Reports from Venezuela—Summer 2008

by George Saunders

The Bolivarian revolution in Venezuela is being torn by motion in contradictory directions, making retrograde moves away from socialism at one moment and advancing in a socialist direction the next. We reproduce below three reports that have come from Venezuela this summer. These reports illustrate the general observation about contradictory motion.

The biggest setback during the past year of course was the defeat of the constitutional referendum in December 2007. Beginning in 1997, the movement headed by Venezuelan President Hugo Chávez enjoyed an unbroken string of electoral victories. December 1997 was this movement’s first electoral defeat in ten years. Some of the reasons for this defeat are examined in the first report below, by Fernando Esteban, a member of the Fourth International working in Venezuela.

Esteban also looks at the difficulties and complications for revolutionary socialists who are trying to work within the reformist-dominated and bureaucratically run new party established by Chávez, the PSUV (Partido socialista unida de Venezuela—United Socialist Party of Venezuela).

On the other hand, some significant gains in a socialist direction have been made. After a hard-fought strike lasting over three months, workers at the giant iron-and-steel plant SIDOR saw a major breakthrough. The Chávez leadership intervened on the workers’ side and nationalized SIDOR. One of this summer’s reports, below, indicate that workers who had been contracted-out by the SIDOR management have now been reinstated as part of the regular work force.

The victory at SIDOR was accompanied by Chávez’s ouster of the pseudo-Trotskyist Jose Ramon Romero as Venezuela’s minister of labor. He had sided too blatantly with the capitalist owners of SIDOR and against the workers. In the process he lost the confidence he had previously enjoyed from Chávez.

Earlier, Chávez had nationalized the cement industry, and the most recent report below describes Chávez’s nationalization of a major private bank, the multinational Banco de Venezuela, at the end of July. (See the article below by Alan Woods.)

The June 2008 interview with a Trotskyist union leader, Stalin Pérez Borges, shows that in June Chávez was playing up to the capitalists and seeking to collaborate with them, moving away from a socialist direction. Now, at the end of July, he is nationalizing one of the banks whose owners he was trying to ally with in June. The worldwide financial crisis, and intensifying food shortages, may have played a role in this apparent about-face. Perhaps Chávez felt forced to nationalize the bank to prevent worse economic turmoil from hitting home.

The existence of a strong current of militancy among Venezuelan workers, expressed also in the fact that several revolutionary socialist groups are among the top union leaders in that country, is also a constant pressure on Chávez, challenging him to act in accordance with the socialist ideas that he proclaims.

A report from Venezuela earlier this year indicated that there may finally be elections in the main union federation, the UNT (Unión Nacional de Trabajo). If so, this could confirm the leading position in the UNT of such revolutionary socialist groups as the Marea Socialista (Socialist Tide) headed by Stalin Pérez Borges and the C-CURA, headed by Orlando Chirino.

The first two reports below are from International Viewpoint, the online publication of the Fourth International. All the reports have been edited for style purposes by Labor Standard.

The Bolivarian Revolution at the Crossroads

by Fernando Esteban

[The author is a member of the Fourth International working in Venezuela.]

The defeat of President Hugo Chávez in the referendum last December marks an important turning point in the Bolivarian process, which began more than ten years ago. Following this defeat a crucial choice arises: to accelerate the process toward a socialist society or on the contrary to prefer the status quo by centering the revolution solely around the image of the president.

After thirteen electoral victories in a row, the defeat in December was a body blow for the whole of the Bolivarian Left. For the first time in ten years, the Venezuelan people [that is, a substantial section of the masses who had previously voted for Chávez] expressed its disapproval, in spite of the widely recognized gains of the revolution.

Gains of the Revolution

In a country which is the fourth largest world exporter of oil and which has the greatest oil reserves in the world, oil is a very powerful financial weapon. The profits generated by PDVSA (the state oil company) make it possible to finance the “missions” of the revolution. Among the most important are those concerning education:

·         The Robinson mission aims at teaching illiterates how to read and write.

·         The Ribas mission trains graduates.

·         The Sucre mission gives access to the university to students that the former republic had excluded. To this end, a Bolivarian University has been established [with branches] located all over the country. It functions parallel to the traditional Venezuelan universities, of which the best known are the Central University of Venezuela (in Caracas) and the Andean University (in Merida).

These educational missions are extremely successful. The students, of all ages, are very numerous, so much so that the centers where they operate are being multiplied. This enthusiasm can be explained partly by the methods of teaching that are used. The courses are given on videocassette, and a teacher is there to help the group, which is always quite small. There is no place here for the system of evaluation and sanction.

Everything is done to encourage the students’ progress. And the results speak for themselves: in October 2005, UNESCO officially proclaimed Venezuela a “territory freed of illiteracy.”

Another of the best-known missions is “Barrio adentro,” which is a medical mission. In the framework of an agreement with Cuba, nearly 15.000 Cuban doctors are today employed by the Venezuelan government.

Access to health care has thus become completely free. Installed in [clinics that are] all built on the same model, these doctors treat the population, but at the same time they inform and make people aware of the rules of hygiene and contraception. They also keep many statistics up to date, in order to observe the evolution of the medical situation of the population. It is clear that progress is being made, and the whole of the population, in particular in the barrios, has seen its living conditions improving, largely thanks to these doctors.

