Venezuela: From Nationalisation to Privatisation

Leander Perez looks at how Maduro’s government is backtracking on Chavez’s nationalisation policy.


During Hugo Chavez’s presidency, important nationalisations took place in Venezuela in various sectors of the economy. Several of the companies had previously been privatised by the neoliberal governments of Carlos Andres Pérez [1974-79 and ‘89-93] and Rafael Caldera [1969-74 and ‘94-99].

Today, Nicolas Maduro’s government is carrying out new processes of economic liberalisation and privatisation, which are closer to the policies of the nineties than to those of Chavez’s governments.

Paralysed company is a nationalised company

FEDECAMARAS [Venezuela’s business chamber] played a leading role in both the 2002 coup d’état and the 2003 oil lockout, straining its already difficult relationship with Chavez. In turn, these events radicalised the masses and specifically the workers, who in some cases began to occupy factories against the lockout.

Under the slogan “A paralysed company is a nationalised company,” workers from VENEPAL [paper factory] and INVEPAL [valve factory] occupied their respective workplaces in 2003 and demanded that the government expropriate them. On January 19, 2005, the forced acquisition of VENEPAL’s assets was published in the official gazette, and on April 27 of the same year that of INVEPAL. This kick-started a period known for its nationalisations and the struggle for worker control.

Few nationalisation processes were carried out without struggle. In the case of SIDOR [metal works factory], the fight began when the Argentine group Techint (the company’s main shareholder) refused to make concessions to workers in the collective contract discussions. The workers then raised the flag of nationalisation and began a process of staggered strikes.

The nationalisation of SIDOR (2008) went through different stages. First, the government received pressure from the Argentine government, so it tried to reach an agreement with the company. The labour ministry then tried to unsuccessfully arbitrate between workers and the company to seek a solution to the labour dispute. Finally, the Bolivarian National Guard was sent in to use force to try to defeat the workers’ strikes. The workers resisted the repression until nationalisation was achieved.

Nationalisation of strategic sectors

Prior to the SIDOR nationalisation, the government had already nationalised other strategic companies.

In February 2007, the executive bought 82.14 percent of Electricidad de Caracas’ [power company] shares for US $739 million and all of the shares of SENECA [Nueva Esparta state power company] for US $105.5 million. Then, in May, the government declared the renationalisation of the telecommunications company CANTV after acquiring 79.62 percent of the company’s shares worth US$1.3 billion, raising its share capital to 86.21 percent.

The oil sector, always a priority, was also the subject of nationalisations during Chavez’s rule. In 2007, the president signed Decree 5200, establishing a minimum 60 percent state share in joint ventures of the Orinoco Oil Belt. Service companies linked to oil activities were also nationalised, moving their workers to the payroll of [state oil corporation] PDVSA and leaving the company in charge of all operations in the oil fields.

Another strategic area in which nationalisations were carried out was banking, with the purchase of the Bank of Venezuela (2009) from the Santander Group for US $1.05 billion. This operation, which was joined by other smaller nationalisations and mergers of banks, would allow the government to create large public banking corporations.

Nationalisation of monopolies

Nationalisations also served to confront production and distribution monopolies and cartels (mainly) of food, which were setting prices or hiding the products from the shelves due to their privileged position in the market.

In 2008, the government nationalised Lacteos los Andes, a company involved in the organised shortages of dairy products. The shift to state hands also involved the creation of new production lines that worked with typical fruits and inputs, making guava, mango, or lemon juices rather than pear and apple that depended on the import of raw materials.

Cafe Madrid and Fama de America [coffee corporations], which controlled more than 70 percent of the coffee production and distribution market, were nationalised a year later. The first, through the purchase of most shares by the executive and the second through an expropriation decree. The same thing happened with several sugar plants.

But food processing was not the only problem, upstream was agricultural production and downstream was the problem of distribution, both also controlled by oligopolies.

For this reason, Chavez ordered the expropriation of the supermarket chain Exito in 2010, and soon after would accept the proposal of the French Casino group to buy 80 percent of the shares of Cativen, owner of the Exito and CADA supermarkets. This would allow the State to create the Abastos Bicentenario supermarket chain, which, together with [state-run food programs] PDVAL and MERCAL, created a large food distribution network. Also in 2010, the company Agroisleña, the main distributor of products for the field (seeds, fertilizers, etc.) was nationalised in order to offer farmers more favourable conditions for production.

Evaluation of the process

Taking stock of the entire nationalisation process is a complex task, especially since it was not uniform. However, there are several aspects that should be highlighted. First and most importantly is that it was a worker-driven process. Secondly, the process took place on the margins of Venezuelan capitalism, and that, far from what Chavez’s detractors point out, meant juicy gains for capitalists in many cases.

