Apr 26, 2019
Over the last several months, the U.S. news media has made the extremely difficult life of the vast majority of people in Venezuela a major story in this country. The news has shown how the Venezuelan economy has been wracked by a devastating economic crisis. It has shown the basic infrastructure crumbling, up to the point that a nationwide electricity blackout in March lasted for more than a week. It has shown the dire shortage of food, medicine and basic supplies for big parts of the population and how this devastation has forced 10 per cent of the population, or three million people, to flee the country since 2013.
Of course, it is hardly a secret why the U.S. news media shows a sudden “concern” for the fate of the Venezuelan people. It serves as justification for the U.S. government’s efforts to overthrow the Venezuelan government headed by President Nicolas Maduro.
This latest effort began in 2015, when the U.S. government under Obama began to impose economic sanctions designed to squeeze the Venezuelan economy. The price of oil dropped a year earlier and this already had a devastating impact on the Venezuelan economy, given that Venezuela is a major oil exporter and much of its economy depends on those exports. In response to the 2015 sanctions, some U.S. companies stopped doing business in Venezuela. This further harmed the Venezuelan economy, since the U.S. is Venezuela’s most important trading partner, accounting for more than half of all the country’s exports and imports.
Thus, even when the price of crude oil on the world market partially recovered, Venezuela’s oil exports declined, deepening the economic crisis inside the country. Venezuela’s basic infrastructure, like electricity, went unrepaired, leading to devastating power outages. Investment in basic industry, especially the oil fields and oil refineries, screeched to a halt, leading to a decline in the production of both crude oil and gasoline. Food production also fell, caused by the lack of imported fertilizer, seeds and animal feed.
When the Trump administration took office in 2017, it ramped up the U.S. offensive against the Maduro government. In early 2018, Rex Tillerson, Trump’s first secretary of state, who had previously headed the giant Exxon oil company, proclaimed that he believed “there will be a change” in Venezuela and that the Venezuelan military would carry it out. As Tillerson bluntly stated, “In the history of Venezuela, and, in fact, the history in other Latin American countries, oftentimes it’s the military that handles that.”
Over the following months, the U.S. state apparatus put into place a plan to provoke the removal of the Maduro government by a military coup – as promised by Tillerson. On January 22, 2019, Juan Guaidó, the little-known head of the opposition-dominated Venezuelan National Assembly, declared himself to be “interim president.” The Wall Street Journal confirmed that Guaidó made this announcement only after assurances by Vice President Mike Pence that the U.S. backed his move. Guaidó was immediately recognized by the U.S. government, along with the governments of 55 countries, including most of Latin America.
The second phase of the U.S. plan to oust Maduro came a week later. On January 28, the U.S. government announced new, much more stringent sanctions. The U.S. Treasury Department banned U.S. companies and individuals from dealing with Venezuela’s state-run oil company, Petroleos de Venezuela, or PDVSA. This ban extended to any foreign entity doing business with Venezuela. Because of the prevalence of the United States financial system and the dollar in the global economy, the ripple effects of the sanctions spread far beyond American borders, making it extremely difficult for the Venezuelan government to continue buying and selling goods on the world market. The U.S. Treasury Department announced that it was freezing all Venezuelan government assets inside the U.S. and would only turn them over after Maduro was ousted in favor of Guaidó. Other governments did the same, working with the U.S. to cut off Venezuela’s international trade and blocking its financial operations. For example, the Bank of England blocked the return of 1.2 billion dollars in gold that Venezuela has in reserve in that country.
Given the Venezuelan economy’s dependence on oil exports and the international market, these measures could only spell a catastrophic drop in the economy, making living conditions even more disastrous for much of the population.
