Breaking Imperial Ties: Venezuela and ALBA

Why does Venezuela bother the world’s most powerful nation? First, it is one of the top suppliers of oil in the world, when the US faces a crisis of rising oil imports. Second, Venezuela is the first country since Cuba to have broken the neoliberal model in Latin America.

In late 2005, while war raged in the Middle East and oil prices rose drastically, governments and oil companies repeated the “market forces” mantra, saying there was nothing they could do about oil prices. However, the Venezuelan government-owned US-based petrol distribution company Citgo (with eight refineries and 14,000 petrol stations across the US) decided to discount up to 10% of its US sales, so that poor families in cold-weather US states could have access to heating oil over the northern winter. Citgo sold over 40 million gallons of oil to 150,000 poor US households at a 40% discount.

This created a reaction. The Republican chair of the House Committee on Energy and Commerce, Texan Joe Barton, wants Citgo examined for possible breaches of anti-trust law. Michael Heath, of the Christian Civic League, claimed Venezuela’s left-wing President Hugo Chavez is “a brutal Marxist dictator … [who is] trying to split our nation”, and the American Family Association has launched a boycott of Citgo because it believes Chavez “has vowed to bring down our government”.

No Latin American government has ever attempted to bring down the US government, nor have any of them backed military coups, corporate leverage, sabotage, intervention in elections, death squads, assassinations or terrorist bombings in the US. The reverse, however, has been routine for more than a century.

The US government backed the failed coup against Chavez in 2002 and recently called for a regional front to oppose Chavez. It funds opposition parties in Venezuela. US President George Bush, in his 2007 budget, called for enhanced Voice of America propaganda broadcasts to Venezuela.

Why does Venezuela bother the world’s most powerful nation? First, it is one of the top suppliers of oil in the world, when the US faces a crisis of rising oil imports. Second, Venezuela is the first country since Cuba to have broken the neoliberal model in Latin America. The influence of the Venezuelan example is spreading, through its influence on social and political movements and through the growth of agreements aimed at a new form of economic integration between Latin American nations.

Changes within Venezuela

Chavez came to power following popular reactions to two decades of neoliberal privatisation, social exclusion and corruption. A former military officer who led a failed coup in 1992, he launched a popular movement outside the traditional parties and won the 1998 presidential election.

This movement, known as the Bolivarian revolution, has developed into a highly participatory and openly socialist project. While there have been no major nationalisations (other than wresting back government control of the state-owned oil company), government surplus has been directed into mass programs of education, health, housing and public investment, rather than subsidies to the corporate and privileged sectors. This created a sharp political polarisation, with almost all the major media and investment corporations opposing Chavez, along with much of the middle class. However, the majority of the Venezuelan population is poor. In 1998, Venezuela’s inequality was one of the starkest in the world, with the income of the richest 10% 62 times that of the poorest 10%.

Support from the poor majority is one factor of several we must recognise when judging how Chavez and the Bolivarian revolution have survived and moved ahead. Second is the dynamism of the government’s participatory initiatives and movement building; third is the immediate goal of institutional change (a constituent assembly, followed by a new constitution in 1999, and reform of the trade union movement and the military); and fourth is the revolutionary legacy of Latin American independence struggles, which stressed anti-imperialism, solidarity and national autonomy. Cuba has been an important influence.

Advancing the revolution’s ideals has been a difficult process. Venezuela’s population is highly urbanised, with massive levels of poor housing, a reactionary media and a state bureaucracy controlled by the old elites. These elites gained the support of the US for the 2002 coup attempt. This failed because of support for Chavez from masses of people and important sections of the army. However the turmoil of this coup and a subsequent oil lockout triggered a substantial recession over 2002-03.

Strong economic growth in 2004-05, however, has opened up new possibilities for the revolution. An average 13% growth over these two years (a quarter of which was due to rising petrol prices) has given the government the means to pursue social programs and create new public economic institutions. The democratic nature of the revolution has also been consolidated in a series of elections that have marginalised the opposition.

