Revolution, Counter Revolution, and the Economic War in Venezuela: Part I

Introduction: A Decisive Battle is at Hand

In a speech outside the Miraflores palace on January 17, 2015, upon his return from a twelve day trip abroad, President of the Bolivarian Republic of Venezuela Nicolas Maduro Moros addressed an expectant crowd of well wishers. Seizing the moment in the midst of an economic crisis and an intense opposition campaign against his administration, Maduro spoke with a renewed sense of confidence and determination: “This economic battle is decisive. We have the resources, the organized people [pueblo organizado], the historic project, the only one that exists in Venezuela. We have the force, moral and spiritual. We have the historic purpose. I am calling for meeting the challenge of the rebirth of the economy of the country.” Just days earlier, perennial presidential candidate of the opposition coalition (Democratic Unity Roundtable, MUD) and leader of the right wing Justice First party, Henrique Capriles Radonski, argued that the combination of falling oil prices and scarcity of basic consumer goods, constituted “a perfect storm for changing the government.” As rumors of an imminent coup against Maduro spread and predictions of economic collapse appear in the some of the corporate international press, the broad spectrum of Chavismo is circling the wagons around the revolutionary project.

Venezuela is not alone, as over the past year there have been expressions of solidarity with the Maduro administration from the Union of South American Nations (UNASUR), the Bolivarian Alliance for the Peoples of Our America (ALBA), the G77 plus China, and the Non-Aligned Movement as well as from progressive forces from around the world. At the height of the guarimbas (violent demonstrations) during the first quarter of 2014, the majority position of the Organization of American States (OAS) too came down on the side of the constitutional order. The late President Hugo Chávez and now Maduro have played leadership roles in the regional associations of Latin American independence and integration; for this reason social movements, Afro-descendant and indigenous peoples, and peasants and workers throughout region are among the stakeholders in Venezuela’s revolutionary project.

A great deal hangs in the balance with regard to the feasibility of advancing a democratic socialist project while under the continuous attack of a U.S. backed opposition, elements of which are bent on restoring the neoliberal regime. One gets the sense that a decisive battle is underway for the political future of Venezuela and indeed, for the cause of sovereignty throughout the region. For all of these reasons Maduro’s annual address to the nation (Memoria y Cuenta) on January 21, 2015 held special weight as Venezuelans and international observers heard the government’s vision for the way forward.

Last Wednesday, President Maduro gave his annual address before the national assembly and the country (Memoria y Cuenta), in his role as head of state during the year 2014. He made his way, walking along the streets towards the National Assembly amid the enthusiastic greetings and embraces of a great multitude of followers. Addressing the nation, he said: “In the year 2015 we will implement a special plan of protection for Venezuelan families through the Great Mission of the Households of the Country, having as our objective to protect, through holistic policies, the attention given to children, and to increase pensions for families and in particular for Venezuelan women.” The government of Venezuela understands that in the face of the difficult economic situation it has to fortify, not retrench, the social programs that benefit the most needy. The Maduro administration is committed to maintaining the Grand Housing Mission that up to now has built 673,416 housing units and it has approved the resources to build 400,000 more housing units this coming year. It has also promised to increase the number of scholarships and pensions as well as increase the minimum wage by 15 percent and preserve the Food Mission. “This is a holistic strategy: protect the family, the households of the country, our young students; advance our powerful Housing Mission of Venezuela which also will generate a great amount of economic development; advance the powerful Great Mission New Barrio–Tri-Color (housing renovation project); to continue the social development of our country,” emphasized Maduro. At the same time, Maduro ordered the immediate inspection of all of the food distribution networks of the country and threatened to bring the full weight of the law against those who continue the economic sabotage. At this writing (January 22) the Minister of Commerce, Isabel Delgado announced that the government is meeting with 100 of the country’s largest producers and distributors at the Miraflores Palace to discuss distribution issues in the coming days.

