CHÁVEZ, VENEZUELA AND THE PINK TIDE
By Ronald J. Bird©

Introduction

In a previous article it was noted that a “Pink Tide” of nationalistic left-wing governments is now a well-established political feature in Latin America. Presidents Lula de Silva in Brazil, Nestor Kirchner in Argentina, Evo Morales in Bolivia, Rafael Correa in Ecuador, Hugo Chávez in Venezuela and Daniel Ortega in Nicaragua are only the most notable. Moderate leaders in other countries of South and Central America as well the Caribbean are monitoring developments carefully; they are pushed on the one hand to do something about poverty and corruption at home, but constrained on the other hand by their country’s dependence upon international development loans or foreign aid from the First World. Even the neo-liberal governments of America’s strongest allies in Latin America, Mexico and Colombia, must be wondering which way and for how long the wind will blow.

The poor and dispossessed including indigenous peoples have learned to use the levers of democratic power and to find leaders to articulate their demands. The poor who came so close to achieving power in Mexico recently know that those Latin American countries that now have progressive administrations have achieved them, not by armed revolution, but through the ballot box. And, while nearly all Latin Americans nurse respect for Fidel Castro for what he has done to better his own people and because of his decades-long defiance of American hegemony in the Western Hemisphere, Cuba’s brand of Stalinist socialism is regarded as undemocratic, dictatorial and claustrophobic.

John Ralston Saul in a March 2004 Harper´s article opined that perhaps the era of globalisation has now come to an end. Globalisation is no longer so unquestioningly accepted to be either a self-fulfilling prophecy or a self-regulating phenomenon. We can note that some successful economies, chief amongst them perhaps China and the Asian Tigers, have never really been true believers anyway; they flourish on exports but keep tight control of their currencies and central banks and protect their domestic markets. Exports, yes. Open borders, no.

Now, dismayed by the twenty-five-year failure of globalisation to deliver the promised material goods in return for which developing countries have permitted the IMF Jesuits of the financial world to restructure both their economies and their societies, many nation-states are now taking back control. And if this is true anywhere, it is true in spades for Latin America.

After the Asian Tigers, indeed, Latin America is now one of the only regions in the world that appears to offer some serious alternative to a neo-liberal, globalised, free-trading world under the aegis of the United States in particular and the First World generally. In addition, America and her First World henchmen have lost moral leadership: they have now been exposed worldwide as naked aggressors (let us not forget here to include, in the case of Iraq, countries like Britain, Spain, Italy, Denmark, The Netherlands and Australia, and, in the case of Afghanistan, even Germany and Canada), As a practical matter, on the other hand, for Latin America that means that the hemispheric hegemon is now distracted and bleeding on far-away battlefields. The coast may at last be clear.

The key reason, however, why American influence in Latin America has waned is because the First World’s credit and aid cartel has been shattered. Living hand to mouth from development loans and aid, Latin America has been forced until now to bend the knee at the neo-liberal altar. This obeisance is now over. Venezuela, with currently over $36 billion in reserves, is ready, willing and able to act as a lender of last resort for its Latin neighbours. It has extended helping hands in troubled financial times to Argentina, Bolivia, Ecuador and Cuba and to the Caribbean. Other countries now know where to go to find a generous and uncomplicated friend.

So, Venezuela is currently key to understanding the “Pink Tide”. But no assessment of Venezuela can be made without studying its president, Hugo Chávez.
Chávez

Chávez, now 53, has just recently (December 2006) been re-elected president of Venezuela by another landslide. The election was fair, attested to by the OAS, the E.U. and by Jimmy Carter. So were all Chávez’s other elections: probably no other politician has been democratically elected, ratified and confirmed as many times as Hugo Chávez.

He comes from a poor rural family and was a career soldier who rose in the Venezuelan Army to the rank of Lieutenant Colonel. Imbued with the liberation ideas of the 60s and 70s, he attempted a military coup in 1992 to turn out one more elitist and corrupt Venezuelan government. The coup was bungled but his name became a banner. He was incarcerated for his role in the coup but was released early after two years. He returned to the political fray. By 1999 he had been overwhelmingly elected President of Venezuela with a mandate to clean up the corruption and do something for the huge mass of poor citizens both in the country and in the barrios of the major cities.