We could also speak about the Mercal mission, which markets food products at low prices. Created for all Venezuelans, it addresses itself more specifically to the poorest sectors of the population.

We could furthermore mention the Piar mission, which aims at improving the living conditions of children; the “Vuelvan Caras” mission, whose purpose is to develop co-operatives of production; and Guaicai, which works to restore the rights of the indigenous peoples and communities of the country. Chávez often repeats that “to fight against poverty, it is necessary to give power to the poor.” The missions are there for that, to help the needy populations of the barrios, those who took to the streets at the time of the 2002 coup and put Chávez back in power.

Lastly, how can we speak about the gains of the Bolivarian revolution without evoking one of the essential reforms of the process: the law on land and fishing. Just eight families in the country own between them more than 150,000 hectares of land. That represents roughly the equivalent of eighteen times the surface of the capital of Venezuela, where more than 4 million people live. Furthermore, these immense landholdings remain most of the time uncultivated, even though they are located in the most fertile areas of the country. It should be stressed that some big landholdings, such as for example the liquor-producing Santa Teresa company, established in the valleys of Aragua, do not have any documented title to the land that they occupy. The law has made it possible to launch a process of more equitable distribution of land resources, by regularizing the division of the land among peasants through the National Land Institute.

This law has encouraged the construction of rural population centers equipped with basic services, giving their inhabitants access to health and education, in order for them to have a better and more dignified life. The law protects the poor peasants and encourages the formation of cooperatives and other associative forms of production, by supporting them financially and technically and by creating at the same time the conditions of their economic viability, through establishing the necessary means of transport and marketing of their produce.

Again on the Lost Referendum

So we might be astonished that in spite of these well-known gains, Hugo Chávez lost the referendum last December. All the more so in that in the president’s proposals we could find in particular:

·         recognition of popular participation through the Councils of Popular Power (such as, for example, Student Councils, Peasant Councils, etc.), and through workers’ associations, cooperatives, and community enterprises;

·         strengthening of the right to a job, including the creation of a fund of social stability for workers, allowing them, with the help of the state, to take advantage of wide-ranging rights concerning retirement, pensions, and paid holidays;

·         the reduction of the working day from 8 to 6 hours, and from 40 to 36 hours a week;

·         recognition of the specificities of the indigenous groups and the groups descended from forced African immigration, guaranteeing the exercise of their rights and special attention from the law;

·         the creation of a state productive economic model, based on the values of humanism, cooperation, and the preponderance of social interests over private interests. The state promotes and develops specific forms of companies and economic units based on social, communal or state property, social production and distribution, mixed enterprises between the state and the private sector, creating the best conditions for the realization of the socialist economy.

All these social gains would make you think that the popular classes would mobilize to once again vote massively in favor of the proposals of Chávez. However, that was not what happened, quite the contrary. The referendum was more a defeat of the Venezuelan president than a victory for the capitalist opposition. If we compare the results with those of the last presidential election, won by Chávez with 61.35% of the votes, the opposition stagnated, with 4 million votes, whereas Chávez lost 3 million votes. The abstention was 45 per cent. In the final analysis, it was by only 200,000 votes that the constitutional proposal was rejected.

Most of the Western [big business] media were quick to salute the wisdom of the Venezuelan people. For them, the explanation of this failure was simple and linear. It came down to two points: the rejection of a “Cuban-style” socialist model and the refusal to allow Chávez the right to stand for the presidency indefinitely. Admittedly, article 230 of the new Constitution proposed a lengthening of the presidential term to 7 years, with the possibility of standing again immediately and indefinitely.

Such a proposal is obviously not satisfactory. But to conclude from it that Chávez wants to make Venezuela a dictatorship, as the media said, is to forget a little too quickly that this same system is in force in France and in other European democracies without it posing the least problem for these right-thinking media people. Besides, they even quickly forgot to point out that Venezuela really is a democracy, since Chávez recognized his defeat and congratulated his opponents on the same evening that the results were announced.

The reasons for the defeat are undoubtedly to be looked for elsewhere.

Reasons for the Defeat

First of all, by aiming to broadly satisfy the population, the proposal did not in the end satisfy anyone. The renewal of the presidential mandate was clearly there to satisfy the moderate wing of the Bolivarian process, the wing that wants a Chavism without socialism. It could not, however, satisfy the most radical wing of the process. So we saw personalities like Orlando Chirino, a member of the leadership of the country’s main trade-union confederation, the UNT, officially come out against the proposal. On the other hand, the entire social aspect of the reform, which we outlined above, was unacceptable to a new Bolivarian bourgeoisie which does not want socialism. From this point of view, it was highly symbolic that General Baduel, an old associate of Chávez, came out strongly against the reform.

Furthermore, there was very clearly a problem with the method chosen by Chávez. The Venezuelan president worked out his constitutional reform proposals, consulting only a group of friends selected by him and gathered around his own person. Over and above the reform proposals, Chávez thus made disappear by decree the original formula of this revolution: that of a popular, revolutionary, democratic process of a constituent nature. The maximum that was obtained was the kind of open discussion that there was around the constituent assembly of 1999. At a moment when the context made it possible to go much further, to undertake a reform by establishing spaces of dialogue and power all over the country, Chávez threw down a challenge to the entire Bolivarian and revolutionary movement, forcing it to be with him or against him.