This essay will offer a briefing on the current political standoff in Caracas and argue that only an effective counter offensive by the government, with the support of the popular sectors, can push back the opposition economic coup underway in Venezuela and start the country down the arduous road to economic recovery. By distinguishing the anatomy of the coup in Chile in September of 1973 from the short lived coup in Venezuela in April of 2002 and by reviewing the use of food as a political weapon during the oil strike in Venezuela from December 2002 to March 2003, we aim at interpreting the dialectic at work in the present confrontation between revolution and counter revolution in this South American nation.

1. Overview of the Current Political Climate in Venezuela

Both the opposition coalition MUD on the one hand, and the United Socialist Party of Venezuela and allied parties on the other, are now preparing to mobilize their constituents for demonstrations during the third week of January, marking the anniversary of the overthrow of the dictatorship of Marcos Pérez Jiménez on January 23, 1958. While it appears that the MUD has moved its march to the 24th, the Venezuelan newspaper El Universal has confirmed a number of anti-government student demonstrations are planned in Sucre, Mérida, Zulia, Guayana, Táchira, Carabobo, and Miranda on the 23rd. The 23rd of January has cultural significance because it marks a break in Venezuelan history, when a dictatorship gave way to a power sharing arrangement between the major political parties (AD, COPEI, URD) called the pact of Punto Fijo or puntofijismo. This representative democracy (also referred to as the Fourth Republic) advanced the interests of transnational capital and the ruling class of Venezuela. It was characterized by routine rampant corruption and the prevalence of poverty for more than half the population.

At this writing, the United Socialist Party of Venezuela (PSUV) has called for a “march of the undefeated” in west Caracas, “in honor of those who were assassinated and persecuted by the fascist right during the governments of the fourth republic.” The MUD has called on its followers to participate in an anti-government demonstration in Caracas on the 24th of January which it designates as “the march of the empty pots, against hunger and for change.” The MUD action is also a protest against “scarcity, the lines, the insecurity, and the repression.” It appears that the MUD will transmit a message “to the nation” on the 23rd with a proposal for change. The 23rd and 24th of January are therefore set to be days of struggle for the hearts and minds of Venezuelan constituent power.

1.2 The Psychological War

In addition to an economic war, some political analysts suggest that there is also psychological warfare being perpetrated by the opposition press and rumor mill. Oscar Schémel, President of Venezuelan polling firm and think tank Hinterlaces argues that the psychological campaign is aimed at the neurotization of the public:

“One of the variables on which these campaigns are based is the exacerbation of the problems, the exaggeration of the problems, mediated by a campaign of rumors to generate a climate of anxiety. After just a week on the queues, people were buying candles, in addition to food, because they heard that a coup was coming, because there was going going to be a magnicide, because there was going to be generalized looting, because there was going to be a social explosion. This generates anxiety and this anxiety does not disappear but accumulates.”

Although, observes Schémel, this sort of strategy has worked at bringing about a social explosion in other countries, it will not work in Venezuela: “This accumulation of anxiety in Venezuela does not generate a neurotic response because Venezuelans think that chaos or violent, irrational, unconstitutional exits can make the situation worse.”

Instances of the sort of rumor mongering observed by Schémel can be found in the opposition press. For example, El Nacional published an opinion piece by journalist Marianella Salazar which lays out the details of an alleged military conspiracy to force Maduro to resign and seek asylum in Cuba where Raul Castro has already allegedly agreed to receive him! Here is how Salazar speculates that the plot might then unfold: “on the agenda for the transition has emerged the name of General Raúl Baduel. Although he is in the military prison of Ramo Verde, he has auctóritas in the heart of the Bolivarian Armed Forces and they consider him a conciliator without intentions of installing a military dictatorship.” Among the outcomes of such a coup is that Venezuela could then “leave the China Fund and go to the International Monetary Fund.” The author also imagines that should General Baduel take the helm of the executive branch of government he would “avoid the Caracazo.” Perhaps this is supposed to give readers comfort. The Caracazo refers to an uprising originating in the poorer sections of Caracas in February 1989 in response to an IMF “structural adjustment package” imposed by then President Carlos Andrés Pérez. Pérez responded by declaring a state of emergency and between 300 and 3000 Venezuelans were killed by the security forces. Yet a return to the IMF is just what Salazar has in mind!

