Venezuela

This article is over 14 years, 6 months old
Mike Gonzalez looks at how economic crisis threatens Chavez’s Venezuela, and notes the revival of indigenous struggles across the region
Issue 2153
 (Pic:» Tim Sanders )
(Pic: » Tim Sanders)

Venezuelan president Hugo Chavez has announced that a number of multinational metal companies are to be nationalised. This follows the government take over of several oil companies, ports, airports and some food producing firms.

Chavez has also announced that executive salaries will be reduced.

The Venezuelan branch of Stanford Bank, whose owner embezzled most of its funds, was also taken over. The Banco de Venezuela, owned by the huge Banco de Santander group, is about to be bought – a year after its nationalisation was announced.

These measures are a response to the world recession and to the falling price of the oil on which Venezuela depends.

Although Chavez frequently says that Venezuela will suffer less from recession than other countries, the reality is that the country is unlikely to escape its impact.

A large proportion of Venezuela’s food, for example, is imported, despite the fact that the country could feed itself if agriculture were working to full capacity.

Curbs on imports and the takeover of some producers of essential food products can only partially meet the needs of the people, although the subsidised food programme (Mercal) may keep the worst hunger at bay for the moment.

State control of oil production is central to the Bolivarian revolution in Latin America. It is logical enough that key oil‑producing areas, which are controlled by the right wing opposition, should be brought under government authority.

The PDVSA national oil corporation funds the social programmes in health, education and housing, as well as many cooperative projects.

Its 2009 budget announced some dramatic cutbacks – though for this year at least the key areas are still guaranteed.

It is unclear how the social programmes can be sustained if the economic crisis goes on into 2010, as seems likely.

Inflation officially hit 31 percent last year (the real level was higher), and the promise that it will be held at 15 percent this year seems very unlikely.

Supermarket prices rise almost by the week, and regular shortages of goods seem to be manoeuvres to justify price increases.

The poorest people are covered by state subsidy, but others are not. The minimum wage has been raised by 20 percent and by 30 percent in the case of teachers.

But workers have also been called on to limit wage increases and the oil corporation has announced it will accept no wage negotiations this year.

The public declarations by executives and government ministers that they will voluntarily cut their wages fool no one, since due to corruption the majority of them earn far more than they declare.

Support for the nationalisation measures taken are reflected in the 60 percent support for Chavez in recent polls. But that acceptance does not extend to his government or to state officials.

Most people still do not hold Chavez responsible for the overall state of the economy, insecurity, and an inefficient infrastructure.

But concerns over those issues are real. In recent weeks three trade union activists and a number of peasant leaders have been murdered.

The expropriation of some key firms is largely a response to need rather than part of a strategic plan to transform the economy.

And the element that was to define Venezuela’s “21st century socialism” – popular power – is still not a reality.

Yet as the crisis deepens, so too will the need for real democratic control of the economy and society, so that recession does not hit most seriously the very classes who have placed their trust in Chavez and the Bolivarian revolution.

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