The Bolivarian revolution in Venezuela continues to defy press pundits and economic analysts alike. A convincing victory for socialist forces in the regional elections of October 2017 poured cold water on the chorus of critics predicting the collapse of the United Socialist Party (PSUV) government and has splintered the opposition ‘Democratic Unity’ (MUD) coalition into infighting and chaos. Meanwhile Venezuela is negotiating to restructure its debt, resisting US sanctions and an international economic campaign to force the nation to default. Inflation, economic sabotage and depreciation of the bolivar currency continue unabated. With municipal elections in December and presidential elections next year, securing finance and making progress against the economic war in the coming months is crucial. Sam McGill reports.
In October’s elections, the PSUV-headed ‘Great Patriotic Pole’ coalition won governors in 18 out of Venezuela’s 23 states, garnering 52.7% of the vote with a 61% turnout. This shows a continuation of support for the Bolivarian project after July’s elections for the National Constituent Assembly saw eight million voters select delegates tasked with rewriting the constitution and tackling the economy. The MUD opposition received a major setback, losing two million votes compared to their significant victory in the 2015 National Assembly elections. The MUD still won five important states, including oil-rich Tachira and Zulia, which border Colombia, hotspots for opposition violence and para-militarism. However, the MUD lost Miranda state, which borders the capital and is the heartland of the Caracas elite, serving as a focal point for the violent opposition protests earlier this year.
Beaten at the ballot box and defeated on the streets, the MUD coalition is fragmented. After failing to block the National Constituent Assembly (ANC) elections in June, the MUD has flatly refused to recognise the constitutional body. Despite this, four of the five opposition governors elected in October were sworn in before the ANC. All are aligned to Accion Democratica, one of the major MUD members. In response, ex-Presidential candidate and leader of the Primero Justicia party, Henrique Capriles, withdrew from the coalition. The frail alliance disintegrated further following the announcement that the three largest MUD parties are boycotting mayoral elections on 10 December, threatening to expel party members who register and vote. Flouting this, several leading opposition politicians have registered their candidacies on the tickets of smaller parties. Whether the opposition will be able to unite behind a single candidate in next year’s Presidential elections remains to be seen.
Despite the important boost provided by the election, the economic noose is tightening. Undermining currency controls imposed since 2003, the unofficial exchange rate, which drives up inflation and propels speculation, is manipulated by influential foreign websites like dolartoday. Punishing the country for the election result, the bolivar lost nearly a third of its value relative to the dollar. Adding to this the US is piling on pressure, trying to create a pretext to seize oil assets by forcing Venezuela to default.
Since Trump imposed economic sanctions in August 2017, banks have restricted credit notes that US refineries need to pay for Venezuelan oil, leading to a 56% drop in US oil imports compared to last year. In response to Maduro’s call to restructure $60bn of debt the Treasury Department threatened US bondholders that dealing with sanctioned Venezuelan officials constituted a violation punishable by 30 years in prison and up to $10m fines. Despite this, 414 investors flocked to Caracas for initial talks in November – 91% of bond holders. Venezuela’s hand was strengthened by support from China and a 10-year restructuring deal already drafted with Russia. However, as sanctions prohibit any US nationals or institutions from issuing new credits to the Venezuelan government, signing off on a restructuring deal could prove difficult.
Ramping up the pressure, Standard and Poor’s downgraded Venezuela’s credit rating to CCC – ‘selective default’. Bourgeois financial news outlets were triumphant, pointing to state oil company PDVSA’s non-payment of $200 million of interest due on 2 November. PDVSA says it made the payment on 3 November. According to Maduro, Venezuela and PDVSA have paid more than US$71.7bn in debt servicing over the last four years, including a $841m payment on its 2020 bonds in October. Regardless, the headlines whipped up further uncertainty and fear around Venezuela’s solvency.
With Luis Almagro, President of the Organisation of American States, demanding a total oil blockade of Venezuela, and the EU declaring an arms embargo and sanctions on Venezuelan politicians, the Bolivarian revolution is facing an international campaign of economic terror and strangulation designed to overthrow the elected PSUV government.
Whether the Bolivarian revolution will be able to face down this latest imperialist threat will depend on its ability to make progress against the economic war at home. As detailed in FRFI 260, billions of dollars are being handed over to private companies who are depositing their wealth abroad and refusing to import or produce food and essential goods. Driving this point home, private company Protinal Proagro have been caught dumping chicks into specially dug trenches before burying them alive, rather than distributing them to farms to mature. According to investigative journalist Carlos Herrera, Protinal has destroyed more than 100 million chicks this year. Similarly, Ovomar, an egg distribution company, was found to have hoarded over six million eggs instead of supplying them to supermarkets, leaving them to rot in warehouses. So far, no criminal charges or sanctions have been brought against either private company.
Tension is building in the Constituent Assembly, with several delegates and their represented communities pushing for urgent progress in tackling economic sabotage, demanding more power for communal organisations. With the opposition at its weakest point in years, now is an opportune moment to take on the monopolies that are sabotaging supply lines, seize control over import and distribution networks and tackle corruption across the board.
Frustrated with a lack of action, Assembly second vice-president Isaias Rodriguez publicly warned of the potential for defeat in next year’s presidential elections ‘if the government and the National Constituent Assembly do not offer timely responses to this problem’. Rodriguez came under fire from PSUV loyalists and was removed from his post, but such debate is essential if the Constituent Assembly is to really represent the sectors that elected it.
Voicing similar concerns, Assembly representative David Paravisini argued: ‘There is pressure from certain sectors of the PSUV who I imagine don’t want this [economic] issue to be opened because it terrifies them’. The PSUV remains a cross-class electoral party, containing socialist community activists alongside powerful business leaders benefitting from juicy state contracts. Maduro has since announced a ‘civic-military’ day against speculation where work teams will inspect 11,890 enterprises nationwide and the ANC is now discussing ‘the law of agreed prices’ to combat speculation. This is an important step but consistent popular participation in enforcement will be crucial.
Further grievances challenge PSUV’s decision to hand-pick candidates for December’s mayoral elections rather than hold primary elections for grassroots delegates. In response organisations in the Great Patriotic Pole have put forward several activists from communal and social movements to stand against nationally proposed PSUV candidates. A case in point is the hotly contested race in El Libertador, Caracas where former minister Eduardo Saman, known for his commitment to fighting corruption and enforcing price controls, will go head-to-head with high-ranking PSUV activist Erika Farias, a staunch supporter of participatory democracy through the communal councils. The opposition boycott has provided much needed space for debate and competition between Bolivarian candidates without risk of a split vote handing a victory to the MUD.
If socialists successfully thwart attempts to shut down debate and self-criticism, this could provide the momentum to tackle the economic war, allowing the Bolivarian Revolution to reclaim the initiative in confronting the distortions imposed by capitalism in the country.
Fight Racism! Fight Imperialism! 261 December 2017/January 2018