After laying the political and economic groundwork for a military coup, the U.S. government provoked a confrontation aimed at forcing the Venezuelan military to switch sides and overthrow the Maduro government. On February 22, it sent a convoy of trucks filled with food, medicine and other staples, under the banner of the U.S. and Guaidó, to the border between Colombia and Venezuela. The Venezuelan government refused entry of these vehicles into the country, denouncing it as a thinly disguised political maneuver, using humanitarian aid as bait. The U.S. convoy was even criticized by the United Nations and various international aid agencies. But the U.S. government bet that several days of confrontations along the border would trigger so much unrest, it would goad top generals to switch sides, bringing their troops with them. But no generals did this, nor did many soldiers defect.
The U.S.-engineered coup d’etat fizzled for several reasons. First of all, Maduro had placed military officers in key economic positions, including in banking, in the Venezuelan oil industry, as well as in the provisioning of food and other necessities. Those positions had opened up vast opportunities for some to strike it rich through speculation and corruption. The U.S. government had promised amnesty to any military officers who switched sides. But the Venezuelan military had no reason to trust such promises. Over the years, there had been a few high profile defections from the Venezuelan government and military into the U.S., but several of the defectors were nonetheless later arrested, tried and sentenced to long prison terms for such things as money laundering and drug trafficking. Top military officials had every reason to fear a settling of scores, once the U.S.-backed opposition took power. News of what happened to common soldiers who defected to a neighboring country was little better. They vegetate in a squalid hotel room, often cut off from friends and family. As a result, the number of defections has trickled to almost nothing.
So far, the U.S. confrontation with Venezuela has resulted in a standoff.
What has kept the Venezuelan economy somewhat afloat has been its growing dependence on U.S. rivals, especially Russia and China, whose companies are involved in the production of oil inside Venezuela and are buying more Venezuelan oil exports. To protect these investments, the Russian government has even sent a few military aircraft and 100 military “advisers” to Venezuela, thus raising the stakes in any direct confrontation with the U.S.
But these ties with Russia and China in no way make up for the lost business with the U.S. and its allies. All it does is slow the devastating decline of the Venezuelan economy. What this means for the Venezuelan population is that life is becoming increasingly difficult for the vast majority. In some ways, this is similar to what has happened to populations in other parts of the world caught between two sides in wars, both declared and undeclared.
The U.S. government has been trying to undermine, weaken and overthrow the Venezuelan government ever since Maduro’s predecessor, Hugo Chavez, was elected to the presidency in 1998.
Chavez was a former military officer, who had served three years in prison for carrying out an unsuccessful coup d’etat in 1992 against a very unpopular government responsible for severe austerity programs that had led to widespread hunger riots in 1989. After Chavez emerged from prison, he ran for president on a populist program, promising to use some of Venezuela’s oil wealth for the benefit of the laboring population and poor and to develop Venezuela into a modern economy that didn’t depend only on oil exports. These promises gained the enthusiastic support of a big majority of the population and allowed him to win the presidency, unseating the old, entrenched political elite tied to U.S. imperialism and the Venezuelan bourgeoisie.
Once elected, Chavez began to follow through on some of his promises to his electoral base, with aid programs for the poor and a land reform program. He also cemented ties with U.S. rivals, starting with Castro’s Cuba, along with Russia, China, Iran and North Korea.
To U.S. policy makers, Chavez was defying the U.S. government and the oil companies at every turn. He was taking away some of what the oil companies and the Venezuelan bourgeoisie considered to be “their” money, and “wasting” it on the poor. On top of that, he was a wild card, a maverick on the world stage, complicating U.S. imperialism’s efforts to impose its order in Latin America, that is, its own “back yard.”
So, in April 2002, the U.S. Pentagon and CIA, along with the Venezuelan bourgeoisie, top Venezuelan officials, the top ranks of the army, the church and the union bureaucracy all banded together to organize a military coup to overthrow Chavez. For about a day, Chavez was imprisoned. The president of the Venezuelan Chamber of Commerce, Pedro Carmona, was declared interim president. But hundreds of thousands of people took to the streets all over the country. Pro-Chavez military officers took control of the army and liberated Chavez. A second coup attempt was carried out in December 2002. The managers of the state-run oil company sabotaged the distribution of gasoline. This was opposed by the oil workers. In one oil refinery, the workers took control. They elected their own leadership and ran the refinery, in all of its complexity, without the bosses.