There was a possible way out of this, making the model of reform proposed by Chávez a working draft for a great many constituent spaces organized all over the country, seeking perhaps their approval but gaining a model of legitimacy and a concretization of constituent and revolutionary democracy. In fact, the reform almost faded into the background because in the campaign Chávez personified the referendum to the point of transforming it into a plebiscite. The line was: “To vote No is to vote for Bush, to vote Yes is to vote for Chávez.”

In the face of that the opposition developed a highly effective campaign. Through advertising spots on television, but also by going into the popular quarters, it ceaselessly argued that with the reform and “the arrival of socialism,” the state would be the owner of all private goods and could seize in an absolutely legal way anyone’s house or car. Exploiting people’s fears by claiming that socialism would take from those who had little or nothing, this line of argument turned out to be extremely successful .

Lastly, the primary reason for this failure was undoubtedly the rise of [internal conflict] within the Bolivarian camp. The desire to identify the Bolivarian revolution with the sole figure of Chávez, the way in which the United Socialist Party of Venezuela (PSUV) is being constituted, without much consultation, and then the way in which they tried to impose the reform, explain this disaffection. Abstention was high because the proposal of Chávez, both in its form as and in its essential contents, did not offer practical democratic and counter-hegemonic perspectives. As Sebastien Ville and Francois Sabado wrote in [the newspaper of the French Ligue Communiste Révolutionnaire] Rouge no. 2230, “this defeat is a response to the degradation of the relations between the government and the most combative sectors of the Bolivarian revolution.”

It is utopian to think that in the Latin America of today, it is possible to impose socialism from on high. The challenge is to build a radical democracy, opposed to the present status quo but pluralist in terms of actors and popular ideologies. Faced with this first setback, there are strong temptations for the moderate wing of Chavism to impose a new reform that would reduce the socializing or socialist aspects, explaining that they were the cause of the defeat on December 2. So what is at stake for the social movement is to keep the process moving forward. And from this point of view, there are fortunately some positive points.

The Nationalization of SIDOR

First of all, there is of course the nationalization of SIDOR [in April 2008]. After three months of a determined strike and of struggle, on Wednesday April 8, Hugo Chávez finally intervened and agreed to renationalize the most important iron and steel plant in the country, which had been privatized in 1997 by President Caldera.

At the heart of the debate was the denunciation by the workers and the UNT trade union of the violation by SIDOR of Venezuelan labor legislation. Completely ignoring the collective bargaining agreement, the management of Ternium-SIDOR, a company owned 20 per cent by the state, 20 per cent by the workers, and 60 per cent by the Italo-Argentinian consortium Techint, had maintained for 15 months a situation of absolute wage insecurity for the 15,000 workers, including 9,000 who had no contracts. Not only did the management refuse to implement the wage increases voted legally in a general assembly by the workers, but on the contrary it sought to impose a reduction of the workforce, wage cuts, modifications of work contracts in the direction of greater insecurity, as well as a downward revision of the pensions paid to former employees.

Worse still, whereas the fact of having 20 per cent of the capital enabled the workers to appoint one of the co-presidents, the management categorically refused to recognize the validity of this vote. Hitherto protected by Jose Ramon Rivero, the minister of labor [appointed by Chávez at the time of Chávez’s reelection in 2006], the management of the firm thought it could count on the fact that it benefited from foreign capital to continue flouting Venezuelan law. Whereas Rivero never sought to negotiate and on the contrary preferred to impose a trial of strength on the workers, as he had previously done last August with the comrades of the UNT in the public sector, he has since been repudiated in a scathing fashion by Chávez.

On April 4, the UNT trade union organized a referendum where two questions were put to the workers of the factory: first of all, did they or did they not agree with the proposal that the employers had made at the negotiating table; then, whether they wished to continue the strike and the negotiations. In spite of three months of struggle, the workers answered No to the first question by 3,338 votes to 65, and Yes to the second by 3,195 to 97. On Monday April 7, weary of the workers’ resistance, the government decided, in the person of Vice-president Ramon Carrizales, to convene new negotiations. Negotiations to which Labor Minister Jose Ramon Rivero was this time not invited. Under the constant pressure of 600 workers guarding the factory permanently, it took less than 48 hours to resolve the crisis.

The Fall of Rivero

This struggle also led to the fall of José Ramón Rivero. It was not the first time that the comrades of the UNT had clashed with him. On August 15 last year, the trade-union representatives of the UNT, workers in the Venezuelan Ministry of Labor, had an appointment with the director of his cabinet, Lennina Galindo, in order to present their draft of a national collective agreement for all workers in the public sector. On their arrival, they were told that she was in a meeting with the minister, José Ramón Rivero. So the trade-union representatives decided to wait. At the end of the day, someone came back to see them to tell them that by order of the minister, Lennina Galindo was not authorized to receive them.

The trade unionists, furious, then decided to occupy the Ministry until they were received. Forty-five people, men and women, thus continued to wait. Initially, the director of his cabinet and the vice-minister were sent to convince the recalcitrant workers to leave the Ministry. Then, understanding that he could not avoid a confrontation, the minister ordered the doors to be closed, but also for water and electricity to be cut off. Six days passed thus, without any change in the situation. Fire fighters were prevented from entering, all contact was prohibited with the employees of the ministry who, out of solidarity, vainly tried to get food to them.