As he promised in his first election campaign, Chávez immediately started the wheels turning to convene a popularly elected assembly to rewrite the constitution. Completed, it was overwhelmingly ratified in a referendum. Amongst other things, it now allowed any president to run twice consecutively and the term of office to be in the future six years rather than five. Chávez is now in his second term under the new constitution. The legislative branch was restructured to a unicameral National Assembly on the basis of representation by population and a guaranteed number of seats for indigenous peoples. The constitution also gave the president the power to rule by decree if agreed by the National Assembly. Clearly presidential power had now increased though it is still limited by a separate legislature, a separate judiciary, a separate prosecuting attorney and even a separate electoral officer.

Already strong, Chávez’s voter support has increased steadily since 1999. In the short-lived reactionary coup against him in 2002, he was seen by the voters to have been the victim of machinations by the old Venezuelan elites who were aided and abetted, as it has now been documented, by Washington. The media, for example, dominated in Venezuela as in America by fat cats, declared Chávez totally anathema. Not enough that he is a jumped-up mestizo (mixed white, black and Amerindian blood), he is a left-wing reformer determined to undermine the privileges of the heretofore rich and powerful.

TV in Venezuela is almost without exception totally over the top in its opposition to Chávez: libel and slander are more the rule than the exception. In 2002, the media moguls called for a coup that nearly succeeded with the help of a few conservative army officers. When it failed, the media then initiated a recall referendum under the provisions of the new constitution. Chávez turned it into a popular referendum on his progressive economic and social policies and came out a clear winner. Then the old management of the national oil industry locked out their workers for three months in order to bring Chávez’s government to its financial knees. This too failed. Chávez instead turned out the old managers, staffed PdV (Petroleos de Venezuela) with more loyal managers and took the opportunity to replace the Old Guard army generals with sympathetic younger officers willing to bend to civilian authority.

While stickhandling through this, Chávez was simultaneously also beginning to deliver on his campaign promises. It was clear to everybody in the country that the old bureaucracy was riddled with corruption. At the very minimum, Yesterday’s Men were not going to be helpful. Chávez very early on, therefore, began to bypass them. He set up a series of Misiones bolivarianos (Bolivarian Missions) each focussed on a specific problem:
§ Portions of the Venezuelan population were actually hungry and malnourished: Chávez began to get subsidised basic foodstuffs to them.
§ Many were living in hovels: Chávez initiated a huge public housing campaign, which is still going on.
§ The nation’s poor were suffering from a lack of medical attention including pre- and post-natal care: Chávez made free healthcare a constitutional right for everyone.
§ Illiteracy was widespread: Chávez started an emergency programme to teach people to read and write as quickly as possible. (The government claims 1.5 million more adults are now literate though this is difficult to confirm.)
§ Even today many children cannot normally afford to attend school: Chávez re-organised the curriculum, made primary, secondary and tertiary education totally free and offered financial support to poor families for school uniforms and books. (The number of children in school jumped dramatically within only a few years. The baby boom accounts for a part of this increase but also illustrates the urgent need to get people educated.)
§ 5 million voters, mainly the urban and rural poor, remained out of the political process: Chávez initiated a voter registration drive to get every man and woman aged 18 and above on the rolls. (The number of registered voters has increased over Chávez’s time from 11 million to now over 16 million in a country of about 26 million.)
§ Local economic decisions were normally made by corrupt officials acting as gatekeepers: Chávez has empowered local cooperatives to draw up measures for their communities and provided them with money to implement them.
§ 75% of agricultural land is held by 5% of the population, much of the land unused: Chávez has instituted a land reform to put the unused land into the hands of landless peasants.

Is it any wonder, therefore, that Chávez’s election results show that he is even more popular now than when he was first elected in 1999. The poor and disenfranchised can now vote. They now believe that Chávez is the only Venezuelan politician who can, has and will do something practical in their interests. In the last presidential election Chávez received 63% of the popular vote with 75% of the electorate showing up to vote. Instead of calling the result fraudulent, his neo-liberal opponents this time at last publicly conceded defeat in what had been attested to as a fair election.

International relations

Chávez’s hero is Simón Bolívar, the early nineteenth-century “Liberador” of South America. Bolívar, a liberal, led the fight for independence in South America. He was Venezuelan but dreamt of a democratic union of the diverse Spanish colonies in the north of South America, i.e. Venezuela, Colombia, Panama, and Ecuador. He called it Gran Colombia.