After defeating the two coups, Chavez tried to solidify his base of support by introducing more programs that relieved some of the worst poverty and greatly reduced hunger. Most importantly, he carried out big programs in education and health care. In exchange for cheap crude oil, Cuba sent doctors and health care professionals to carry out a wide-ranging public health campaign. As a result of all these programs, during Chavez’s early years, the official poverty rate declined substantially.
The funding of these programs was made possible because Venezuela was sitting on top of a very valuable resource, oil, and the price of oil was rising, bringing extra money into the state coffers.
In order to fund all of his programs, Chavez aimed to increase oil production and export more oil on the world market. But he needed to entice the big oil companies to invest. Formally, the oil industry is nationalized – and had been since 1976. But Venezuela cannot develop oil reserves on its own. It takes huge investments and resources and technology that Venezuela doesn’t have. So, it has to depend on the big multinational oil companies for that too. Under Chavez, these included such big U.S. companies as Chevron, Exxon, Phillips, Halliburton and Schlumberger. That meant allowing the companies to keep the lion’s share of the profits, and assuring that Venezuela’s dealings with the major oil companies went smoothly.
If Venezuela was going to continue to import and export on the world market, it also had to maintain good relations with the International Monetary Fund (IMF) and the banks. So Chavez had no choice but to scrupulously make the payments on the debts run up by his predecessors. The Venezuelan banks also made big profits funding Venezuela’s growing public debt. One economist in Caracas told Bloomberg News that while Chavez was president “banks were making money almost without doing anything.”
To further development, Chavez opened the doors to big multinationals outside the oil companies, including Coca-Cola, General Motors, Kraft, McDonalds, Mitsubishi, Pepsi-Cola, Procter and Gamble, Toyota, and many more.
Chavez also sought the cooperation of the Venezuelan bourgeoisie, which is tied to U.S. imperialism and the international capitalist class. During his campaign for president, Chavez had already forged ties to the Venezuelan business community, seeking their support. As one billionaire later explained to The New York Times, influential businessmen in Venezuela supported Chavez’s candidacy, just like they supported politicians of a variety of stripes in the past. Their purpose was to retain their influence, that is, to keep the door open to fat contracts and other big favors that the president could confer on them. Among Chavez’s supporters was the richest man in Venezuela, Gustavo Cisneros, who owns a global multimedia company and is known as the Venezuelan Rupert Murdoch. Cisneros backed Chavez for president in 1998. But in 2002, he turned around and supported the coup against Chavez. In June 2004, Jimmy Carter brokered a deal that brought the two men back together. This then opened the way for deals with other top Venezuelan capitalists.
Keeping these ties with the capitalist class prevented Chavez from fulfilling some of his most important promises. For example, the Venezuelan capitalist class violently opposed land reform, which Chavez had promised to the great mass of impoverished peasantry. So, the Chavez government passed a very tame land reform law in 2001, even when compared to other land reforms carried out around the world. The law recognized the property rights of the big landowners and clearly stated that if the government does expropriate property, it must compensate the landowners at current market rates. The government did not carry out any land seizures. Whatever land the government took for the peasants, it paid top dollar. When poor peasants tried to take the initiative and occupy land themselves, the big landowners often drove them off through terror and assassinations. In the end, little land was distributed to the poor peasantry.
When oil prices crashed in 2008, sending the Venezuelan economy into a deep recession, the Chavez regime had to confront the working class. It tried to impose sweetheart contracts on workers, with the cooperation of some union apparatuses. When workers rejected these contracts, the government responded with repression. When workers occupied factories, the police were sent in to expel them and break the strikes. Laws were passed to criminalize workers’ struggles.
