Venezuela: Fighting sanctions and sabotage

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In the face of plummeting oil prices, US sanctions, recession and inflation, in January President Nicolas Maduro promised that Venezuela would invest in production and slash government salaries, including his own. He went on: ‘We will never cut one bolivar of what we spend on education, food, housing – on our people.’ Sam McGill reports.

War of attrition

In the same week that US President Obama announced the re-establishment of diplomatic ties with socialist Cuba, he signed a law freezing the assets of Venezuelan officials for alleged human rights abuses during the opposition’s orchestrated ‘Exit Strategy’ violence in spring 2014. What the new law ignores, of course, is that the majority of the 43 deaths during the clashes were caused by street barricades erected by opposition gangs; four are attributed to state security forces. These sanctions were imposed scarcely a week after the US Senate intelligence committee reported on the brutal torture methods used by the CIA. At least Venezuela’s attorney general has launched a criminal investigation into the deaths that occurred at the hands of the state security forces. Obama on the other hand has categorically refused to prosecute any US official implicated in using or ordering torture.

The Community of Latin American and Caribbean states (CELAC), the G77 and China have all denounced the US sanctions against Venezuela. Nicaragua announced its own travel ban against the two US senators, Marco Rubio and Ileana Ros-Lehtinen, who were the key sponsors of the sanctions. The Bolivarian Alliance for Latin America (ALBA) declared that any aggression against Venezuela, whether legal, economic or political, would be seen as ‘an aggression to each and every member country.’

A key strand of US policy is to provide at least $15m increased funding for reactionary opposition groups – on top of the $100m plus US agencies have channelled to the opposition since 2002. Such groups will also have the services of the US’s international propaganda broadcaster, Voice of America, at their disposal.

The sanctions have already bolstered the opposition in Venezuela. January saw attempts to rekindle street violence with a fire-bomb attack on the state telecommunications company CANTV, and a demonstration by opposition group MUD in Caracas on 24 January. However, the ‘general strike’ called by the opposition for 5 January was widely ignored. A million dollars, thought to be funding from Colombian paramilitaries, was seized by state security forces who also say they foiled a plot to generate disorder and looting at supermarkets.

Hoarding, scarcity and speculation continue. Private sector imports fell 12.3% in 2014. Whilst public sector imports grew, overall net imports dropped by 1.4%. December’s holidays mean depleted shelves in shops in January are a regular occurrence. This year, however, opposition broadcasters chose to focus on the long queues and empty shelves for propaganda purposes, with MUD leader Henrique Capriles describing the shortages as ‘a perfect storm for changing the government’. Soon after, security forces discovered 135 tons of detergent, 5,000 packs of nappies, 50 tons of milk, 38 tons of rice, and 158,000 cans of tuna in the warehouses of private company Herrera CA. Herrera’s investors have links to the right-wing ‘Popular Will’ party. 400 tonnes of coffee and 33 tonnes of hygiene products were uncovered a week later. All the goods were confiscated and redistributed through the state’s subsidised food outlets, Mercal and PDVAL.

Chavistas have rallied to defend the Bolivarian Revolution. Thousands thronged the streets of Caracas on 15 December to defend Venezuela’s constitution and denounce US intervention. On 23 January, commemorating the 1958 uprising against dictator Perez Jimenez, thousands joined the ‘March of the Undefeated’, promising to fight the economic war.

Nevertheless, the Bolivarian Revolution is faced with some crucial economic questions. Venezuela entered recession in the second quarter of 2014 and annual inflation reached 63.6%, illegal currency exchange continues to spiral, with the dollar selling for up to 170 bolivars, nearly 30 times the preferential rate in Venezuela’s multi-tiered currency exchange system. Venezuela has also been hard hit by falling oil prices, which have fallen by well over 50% over the last six months. Oil accounts for over 90% of export earnings. Though the annual budget typically accounts for oil prices well below the stable rate, guaranteeing public spending despite price fluctuation, the 2015 spending plan announced in October budgeted for oil at a cautious rate of $60 per barrel. Since then, the price of crude oil has plummeted to $43 per barrel, hitting unanticipated lows.

There is a current oil surplus of around one billion barrels per day, attributed to the doubling of US fracking output and Saudi Arabia’s refusal to cut oil production to hold prices in check. Saudi Arabia, OPEC’s primary exporter, holds nearly $1 trillion in reserves, and has opted to weather the lower prices in order to maintain market share. With the squeeze on oil prices weakening Venezuela, Iran and Russia, the US and Saudi Arabia are unlikely to change tack any time soon.

Venezuela’s finance and economic development commission identified two components to the country’s economic crisis: ‘1) the economic war with inflation and a 3–4% drop in productive output and 2) an economic model that is incapable of promoting the development of the nation ... we have to commit to economic recovery in a situation of crisis, political conflict and electoral process. We do not have any alternative.’

Despite the bleak outlook, Venezuela maintains a positive balance of payments. The Central Bank (BCV) reports a trade surplus of $6.8 billion for the first three quarters of 2014 whilst international reserves total $20.8 billion. Venezuela is not about to default.

Fighting the economic war

In order to strengthen links and secure foreign investment, in January Maduro launched an international tour to ‘fight for fair oil prices’. During a high level forum between China and CELAC in Beijing, China pledged $250 billion in new investment in Latin America in the next decade, providing an immediate $20 billion for development and industrial projects in Venezuela. In return, Venezuela plans to double oil exports to China to 1m barrels per day by 2016. Maduro then went on to visit Iran, Qatar, Saudi Arabia and Algeria.

Nationally, the government has announced a recovery programme to stem recession and stimulate national production. On 21 January, Maduro announced increased social spending, particularly for education and housing, restating the plan to build three million homes by 2019. To tackle currency speculation, the official exchange rate will remain fixed at 6.3 bolivars to the dollar for health care and food, but non-state transactions will be subject to a floating market rate. To alleviate the impact of inflation, workers’ salaries and pensions will be increased by 15% from the beginning of February. An increase in petrol prices will be considered. There will be increased foreign investment in production with proposed ‘special economic zones’ and a focus on agriculture. National food production has tripled in the last 15 years but improvements in nutrition and purchasing power mean consumption still outstrips production. A new body headed by Maduro will implement the recovery plan.

These plans may provide breathing space, but to win the economic war, a state monopoly of foreign trade is essential to end the private capitalist control of imports and distribution. Venezuela will continue to be hamstrung by reliance on oil exports unless it can diversify production on a national scale. Winning the economic war is dependent on the Bolivarian Revolution’s ability to mobilise the working class in industry and agriculture. As Hugo Chavez put it in his Programa Patria in 2012, building socialism in the 21st century requires ‘transcending the oil-rentier capitalist model for a productive economic socialist model...a productive, redistributive, post-rentier, post-capitalist economy based on broad public, social and collective support of ownership of the means of production’.

Fight Racism! Fight Imperialism! 243 February/March 2015