Although he has rejected First World-led globalisation, Chávez’s political horizon is by no means limited to his native country. Unlike even the other New Dealers in the hemisphere, he has a much broader vision. He has also taken a striking leadership role. Like Bolívar before him (Chávez has changed the name of Venezuela symbolically to the Bolivarian Republic of Venezuela) Chávez wants to see the countries of South America united and including also possibly those of Central America and the Caribbean. He preaches Gran Columbia at every opportunity.

And he has the money to do it. Venezuelan oil money makes it possible for friendly countries to defy the IMF and the U.S.A. Once they realise they will not be crushed by such defiance, the leaders of neighbouring countries have become more willing to join in initiatives that attempt to return power to the region. Venezuela has actively helped Argentina, Bolivia and Ecuador and many English-speaking countries in the Caribbean, not to mention Cuba which was left destitute after being abandoned by the Russians.

Several wide-reaching agreements already exist that could be the skeleton of a new union of Latin America. One is MERCOSUR, the Common Market of the South, which currently includes Argentina and Brazil, large and partially industrialised, as well as Uruguay and Paraguay, small and underdeveloped. Venezuela joined somewhat later and is bringing new life to MERCOSUR. Others, like Ecuador and Bolivia, have applied to join under their new left-wing and pro-Chávez leadership. Despite stresses within MERCOSUR, there is a bustling sense that something is happening and top-level working visits abound amongst the members. A second political block is ALBA, Chávez’s own Bolivarian alternative which so far includes also Cuba. Finally there is the Banco del Sur, the Bank of the South, which is designed to replace the development aid that comes with so many strings attached from the American-dominated World Bank, IMF and the Inter-American Development Bank. Scoffers there are aplenty. But all of the above agreements are conceptually more advanced than, say, the European Coal and Steel Union which launched what has now become the 27-nation European Union.

Money talks and Venezuela has lots of it. There are five major hydrocarbon producers in Latin America. Ecuador and Bolivia, two recent Chavez-like additions to the Pink Tide, are just going through their own left-wing rebirths, rewriting constitutions, creating their New Deal implementation structures, renegotiating royalty agreements with Big Oil and restructuring their onerous international debt. Eventually, however, they too should have surplus cash. Should Mexico and Colombia join the Pink Tide (this is perhaps not very likely at present in Colombia, but the last federal election in Mexico on the other hand was a near-run thing) there would be plenty of resources. If political and economic integration continues in Latin America, it will mean much larger consumer markets for economic growth even without access to North America, Europe and Japan, access, by the way, that has been repeatedly promised and just as frequently thwarted.

The big fly in the ointment of course is the United States of America. Washington has always regarded Latin America as its private backyard. Because the countries there have always been so poor, because the political masters there have always been supported by and are supportive of the U.S.A., it is now all the more obvious that Washington is losing its grip over Latin America. It is all the more understandable when one realises that Republican-Party Latin American policy is made by and for exile Cubans in the critical swing state of Florida. Otto Reich and Roger Noriega, successive Undersecretaries of State for the region, were highly objectionable policy-makers for the region. John Negroponte, another Bush tough hombre who was implicated in channelling money to death squads while he was U.S. Ambassador to Honduras under Reagan, has just been made Deputy Secretary of State possibly with the task of getting the backyard back under control. He is unlikely to do anything positive to improve relations between America and Latin America. In the case of Cuba, Venezuela, Bolivia and Ecuador, expect trouble.

How autocratic is Chávez?

The criticism both in Venezuela and overseas is that Chávez is a dictator intent only upon plundering the rights and liberties and wealth of Venezuelans. Is there any truth to this?

Clearly Chávez is immensely popular and has been popularly elected or confirmed over and over again in fair elections and referendums. Not all republics can claim this about their leaders. He has set up parallel government bureaucracies to deliver the goods rapidly to the poor and needy who elected him. It has meant of course bypassing the frequently corrupt and foot-dragging existing institutions dominated by his enemies. Delivering the goods, of course, gets him the votes, a novel concept possibly worth emulating in other democracies. The armed forces and the management of PdV are now also loyal. (Chávez’s opponents cry foul. But surely no democrat would want the army or a corporation to be the centre of opposition in a republic.)

More critically, however, Chávez packed the Supreme Court with a number of sympathetic judges in order to prevent some of his more popular measures from being locked up in the courts. Picking sympathetic judges or packing parliamentary bodies is not unknown in other democracies so perhaps one should be careful with criticism. But it is also not something one should welcome.