The Chavez regime tried to use a new union confederation, the Union Nacional de Trabajadores de Venezuela (UNT), that workers throughout the country had formed in 2003, to impose more sacrifices on the workers. The slogan of union officials was “Chavez First.” Among the militants inside the UNT who opposed this policy were those from a Trotskyist current existing in many Latin American countries that had been founded by Nahuel Moreno from Argentina. In 2008, Trotskyist militants in Venezuela were physically attacked by thugs working with the UNT union confederation. One militant, Richard Gallardo, was the leader of an important union in the state of Aragua, where workers mobilized several times against the attacks from Chavez. In 2008, Gallardo was assassinated, along with two of his comrades.
But repression did not stop important strikes and mobilizations by different parts of the working class. In 2008, thousands of steelworkers went on strike against a two-year pay freeze. Over the next six years, the strikes continued on and off.
In 2011, two million public sector workers fought against a seven-year pay freeze. In that same year, thousands of metal workers went on strike after working without a contract for more than a year. And hundreds of thousands of workers in the oil industry went on strike over a contract that had expired two years before.
In 2012, Chavez imposed, by decree, a new labor reform, which limited the rights of workers to organize. He added an “anti-terrorist” law which designated zones in which all workers’ strikes were illegal.
Chavez died of cancer in 2013. By the time he died, many of the reforms that he had instituted had been seriously eroded. But because of his earlier history, he still maintained a high level of support amongst working and poor people. But the person who succeeded Chavez, Nicolas Maduro, had to preside over the country in this latest deep, deep crisis, without the same history or level of support. So discontent against the Maduro regime increased considerably, especially since many officials in his regime used their positions of responsibility to line their own pockets and fill up their own bank accounts through corruption and shady deals, while most of the population faced untold hardship.
In December 2015, the right-wing parties opposed to Maduro won the elections to the current National Assembly. The result did not necessarily represent a rightward shift. Two million Chavez supporters did not vote. It was a protest against the gathering crisis, and a prelude to the current devastating situation.
In its propaganda, the U.S. news media and U.S. government say that Venezuela should be prosperous, given the vast oil wealth in the country. They say that it was ruined through corruption and mismanagement by the current Venezuelan government. In an interview on Fox News on January 26, Trump’s national security advisor, John Bolton, claimed that the people of Venezuela would be much better off with the U.S. oil companies calling the shots in their country. “...If we could have American oil companies really invest in and produce the oil capabilities in Venezuela, it would be good for the people of Venezuela,” promised Bolton.
Venezuela’s history shows the exact opposite.
Oil in Venezuela was first developed by Royal Dutch Shell, a British-Dutch company, one of the biggest in the world. In December 1922, Shell hit a gusher that was more powerful than anything Shell engineers had ever seen. They knew they had something special. British imperialists tried unsuccessfully to keep their U.S. competitors out of Venezuela. But in the post-World War I era, U.S. imperialism was pushing out the weakened British imperialists from many of their old strongholds around the world. Shell soon faced two big American monopolies, Standard Oil, owned by the Rockefellers, which eventually became Exxon, and Gulf, which was owned by the Mellon family, whose fortune was originally based on steel and banking.
By the end of the 1920s, Venezuela emerged as the second largest oil producer in the world, after the U.S. itself, and the biggest oil exporter. But rather than stimulate the economic development of the country, under the domination of U.S. and British imperialisms, the influx of oil wealth only stimulated a massive increase of imports, with U.S. companies dominating all trade with Venezuela. Meanwhile, agricultural production both for export and domestic consumption declined precipitously.
Given the extremely unstable conditions coming out of years of social upsurges, economic depression and world war, the U.S. oil companies found Venezuela to be a reliable oil producer that could be counted on year in, year out. In 1938, in the wake of big strikes, another big oil exporter, Mexico, nationalized its oil industry, a blow to American and British oil companies’ profits. Fearful these nationalizations would spread, the oil companies immediately got their governments to embargo Mexican oil. Much of the slack in the loss of Mexican oil to world markets was quickly made up by increased exports from Venezuela. Venezuela had a population that was five times smaller than Mexico, while Venezuela produced four times as much oil. When trade was disrupted by World War II, imported Venezuelan oil was a key resource for the U.S. war machine.