Deprived of water, food, and medicine, faced with this serious lack of respect for the elementary rights of the human person, the courageous trade unionists nevertheless remained in place. The minister then called on the army to evacuate them. Soldiers came to the scene, noted the occupation, but decided not to intervene. Furious, the minister then decided to use purely and simply gangster methods, by calling in roughnecks from the neighborhood. Promising each of them 50,000 bolivars (approximately 15 euros), he asked them to forcibly make these trade unionists leave, presenting them as anti-Chavist oppositionists. A violent evacuation of the ministry ensued, with the trade unionists being driven out by thugs armed with revolvers.

But the strangest part of the story was not the evacuation itself.

In fact, these trade-union comrades were all members of the C-CURA and Marea Socialista currents of the UNT, and many of them were Trotskyists.

At the very time when the evacuation was taking place, this same minister was making an inaugural speech on the occasion of the first official homage paid by the Bolivarian Republic to Leon Trotsky! Such are the methods of Rivero.

Finally, at the time when he was ousted, Rivero was trying to set up a new trade-union confederation, which would have been directly in competition with the UNT, and would have followed his orders. Although this project seems to have been frozen with the departure of Rivero, nothing indicates that it will not be taken out of the closet one day by the right wing of Chavism.

Internal Maneuvers in the PSUV

The right wing seems for the moment more preoccupied by the PSUV, the United Socialist Party of Venezuela, the new party bringing together the old MVR (Movement for Fifth Republic) of Chávez, and parts of the Venezuelan Communist Party, of PPT, and of Podemos. During March, the election of the leadership took place.

The first stage consisted of designating the members who had the right to vote. Out of 5 million members, only 80.000 could vote, without anyone knowing on what criteria this choice was based. In a second stage, Chávez announced on live television a list of 70 names from which it was necessary to choose the 35 people who were going to make up the national leadership. Lastly, in the third stage, once the 35 members of the national leadership had been elected, Chávez designated on live TV the members of the political bureau. There you can only find members of the government, and there are no representatives of the social or trade-union movement. The vote of the delegates in each battalion (base organization) proceeded without there being any control of the results.

In spite of the way the bureaucracy arranged this election, there remain political spaces within the PSUV. Thus for example, when there was the election of the 35 people who were to make up the national leadership, a list drawn up by the government was circulated, indicating the names for which it was necessary to vote. Unfortunately for those thus designated, the 80,000 grand electors did not follow instructions and voted freely. Which undoubtedly partly explains Chávez taking matters in hand directly by nominating the political bureau. In the same way, comrade Gonzalo Gomez, a member of Marea Socialista, succeeded in being elected a delegate, in spite of the opposition of the bureaucracy.

Admittedly, learning how to work within the big machine that is the PSUV will be extremely complicated. Nevertheless the assiduity and the sharpness in the political struggle that the comrades of Marea Socialista, above all Stalin Pérez, have shown, is making it possible for them to win a hearing. These small day-to-day political victories validate a posteriori the choice of going into the PSUV and calling for a Yes vote at the time of the last referendum. Conversely, the positions of the comrades of C-CURA and Orlando Chirino on these two principal points tend to put them off the political field.

The Next Electoral Deadlines

In this context, it looks as though the municipal elections in November could be very complicated. There is a strong chance that the Chavist camp will lose quite a few towns and cities, which would further weaken the Bolivarian revolutionary process. At a time when the revolution seems to be looking for its second wind, the problems of daily existence are coming to the fore again. Galloping inflation (20 per cent per annum), insecurity, the problem of refuse disposal, unemployment, corruption are elements which contribute to weighing on the process and which will play a preponderant role at the moment of putting a voting paper in the ballot box.

Admittedly, these problems did not start with the Bolivarian revolution and are inherited from the former republic. However, the Chavists must be able to respond to questions relating to living conditions at the same time as proposing a project for another society.

For ten years, the revolution has continued to be unceasingly attacked by the capitalist bureaucracy, which forces it to solve the strategic problems of industrialization and nationalization, of the development of agro-industry in the countryside, and especially of private banking, which still controls public finances and the rates of interest and borrowing (which is about 32 per cent). If the Bolivarian camp does not grapple with these problems, the towns of Ciudad Guyana (the most important iron and steel basin of Venezuela), of Puerto Cruz (an oil town), of Valencia (the main industrial city in the country), and even Caracas, the capital, can be lost, which would lead to a halt in the revolutionary process.

So it is more than ever important to defend the Bolivarian process. Of course it makes mistakes, even takes condemnable decisions such as those that we have described above, and we will not cease to condemn them.

Nevertheless, it is worth repeating with force that the Bolivarian revolution remains by far, and in spite of its errors, the most interesting phenomenon existing on the planet today. On it depends the equilibrium of the entire Andean and Caribbean region. If a fatal blow was dealt to it, the Bolivian and Ecuadorian processes would crumble. The Cuban experience would end. In spite of undeniable gains which have benefited the most underprivileged layers, the bureaucratic heaviness of the state apparatus as well as the continental context weigh enormously.

That is why it is important to follow and support the Venezuelan social movement. Admittedly, it remains weakened and divided. But it is its capacity to unite which will make it possible to give a second wind to the revolution and will radicalize a process which is still and always too dependent on the sole figure of Hugo Chávez.

Interview with Venezuelan Socialist Union Leader:
Alliance with the Employers Is Putting Brakes on the March Toward Socialism”

[The following is an interview with Stalin Péres Borges, one of the national coordinators of the UNT, Venezuela’s main trade-union confederation, and editor of the newspaper Marea Socialista (Socialist Tide).

