Venezuela's socialist revolution surges forward

By Sam King

At a May 21 mass meeting of more than 400 trade union leaders in Bolivar City, Venezuelan President Hugo Chavez and labour minister Maria Cristina Iglesias resolved to nationalise six strategic industrial companies. Chavez made the announcement after hearing submissions from union leaders who called, one after another, for workers’ control of industry, the sacking of capitalist managers and nationalisation of the companies, according to a report from a participant.

Chavez stated: “It is necessary to integrate all the companies in Guayana [state]’s basic industrial sector … We are constructing a new iron and steel company in Venezuela.” In the speech, shown live on Venezuelan television, Chavez declared: “The iron briquettes sector is nationalised. There is nothing to discuss.”

Chavez continued: “The process of nationalisation, to be able to create this industrial complex, commences immediately … The nationalisation process is beginning precisely to create this industrial complex … These companies must be under workers’ control. That’s how it must be.” He added: “It has to be assumed with responsibility, with a sense of integration between government and workers … I am sure that Guayana will be converted into a massive platform of socialism, of construction of socialism with the working class in the vanguard, with the working class as the protagonists, and Guayana will be a school of socialism. As Che said: ‘Each factory (will be) a school of political formation’, to produce not only briquettes and snowcaps and steel and aluminum, but also, above all, the new man and women, the new company, the socialist company … I feel happy, because I see, touch and I feel the roar of the working class. When the working class roars the bourgeoisie trembles.”

The six companies to be nationalised are the Guayana Steelmaking Complex (Comsigua), the steel tube producer TAVSA, iron producers Orinoco Iron and Venprecar, the briquetted iron producer Matesi and the ceramic tile producer Ceramicas Carabobo. Orinoco Iron and Venprecar together produce 2.7 million tonnes of briquetted iron per year, and are partly owned by Australia’s BHP Billiton, the world’s largest mining company. Comsigua is controlled by the Japanese multinational Kobe Steel. The decision included wage rises for thousands of workers and cuts to managerial salaries.

Venezuela’s working people’s government, the product of a revolutionary uprising by working people in April 2002, has accelerated the pace at which the state is taking control of the economy since Chavez was re-elected president in December 2006. The approach of the Chavez leadership has been to expropriate capitalist companies when their workers and the government are in a position to take over management from the former owners. For example, the government announced that it would nationalise Sidor, owner of Venezuela’s largest steel plant, on April 9 last year, only after a 14-month industrial dispute between the workers and Sidor’s capitalist owners, in which the workers demanded the state takeover the steel mill.

Oil services companies

As the creation of an integrated, (centrally planned) industrial complex gathers momentum, the remaining capitalist sector in the oil industry is being eliminated. The May 8 New York Times reported: “Industry representatives in the oil-producing state of Zulia said uniformed soldiers had begun occupying oil installations on Thursday, shortly before the National Assembly approved a measure allowing the takeovers. The move deepens Mr Chávez’s control of the oil industry, following the imposition of higher royalties on foreign oil companies, raids on their offices by tax authorities and the nationalization of large oil-producing projects in recent years.”

The May 13 Miami Herald reported that PDVSA, the government-controlled oil company, stated “it has taken control of 90 percent of oil contractors on western Lake Maracaibo as it aims to reduce costs due to falling crude prices. President Hugo Chavez announced last week that Venezuela is nationalizing 60 oil contractors …” The private oil contractors, including the Venezuelan subsidiary of the US-owned Halliburton, operate offshore oil drilling rigs.

On May 20 the Chavez government took over a gas compression plant in the eastern state of Monagas owned by the US corporation Williams Companies. Venezuela’s state oil company PDVSA had contracted the project to a company controlled by Williams in 2001. The plant has the capacity to produce 40 billion cubic metres of gas per day. Williams has now lost its gas compression plant and two gas injection plants in Venezuela. Nationalisation is expected to deliver PDVSA a 20% reduction in production costs.

The May 23 Wall Street Journal reported: “Almost every sector in Venezuela is now under the state’s expanding embrace, including power, telecommunications, and agro-industrial companies”. That same day, Associated Press reported: “President Hugo Chavez’s government [has turned] into the country’s top financial player”, as a result of the government’s decision to take over the Spanish-owned Bank of Venezuela. The Venezuelan state already owns four other banks.