But this vast wealth never “trickled down” to most of the people. For almost 40 years after oil was discovered, Venezuela was run by a series of military dictators, who were little more than puppets of the oil companies. The oil companies fought tooth and nail to keep as much of the profits as they could. In the 1940s and 1950s, estimates were that Venezuelan oil accounted for 40 per cent of Standard Oil’s worldwide profits. A small group of military officials and big landowners, who owned most of the land, also got rich. This left most of the population extremely poor, often landless, and the country largely underdeveloped.
Some capitalists, such as Nelson Rockefeller, as well as some U.S. government officials saw the handwriting on the wall. They warned that the misery in the country could fuel a social explosion that could endanger their holdings and profits. “They will take away our ownership,” wrote Rockefeller in 1940 after touring the oil camps in Venezuela. These officials called for the oil companies to plow back a small part of their profits into the economic development of Venezuela. So, the oil companies, in partnership with the government, invested in a few other industries, including making Venezuela into a producer of steel. In the 1950s, the Venezuelan government also lavished public works projects on the capitol, Caracas. The construction of new hotels, office buildings, apartments and super highways transformed Caracas into a glittering, architecturally modernistic city. Other than public construction, the nation’s money was concentrated on the armed forces, the mainstay of the regime, the protector of law and order.
But behind this “showcase” of U.S. policy in Latin America, Venezuela remained a poor country, which depended on the sale of one product. Much of the population remained impoverished, with chronically high unemployment. Even the Archbishop of Caracas publicly charged, “the immense majority of our people are living under subhuman conditions.” And the grip of the military dictatorship was not loosened one bit, with all political parties, including bourgeois, radical and communist, outlawed.
On January 1, 1958, a rebellion inside the military against the dictatorship of Colonel Marcos Perez Jimenez broke out. Although it was put down by troops loyal to the dictator, the rebellion set off three weeks of demonstrations, strikes and clashes with police that forced Perez Jimenez to flee to the Dominican Republic. On January 23, a new military junta was set up. This, too, was met by unrest that lasted throughout the year. Finally, on February 6, 1959, military rule gave way to an elected government.
The military dictatorship was not the only target of deep anger inside the population. In May 1958, U.S. Vice-president Richard Nixon made Caracas his final stop on a big Latin American tour. He was attacked in his limousine on the way to the airport by angry masses of demonstrators and nearly killed. This attack was only one, albeit the most dangerous, of a series of confrontations that Nixon faced in Latin America. Throughout Latin America there was bitter anger against U.S. domination. Venezuela was no exception.
In January 1959, Fidel Castro took power in Cuba at the head of a popular revolt against another U.S.-sponsored dictator. Although Castro showed that he was ready to do business with the U.S., U.S. policy makers feared that the Cuban Revolution would encourage other armed revolts against U.S.-sponsored regimes. So the U.S. government tried to isolate and overthrow the Castro regime.
A top priority for the U.S. government was stabilizing Venezuela after all those revolts and unrest in 1958. According to an official report commissioned in 1961 by the incoming Kennedy administration, if a revolution broke out in Venezuela, it could very quickly spread throughout both the Caribbean and Latin America. So, within the context of Kennedy’s brand new Alliance for Progress, which was supposed to encourage the growth of supposedly democratic and progressive political parties, a political system was set up in Venezuela along American lines. There were two big parties, a liberal party and a conservative Christian party, that took turns holding power, like the swings of a pendulum. There was also a trade union confederation that was completely tied to the government and was used to tame and control the workforce.
However, throughout the 1960s, the Venezuelan economy was mired in deep recession and high unemployment, with impoverishment especially high in the ever-expanding slums of Caracas and Maracaibo. Behind this new crisis was the fact that oil was selling cheap on the world market because of a chronic oversupply. In response, the big oil companies in Venezuela cut back on their investments, stopped drilling new wells and pressured the government to cut their taxes.