That leaves the newspapers and television. They are almost without exception not just critical, they are libellous and slanderous and completely over-the-top when it comes to Chávez, even going so far as seditiously to connive at the illegal overthrow of the duly elected government. Nevertheless, although he had media-intimidating laws placed on the books for slander and libel, Chávez does little to interfere with them notwithstanding some reports that he sends people around to intimidate critical journalists. “If the dogs are barking it just shows we are working,” he says, quoting Cervantes. (See: http://www.truthdig.com/report/item/20070609_tves_how_you_really_are/ and
http://www.fair.org/index.php?page=3107)
More famously, he has also recently announced to media furore (see: http://www.fair.org/index.php?page=3107 and http://www.truthdig.com/report/item/20070609_tves_how_you_really_are/)that the government would not be renewing the public-broadcasting licence for RCTV, by far the most rabid anti-Chávez television station and the station that was actually intimately involved with organising and initiating the violent coup d’etat against Chávez. RCTV in fact falsified news and events and created fictitious newsreel footage to manipulate viewers into the streets. You can’t have press freedom, surely, without at least some modicum of responsibility! It is hard to find sympathy for the likes of RCTV, therefore. Its cable and satellite TV broadcasting will in any case remain unaffected. The non-renewal issue does, however, underline the fact that, in many, many areas of Venezuelan life, there is still no serious due process and decisions can be made somewhat arbitrarily. This is balanced at present by Chávez’s reticence to interfere with the media, his unassailable popularity even without media support and his personal integrity.

It is also questionable as to whether the country can or should have two parallel government bureaucracies. At some point Chávez will have to decide whether to fold the Misiones into the regular bureaucracy or develop the Misiones to replace the old bureaucracy.

Chávez will have been el Presidente for thirteen years when his term expires in 2013. Twice the National Assembly has granted him the power for limited periods of time to govern by decree. Early on in Chávez’s period it might have been necessary since there were so many powerful elements arrayed against him and he could justify ruling by fiat because of his enormous popular mandate. But this time, following his latest inauguration in January 2007, he asked for and received it again for 18 months on a show of hands by the completely Chavista Assembly (the opposition boycotted the last assembly elections). Chávez wants the ability to rule by decree so he can negotiate his promised “nationalisation” of several public utilities, the “takeover” of Verizon’s 28.5% of CANTV, the largest telephone company, as well as a make-over of the Central Bank essentially into a government department.

The words “nationalisation” and “takeover”, of course, are hot-button words. Note however, first, that the public utilities and telephone companies were “privatised” out of public ownership in the past as part of the IMF Structural Adjustment Agreement (SAA) with Venezuela. Their ownership passed into foreign hands. Some criticise that a lot of money also stuck to the wrong fingers at that time.

Second, Chávez has so far also paid fair market value to the shareholders as attested to in several cases by the foreign managers of the companies themselves.

Third, as in Argentina, having certain critical components of the economy under government control makes it possible for the government to deal with financial problems such as inflation much more easily. Argentina, for example, was able to develop an incomes policy in part because it could prevent utility prices from driving up inflation. It was also able to manage exchange rates during the recovery period which it could not do as long as its central bank was independent and as long as the SAA insisted upon independence.

All of Chávez’s calculations must by the nature of Venezuela’s situation be based upon future revenues from oil. For that reason, fourth, it is imperative that the government be in control of PdV and the Central Bank, where the currency reserves lie. Despite NAFTA, for example, Mexico retains government control of Petromex for exactly the same reason. One could argue that it is not necessary to interfere with the Central Bank. But it sits on the $36 billion in reserves of which not more than probably half is actually necessary to back up the national currency. The rest can be put to better use along with PdV’s profits for the good of the country.

The question of course is how effective can a newly organised and government-dominated “Central Bank” be in controlling inflation. This question should not be trivialised since Chávez’s programmes such as emergency make-work efforts, the construction of mass housing, highways, electrification, water and sewerage schemes, expanded schools and medical facilities are all currently having an enormous Keynesian impact on the economy. Venezuela is booming but inflation is currently nearly 20 percent.

Will Chávez’s programme work?

At home the government is totally revamping the social and economic fabric of the country. It is not only pouring money directly and rapidly into the more urgently-needed areas (nutrition, free healthcare, free education, low-cost housing), it is also beginning to make long-term adjustments to benefit a broader public. Chávez is, for example, switching government income to fairer progressive income and inheritance taxes while at the same time reducing the relatively high sales taxes that impact the poor disproportionately. Sales taxes, indeed, have just recently been nearly halved and are eventually to be eliminated altogether. This is the polar opposite, let it be noted, of trends in Canada, Europe and the U.S.A. The results in those countries have been to enrich the already wealthy, to expand the ranks of the poor and to squeeze the middle class.