[The interview was conducted by the staff of Marea Socialista

[It was also published on the site <> on June 30, 2008.]

On June 11, President Chávez, accompanied by several of his principal ministers, met in the hotel ALBA in Caracas with the 500 most important employers in Venezuela. Among them were those who manage the Polar and Mendoza groups and the country’s big bankers. During this meeting, entitled “The Relaunching of  Production” (Reimpulso Productivo), President Chávez announced a series of measures favoring the financial sector and the big employers who are linked to the multinationals. He called for national unity” and an “alliance with the national productive sectors” and tried to convince the entrepreneurs that socialism would do them no harm. The socialist journal Marea Socialista asked Stalin Pérez Borges to evaluate this meeting in the present Venezuelan context.

Question: How do you evaluate the meeting of President Chávez with the employers?

Answer: Scarcely a few months ago, the president reaffirmed that his government was a “workers’” government. He also nationalized the iron and steel company SIDOR [in April 2008; see the article above, by Fernando Esteban], although he did it by repurchasing it, whereas, in our opinion, it is this multinational which should have paid the Venezuelan state for not respecting its laws and for punishable acts against the country. Despite everything, we cannot deny that it was a very progressive measure, asked for, demanded, and won by the struggle of the workers. This reaffirmation of the concept of a “workers’ government,” as well as the dismissal of one of the most anti-working class Ministers of Labor that you can imagine, were steps in the right direction: in the direction of measures that we have been demanding since December 2 (the date of the defeat of the referendum on the constitutional reform).


How do you evaluate the meeting of President Chávez with the employers?

At the time, we affirmed that the revision, the rectification, and the relaunching of the revolutionary process should be centered on the resolution of the problems of the popular sectors. But this June 11, this meeting with the employers, the economic measures announced, and especially the political proposal that President Chávez made to them, represent a step backwards in relation to the orientation conquered by the workers of SIDOR and by the people for the Bolivarian Revolution.

The proposal of the president, his call for an “alliance” with employers described by him as “national,” with the “national” bourgeoisie, all that is taking place at the same time as the putting forward of an alliance with the workers and the people. On the very eve of his meeting with the employers, Chávez had signed [an authorization for] the reincorporation of the first 900 contracted-out workers into the official work force of SIDOR. So these actions by Chávez are contradictory; they are by no means complementary: one excludes the other.

All the historical experiences of alliances with the aforementioned “national” bourgeoisie show that this road has led to the failure of the popular processes, of processes of national independence, of socialist processes. They lead only to the strengthening of the bourgeoisie and of imperialism and to the victory of the counter-revolutionary sectors. At the moment when we are commemorating the centenary of the birth of Salvador Allende, it would be good to remember why the Chilean road to socialism was broken. In our opinion, it was because they did not want to confront in a consistent way the Chilean bourgeoisie, allied to the Yankees, and that this bourgeoisie was able to organize the destabilization, the economic boycott, and the weakening of [Allende’s] government of Popular Unity, which opened the way to and facilitated the coup d’etat (of September 11, 1973). We have already experienced such a situation here, but thanks to the revolutionary action of the masses, the coup was defeated on April 13 (2002).

Q.: Many comrades think that what is involved is a tactic of the president with a view to the next elections (regional and local elections in November), in order precisely to avoid economic destabilization and to slow down inflation.

A.: I want first of all and above all to insist on the political, strategic problems of the Bolivarian Revolution. It is on this level that we can explain why the measures that were announced will not obtain the results that are claimed to be sought. The measures necessary to obtain these results are of quite a different order. They must really express the idea of a “workers’ government,” as the Chávez government defines itself.

The political problem is the most important one because the president is talking to the wrong people if he wants to stop inflation and relaunch production. It is not these employers, it is not, in general, the big bosses, the Mendozas, who want to or who can stop inflation. Those who were present at this meeting work closely with the multinationals, and their companies are sometimes themselves multinationals. The case of the private banks is illuminating; all of those banks in Venezuela are multinationals, which only play by the rules of neo-liberalism. Moreover, they receive in deposit most of the financial resources of the state and do business with this public money without any control. They are by no means worried about whether the use of these funds causes inflation or not.

It is a mistake to think, precisely at the moment when the banking system in the United States and internationally is collapsing, when big banks are collapsing, and when neo-liberal governments have to rush to the aid of the banks with the people’s tax money, that these bosses of finance will act in a different way in Venezuela. They do nothing but obey the orders of the financial institutions that control them. They are in no way interested in an “alliance” with the Chávez government, unless such an alliance makes it possible for their enterprises to make bigger profits, which will in any event be dispatched out of the country.

That is the reality. You cannot speak to these employers from the heart, with a project of national independence, even less with a socialist project, because their very existence depends on the maintenance of a system of neo-colonial relations with imperialism. These people would have acted at the time in the same way as the oligarchy behaved with Bolivar. You cannot make these bankers and the big economic groups recognize the need for national unity. On the contrary, they represent a real threat to the revolution.

