Revolutionary Venezuela and the capitalist crisis

By Roberto Jorquera

While capitalist governments around the world have responded to the freezing up of the capitalist financial system by turning trillions of dollars of public funds over to bankrupt bankers, the revolutionary government of Venezuelan socialist President Hugo Chavez has continued to take steps to redistribute wealth to Venezuela’s working people.

Since being restored to Venezuela’s presidency by a mass revolutionary uprising against a US-backed military coup in April 2002, Chavez has led the way towards an ever-increasing state share and control over the natural resources of the country and major industries. There have been nationalisations in telecommunications, steel, cement, electricity and the banking sector. The Venezuelan government is taking increasing control of the main pillars of the economy and increasing price regulations on food. These measures, together with increasing spending on social services and infrastructure, enabled Venezuela to protect ordinary people from the capitalist world’s economic chaos. At a press conference on October 27 held jointly with the Ecuadorian President Rafael Correa, Chavez said: “The consequences of the world’s financial crisis are unpredictable, but in Venezuela we had a constituent process where it was developed a new economic system.”

Martin Saatdjian, third secretary at the Venezuelan foreign affairs ministry, stated in an article on the website in response to the way in which capitalist governments where responding to the crisis (nationalising or partially nationalising bankrupt financial corporations): “On the other hand, the socialist state intervention prioritises the most basic needs of people. This is the type of controlled and planned intervention that has been carried out by Hugo Chavez in Venezuela, while at the same time maximising democracy, political consciousness, and the participation of the people in managing their own affairs. The enterprises that have been nationalised in Venezuela, such as the main communications company (CANTV), the iron and steel industry (Sidor), and one of the principal banks of Venezuela (Bank of Venezuela), are highly profitable enterprises.

“In the case of CANTV, its nationalisation cost the Venezuelan state roughly [US]$1.6 billion; however, after a full year of operations this company earned nearly $400 million in net profits. At this pace, the Venezuelan state will recover its initial investment is just three years of operations. The resources that previously went into the pockets of rich people or became capital flight, are now being used by the government of Hugo Chavez to finance public heath care projects that are highly beneficial to the neediest people.”

The Chavez government-funded VIO News blog reported on October 16 that a “Miami Herald opinion piece claims that economists ‘agree’ that Venezuela will be harder hit by the global financial crisis than any other country. This is, however, untrue; analysts quoted recently in the Financial Times, Bloomberg, and Reuters have all said that Venezuela is well insulated. Reuters reported that Venezuela ‘will likely emerge unscathed from the current global financial contagion even if tumbling crude prices force the oil-dependent OPEC nation to scale back spending’. AFP reports that Venezuela’s stock market has seen a drop in value of less than one percent, while percentage losses are in the teens for Brazil and Argentina, which are among Latin America’s largest economies.”

While many US newspapers have claimed that the Chavez government will be hard hit by the fall in oil prices as a result of the global recession — from its speculation-driven peak of US$147 a barrel in July back down to around their 2007 average of $64 — on October 22 Chavez dismissed such claims. Reviewing the evolution of international oil prices since he was elected Venezuela’s president in 1998, Chavez said: “I say, to keep pace with the great campaign that already started trying to foment fear and uncertainty among Venezuelans, even if the price of oil were to fall back to 2006 levels, when it finished at $55 per barrel, you can be totally sure of it, Venezuela would continue growing socially and economically.”

Chavez pointed out that the Venezuelan economy grew by 15% in 2004, when the average price of oil was $32.80 per barrel, and has grown for five consecutive years, during four of which the average price of oil was lower than it is today. “For 10 years [the US capitalists] have been saying that the Venezuelan economy is sinking, and now they are the ones who sank”, Chavez said.

On October 30, the Venezuelan ABN news agency reported that Chavez called for “a new, fairer, more balanced, and supportive economic and political international system has to be created before capitalism’s meltdown”. In a speech that day, Chavez “made reference to a recent letter written by [retired Cuban president] Fidel Castro, who, among other issues, talked to him about the world financial crisis and North American empire’s usage of economic power, ‘he gives me an explanation about why that model is unsustainable and it is sinking like the Titanic’. Chavez warned that Venezuela is still alert about this world crisis, ‘because it is like a financial economic earthquake; for that reason I insist on creating a new international economic institutionality and, in this sense, the Southern countries have to fight for it and not [allow to be] impose[d] again [the] dollar’s dictatorship, its hegemony, the hegemony of a system managed by the International Monetary Fund and the Empire of United States, which is the main cause for this disaster’.”

Chavez stressed that “Venezuelans must know that Venezuela will keep working, as well as Cuba. Social programs are not in danger, nor our missions, social equity, social justice, social inclusion, nor the social development of our people.”

James Suggett, writing for the web-based news service, reported on October 24 that “Venezuela’s Finance Minister Ali Rodriguez presented a national budget proposal for 2009 that will increase social spending and is based on predictions of 6% economic growth, a stable national currency, and oil exports at a price of $60 per barrel”. Suggett also reported: “A swift assessment of 2007 figures reveals that Venezuela tops most nations in the world and the entire American Hemisphere (including the United States and Canada) with the biggest international reserves (IR) per capita. According to figures from 2007, for each single person that lives in Venezuela there are nearly $1,300 worth of IR at the end of 2007 ($34 billion total). This per capita amount surpasses the main economies of Latin America, such as: Argentina ($1,141); Brazil ($919), Chile ($1,023) and Mexico ($799). According to these figures, Venezuela’s IR surpasses the second Latin American country with most IR per capita, that of Uruguay, by $113. This amount, if multiplied by the entire Venezuelan population (26.4 million), would total nearly $3 billion. Such an amount could be used to tackle the negative impacts of the financial crisis and Venezuela would still be at the top of the Latin American list in IR per capita.”

Though no country will be immune from the effects of the current capitalist world economic meltdown, the example of Venezuela clearly shows what is possible with an increasingly socially-owned economy directed by a government that serves the interests of working people rather than profits of capitalist corporations.

[Roberto Jorquera is a member of the Revolutionary Socialist Party and is one of the organizers of this month’s eighth Australian-Venezuela Solidarity Network brigade to Venezuela.]