1.3 Polarization versus Accommodation

These sorts of economic and psychological opposition campaigns are not new to Venezuelan politics. Since Hugo Chávez was elected President in 1998 the counter revolution has been relentless in its quest to bring about regime change, with hard liners willing to deploy terrorist attacks and sabotage. Each onslaught by the ultra right has been deterred by the civic military alliance that has continued to back the constitutional order to this day. But is this time different? Are we witnessing the eve of another break in history, one that will restore a rehabilitated version of the neo-liberal regime of the fourth republic? Or will the Bolivarian cause weather yet another political and economic storm?

The last fifteen years show that Chavismo does not strengthen its position by negotiating with the right but by confronting it. After the April 2002 coup Chávez resorted to conciliation and compromise to no avail. Something similar has happened during the Maduro administration. After narrowly winning the presidential election in April of 2013, the opposition presidential candidate refused to concede the electoral victory to Nicolas Maduro and urged his followers to “drain the outrage.” The opposition waged an unsuccessful international campaign to delegitimize the outcome of the presidential election and an estimated eleven Chavistas were killed by anti-government extremists. Yet Maduro called for dialog with the opposition, and UNASUR as well as the Vatican helped to mediate the discussions. Maduro took some heat from the left for these talks and the shortages and price gouging only continued.

Later in the year (2013), Maduro launched an offensive to enforce price controls and anti-hoarding laws. While evoking the antipathy of big business, such measures may partly account for a recovery in the electoral base of Chavismo in time for the municipal elections in December that year. The PSUV and their allies won about three quarters of the municipalities in the December 2013 municipal elections. In what opposition leader Capriles had vowed would be a plebiscite on Chavismo, the PSUV and its allies together also won the popular vote by a margin of about 6.5 percent. Of course, a year later things are different: the economy is in recession and despite intensified government efforts to curtail contraband, speculation, and hoarding, the shortages have persisted.

A poll released in October 2014 by Venezuelan Institute of Data Analysis (IVAD) shows an erosion in the public approval rating of President Maduro though the think tank and polling firm Hinterlaces maintains that the opposition is in no better shape with regard to public confidence. In terms of the mood of the electorate, Venezuelan journalist Eleazar Díaz Rangel argues that the shortages could provoke apathy among voters and therefore influence the outcome of the upcoming parliamentary elections. He urges that Maduro needs more effective “political communication and to execute what he promises.”

To be sure, there are indeed signs of some dissatisfaction with the government response to the shortages even in the popular barrios. But this does not necessarily translate into widespread disaffection. Those who are prepared to write the obituary on Chavismo will probably join their like-minded predecessors of the last fifteen years in underestimating the driving force behind the Bolivarian revolution: the millions of formerly excluded constituents, now protagonists in a politics of liberation, who will not easily succumb to military, economic, or parliamentary coups, the success of which they reasonably suspect would once again relegate them to the margins of social and economic life.

2. Historical Precedents

2.1 Venezuela Compared to Chile in 1973

The situation on the ground today in Venezuela, in particular the shortages of basic goods, is in some respects analogous to the the conditions leading up to the 1973 coup against the democratically elected socialist government of Salvador Allende in Chile. A major tactic of the right-wing Chilean opposition and the Nixon administration was to “make the economy scream” by provoking food shortages, a truckers strike, and mayhem in the streets. Researcher Peter Kornbluh, in The Pinochet File: A Declassified Dossier on Atrocity and Accountability, summarizes declassified cables that indicate in the days preceding the overthrow of Allende a terrorist paramilitary group and a “large segment” of the business community were “undertaking actions to increase discontent and incidents of violence…in order to create an atmosphere in Chile which would be propitious for a military coup” (2003, p 91).

