Monday, January 18, 2016

Venezuela: Behind the defeat of December 6, 2015


The following article is a harshly critical appraisal of the domestic economic record of Venezuela’s Bolivarian government, attributing its electoral defeat in the National Assembly election to what the authors consider a faulty model of development.

Published first in Inprecor, the article was republished in the Quebec on-line weekly Presse-toi à gauche, on which I have based my English translation. Although dated January 12, the article appears to have been written immediately after the December 6 election and before the meeting of the national Communal Parliament on December 15. (See the translator’s endnote 11, below.)

Patrick Guillaudat is a French anthropologist, trade unionist and specialist in Latin America. Pierre Mouterde is a sociologist and journalist, based in Quebec City. The two authors published in 2012 a book the title of which translates as “Hugo Chávez and the Bolivarian Revolution – Promises and challenges of a process of social change” (Montréal, M éditeur).

– Richard Fidler

* * *

Venezuela: Behind the defeat of December 6, 2015

by Patrick Guillaudat and Pierre Mouterde

On December 6, 2015 Venezuela underwent a profound political change. The opposition coalition, the Democratic Unity Roundtable (MUD), defeated the government led by President Nicolás Maduro in the parliamentary election. Of the 167 seats, the MUD took 109, with the support of another 3 seats reserved for the indigenous peoples, leaving 55 seats for the pro-government coalition grouped around the United Socialist Party (PSUV).

With this majority, the opposition can not only pass laws but can also make substantial changes to the functioning of institutions, such as appointing members of the National Electoral Council (CNE) or voting to depose ministers. With a total of 112 seats, a two-thirds majority, it can convene a Constituent Assembly.

The reactions in the western media are astonishing. Journalists usually paint the Chavista regime as a “dictatorship,” or accuse it of “muzzling the opposition.” Felipe González, the former Socialist prime minister in Spain, even went so far as to state, in September 2015, that the Venezuelan government was less respectful of human rights than Chile’s former dictator Pinochet! Such exaggerated statements, motivated by bias or hatred, have been common in every election and at each victory of the Bolivarian government.

So what happened on December 6, 2015? How is it that the entire media abruptly changed their position, calling the vote democratic? There had been no change in the institutions or in the way the election was organized. Just one detail: this time, the opposition won.

This second electoral defeat (the first was in a referendum to change the Constitution, on December 2, 2007) raises questions for all those who have followed the developments in what has been called the “Bolivarian revolution.” First, in its scope: the pro-PSUV coalition won only 41% of the votes. Second, by its political meaning: Maduro is not a Chávez, but he was simply pursuing the policies of his predecessor in past years. So it is necessary to take the time for a close look at the reasons for this defeat.

Unfortunately, most criticisms of Hugo Chávez’s record or that of his successor Maduro are either from the right, with the explicit objective of overthrowing the Bolivarian government, or from a section of the radical left that tends to draw a negative balance sheet of the Chávez years totally lacking in nuance. Some supporters of the government adopt the approach that was characteristic of them throughout the cold war, unconditionally supporting the government and demanding that people accept its actions uncritically.

A particularly stark example was provided by L’Humanité Dimanche, with its headline December 4: “Venezuela – The liberal opposition is preparing the way for a coup”; or on December 8: “Economic war saps Chavismo.” This reduces the economic war to sabotage of the economy by the opposition. Nowhere will you find any reflection about the government’s economic policy, the petroleum rent economy, the corruption and the development of the “bolibourgeoisie,” or about questions of participative democracy and its limits. Yet even within the PSUV and among its “fellow travellers,” many voices are being raised, as they have in the past, questioning the government’s orientation and the drift that has ensued.

Some worrisome signs were accumulating

The Right’s victory does not come out of nowhere. Even before Hugo Chávez’s last election victory, in October 2012, some worrisome signs were accumulating, if only in terms of the standstill in social reforms[1] that had helped to improve the living conditions of the majority of the population. While poverty levels dropped substantially between 1999 and 2007, the official statistics of Venezuela’s Central Bank (BCV) confirm a stop to this trend since then.

