Venezuela’s constitutional reforms supporting President Chavez’s
socialist project were defeated by the narrowest of margins: 1.4% of 9
million voters. The result however was severely compromised by the
fact that 45% of the electorate abstained, meaning that only 28% of
the electorate voted against the progressive changes proposed by
President Chavez. While the vote was a blow to Venezuela’s attempt to
extricate itself from oil dependence and capitalist control over
strategic financial and productive sectors, it does no change the 80%
majority in the legislature nor does it weaken the prerogatives of the
Executive branch. Nevertheless, the Right’s marginal win does provide
a semblance of power, influence and momentum to their efforts to
derail President Chavez’ socio-economic reforms and to oust his
government and/or force him to reconcile with the old elite power
brokers.
Internal deliberations and debates have already begun within the
Chavista movement and among the disparate oppositional groups. One
fact certain to be subject to debate is why the over 3 million voters
who cast their ballots for Chavez in the 2006 election (where he won
63% of the vote) did not vote in the referendum. The Right only
increased their voters by 300,000 votes; even assuming that these
votes were from disgruntled Chavez voters and not from activated
right-wing middle class voters that leaves out over 2.7 million Chavez
voters who abstained.
Diagnosis of the Defeat
Whenever the issue of a socialist transformation is put at the top of
a governmental agenda, as Chavez did in these constitutional changes,
all the forces of right-wing reaction and their (‘progressive’) middle
class followers unite forces and forget their usual partisan
bickering. Chavez’ popular supporters and organizers faced a vast
array of adversaries each with powerful levers of power. They
included: 1) numerous agencies of the US government (CIA, AID, NED and
the Embassy’s political officers), their subcontracted ‘assets’
(NGO’s, student recruitment and indoctrinations programs, newspaper
editors and mass media advertisers), the US multi-nationals and the
Chamber of Commerce (paying for anti-referendum ads, propaganda and
street action); 2) the major Venezuelan business associations
FEDECAMARAS, Chambers of Commerce and wholesale/retailers who poured
millions of dollars into the campaign, encouraged capital flight and
promoted hoarding, black market activity to bring about shortages of
basic food-stuffs in popular retail markets; 3) over 90% of the
private mass media engaged in a non-stop virulent propaganda campaign
made up of the most blatant lies – including stories that the
government would seize children from their families and confine them
to state-controlled schools (the US mass media repeated the most
scandalous vicious lies – without any exceptions); 4) The entire
Catholic hierarchy from the Cardinals to the local parish priests used
their bully platforms and homilies to propagandize against the
constitutional reforms – more important, several bishops turned over
their churches as organizing centers to violent far right-wing
resulting, in one case, in the killing of a pro-Chavez oil worker who
defied their street barricades. The leaders of the counter-reform
quartet were able to buy-out and attract small sectors of the
‘liberal’ wing of the Chavez Congressional delegation and a couple of
Governors and mayors, as well as several ex-leftists (some of whom
were committed guerrillas 40 years ago), ex-Maoists from the ‘Red
Flag’ group and several Trotskyists trade union leaders and sects. A
substantial number of social democratic academics (Edgar Lander, Heinz
Dietrich) found paltry excuses for opposing the egalitarian reforms,
providing an intellectual gloss to the rabid elite propaganda about
Chavez ‘dictatorial’ or ‘Bonapartist’ tendencies.
This disparate coalition headed by the Venezuelan elite and the US
government relied basically on pounding the same general message: The
re-election amendment, the power to temporarily suspend certain
constitutional provisions in times of national emergency (like the
military coup and lockouts of 2002 to 2003), the executive nomination
of regional administrators and the transition to democratic socialism
were part of a plot to impost ‘Cuban communism’. Right-wing and
liberal propagandists turned unlimited re-election reform (a
parliamentary practice throughout the world) into a ‘power grab’ by an
‘authoritarian’/’totalitarian’/’power-hungry’ tyrant according to all
Venezuelan private media and their US counterparts at CBC, NBC, ABC,
NPR, New York and Los Angeles Times, Washington Post. The amendment
granting the President emergency powers was de-contextualized from the
actual US-backed civilian elite-military coup and lockout of
2002-2003, the elite recruitment and infiltration of scores of
Colombian paramilitary death squads (2005), the kidnapping of a
Venezuelan-Colombian citizen by Colombian secret police (2004) in the
center of Caracas and open calls for a military coup by the ex-Defense
Minister Baduel.
Each sector of the right-wing led counter-reform coalition focused on
distinct and overlapping groups with different appeals. The US focused
on recruiting and training student street fighters channeling hundreds
of thousands of dollars via AID and NED for training in ‘civil society
organization’ and ‘conflict resolution’ (a touch of dark humor?) in
the same fashion as the Yugoslav/Ukrainian/Georgian experiences. The
US also spread funds to their long-term clients – the nearly defunct
‘social democratic’ trade union confederation – the CTV, the mass
media and other elite allies. FEDECAMARAS focused on the small and big
business sectors, well-paid professionals and middle class consumers.