A similar game plan was played out, albeit unsuccessfully, during the short lived coup against Chávez in April 2002. In the months leading up to the coup there was a fall in oil prices, an economic slowdown, growing resentment within the PDVSA management over government interventions, and some erosion in Chávez’s approval ratings. A general strike called by the anti-government Federation of Venezuelan Workers (CTV) and the Venezuelan Federation of Chambers of Commerce (fedecámaras) on December 10, 2002 met with what Wilpert calls “moderate success” (2007, p. 23). The fedecámaras–Media–Military coup went into action on April 11 and by the afternoon of April 12 the most extreme elements within the golpista camp exhibited their brand of democracy. Political analyst Fernando Coronil describes the scene inside Miraflores Palace that day:

“Pedro Carmona [then head of fedecámaras] proclaimed himself provisional president in the name of the law of Chávez’s constitution. Immediately afterwards he named some members of his cabinet, summarily dismissed the National Assembly, the state governors, and municipal leaders (all of them democratically elected), disbanded the Supreme Court, and fired the Attorney General and the People’s Defender.” (2011, p. 49)

No sooner had this regime been sworn-in amidst a great deal of celebration and fanfare by the golpistas than the coup began to unravel.

The situation on the ground today in Venezuela, especially the shortages of basic goods, is reminiscent of the U.S.–backed coup that toppled the democratically elected government of Salvador Allende. That coup succeeded and Chile was subjected to a decade and a half of brutal rule by the Pinochet dictatorship. By contrast, the short-lived coup of April 2002 against Chávez, once again supported by a U.S.–backed opposition, was derailed by an enormous show of popular power and by the loyalty of a majority of army and security forces. This reversal of a military coup was unprecedented in Latin America and it came as a great surprise to the Venezuelan golpistas. Since that time a persistent slogan of Chavismo has been that “for every April 11 there will be an April 13.” On January 17, 2015, Maduro urged: “In the face of this 11th of April in process, in the arena of economic sabotage, we need to wage an economic 13th of April….”

2.2 The Oil Strike of December 2002 to March 2003

The short lived 2002 coup against Chávez removed the military option from the arsenal of the counter revolution. Just months later, the same opposition groups launched an attempt at an economic coup against the Bolivarian government. Chávez had issued 49 laws by decree, a temporary power (the enabling law) granted by the National Assembly. Some of these laws, in particular those relating to land reform and oil industry policy, did not sit well with landowners and PDVSA. With the possibility of privatizing the state owned oil industry foreclosed by the 1999 Constitution, Chávez sought to ensure that a substantial part of oil revenue would be directed towards social investment (referred to often as by Bolivarians as “paying the social debt”), but he was up against an entrenched group of oil executives that coveted their independence.

PDVSA management argued that Chávez was seeking to politicize PDVSA and undermine what it took to be a “meritocracy”. According to Gregory Wilpert’s history of the period, the company was unwilling “to go along with the government’s plans to increase taxes on the oil industry, to reduce costs, to increase transparency in its international operations, and to appoint a pro-Chávez board of directors.” Wilpert observes that this conflict came to a head during the April 2002 coup attempt “when PDVSA managers actively supported the coup by shutting down one of Venezuela’s main refineries during that crisis…” (p. 95). After a brief period of what Wilpert calls a “retreat” by Chávez in the aftermath of the coup, the opposition called for a “general strike” which led to “a combination of management lockout (of the oil industry), administrative and professional employee strike, and general sabotage of the oil industry” (25). It is important to note that in addition to placing a stranglehold on the country’s main source of export revenue, there were “food and gas shortages throughout Venezuela, mostly because many distribution centers were closed down” (25). In a move that brought most harm to the poor and working class, gasoline and food were being used as a political weapon against the Bolivarian project.