True, the unemployment level has stabilized, but inflation has flared up, going from 28.2%[2] in 2010 to 62.2% in 2014 and most probably in excess of 80% in 2015. This inflation affects primarily staple products; the prices of food and non-alcoholic beverages increased by 86.7% in 2014.

Insecurity, one of the main concerns of the population, particularly in the working-class neighborhoods of the major cities, has increased dramatically despite the creation of the Bolivarian National Police force, which was supposed to provide a solution to this problem through bypassing the corruption of the national, local and state police.

Not all of these setbacks can be attributed solely to the economic sabotage organized by the bourgeoisie and the political Right. The sabotage is real, but there are two questions that merit consideration. First, in 2002-03, after the right-wing coup and the oil strike, the government was able to surmount the crisis by launching a series of social initiatives and mobilizing the people, so why has it been unable to do so for the last seven years? Second, while the government talks about a permanent deepening of socialism, why has the bourgeoisie now apparently become stronger?

The answers to these two questions are found in the model of development adopted by Chavismo since 1999, and in the question of the population’s participation in a process of building socialism — whatever one’s opinion on the actual regime resulting from the Constitution of 1999.

Lack of an alternative economic model

The Venezuelan bourgeoisie is obviously doing whatever it can to reinforce the shortages, increase smuggling and disorganize production. It can do this all the easier because 17 years after Chávez’s first election it still holds most of the economic power. However, many voices have been raised, even within the PSUV and the government, warning the political leadership about this situation. When we know that in 2014, two-thirds of Venezuela’s GDP are produced by the private sector, the same proportion as in 1998,[3] there is cause to wonder. Meanwhile, the petroleum rent, which was generally applied to develop the social programs, was not used to modify, modernize and expand the productive system. Instead, it served to enrich the “bolibourgeoisie,” and at the expense of the environment and health of the workers in the hydrocarbons sector.

This is what explains, to a considerable degree, the bourgeoisie’s nuisance capacities. Recall the effects of the 2008 financial crisis! In Venezuela, several banks were bankrupt and while a number of economists close to the government were insistent on the need to nationalize the banking sector and establish strict control of foreign currency flows, these proposals were not only rejected but the state used its own funds to bail out the failed banks and limited itself to installing partial exchange controls. Since then, the country’s monetary situation has continued to decline and the black market in currencies has exploded, particularly since March 2013. The exchange rate in the parallel market went from 50 bolivars to the dollar to 100 in October 2014, rose to 220 in March 2015 and soared to 816 on September 29, 2015.[4]

This choice to leave the economy as it is stems, for some people, from a policy illusion, that of developing a mixed economy that avoids confrontation with hard-line sectors of the bourgeoisie. But for others, it is something completely different. An initial study published September 8, 2014 by some economists linked to the left current of the PSUV, Marea Socialista,[5] and based on data from the accounts of the state-owned oil company PDVSA, proves that $259 billion in oil revenues were embezzled between 2004 and 2012, in three ways: financial speculation, corruption and flight of capital. A second study, published December 4, 2015, entitled “Autopsy of a collapse: What happened to Venezuela’s oil dollars?,” reports the difference between revenues recorded in the PDVSA accounts and those transferred to the government between 2004 and 2012 at $216,397 million.[6] Where did they go?

The monetary reform[7] favoured currency speculation and corruption but also fueled the staggering increase in the money supply, which pushed inflation to the point where it became preferable to stockpile commodities rather than put them on sale. The Central Bank acknowledges the increase in shortages of staple products, which it reported in March 2014 had risen by 29.4%.[8] This shortage is increased by the weakness of the country’s agricultural production, a large part of which is sold in Colombia, thus providing income for the big landowners. That was one of the reasons for the closing of the border between Venezuela and Colombia beginning August 22, 2015.

Venezuela is therefore going through a major economic crisis, behind which we can point to two fundamental causes.