Bank of Venezuela has a network of 286 offices across the country. Its acquisition by the government “will be a weapon to pursue [Chavez’s] socialist agenda”, Oscar Garcia, president of the private Venezuelan Credit Bank, told the Wall Street Journal. The opposition newspaper El Universal commented on May 18: “When the government has a network of branches all over the country, it will concentrate the money of the state in its financial conglomerate.” The capitalists’ fear of the revolutionary government’s dominance of the banking sector is heightened by the overwhelming financial dominance of PDVSA, which provided 90% of Venezuela’s foreign currency earnings in 2007, according to Central Bank of Venezuela figures.

Food sovereignty and land

Following its March expropriation of a rice-processing plant owned by US food giant Cargill for evading government price controls, last month the state took temporary control of a Cargill pasta factory for the same reason. “The vice minister for food, Rafael Coronado, said the government will run the factory for 90 days, and make a new decision in the meantime on how to proceed”, the Venezuelanalysis website reported on May 19.

Two weeks earlier, Reuters had reported that the National Land Institute (INTI) had expropriated a eucalyptus plantation owned by Irish cardboard company Smurfit Kappa to use the land for food crops. On May 10, INTI expropriated 10,000 hectares of arable land making up six farms and mixed farming industries in the state of Barinas.

Speaking on his weekly television program Alo Presidente, Chavez said on May 10 that “the only way to save Venezuela is through socialism”. He added that the government must “end the practice of [capitalists] owning farms to spend the weekends only … Occasionally, they kill a calf to celebrate, to drink whisky, rum and have a party. We have to stop this once and for all. Whoever wants to work his land, must come to work. It is not for fun. They just want to show their high status and their luxury... No!, no!, no! The land belongs to the one who works on it.”

Agriculture and food production is a strategic economic sector yet to come under full government control. Food shortages are widespread due to capitalist companies such as Cargill and Polar hoarding food or selling it on the black market, often by illegally exporting it through Colombia to avoid selling it at government-regulated prices. According to the US-based think-tank Stratfor, food shortages were a key reason the Chavistas narrowly lost the December 2007 constitutional referendum. A subsequent referendum in 2008 was easily won by the Chavistas, and two recent opinion polls, including one by a company aligned with the pro-capitalist opposition parties, both put Chavez’s popularity above 60%.

Global capitalist economic crisis

The global capitalist economic crisis has quickened the pace of economic transformation in Venezuela. The new wave of nationalisations are all, in part, triggered by deteriorating global economic conditions, which have resulted in 59% drop in oil prices since mid last year, which has cut state revenue. The March 24 Wall Street Journal reported that PDVSA had paid only “a fraction of its debt to a group of 56 oil-service companies” whose Venezuelan operations have since been taken over by PDVSA. “Oil service giants Halliburton Co and Schlumberger Ltd have received anywhere between 5% and 7% of their total pending bill which adds to roughly $1 billion combined …” The US-based Bloomberg business news website reported on May 22: “Chavez is seeking control of the metals industry as aluminium and bauxite companies buckle under low international prices.”

Many of the companies that have been targeted for nationalisation have been involved in protracted labour disputes in an attempt to maintain their profits by cutting production costs — causing workers to take strike action and raise the demand for nationalisation. “We are joyous about the decision to nationalise Ceramicas Carabobo, which represents a long struggle”, Leandro Gonzalez, a representative of the enterprise-based union told Venezuelan television. “Previously, the owners kept us subjugated, and we even went seven months without pay.” Workers previously employed by the private owners will be transferred to the government payroll, which promises far better wages and conditions.

While the Venezuelan government is criticised by some foreign socialists for not having nationalised more capitalist companies, its approach has been to nationalise businesses only when workers and the state are in a position to manage them. The current planning and development minister, Haiman El-Troudi, told me in June 2007: “Why should the state control the other 30% [of the economy still privately owned] if we don’t have a guarantee that we can administer it efficiently and control it? So that we have to subsidise it? Or to bankrupt it? No.”

This is not a new dilemma for revolutionary socialists. In a 1918 pamphlet, Russian revolutionary leader Vladimir Lenin wrote: “The difference between socialisation and simple confiscation is that confiscation can be carried out by ‘determination’ alone, without the ability to calculate and distribute properly, whereas socialisation cannot be brought about without this ability.”