The right-wing students were the detonators of street violence and
confronted left-wing students in and off the campuses. The mass media
and the Catholic Church engaged in fear mongering to the mass
audience. The social democratic academics preached ‘NO’ or abstention
to their progressive colleagues and leftist students. The Trotskyists
split up sectors of the trade unions with their pseudo-Marxist chatter
about “Chavez the Bonapartist’ with his ‘capitalist’ and ‘imperialist’
proclivities, incited US trained students and shared the ‘NO’ platform
with CIA funded CTV trade union bosses. Such were the unholy alliances
in the run-up to the vote.
In the post-election period this unstable coalition exhibited internal
differences. The center-right led by Zulia Governor Rosales calls for
a new ‘encounter’ and ‘dialogue’ with the ‘moderate’ Chavista
ministers. The hard right embodied in ex-General Baduel (darling of
sectors of the pseudo-left) demands pushing their advantage further
toward ousting President-elect Chavez and the Congress because he
claimed “they still have the power to legislate reforms”! Such, such
are our democrats! The leftists sects will go back to citing the texts
of Lenin and Trotsky (rolling over in their graves), organizing
strikes for wage increases…in the new context of rising right-wing
power to which they contributed.
Campaign and Structural Weakness of the Constitutional Reformers
The Right-wing was able to gain their slim majority because of serious
errors in the Chavista electoral campaign as well as deep structural
weaknesses.
Referendum Campaign:
1) The referendum campaign suffered several
flaws. President Chavez, the leader of the constitutional reform
movement was out of the country for several weeks in the last two
months of the campaign – in Chile, Bolivia, Colombia, France, Saudi
Arabia, Spain and Iran) depriving the campaign of its most dynamic
spokesperson. 2) President Chavez got drawn into issues which had no
relevance to his mass supporters and may have provided ammunition to
the Right. His attempt to mediate in the Colombian prisoner-exchange
absorbed an enormous amount of wasted time and led, predictably,
nowhere, as Colombia’s death squad President Uribe abruptly ended his
mediation with provocative insults and calumnies, leading to a serious
diplomatic rupture. Likewise, during the Ibero-American summit and its
aftermath, Chavez engaged in verbal exchange with Spain’s tin-horn
monarch, distracting him from facing domestic problems like inflation
and elite-instigated hoarding of basic food stuffs.
Many Chavista activists failed to elaborate and explain the proposed
positive effects of the reforms, or carry house-to-house discussions
countering the monstrous propaganda (‘stealing children from their
mothers’) propagated by parish priests and the mass media. They too
facilely assumed that the fear-mongering lies were self-evident and
all that was needed was to denounce them. Worst of all, several
‘Chavista’ leaders failed to organize any support because they opposed
the amendments, which strengthened local councils at the expense of
majors and governors.
The campaign failed to intervene and demand equal time and space in
all the private media in order to create a level playing field. Too
much emphasis was placed on mass demonstrations ‘downtown’ and not on
short-term impact programs in the poor neighborhoods –solving
immediate problems, like the disappearance of milk from store shelves,
which irritated their natural supporters.
Structural weaknesses
There were two basic problems which deeply influenced the electoral
abstention of the Chavez mass supporters: The prolonged scarcity of
basic foodstuffs and household necessities, and the rampant and
seemingly uncontrolled inflation (18%) during the latter half of 2007
which was neither ameliorated nor compensated by wage and salary
increases especially among the 40% of self-employed workers in the
informal sector.
Basic foodstuffs like powdered milk, meat, sugar, beans and many other
items disappeared from both the private and even the public stores.
Agro-businessmen refused to produce and the retail bosses refused to
sell because state price controls (designed to control inflation)
lessened their exorbitant profits. Unwilling to ‘intervene’ the
Government purchased and imported hundreds of millions of dollars of
foodstuffs – much of which did not reach popular consumers, at least
not at fixed prices.
Partially because of lower profits and in large part as a key element
in the anti-reform campaign, wholesalers and retailers either hoarded
or sold a substantial part of the imports to black marketers, or
channeled it to upper income supermarkets.
Inflation was a result of the rising incomes of all classes and the
resultant higher demand for goods and services in the context of a
massive drop in productivity, investment and production. The
capitalist class engaged in disinvestment, capital flight, luxury
imports and speculation in the intermediate bond and real estate
market (some of whom were justly burned by the recent collapse of the
Miami real estate bubble).