The president also invited the employers of the building industry to collaborate with the Brazilian and Argentinian multinationals. He invited the importers, producers, and processors of food to collaborate with the Brazilian and Argentinian multinationals. He opened a fund of a billion dollars, to be shared between the local employers and the multinationals. But when we speak about Brazilian and Argentinian multinationals, it would be more exact to speak about North American, European, and Asian multinationals, because the majority of their financial capital comes from companies and banks in those regions. Like the Ternium enterprise (which controlled 60 per cent of the SIDOR iron and steel plant that was nationalized). This is allegedly an Argentinian multinational, but its capital is Brazilian, Mexican, Italian, and North American (U.S.).

To appeal to such firms in the name of national unity while following the path of Bolivarian socialism reveals great confusion on the part of the president. None of the 500 owners present at the meeting will answer this appeal. They want to hear only one thing: the appeal of profit at any price. It is they who create precarious employment, who subcontract jobs, who lay off workers, who harass the trade-union organizations when they cannot buy off or corrupt their leaders.

But let us return to the political problem. Mendoza and its group of companies are among those principally responsible for the food shortage and the speculation on food. Why would it change its attitude today? The president is bathing in illusions if he thinks that by granting the privileges claimed by the employers, they will no longer constitute a factor of destabilization. The electoral agenda matters little to the employers. Their only agenda is profit and for that they will use the electoral conjuncture if necessary. Either the president is mistaken, or he knows what he is doing and in that case he is promoting a capitalist model, which will never win independence because these economic groups have no sense of the fatherland or of independence. They are only junior partners of imperialism and they only aspire to remain that.

To ask them to repatriate the billion dollars that they have hidden abroad constitutes another demonstration of naivety. They could indeed do it, but only with the guarantee that they will make even more money than they currently make and with the assurance that they will never be expropriated. And the only thing that can give them such confidence is that the (presidential) palace of Miraflores is occupied by a president who, as in the time of the Fourth Republic (1948-1999), does exactly what they want.

So the problem with which we are confronted is political. It is a question of choosing between two models. It is necessary to choose between the model suggested by the president on June 11 with the employers and that of the workers of SIDOR, of a consistent fight against the multinationals.

Q.: Some people claim that “alliance with the employers” would be a kind of New Economic Policey (NEP), the economic policy followed by Lenin after the Russian civil war. In order to solve the problems of supply and the productive crisis, he loosened controls on the market and gave certain advantages to the small capitalists. What do you think about that?

A.: The Leninist NEP was a policy intended to solve the brutal crisis in which Russia had become enmeshed after the disasters of the First World War and the Civil War. This policy caused serious distortions; the well-off peasants quickly grew rich. In Venezuela, there cannot be a NEP, in the first place because we do not have a workers’ state that is making a transition toward socialism. In Venezuela, the capitalist state has not been dismantled. We still have a bourgeois state with all its structures intact and with elements of state capitalism. To put forward such a comparison only serves to sow confusion.

Moreover, the launching of the NEP in Russia was done after the expropriation of the great majority of the factories and the policy of  War Communism” during the Civil War. The NEP was a policy made necessary by the condition of Russia after years of war and the failure of the revolution in Germany. So it was a defensive policy of Leninism, not an offensive one. To talk about the NEP in the Venezuelan context constitutes a falsification intended to cloud over the fact that what they call the “relaunching of production” is nothing other than a policy offering incentives, subsidies, and privileges to the big bosses, the majority of whom are putschists, destabilizers, and saboteurs [people who tried in the past to overthrow the Chávez government and will try again].

Q.: What measure do you propose to achieve the goals defined by the president?

A.: In the first place, there is a political objective. We reject this “alliance of national unity” because it is counterproductive if we really want to advance toward socialism. It will even be reactionary if it is carried out, because it will weaken the revolutionary process. We propose on the contrary an alliance of popular power, of the workers and the exploited and oppressed sectors of society, in order to resolve the question of state power. In the second place, we need measures of economic policy that are consistent with the discourse on the building of socialism and the working-class nature of the government, measures which must respond to the real problems and needs of working people.

Let us take the example of foreign trade. If there is an area in which the state must have a monopoly of purchases and imports, it is certainly that of food. The nationalization of foreign trade and particularly of the food sector is a fundamental tool for controlling inflation.

Next, there is the question of wages. You cannot on the one hand spend millions of dollars on incentives and subsidies to the employers, without any control by the workers, while on the other hand workers are affected every day by price increases. We must install a periodic, monthly or quarterly indexation of wages to keep pace with inflation.

Collective bargaining agreements concluded every two years cannot respond to the situation.

One of the main issues whose gravity should be understood is that of the control of finances, the banks and credit. The crisis of the international economy will continue to deepen, just like the crisis of the banking sector. In this context, it is not acceptable that there does not exist any control on deposits in our country. We think that the system of credit is a strategic sector just like basic industries, oil, food, communications, etc. This sector cannot remain in the hands of the private sector and even less of the multinationals. At the very least, deposits would have to be nationalized. Or else, the central bank should control and manage all the money in the banking system. It would also be necessary to directly abolish the value-added tax (VAT) and to progressively increase taxes on company profits. That means, concretely: those who earn more pay more.

Those are some of the ideas and proposals which we want to put up for discussion among workers. But what remains fundamental is the question of knowing whether we are working with the perspective of an alliance with the supposedly national bourgeoisie, which would represent a retreat on the road to socialism. The president must know that each of the possible choices excludes the other: either you are with the workers and the people or you are with the big economic groups and the multinationals. A genuine workers’ government cannot choose an alliance with the bourgeoisie because that would mean the retreat of the revolution, and in saying that we are not falling into any kind of “ultraleftism.”