Richard Gott’s history of the Bolivarian revolution draws attention to the impact of deliberate food shortages during the oil strike: “The mass of the population bore the food shortages with equanimity. They tolerated the electricity blackouts, the oil scarcity, and the transport failures” (2011, p. 251). Historian Bart Jones (2007) also describes the scene and Chávez’s decisive actions at the time:

“The situation was desperate. Gasoline supplies were dwindling, and service stations were closed. So Chávez did something else previously unthinkable in a nation with some of the world’s largest oil reserves – he imported gasoline. He contacted Brazil, Trinidad and Tobago, Mexico, Russia and other countries to ask them to send what they could. When basic foods grew scarce, he cobbled together another informal supply network, persuading Colombia The Dominican Republic, and others to send rice, flour, milk, meat and other products.” (p. 378)

After weeks of an industry lockout and acts of sabotage against PDVSA infrastructure Chávez went on the offensive, using troops to stop the hoarding of food and to keep schools and banks open (254). The opposition attempt to cripple the oil industry did not sit well with the military, who were called in to secure the facilities. The management of PDVSA was replaced and an overall 18,000 (almost half the workforce) lost their jobs.

The oil lockout and the subsequent government takeover of the management of PDVSA struck a great blow against the economic power of the oligarchy. As George Ciccariello-Maher points out in We Created Chávez, A People’s History of the Venezuelan Revolution:

“If the reversed coup marked the political destruction of the anti-Chávez opposition, then the defeat of the oil lockout effectively crushed the opposition’s economic power, wresting the national oil company PDVSA–often referred to as a ‘state within a state’ as a result of its de facto autonomy–from their greedy hands to be put instead into the service of the Revolution.” (2013, p. 181)

Ciccariello-Maher also documents, through interviews with activists who resisted the oil strike, that pro-Chavista workers played a role in taking back control of the oil installations from striking managers and workers (p. 182). Another account by a PDVSA insider, former PDVSA president (2004 – 2014) and currently Venezuela’s ambassador the the United Nations, Rafael Ramírez, supports this view:

“In the petroleum industry something very interesting happened. Being a vertical organization the workers knew who had given the instruction to bring the industry to a hault. So just as on April 13, the patriotic soldiers and officials rebelled against the senior military officials. The patriotic workers and managers rejected the indications of their bosses who were committed to sabotage. The petroleum meritocracy was very arrogant and demeaning towards the people [pueblo].” (German Sanchez, 2012, p. 283)

It is important to note that popular power ensured the return of the democratically elected government of Chávez to power in 2002 and defended the government again during the oil strike in 2002-2003. These events occurred prior to the implementation of the social missions later in 2003. These are the social programs that have done so much to reduce economic inequality in the country, alleviate poverty and increase access to education, healthcare, and housing for millions of formerly excluded Venezuelans. It appears that the popular sectors had cast their lot, despite the trappings of economic and psychological warfare, for staying the Bolivarian course rather than opting for a restoration of the neoliberal regime.

The damage wrought by an attempt at an economic coup by crippling the oil industry was devastating. According to Jones (2007) “Production plummeted to as little as 150,000 barrels a day, compared with normal output of 3 million a day. Exports typically averaging 2.5 million barrels a day dropped to next to nothing” (p. 379). Furthermore, Jones writes that “the economy nearly collapsed, contracting by 27 percent in the first fourth months of 2003” (p. 386).Jones puts the total cost to the oil industry of the lockout at $13.3 billion USD (2007, p. 386). Economist Alfredo Serrano Mancilla indicates that by the end of the strike unemployment shot up to 20.7 percent and about 700,000 jobs were lost. Many small and medium size businesses went bust because they depended for their supplies on businesses under the umbrella of the opposition Fedecámaras. Poverty reduction that had been underway since 1998 suffered a reversal that could not be effectively remedied until the implementation of the missions established in the aftermath of the oil strike in 2003 (pp. 308-310).

After the oil strike, the opposition regrouped and within months Chávez faced a recall referendum in which he won a resounding victory. On August 15, 2004, 5,800,600 (59.25 percent) voted for Chávez and 3,989,000 (40.74 percent) voted for recall. So in just a three year period, the Bolivarian revolution faced down a military coup, an economic coup and constitutional referendum by an opposition that sought regime change even this meant resorting to extra constitutional means. As a result, argues Ciccariello-Maher, the revolution only became more radicalized and determined.

Note: Translations by the authors are unofficial.

See: Revolution, Counter Revolution, and the Economic War in Venezuela: Part II