In 1973, Venezuela’s economy began to boom. Under the guise of the Arab oil embargo that followed the Six-Day War between Israel and Egypt, the major oil companies engineered fake oil shortages as an excuse to quadruple oil prices on the world market. This meant not only record profits for the oil companies, but an enormous influx of money into the Venezuelan economy.
Generally, this period is presented as some kind of big power shift to the oil exporting countries. In reality, U.S. imperialism was pulling the strings.
For example, the big oil companies profited greatly out of the 1976 nationalization of the Venezuelan oil industry. The multinational oil companies had stopped investing and exploring for oil, at least going back as far as 1958. When the Venezuelan government nationalized the oil industry, it took over a lot of old, run-down equipment and facilities. For that, the Venezuelan government paid the oil companies top dollar, which added to the country’s debt. The Venezuelan government then shouldered the cost of any new investments and exploration, with money that it had to borrow from U.S. banks. And, the Venezuelan government had no choice but to hire the very same U.S. and British oil companies to do the work, since they had the resources and technology. The same people who ran the old oil companies then ran the new nationalized Venezuelan company. The signs changed. The name of the payer on the checks changed. But it was the same operators. The only difference was that all the bills for all the new work were sent to the Venezuelan treasury, that is, the Venezuelan taxpayers.
As for the Venezuelan economy, the oil boom fueled feverish economic development, as the government bankrolled big infrastructure spending, real estate development and corporate subsidies to expand other industries. But the masses of workers and poor hardly benefitted, since very high inflation quickly eroded any gains that ordinary people might have made.
In the process, the Venezuelan government ran up big debts to pay for subsidies and tax breaks to big companies, to fund investment in the oil industry and compensate the oil companies for the nationalization, etc. When a big worldwide recession caused the oil markets to crash in the early 1980s, Venezuela went from boom to bust. The Venezuelan government was faced with enormous interest payments and debt service that it had no money to pay. The banks and the IMF forced the government to impose heavy austerity measures on the working population and poor, leading to major hunger and deprivation.
But the population refused to allow itself to be starved to death. For five days in February 1989, food riots broke out in Caracas, Venezuela’s capital. People looted supermarkets. The national guard and the army were brought out. Officially, hundreds were killed, with the real numbers in the thousands.
No, under the domination of the U.S. and the oil companies, Venezuela was never a “middle class” country, nor was there ever any extended period of prosperity that reached the working and poor masses. As for its economic development, Venezuela, despite its great oil wealth, has remained the equivalent of a one-crop economy, a petro-state, that throughout the last century has mainly fed the stupendous profits of the U.S. capitalist class.
Long before Hugo Chavez and Nicolas Maduro headed the government of Venezuela, the situation in the country had been a disaster created by the domination of imperialism.
The experience of Venezuela shows that there is no escape for a country under the domination of imperialism, no matter what natural resources that country has. It has to depend on the global marketplace for trade, finance and technology. That market is dominated by the big imperialist powers, always trying to impose their monopolies over the underdeveloped countries, even more so at a time of worsening economic crisis and decline like today.
Chavez might have claimed that Venezuela’s oil resources would let him find a way to serve the interests of both the capitalists and the workers. But that was impossible. Because the interests of the capitalists and the workers are completely opposed. One cannot serve two masters. What is given to the bourgeoisie is taken from the working class and the oppressed. Finally, what Chavez did was to sow illusions amongst workers and the oppressed, allowing capitalism to prosper.
No radical, no nationalist, can advance the cause of the working class. Only revolutionary workers, who are organized in a party at the head of the working class, can carry out this fight.
Certainly, the working class in Venezuela has, throughout its history, found ways to carry out all kinds of fights, sometimes to the point of open revolt. And it has carried out these fights under many kinds of regimes, from military dictatorships, to supposedly “liberal” democracies, and finally to such nationalists as Hugo Chavez and Nicolas Maduro. But what the Venezuelan workers need is enough militants in the working class who understand that it’s not enough to push those fights forward. They also have to build their own revolutionary party whose goal is to unite the working class with the international perspective of taking the power from the capitalist class, destroying imperialism and running society in the interests of all humanity.