In the case of the Bank of Venezuela, for example, the executive paid US $1 billion to the Santander Group, which in 1996 had bought the bank for US $300 million, and which in 2007 alone made US $325.3 million in profits. There were other cases where the government nationalised companies with out-dated machinery or on the brink of obsolescence due to a lack of private sector investment in fixed capital. All this suggests that on more than one occasion the executive’s negotiating teams turned out to be fools in the service of foreign capital, or avid attorneys for their pockets.

Paradigm shift

In early October 2020, [journalist] Vladimir Villegas asked Elias Jaua how Maduro follows Chavez’s legacy and how he does not. Jaua, who was not only a minister during Chavez’s governments but also under Maduro, noted that the current government differed from Chavez’s because of its conception of state property.

Another central issue where a differentiation is emerging is on the issue of national property, of public property. I believe that in President Maduro’s government there is a tendency to prioritise the private sector in the control of the means of production, even those that are state-owned, while Chavez was an absolute advocate of public property, of national property. He did not ignore the private sector, but he prioritised the defence and expansion of public property or social, cooperative, communal, family property, etc. The government of President Nicolas Maduro is more oriented towards strengthening the private sector.

Later, he noted that there is currently an “orientation towards the transfer of the nation’s assets, in one way or another, to the private sector”.

One way or another

Carrying out this Strike at the Helm [internal policy shift] towards privatisation has not been so easy for the government. It probably wanted to move faster.

The main obstacle is the existing legal framework, built in the late 1990s precisely to deal with privatisations. The government had to look for legal loopholes to act, and when it did not find them, it used the all-powerful National Constituent Assembly to land a blow to the constitution.

One of these legal reforms has been the New Associates Act (2012) which contemplates strategic alliances as an agreement between “a private or community enterprise and the state for the purpose of sharing productive processes, either in the same activity or in associated chains.” The government has interpreted this act as a mechanism to hand over the control and administration of public enterprises to the private sector.

The research web portal La Tabla, through its Twitter account, has been sharing information on some of these privatisation processes through strategic alliances. On November 28, 2020, it reported:

These are some state-owned companies subject to transfer processes to the private sector, according to data obtained this week.

  • Agropatria to Agrollano 2910 Group

  • Lacteos Los Andes to a company of Iranian origin (more details to come)

  • Pío Tamayo Sugar Plant, Morán municipality, Lara [state], to Consorcio VEINCA

  • Rio Guanare Sugar Plant to Aliceole

  • Waraira Repano Cable Car #Operadora1956 of the Hotel Humboldt

Other companies undergoing similar processes are the Turén Balanced and Concentrated Food Plant, which passed into AgroInlaca’s hands in 2015; the Barinas Pig Complex, delivered to the JHS Group in 2017; Abastos Bicentenario delivered to Salva Foods in 2018; and ALBA Rice ceded to AgroInlaca in 2019.

The creation of joint ventures from the merger of foreign capital with existing state-owned enterprises, or the change in the shareholding composition of such enterprises, has also been a method used for de-facto privatisation.

In the case of alliances with China, the shift of Ferrominera del Orinoco [mining consortium] into a joint venture stands out among the latest agreements, expanding the share of Chinese capital from 9.9 percent to 49.9 percent. Likewise, agreements on gas extraction with the China National Gas Exploitation Corporation, gold mining with the Yankuang Group and iron mining with the Railway Engineering Corporation, as well as agreements for the extraction and processing of coltan among others, have figured.

Government partners have also benefited from the alliance with Turkey, and have used it to establish capital and then partner with Venezuelan companies. Glenmore Proje Insaat, S.A. has been one of the most benefited firms, establishing a partnership with Carbones del Zulia [coal producer] in 2018, now Carbones Turquía-Venezuela, in which it has 45 percent of the shares. Another was with Maderas del Orinoco [wood firm] in 2019, now called Maderas de Venezuela y Turquía (Mavetur), with 49 percent. For its part, the Marilyns Proje Yatirim, S.A. company created a company with the state mining company Minerven in 2018 for the exploitation of gold called Sociedad Anónima Minería Binacional Turquía – Venezuela, with 45 percent of the share capital.

The violent way

Privatisations, far from being idyllic, are violent processes in which capitalists and the government have to overcome worker resistance on multiple occasions denouncing corruption, intentional bankruptcy and the intention to privatise.

In the case of Abastos Bicentenario, the state’s main food distribution chain, the company implemented a mass redundancy policy across the country before starting the privatisation process. By mid-2016, the company had already laid off more than 3,000 workers without regard to trade unions, maternity leaves or occupational illnesses. In some cases, up to 600 workers were laid off a day.