Venezuela: The Nationalization of Banco de Venezuela

by Alan Woods

In a television program broadcast to the whole of the country on July 31, President Chávez announced the nationalization of Banco de Venezuela, the Venezuelan bank owned by the Spanish banking multinational Grupo Santander. “We are going to nationalize Banco de Venezuela. I make an appeal to Grupo Santander to come here so that we can start to negotiate”.

He added: “Months ago I received the information through intelligence sources that Banco de Venezuela, which had been privatized for years, was being sold by its Spanish owners; that an agreement had been signed between Grupo Santander and a Venezuelan private banker, then the Venezuelan banker needed the permission of the government to buy a bank, this is not a small operation (…) and then I sent a message to the Spanish and the Venezuelan banker, to tell them that the government wanted to buy the bank; we want to recover it. Then the owners said, ‘No, we don’t want to sell it.’ So now I say, ‘No, I will buy it, how much is it? We are going to pay for it, and we are going to nationalize Banco de Venezuela.’”

President Chávez continued: “From this moment the media campaign on the part of the Spanish and international media is going to start. They are going to say that Chávez is an autocrat, that Chávez is a tyrant. I don’t care. We are going to nationalize the bank regardless.”

“Ladran, luego cabalgamos” (The dogs bark. That means the caravan is moving), he said, quoting from Don Quixote.

“There is something obscure here because its owners first were desperate to sell, and now they are saying they do not want to sell it to the Venezuelan state. We are going to nationalize it so that it is put at the service of the Venezuelan people.” He added that the bank controls millions of Bolivars, which belong to “the Venezuelan people and also the Venezuelan government.”

“We need a bank of that size. Because this is the Banco de Venezuela [formerly a government bank]…[T]his bank generates massive profits, but these profits are going abroad.”

Chávez also assured his listeners that the savings of account holders were going to be guaranteed as well as the jobs of the workers, whose conditions would improve, “as has happened with the nationalization of SIDOR.”

Chávez thanked the private managers of the bank for having turned it into a very efficient institution, but added that the bank would cease to be a capitalist bank and would turn into a socialist one: “Profits will not go to one private group. They will be invested in socialist social development. Socialism is stronger every day that passes!”

Super Profits

Banco de Venezuela is one of the most important banks in Venezuela, with a 12 percent share of the market in loans and with profits of US$170 million in the first half of 2008, a 29 percent increase over 2007, when its profits had already increased by 20 percent. It has 285 offices and three million customers.

Banco de Venezuela was nationalized in 1994 after a massive banking crisis, which bankrupted 60 percent of the banking sector, only to be privatized in 1996 and bought by Grupo Santander, a Spanish multinational banking group, for only US$300 million. In only nine months Grupo Santander recovered its original investment. The bank’s assets are now estimated at $891 million. In 2007 alone it made $325.3 million in profits, which is more than what Grupo Santander paid for the bank in the first place.

This is not the only example of scandalous profiteering by Spanish bankers in Venezuela. Banco Provincial was also bailed out by the Venezuelan state in 1994 and then sold in 1996 to Spanish multinational group BBVA. As a result, the Venezuelan banking sector is dominated by four groups: two Spanish multinationals, BBVA and Santander, and two

Venezuelan banks, Mercantil and Banesco. The Spanish Grupo Santander is now Latin America’s largest banking concern, with 4,500 branches, and it drew one third of its profits in 2007 from the region. This is just one example of how big foreign multinationals are plundering the resources of the continent.

The attempt of the Venezuelan government to regain control over the resources of the country is entirely justified. Yet it has been met by howls of protests from the multinationals. “It’s looking like a negative development. I don’t see why the banking sector needs to be under the purview of the public sector,” said Alberto Ramos, a senior economist with Goldman Sachs. “The private sector does a much more efficient job of running that type of business.”

Lying Hypocrisy

This is an excellent example of the lying hypocrisy of the defenders of big business. How can these gentlemen speak of the so-called efficiency of the private bankers when everybody knows that the big banks in the USA and other countries have been engaged in massive and criminal speculation for decades, which has led to the collapse of one big bank after another in the last 12 months, threatening the entire world financial system with collapse?

Not long ago, the Federal Reserve Bank of New York was forced to hand over US$29 billion to The Bear Stearns Companies Inc., a major investment bank in the USA, to facilitate its purchase by another big bank, JPMorgan Chase & Co. This is a perfect example of the “efficiency” of the private bankers, who have made fabulous profits from criminal speculation for years in the U.S. housing market, and now run cap in hand to the government to bail them out with billions of dollars of taxpayers’ money. Instead of going to jail for their crimes, which caused 77,000 American families to be evicted from their homes in the month of May 2008 alone, these wealthy parasites are richly rewarded by their friends in the White House and Wall Street.

When President Chávez announces the nationalization of a bank, he is accused of committing a crime against private property. But bourgeois governments in the USA and Europe have been nationalizing banks themselves. The Federal Reserve, having already poured money into the pockets of the bankers in the Bear Stearns affair, have now in effect nationalized the two huge mortgage giants Fannie Mae and Freddie Mac at a cost to U.S. taxpayers of a further US$25 billion [with a b]. George Bush and his administration have no money for health or pensions, but plenty of money to put in the pockets of their rich friends. In the words of the celebrated American writer, Gore Vidal, it is a case of “socialism for the rich and free enterprise for the poor.”