Frustrated with non-cooperation from the bureaucracy in the pro-poor social programs, the government created a series of “missions” outside the normal departments, to fast-track new programs. Cuban professionals are playing an important role in supporting the health and education missions.

Missions Robinson, Ribas and Sucre have set up primary, secondary and tertiary education systems, parallel to the schools and colleges. Illiteracy was the first target, but the increase in secondary enrolment (19% in 1992, but 59% in 2003) is most dramatic. These missions have added 3 million students to Venezuela’s education system, while the schools have also increased enrolments by half a million since 1998.

Very low-interest loans are being made available to small farmers (and almost 3 million hectares of land has been given to 70,000 poor families), subsidies are being used for the development of cooperatives, and there is substantial employment being generated in local government programs. Apart from housing construction programs, the government has been hearing squatter claims over the occupation of unused buildings. There is a right to housing in the 1999 constitution, and programs seek to resolve the gap between promise and reality.

Mission Mercal has set up a parallel chain of supermarkets, providing basic foods at cheap rates. Most poor families and even 28% of higher-income families now use Mercal, which accounts for 45% of rice, 38% of pasta and 22% of maize flour sales in the country. Private retailers have complained of “unfair” competition from this cost-recovery operation.

Indigenous rights are defended in the new constitution, and the Chavez government has been handing back land titles to indigenous communities. However there is still controversy over some mining developments in natural and indigenous heritage areas.

One of the most remarkable achievements of Venezuelan politics has been the communication between Chavez and the population “over the heads” of the corporate media. Ninety per cent of the newspapers and all the private television stations are against the Chavez government, declaring themselves the “voice of the opposition”.

But the structure of the media is changing. Before 1998 the corporate media had substantial support from the government. More than 60% of newspaper advertising, for example, came from official sources. After they declared their political position, these papers received no government money. This change led to major restructuring and lay-offs, and the maintenance of some media as loss making propaganda arms of the corporate sector. Also, the government has supported some left papers (e.g. Diario VEA), has helped fund new TV channels and has set up a public news agency (ABN). The media war seems to be slowly turning the government’s way.

Academic estimates of combined poverty and extreme poverty by the mid-1990s range from 49% to 84%. In the Chavez period, figures from the National Institute of Statistics demonstrate that poverty fell steadily from 1998 to 2001, rose again during the coup-linked recession of 2002-03, then fell again with the strong growth and renewed social programs of 2004-05. By the end of 2005, unemployment had fallen below 10% (it was 15% in 1999), there was steady progress in extending improved water and sanitation to households, and a new mission (Negra Hipolita) had been started to coordinate support for the poorest families.

With oil revenue and strong economic growth, Venezuela has foreign reserves of more than US$30 billion. It is therefore in a strong position to help build new relationships with other countries in the region.

The ALBA agreements

Venezuela has promoted a model of Latin American economic integration that it refers to as the Bolivarian Alternative for the Americas (ALBA), which is directly counterposed to the US-pushed neoliberal Free Trade Area of the Americas (FTAA). ALBA represents a challenge to the imperial domination of trade and investment in the Americas. These heterodox trade and integration agreements between six Latin American countries (Venezuela, Cuba, Argentina, Uruguay, Brazil and Bolivia) also represent the most practical alternative to relationships generated by the neoliberal model. Because Venezuela and Cuba are currently leading ALBA, there is a preference for shared institutions and public (or joint venture) investment. In other words, there is a socialist tendency.

The Cuba-Venezuela agreements, formalised in late 2004, give the best view of what this alternative could mean. The two countries agreed that ALBA relationships would be based on principles of “just and sustainable development”, “special and differential treatment”, guaranteed access to benefits, “cooperation and solidarity”, “energy integration” between countries, more regional investment and reduced reliance on foreign investment, a special emergency fund, measures to protect the natural environment, and defence of Latin American, Caribbean and indigenous cultures. They also agreed to support a continental anti-imperialist television station (Telesur) as an alternative voice to present “our realities”.