Other cases of mass layoffs include Maderas del Orinoco (a joint venture with Turkey), with more than 700 workers laid off in 2020, and the Pío Tamayo sugar plant (in strategic alliance with the VEINCA consortium) of which around 450 workers were laid off in the same year. In the latter case, public denouncement and popular mobilisation achieved a partial victory: privatisation was not reversed, workers were reassigned to their former job posts (2021).

For their part, in Cafe Fama de America y Lacteos los Andes workers denounced the intentional bankruptcy of the companies as a means to justify privatisation. In 2018, the trade union and the productive council of workers [workers’ organisation] of Fama de America noted that:

There is a plan to break the company. The near-zero supply of raw materials keeps workers with a monthly wage that does not meet basic food needs, while the company’s authorities state that raw material (coffee beans) are very expensive. Nonetheless, ground coffee from private companies in gourmet presentation is sold on the shelves. The orders for the transfer of raw coffee are given by the president of the Venezuelan Coffee Corporation José Alfredo Mora [also president of Fama de America and National Coffee Company formerly Café Madrid].

Also, in 2019, workers reported that despite partnerships with private companies and delivering ground coffee in Fama de America’s packaging, the fate of these products was not known and there was no impact on wages.

The workers of Lacteos Los Andes even held a protest at the Cabudare plant, Lara state (2018), bringing to the fore the bypassing of resources destined for the purchase of raw materials as part of a strategy to dismantle the company. In turn, the police arbitrarily arrested two key union leaders, Exion Urriola and Carlos Mora.

The strategic alliance with AgroInlaca (2019) also required the use of force. Ten communards spent more than 60 days detained for opposing the handing over of ALBA Rice (Portuguesa State) and demanding that social property be prioritised. The same method was used with students from the Livia Gouverneur Student Residence, who faced arrests and forced eviction (2020), after which private businesses opened their doors in areas originally intended for the popular economy.

However, where force has most been applied, mostly with impunity, is in the Venezuelan countryside (which requires a separate study), where according to the Peasant Struggle Platform, the process of eviction of campesinos and land privatisation has yielded 35 peasant prisoners, 75 persecuted and 370 killed since the adoption of the Land Law in 2001.

Anti-blockade law and upcoming struggles

The left has been the first to condemn the imperialist blockade and its devastating effects on the economy and especially on the population. However, the blockade does not justify the liberal measures taken, including privatisation, economic liberalisation and deregulating labour conditions.

An anti-blockade policy should nullify agreements against double taxation, allowing resources to be collected through fiscal methods for social programmes. Instead, not only are these agreements with imperialism maintained, but external debt is paid religiously, foreign oil companies are exempted from paying taxes, and legislation is passed to allow for further privatisation.

The Anti-Blockade Law is the most perfect expression of the Venezuelan government’s privatisation policy. Until its “express” approval in late 2020 without any discussion at the National Constituent Assembly, government partners had settled on being the administrators and regents of the companies that the executive had ceded to them through strategic alliances, or at best (for them), they improved their participation through joint ventures. With this law, private investors will now be able to take advantage not only of the profits of public companies, but become the owners as well.

Beyond the legislation’s stated purpose and the mention made to popular power in the text, the objective of the Anti-Blockade Law is to lift the legal implications for the handing over of the national industry to private, national and foreign capital. To this end, the law gives the executive the power to “un-enforce” rules of a legal or sublegal nature (art. 19) that prevent privatisations or changes in the shareholding of joint ventures, while making the formalities and negotiations for such processes state secrets (arts. 37-42). All this is a violation of the 1999 Constitution.

The trend towards the liberalisation and privatisation of the economy is clear, and it will continue to generate debate, but also resistance, within the left.

Privatisations affect people in different ways and generate diverse responses. On the one hand, there are the effects on the workers themselves: redundancies (before or after privatisation) and the potential arrests of those who oppose them. On the other hand, there are direct effects on the wider population, especially when it comes to service providers, including the dollarisation of telephone, gas, electricity or gasoline tariffs, thus generating popular mobilisations.

It is necessary to build a broad movement against privatisations that is capable of linking and organising diverse forms of resistance. The struggle for the re-employement of laid-off workers at the Pío Tamayo Sugar Plant sets an example. While this is only a partial victory, it shows that our enemies are not invincible. In that case, the return of workers to their posts builds confidence and prepares the next fight for wages.

Leander Perez holds degrees in Political Leadership and Government, as well as in Political and Public Management. He is a member of Homeland for All (PPT) party.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

Translation by Paul Dobson for Venezuelanalysis.