The first lies in the economy’s dependency on the global market and international capitalism. The government has based its policy solely on the growth in resources produced by the sale of hydrocarbons on the world market. For some years the market price per barrel was at its highest, but in the last two years that price has been cut by a factor of 3, limiting by an equivalent amount the government’s room for maneuver. The government has sought to compensate for its losses from lower prices through a rapid increase in hydrocarbon production, primarily in the Orinoco delta, at the cost of the indigenous peoples and the environment. But parallel to this, the monetary crisis and the lack of development of the productive apparatus result in a contraction of the domestic market; the GDP declined by 4% in 2014.[9]

This rentist economy has been hit hard by the variations in raw materials prices. Economic policy makes the Venezuelan economy highly dependent. However, there have been periods in Latin American history when the rent from raw materials was used to strengthen the productive apparatus and in particular its industrial diversification; a prime example was during the period of so-called import substitution during the first half of the 20th century.

The second cause originates in the absence of any break with the logic of capitalism. From the outset, Chávez’s program was centered on a justified denunciation of the political system and its harmful consequences on the living conditions of the people of Venezuela. He was first elected to do away with the old, corrupt political elites and to inject a dose of participatory democracy into the traditional way of governing, and that is what the Constitution of 1999 did. But at the same time Chávez thought there was a huge social debt owing to the majority of the population, which was suffering the effects of the neoliberal policies and did not profit from the oil revenues. That was the justification for the initial social reforms, beginning with the Plan Bolívar 2000 and then the 49 measures taken in 2001 followed by the missions after 2002-03.

But the break with the old model of development was envisaged only on two levels. Firstly, by developing a mixed economy based on cooperatives, ostensibly to offset the weight of capitalist relations of production. This approach proved a failure, and was recognized as such by the responsible minister. Secondly, by trying to control abuses perpetrated by the bosses. The few nationalizations that were carried out under Chávez were “punitive.” They targeted industrialists caught in affairs of corruption, flight of capital or economic sabotage. There was no strategic plan for developing a public sector coordinated with an economic development plan.

In fact, one of the major reasons for the slowdown in the “Bolivarian revolution” is that some leading officials in the government are themselves actively participating in the corruption (through the management of firms and distribution of the petroleum rent) and have interests that diverge more and more from those of the Venezuelan people. This contradiction between, on the one hand, the government’s discourse on socialism and revolution, and on the other hand the concrete reality lived by broad sectors of the population paralyzes any effective political intervention against the strategies of tension mounted by the opposition.

No “popular” power without free debate

The Chavist rhetoric emphasizes the decisive importance of “popular power,” an expression of the advance toward socialism. And a number of laws have traced the contours of the institutional structures organizing this new power.

First, the Constitution itself from the outset provided for the existence of a power complementary to the governmental bodies, in particular through the idea of a participatory and protagonistic democracy. But it was the crisis of 2002-03 that really boosted the phenomenon. There were the missions, the committees for distribution of lands, etc., and the laws: on the Communal Councils, in 2006, on Popular Power, in 2009, and on the Communes, in 2011.[10] We shall not dwell in detail on their content. But it is worth noting that the multiplication of these laws did not fundamentally change the story, and the self-management claimed, for example, by some unions in firms such as Sidor or in the automobile industry is far from being the rule.

And that’s without mentioning the fact that the essential decisions governing economic orientation, choice of investments and political decisions, even those of greatest importance to the population, still continue to be taken within the governmental institutions. It is no accident that the communal councils have never been able to obtain the formation of a “National Assembly of Communal Councils” that would allow them to take coordinated decisions.[11]

In fact, it cannot be otherwise when the party in power does not tolerate internal debate. We recall in this connection the polemic that occurred in 2009 around a meeting of many Latin American intellectuals who were supportive of the Bolivarian process.[12] The few criticisms that came out of this meeting concerning the “hyper-power” of Chávez elicited reactions of unprecedented violence from some people close to the government, and Chávez had to intervene personally to calm things down.

This was in fact only the surface manifestation of a more profound conception that affects Venezuelan society as a whole, based on a rejection of debate that allows the promotion of persons whose primary quality is summed up in their absolute loyalty to power. Even at congresses of the PSUV, the party leadership exerts a strong influence in the initial selection of the delegates, and we find, in addition to the places reserved by right to the institutional leaders, delegates that for the most part are installed in state institutions. That is how the leadership provides all the guarantees necessary to avoid a possible internal challenge.