It goes without saying that Chávez’s tax policies offend against IMF orthodoxies. That said, however, IMF’s voice is no longer listened to here. Heavy state involvement has after all worked reasonably well in other capitalist countries: the building of transcontinental railways, the St. Lawrence Seaway or the Interstate Highway System come immediately to mind. Whatever the economic risks, who is to gainsay that a mixed economy cannot in the future be a perfectly acceptable structure for the Venezuelan economy? Chávez is simply accepting the logic of his programmes for the poor and accepting the priority of full employment and economic development over the control of inflation.

Critical long-term issues

There are, however, two very critical long-term issues, one economic with social implications, the other political. The first has to do with being a rich oil country. Venezuela sits on vast amounts of oil yet to be developed. The Orinoco tar sands are said to be almost limitless. Now that Venezuela refuses any longer merely to give away its natural resources in return for bribes for the select and bennies for the few, there is going to be plenty of lolly. Chávez’s government budgets are currently all conservatively based upon an oil price of $29/barrel. To develop the oil sands requires market prices for oil to be kept at a minimum of $30/barrel. Venezuela, indeed, wants OPEC, of which it is a member, to keep oil at $60/barrel. It is currently fluctuating at above $50/barrel.

Given so much cash coming towards them, perhaps after the schools and the roads and the housing issues have all been dealt with, Venezuelan citizens, if their population boom can be contained, could simply start cashing oil-dividend cheques. That’s, after all, what the oil Emirates do. It’s what Albertans do in part as well. But after that, should you import peons from the Philippines, Palestine, Indonesia and Pakistan to do the grunge work for you? Perhaps young Venezuelans will become as frustrated as young people in the oil Emirates. What’s the use of a great education when there is no hope of an interesting job in a country whose only industry is low labour-intensity oil pumping. Alberta, take note.

At present, long-term economic development is almost beyond the technical capabilities of the Venezuelan government. The bureaucratic skill is not there. On a positive note, though, whereas Venezuela is at present too much a hewer of wood and drawer of water and its population of around 26 million too small to justify large-scale manufacturing, in a Southern Common Market (MERCOSUR), there would be a much bigger consumer population. The five current MERCOSUR countries alone represent 65% of South America’s population (approx. 372 million) and 75% of its combined GNP. This would provide a better balance between industry and resource economies. Brazil and Argentina are already industrialised countries but need energy. Venezuela, Bolivia, Ecuador and Colombia can supply it. Free movement of labour as in the E.U. would provide some point to a good education.

The second long-term issue is one of political maturity. There is a long Caudillo tradition in Latin America, i.e. a strong leader perhaps doing good things for the broad mass of the people. This is unhealthy for democracy for several reasons, not least because the Caudillo decides what is good for the people, because sycophants establish insider positions, because the system very quickly becomes corrupt, and because democratic succession becomes very dodgy. In Venezuela at present, the electoral winner takes all, becomes nearly all-powerful. Election losers are marginalized altogether until the next election. This is not a healthy state. Dissenting voices need to be heard at all times. There needs to be a responsible shadow government committed to legitimate government. At the same time, the opposition needs to prove itself far more responsible than it has in Venezuela to date.

Chávez is by all accounts an honest and intelligent man. Unfortunately, he alone is currently also probably the only person in all of Venezuela who can drive the New Deal process forward. Without him Venezuela is too likely to fall back into its old ways. Chávez will undoubtedly be asked to become president for life. For the good of the country, therefore, there needs to be an active but fair political opposition, i.e., a loyal opposition, a process for orderly succession and alternate candidates.

Too much now turns on one person. At present, Venezuela is clearly a “one-bullet country”, i.e., one bullet can change everything. Chávez’s enemies both at home and in Washington will no doubt have taken note of this fact.


A shortened version of this article appeared in INDEPENDENT VOICE. Visit http://www.independentvoice.ca/2007/06/RBird_PinkTide.php

About the author. Ronald Bird, a Canadian, lived as an international banker in Europe for over thirty years. Currently in Ecuador and Venezuela, he and his wife live aboard a wooden sailboat. His blogsite is www.vilisar.com.