Caracas, March 3rd 2016 (venezuelanalysis.com) - Venezuela’s right-wing parliamentary majority, the Democratic Unity Roundtable (MUD), approved a Law for the Activation and Strengthening of National Production in first discussion this past Tuesday, inciting protest from the opposition socialist bloc.
According to the MUD coalition, the law seeks to put an end to the country’s “economic crisis” and promote Venezuela’s domestic industry over imports.
But United Socialist Party of Venezuela (PSUV) legislators and members of government have rallied against the proposed legislation, citing it as a veiled attempt to open up key state-owned industries to a private corporate takeover.
“The title sounds nice, but when you start to read the law, what the law sets out is the privatisation of land, basic industries, recovered (expropriated) state corporations and the flexibilisation of labour laws,” said PSUV legislator, Hector Rodriguez.
“Today the opposition is paying its debt to Conindustria (business federation), obeying its instructions,” he added.
The legislation is reported to have been championed by the conservative “Justice First” party, headed by former presidential candidate Henrique Capriles Radonski.
Its thirty-four different articles include initiatives such as a four year 30% tax break for new investments in national production, funnelling state-subsidised dollars to importers of raw materials and allowing those in receipt of state dollars to keep 100% of profits. The law would also allow producers to modify the prices of government regulated items such as flour and cooking oil on a two-monthly basis.
The most controversial aspects of the legislation, however, are its proposed changes to state-run enterprises and state expropriated “businesses, lands, services and production plants”.
If passed, the law would allow all state-businesses to be “reviewed” by a National Assembly commission and handed over to “third party management” if they were found to be “fully or partially unproductive” - as well as potentially sold on to the new management after a certain period of time.
Idle land expropriated by the government and granted to farming and indigenous communities would also be put at risk of privatisation under the law.
“They are attempting to take away land from the campesinos, from the indigenous… It’s absolutely illegal, immoral and unconstitutional,” stated Venezuelan President Nicolas Maduro, reacting to the law on national TV.
The legislation would mark a drastic change from the ruling Chavista government’s economic policy, which has increasingly sought to bring key industries, such as oil, gold mining and energy production, under state control over the past 17 years.
Maduro also informed viewers that the legislation would require the executive branch to pick up the tab on debts “accrued by private businesses” and called on Venezuelans to rebel against the legislation.
“Never before in history has it occurred to anybody to create a law obliging the government to recognise a group of private enterprises to whom the state is obliged to pay an external debt of I don’t know how many millions of dollars at the rate which they feel like,” he said.
The state is currently locked in a dispute with a number of transnational companies, which are alleged to have illicitly used subsidised government dollars for financial gain, as opposed to their intended purpose of bringing vital imports into the country.
According to the proposed law, state financial agencies must present a plan to renegotiate their debts to transnational importers within fifteen days of the law being passed– effectively siding with the companies over the national government in the ongoing dispute.
The executive and legislative branches of government have been at loggerheads since the right-wing MUD coalition was elected to parliament on December 6th on the back of a severe economic crisis.
Despite their victory, the new law could prove unpopular with Venezuelans, who are widely hostile to privatisation. The country’s foray into neoliberalism in the 1990s infamously led to economic ruin and significant social unrest.
A poll conducted at the end of January showed that 75% of Venezuelan citizens are still opposed to the privatisation of the majority of the country’s state corporations.