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Opinion and Analysis: Economy

“We Are In an Economic War,” Says Venezuelan President

“Make the economy scream,” wrote Henry Kissinger in a note to CIA forces involved in efforts to oust President Salvador Allende in Chile in the early 1970s. Later, economic sabotage overtook the South American nation, as workers went on strikes and business owners hiked prices, temporarily shut doors and caused mass inflation, creating an overall climate of instability that led to the 1973 coup d’état overthrowing Allende.

The same strategy was applied in Venezuela in 2002. A coup d’état that briefly succeeded, but then failed, was followed by an economic sabotage that shut down the oil industry and depleted the nation of basic consumer products, causing more than $20 billion USD in damages to the economy, but failing to remove Chavez from power. The business, labor, media and political groups backing the coup and the sabotage received direct funding and support from Washington and its agencies, including USAID, National Endowment for Democracy, International Republican Institute and the National Democratic Institute for International Affairs.

In 2007, they tried again, causing major product shortages nationwide, which spiked inflation, while at the same time taking protests to the streets and garnering international media attention that attempted to portray the Chavez government as dictatorial, repressive and in crisis.

Former US Secretary of State Lawrence Eagleburger, explained the US strategy and role at the time on Fox News, “[Chavez’s] ability to appeal to the Venezuelan people, only works so long as the populous of Venezuela sees some ability for a better standard of living. If at some point the economy really gets bad, Chavez’s popularity within the country will certainly decrease and it’s the one weapon we have against him to begin with and which we should be using, namely the economic tools of trying to make the economy even worse so that his appeal in the country and the region goes down.”

Eagleburger, also advisor to President George W. Bush at that time, went on to state that “Anything we can do to make their economy more difficult for them at this moment is a good thing, but let’s do it in ways that do not get us into direct conflict with Venezuela if we can get away with it.”

Sabotage

Shortly after Eagleburger’s statements, Venezuela’s economy plummeted. But the Chavez government’s swift nationalization of several industries and companies, along with firm legal action taken against those businesses hoarding products and illegally raising prices, saved the country from recession. The year 2007 in Venezuela was incredibly difficult, even toilet paper was hard to find, along with basic food staples like sugar, milk, flour and coffee. But it wasn’t because these products were lacking in the country. Discoveries were made of tons of products, hidden from consumers in warehouses belonging to national and transnational corporations. Other products were illegally transported across the border into Colombia and Panama for resale at higher prices.

During the past several years, the sabotage has continued in waves. Sometimes sugar is absent from supermarket shelves, causing panic, other times it’s milk, or corn flour, napkins or black beans. Then, mass quantities of these products are found in some container or warehouse belonging to a private corporation or overseen by a corrupt government official.

Just recently, 32 tons of decomposed food products, including oil, coffee, sugar, butter, rice, pasta, meat and milk, were discovered by Venezuela’s intelligence agency, Sebin, in 1,300 containers sitting in Port Cabello, on the north-central coast. The products were destined to be sold in the government subsidized markets, Mercal and Pdval, but corrupt officials had purposefully left them there to rot in order to provoke product shortages. Several government officials have already been detained and are under investigation for their role in this and other acts of corruption and sabotage in the food industry.

“War on corruption,” declared President Chavez on Wednesday, adding that “These are vices of the past, and we have discovered many public officials involved in corruption and will investigate and bring them to justice. No one is protected from corruption here, whoever falls, falls.” Chavez revealed that more than 30 public officials had already been tried and imprisoned for corruption in the food industry during the past few years.

Economic Warfare

In an event on Wednesday at a new socialist processing plant, Diana Oil, President Chavez responded to his private sector critics, diminishing their accusations. “They say Chavez is destroying the country, that the workers don’t have the capacity to manage companies and that worker-run production is a crazy idea. They say the government destroys all the companies we run.”

Chavez also called for a response to what he perceives as a “declared economic war” against the people and the Revolution. “I call on the true working class in Venezuela to battle in the economic war against the bourgeoisie,” he exclaimed, adding, “I was born for this battle. They have declared economic warfare against me and I call on all workers to join with me in the fight to take back our economy.”

The Venezuelan President had particular words for the owner of the nation’s largest food and beverage producer and distributor, Lorenzo Mendoza. One of the wealthiest men in Venezuela, and a Forbes billionaire, Mendoza runs Empresas Polar, which produces and distributes products such as Polar beer, PepsiCola and all kinds of juices, vinegars, sauces, ice creams, cereals, canned and frozen foods.

Chavez responded directly to Mendoza’s claims that the Venezuelan President is destroying the country, stating, “I accept your challenge. Let’s go. You with your millions and me with my morals. Let’s see who lasts longer, you with your Polar and your riches, or me with my people and the dignity of a revolutionary soldier.” Chavez also warned Mendoza that if his company continues to hoard products, speculate and violate price regulations, Empresas Polar could be nationalized.

“I’m not afraid to nationalize Polar, Mendoza, so be careful. The law is the law,” declared the Venezuelan head of state.

Polar has been one of the principal companies propelling product shortages in the country during the past few years, by hoarding the consumer goods in its hundreds of warehouses nationwide until enough panic and discontent has been generated in the country. Then the products are released at higher prices, violating financial regulations, causing inflation and attempting to cripple the economy.

But this week, President Chavez called on all sectors, private and public, to resist and combat this economic warfare. “We are working for the well being of everyone, even the upper classes and private businesses. You won’t be stable until the rest of the country is, so let’s work for that together.”

Despite the economic turmoil affecting Venezuela, unemployment rates have decreased over the past few years, and poverty has been reduced from 70% to 23% since 1999.

Source: Chavez Code