Similarly, during the discussion on the new labour law (a sort of Labour Code), the government did not hesitate to break the UNT, a militant union that was created to defend Chávez at the time of the confrontation of 2002-03 with the coalition linking the bosses, the right-wing opposition, the majority trade-union confederation (the CTV) and the United States. But the UNT’s refusal to be a simple relay for policy decisions led the government to put an end to it by creating the Bolivarian Socialist Workers Central (CBST), which functions as a cog in the Chavista political apparatus.

Then came the governmental crisis of 2014. Jorge Giordani, the minister of planning since 1999 (with a two-year interruption), published a document on June 18, 2014[13] warning the government about what he considered errors in economic orientation and the increasing corruption within the regime itself. He emphasized the lack of strategic planning aimed at building a public sector, as well as the lack of control over the banking system. And he denounced the financial measures that had established a three-level exchange rate, singling out the corruption this produced through the structures linked to foreign trade. Finally, he pointed to the risks related to all the unsupported expenditures made by the government and all the irregularities in the management of PDVSA and the BCV. Because he initiated the debate, albeit internally, Giordani was dismissed from the government by Maduro on June 17, the day before he released his letter.

This affair quickly snowballed. The former minister of education, Héctor Navarro,[14] announced his support for Giordani’s criticisms. He was suspended from the leadership of the PSUV, then expelled from the party. The former minister of the environment, Ana Elisa Osorio, resigned from the PSUV and joined the radical left organization Marea Socialista, as did Gustavo Márquez, a former minister of industry and trade, and later foreign trade, both of them adopting the criticism of the other former ministers.

Of course, these Chavista cadres had, throughout their period in the government, shared responsibility for the political and economic orientations that led to the present situation.[15] But their criticism expressed the crisis of confidence and the political crisis that was convulsing society. The December 6 defeat cannot be understood simply by attributing the blame to sabotage by the bosses. The election was organized by the government and it lost. Following the 2003 crisis all the elections were won by the Chavistas. What has changed is the living conditions of the Venezuelan people, which have deteriorated: wages falling behind inflation, recurrent shortages, a crime rate that is unabated, etc.

Solidarity with the Venezuelan people or with the government?

In the early Chávez years many social measures were adopted and they clearly improved the situation of the poorest. But since 2007, the process has ceased to advance.[16] The economic power of the bourgeoisie has generally been spared while the power of the “bolibourgeoisie” has exploded on the ruins of the national currency.

The tail-ending conformity of some people who are supportive of the process never ceases to astonish us. In November 2015 Romain Mingus,[17] normally more inspired, thought “Chavism can win” and explained that if it lost, the fault would lie in the sabotage organized by the USA, the right, and the “ultraleft,” including Marea Socialista,[18] depicting the Chavista regime as an omniscient government that did not have a chance. But who holds the governmental power?

In the same vein, the interpretation of Maduro’s defeat by L’Humanité comes close to the practices of another age, as when it was defending blow by blow the “overall positive record” of the former “socialist” countries. We might paraphrase Bertolt Brecht: Since the people voted against the government, “would it not be simpler if the government simply dissolved the people and elected another?” Unless we think, improbably, that the majority who voted for the opposition represent only the bourgeoisie....

What characterizes all of these interpretations? They defend a government and its policies more than they do the people itself. Have we forgotten what Marx was saying when he stated that “the emancipation of the workers must be the task of the workers themselves”? This raises a basic question that we find in all processes of revolutionary radicalization throughout the world. How can we build a society that is free of exploitation? While the debate has often occurred around the economic steps to be taken and the transfer of power within enterprises, it has remained quite limited in regard to the political organization of society. The proclaimed desire to build a socialism of the 21st century, to develop popular power, has clashed with the de facto confiscation of power — a confiscation conducted through the structures and institutions built on the model of the delegation of power. And without an alternative power being built parallel to that power. Who can reasonably claim that in Maduro’s Venezuela the economic orientations are adopted in the communal councils? Who can say that the basic political decisions are the work of those councils? It is no surprise that the people take their distance from the regime, insofar as they are experiencing a deteriorating economic and social situation while being bombarded every day with the message that they should place absolute trust in their leaders. Trust has to be earned.