The Government’s half-way measures of state intervention and radical
rhetoric were strong enough to provoke big business resistance and
more capital flight, while being too weak to develop alternative
productive and distributive institutions. In other words, the
burgeoning crises of inflation, scarcities and capital flight, put
into question the existing Bolivarian practice of a mixed economy,
based on public-private partnership financing an extensive social
welfare state. Big Capital has acted first economically by boycotting
and breaking its implicit ‘social pact’ with the Chavez Government.
Implicit in the social pact was a trade off: Big Profits and high
rates of investment to increase employment and popular consumption.
With powerful backing and intervention from its US partners,
Venezuelan big business has moved politically to take advantage of the
popular discontent to derail the proposed constitutional reforms. It’s
next step is to reverse the halting momentum of socio-economic reform
by a combination of pacts with social democratic ministers in the
Chavez Cabinet and threats of a new offensive, deepening the economic
crisis and playing for a coup.
Policy Alternatives
The Chavez Government absolutely has to move immediately to rectify
some basic domestic and local problems, which led to discontent, and
abstention and is undermining its mass base. For example, poor
neighborhoods inundated by floods and mudslides are still without
homes after 2 years of broken promises and totally inept government
agencies.
The Government, under popular control, must immediately and directly
intervene in taking control of the entire food distribution program,
enlisting dock, transport and retail workers, neighborhood councils to
insure imported food fills the shelves and not the big pockets of
counter-reform wholesalers, big retail owners and small-scale black
marketers. What the Government has failed to secure from big farmers
and cattle barons in the way of production of food, it must secure via
large-scale expropriation, investment and co-ops to overcome business
‘production’ and supply strikes. Voluntary compliance has been
demonstrated NOT TO WORK. ‘Mixed economy’ dogma, which appeals to
‘rational economic calculus’, does not work when high stake political
interests are in play.
To finance structural changes in production and distribution, the
Government is obligated to control and take over the private banks
deeply implicated in laundering money, facilitating capital flight and
encouraging speculative investments instead of production of essential
goods for the domestic market.
The Constitutional reforms were a step toward providing a legal
framework for structural reform, at least of moving beyond a
capitalist controlled mixed economy. The excess ‘legalism’ of the
Chavez Government in pursuing a new referendum underestimated the
existing legal basis for structural reforms available to the
government to deal with the burgeoning demands of the two-thirds of
the population, which elected Chavez in 2006.
In the post-referendum period the internal debate within the Chavez
movement is deepening. The mass base of poor workers, trade unionists
and public employees demand pay increases to keep up with inflation,
an end to the rising prices and scarcities of commodities. They
abstained for lack of effective government action – not because of
rightist or liberal propaganda. They are not rightists or socialist
but can become supportive of socialists if they solve the triple
scourge of scarcity, inflation and declining purchasing power.
Inflation is a particular nemesis to the poorest workers largely in
the informal sector because their income is neither indexed to
inflation as is the case for unionized workers in the formal sector
nor can they easily raise their income through collective bargaining
as most of them are not tied to any contract with buyers or employers.
As a result in Venezuela (as elsewhere) price inflation is the worst
disaster for the poor and the reason for the greatest discontent.
Regimes, even rightist and neo-liberal ones, which stabilize prices or
sharply reduce inflation usually secure at least temporary support
from the popular classes. Nevertheless anti-inflationary policies have
rarely played a role in leftist politics (much to their grief) and
Venezuela is no exception.
At the cabinet, party and social movement leadership level there are
many positions but they can be simplified into two polar opposites. On
the one side, the pro-referendum dominant position put forth by the
finance, economy and planning ministries seek cooperation with private
foreign and domestic investors, bankers and agro-businessmen, to
increase production, investment and living standards of the poor. They
rely on appeals to voluntary co-operation, guarantees to property
ownership, tax rebates, access to foreign exchange on favorable terms
and other incentives plus some controls on capital flight and prices
but not on profits. The pro-socialist sector argues that this policy
of partnership has not worked and is the source of the current
political impasse and social problems. Within this sector some propose
a greater role for state ownership and control, in order to direct
investments and increase production and to break the boycott and
stranglehold on distribution. Another group argues for worker
self-management councils to organize the economy and push for a new
‘revolutionary state’. A third group argues for a mixed state with
public and self-managed ownership, rural co-operatives and middle and
small-scale private ownership in a highly regulated market.
The future ascendance of the mixed economy group may lead to
agreements with the ‘soft liberal’ opposition – but failing to deal
with scarcities and inflation will only exacerbate the current crisis.
The ascendance of the more radical groups will depend on the end of
their fragmentation and sectarianism and their ability to fashion a
joint program with the most popular political leader in the country,
President Hugo Chavez.
The referendum and its outcome (while important today) is merely an
episode in the struggle between authoritarian imperial centered
capitalism and democratic workers centered socialism.