The practical aspects of the Cuba-Venezuela agreements comprise elements of barter exchange, liberalisation and integration with a socialist flavour. The exchanges reflect Cuba’s strength in human resources and Venezuela’s oil and oil refinery capacity. Cuba gives Venezuela a minimum of 15,000 health professionals, 2000 general tertiary scholarships and additional uncapped medical scholarships over ten years. In return, Venezuela gives Cuba oil at a preferential price (a minimum of $27 a barrel plus agreed market premiums), transfer of energy sector technology and finance for infrastructure and energy projects. There is also an exchange of multi-destination tourist products.

Both countries agree to treat each other’s publicly-owned planes and ships as if they were their own, in terms of servicing and maintenance. They agree to drop all bilateral tariffs and trade barriers, to give preference to investments from “state and joint venture” operations in the other country and to share sports facilities.

Collaboration has been extended to aid projects, such as the Cuban-run Operation Miracle, which provided more than 200,000 free eye operations in 2005 for those with curable blindness in Latin America and the Caribbean. In Venezuela, the government transports the patient, along with one companion, to Cuba for the operation.

Two other ALBA-type regional agreements initiated by the Chavez government are Petrosur and Petrocaribe. For much of the former and all of the latter, Venezuela has agreed to provide fuel at a 40% discount rate.* Petrosur, as it affects Argentina (a more wealthy country), involves technology exchange and the Argentine supply to Venezuela of ship-building services. A Latin America-wide public bank, Bancosur, is to join Petrosur and Telesur as a new continental institution, while Cuba’s Henry Reeve Brigade has been set up (after Hurricane Katrina) to provide rapid response emergency medical assistance after disasters. The US did not accept the offer, but the brigade has been accepted with gratitude by Guatemala and Pakistan.

Venezuela has developed ALBA agreements with Argentina and Uruguay, and is involved with ALBA-type agreements with Brazil. The nine integration and cooperation agreements signed between Venezuela and Argentina, in January-February 2005, commit the two countries to Telesur, technical cooperation over oil, health, hospitals, health sciences and social sciences, and to exchanging ship-building facilities for oil preferences. New agreements that Cuba and Venezuela have made with Bolivia appear mainly as forms of aid, to help Bolivia with health and education, along with supplies of fuel (200,000 barrels per month) and technical assistance to develop its own oil and gas reserves. At a later stage, Chavez says, Bolivia can provide in exchange its soy products and meat.

The ALBA agreements provide new models of aid, south-south trade, cooperation and symmetrical integration, and back the claims of Chavez that the FTAA is ”dead and buried’‘. The FTAA was proposed by then-US President Bill Clinton in the mid-1990s, as a US-dollar denominated “free trade” zone from Alaska to Tierra del Fuego. It was Washington’s attempt to counter the rising economic power of a united Europe, with the North American Free Trade Agreement (NAFTA) as its precursor. It was also a hedge against anticipated failures in the World Trade Organisation process.

The US has such agreements with Mexico and Chile, and a provisional agreement with the Central American group of countries; but most of Latin America was not impressed. Even important US allies (Mexico, Colombia and El Salvador) joined the dissent at the 2003 WTO talks, rejecting new agricultural and investor rights proposals.

In this context, the “south-south” ALBA agreements have filled a gap. As Chavez puts it, Latin America needs integration, but not the type of integration suggested by neoliberal globalisation. It must be “liberating integration, not integration through neocolonialism and neo-dependency … [We must have] integration for freedom and equality.”

Complaints about “economic injustice” now form part of the neoliberal attack on ALBA. While US oil companies complain of the “unfairness” of subsidised/lower-profit Citgo oil, private supermarkets in Venezuela complain of the unfairness of subsidised/lower-profit sales of basic goods by the state-owned Mercal chain. This is the root of US attempts to destabilise Venezuela — a genuine contest between socioeconomic models, and of different views of regional integration.

From Green Left Weekly, March 29, 2006.

* Editor’s note: Neither Petrocaribe nor Petrosur involve discounts on oil sales. Rather, a portion of the oil sales may be financed at low interest rates of 1% and 2%.

Source: Green Left Weekly