The people brought Chávez back in 2002 in the wake of the coup because they were mobilized by the beginnings of change after decades of austerity politics. The economic crisis, the sabotage and the infiltrations of the CIA or Colombian paramilitary groups that followed did not prevent either the establishment of the missions or the election victories. There was then a real hope in the construction of another society. But with the passage of years the social movements were confronted with repression in the workplace. The indigenous movements, won to Chavism after the laws on the rights of the indigenous peoples, returned to the opposition in the wake of unkept promises. Parallel to this, the enrichment of the dignitaries of the regime proceeded apace. The right-wing opposition thrived on this and had no need of a coup; the electoral rejection was enough.

So yes, the bourgeoisie will do anything to keep its privileges, including the resort to violence. The surprising thing is that some people say the government lost because of that violence. If it is impossible to do better (since according to them the government policy is perfect) it amounts to saying that any progressive government will be powerless in the face of such violence.

We prefer to explain that solutions exist and they are found in the mobilized people, more than in the elites of the institutional circles. But again, it is necessary to defend the popular interests before those of the governing party. That is the main lesson that we can draw from the victory of the Right on December 6.

[1] See our article in Contretemps, April 2015, “16 ans après, où en sont les acquis sociaux de la révolution bolivarienne?

[2] Figures from the INE, the Venezuelan national statistics institute.

[3] Central Bank of Venezuela (BCV) data.

[4] BCV news release, September 30, 2015.

[5] Marea Socialista has since left the PSUV, forced out in part by the expulsion of many of its members and in part by its own political decision based on its observation of an accelerated rightist drift of the government.

[6]Autopsia de un colapso: ¿Qué pasó con los dólares petroleros de Venezuela?

[7] In 2013, the government modified the exchange rate of the bolivar by creating three different rates, at 6.3, 12 and 50 bolivars to the dollar. Which of these parities applied depended on the purpose for which the exchange was to be used.

[8] By way of comparison, the BCV acknowledged, in a news release dated January 24, 2014, an increase in shortages of 16.3% in December 2012 and 22.2% in December 2013.

[9] Data from ECLAC, the Economic Commission for Latin America and the Caribbean.

[10] See the article by Mila Ivanovic, “Les conseils communaux à l’ombre du ‘pouvoir populaire’: entre espoirs et continuités,” Contretemps No. 25, April 2015.

[11] [Translator’s note: No such body is mentioned in the referenced laws. However, in the “Organic Law of the Communes,” Title IV, Chapter I provides for the creation of a Communal Parliament, a national delegated body that in fact met for the first time on December 15, 2015 and has met on three occasions since then, with the intention of meeting frequently in the coming months. See “Can People’s Power Save the Bolivarian Revolution?,” Life on the Left, January 13, 2016.]

[12] The meeting was entitled “Intellectuals, democracy and socialism: Dead-ends and roads to travel,” and was organized June 2-3, 2009 in Caracas by the Miranda International Centre. Its proceedings were published in the journal Comuna – Pensamiento crítico en la revolución, no. 0, July-September 2009. The presentations by Victor Álvarez R., Gonzalo Gómez, and Aram Aharonian were translated into French and published in Inprecor No. 553/554, September-October 2009.

[13] It was entitled “Testimonio y responsabilidad ante la historia” (Testimony and responsibility before history).

[14] In an interview with the newspaper El Tiempo, on May 26, 2015, Navarro said Maduro had contemplated a partial dollarization of the economy, first in the sale of vehicles. Forewarned, the unions demanded in these conditions to be paid in dollars!

[15] See the article by Johnny Alarcón Puentes, “Pérez Pirela, Navarro, Giordani, Osorio y Barreto también son corresponsables de la derrota,” published December 12, 2015.

[16] See our book Hugo Chávez et la révolution bolivarienne (Montréal, M éditeur, 2012).

[17] A sociologist and journalist residing in Venezuela since 2005.

[18] It is a caricature to say the candidates of Marea Socialista are “from the academic intelligentsia” — like him, one could mischievously say — overlooking the trade-unionists and other candidates from the working-class neighborhoods.

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