What does this case tell us about the “efficient job” done by the private bankers of the USA? Fannie Mae and Freddie Mac, which account for at least 50 percent of all mortgages in the USA, have issued $5 trillion in debt and mortgage backed securities. Of that amount more than $3 trillion is held by U.S. financial institutions and more than $1.5 trillion is held by foreign institutions. Their involvement in massive swindling and speculation posed a serious threat to the stability of the global economy. That is why the U.S. authorities were forced in effect to nationalize them. Yet nobody raises any questions about this.

We saw exactly the same thing last year in Britain, where the fifth biggest bank, Northern Rock, was nationalized by the government to stop it from collapsing. These private bankers were so efficient that they caused the first run on a bank in Britain for over 150 years, with long queues of worried savers waiting all night to withdraw their money. The nationalization of Northern Rock cost the British taxpayer £20bn (US$40bn). At the same time, Prime Minister Gordon Brown tells the British workers that there is no money for wage increases and everyone must make sacrifices—everyone, that is, except the private bankers!

Appetite Comes with Eating

The workers of Venezuela and the whole world will welcome the nationalization of the Banco de Venezuela. They will understand that the attacks and calumnies against Hugo Chávez are dictated by hypocrisy, greed, and hatred of the Venezuelan revolution. The Spanish bankers, who have been shamelessly plundering Venezuela, were quite prepared to sell the Banco de Venezuela to a private Venezuelan banker, that is, a companion in crime, but they were not prepared to allow the bank to be taken over by the state and used to further the interests of the Venezuelan people.

For Marxists, the question of compensation in itself is not a question of principle. Long ago, Marx advocated paying compensation to the British capitalists as a means of minimizing their resistance to nationalization and Trotsky raised a similar possibility in relation to the USA. However, the idea of the reformists that the capitalists’ property must be bought at market values is entirely false and impossible in practice. Our policy should be minimum compensation in cases of proven need only. In other words, we would consider compensation for middle class small shareholders, old age pensioners, etc., but not lavish sums for the super-rich who have already made vast fortunes out of the plunder of countries like Venezuela. The Grupo Santander bought the Banco de Venezuela at the ridiculously cheap price of $300 million. This sum of money has been paid for many times over. There is no justification for paying them a single Bolivar more.

However, the real issue here is not the amount of compensation. It is the fact that a big bank is being taken out of private hands. What the capitalists and imperialists really fear is that the tendency of the Venezuelan revolution to make inroads into private property will become irresistible. The [current worldwide financial] crisis of capitalism means that an increasing number of banks and other private enterprises will enter into crisis and close in the next months, causing a sharp rise in unemployment. Already, private investment in Venezuela has plunged. The Venezuelan economy is only being maintained by state investment and the public sector. This poses a serious threat to the revolution and can adversely affect the results of the November elections, especially if one takes into account the high and rising rate of inflation.

The argument of the reformists and Stalinists that the revolution must form a “strategic alliance with the national bourgeoisie” is dangerous stupidity. Everybody knows that the bourgeoisie is the enemy of the revolution and socialism. It is not possible to form a “strategic alliance” with a “progressive national bourgeoisie,” which does not exist. The reformists and Stalinists would like to create a national bourgeoisie with state money. What logic is there in this absurd proposal, which they put forward as so-called realism? Instead of throwing money at private capitalists who will immediately send it out of the country to bank accounts in Miami [or Switzerland], the state should take the productive forces into its hands and use its resources to create a genuine socialist planned economy. The prior condition for this is that the productive forces should be in the hands of the state, and the state should be in the hands of the working people.

Despite all the exhortations, the private capitalists will not invest in Venezuela. The only way forward is nationalization. The expropriation of SIDOR earlier this year was the result of the movement of the workers from below. The threat of factory closures in the next few months will undoubtedly lead to a new wave of factory occupations and demands for nationalization. The nationalization of the Banco de Venezuela will give a further impetus to the workers’ demand for expropriation and workers control. Appetite comes with eating!! That is why the owners of the Banco de Santander wished at all costs to avoid their property passing into the hands of the state, even though President Chávez offered to pay for it.

In the television program in which President Chávez announced the nationalization of the Banco de Venezuela he mentioned Marx and Lenin and referred to the importance of reducing the working week, as well as analyzing the world crisis of capitalism. He said that only with socialism can societies achieve their emancipation. That is absolutely true. But socialism is only possible when the working class takes power into its hands, expropriates the bankers, landlords, and capitalists and begins to run society on socialist lines.

The Venezuelan revolution has begun to take measures against private property. Marxists welcome every step in the direction of nationalization. At the same time, we point out that partial nationalizations are not sufficient to solve the fundamental problems of the Venezuelan economy. The nationalization of the entire banking and financial sector is a necessary condition for establishing a socialist planned economy, along with the nationalization of the land and all big private firms, under workers’ control and management. This would enable us to mobilize the entire productive resources of Venezuela to solve the most pressing problems of the people.

We therefore welcome the nationalization of the Banco de Venezuela as a step forward. But the main objective has not been yet attained: the elimination of the economic power of the oligarchy and the establishment of a real socialist workers’ state. The battle continues.

Barcelona, August 1, 2008