The Chávez decade

Academic and former economic adviser to the Venezuelan vice-president gives her analysis of the first ten years.

Men on a motorbike pass a Chavez mural in Caracas.
A Chávez mural in downtown Caracas. Photograph: Getty Images.

When Hugo Chávez Frias won the presidential elections in Venezuela on 6 December 1998, it was against the odds.

In a victory mimicked by Barack Obama 10 years on, Chávez came up from behind relatively late in the presidential race, beating the establishment candidates of two dominant political parties.

He also became the first “non-white” president of his country, elected on a broad platform for change after long years of neoliberal excesses.

Of course, Venezuela is not the United States, and Chávez’s brief in 1998, though no less challenging than Obama’s today, was very different: to transform a stagnant, “oil-ridden” rentier economy dominated by a largely unproductive middle class into something dynamic, something fairer.

The new Venezuela would aim to mobilise the lost potential of its poor majority and to utilise its vast natural resources for egalitarian social and economic progress.

All this had to be achieved in a hostile international environment, marked by the rise of US neoconservatism and a global economy riding high on the seemingly unbeatable powers of de-regulated markets to generate sky-rocketing financial wealth (Yes, that was then.).

It is also worth remembering that Chávez came to power on the electoral ticket of an eclectic left-of-centre coalition of parties, civil movements and workers’ representations, the MVR or Fifth Republic Movement.

While the MVR commanded popular support, it fell far short of a unified party-political organisation. History may judge that one of Chávez’s key achievements was the foundation of the PSUV or Unified Socialist Party of Venezuela.

Constituted on 8 March 2008, following a year-long process of mass formation “from below”, the PSUV won around 5.6 million votes in the regional elections on 23 November. This compares with around 4.5 million opposition votes, the most all opposition parties together have been able to mobilise in any one of the many elections held since 1998. The PSUV is clearly here to stay.

Another towering achievement is closely related: In its “Social Panorama of Latin America 2007” (p. 56), the United Nations’ Economic Commission for Latin America (ECLAC), not known for its political sympathies for Chávez, lists the Bolivarian Republic of Venezuela as an essential driver in the reduction of poverty in Latin America.

Under Chávez, the Venezuelan poverty rate fell from more than 50 per cent pre-1998 to 31 per cent in 2006, illiteracy rates from more than 15 per cent in the 1980s to below 5 per cent since 2005, and access to health and education up to tertiary levels has increased sharply.

Today, Venezuela has the most egalitarian income distribution in Latin America. The future role of the PSUV has to be seen in this broader context of a very palpable general empowerment of Venezuela’s poor. Rather than writing the new party off as an election tool in the hands of a demagogue, and harking on about measurement problems with the social statistics, the opposition would be better served by taking note of what promises to be a lasting change to Venezuela’s political map: An empowered and organised popular sector.

This said, other structural changes necessary to achieve the country’s transformation into a progressive developmental state have been slower in materialising.

Early modest reforms – including the 1999 Constitution, enshrining social rights to free education and health as well as ethnic minority rights, and the 1999 and 2001 Hydrocarbon Laws designed to establish firm public control over the oil rent – quickly led to a hardening of the right-wing opposition.

The violent but bungled 2002 coup against Chávez was almost immediately followed by a crippling oil strike, led by the managerial and technocratic middle class allies of the old oligarchy. Defeated by popular resistance and their own incompetence, from mid-2003 the opposition settled into an uneasy truce with a president who had emerged the stronger for the challenge.

While outright violence has been relegated from an imminent threat to a latent spectre hovering in the background, the stand-off between the popular classes and their president and the right-wing oligarchic opposition together with the majority of the well-to-do middle classes which largely control the every-day running of the state apparatus continues. One way of viewing current political and economic dynamics is in terms of an ongoing “fencing match” between these two camps, in which phases of redistributive peace bolstered by high growth rates interchange with sallies to push more radical, socialist reforms:

The years 2004 to 2006 saw very high growth rates (relative to their collapse in 2002 an 2003) of 18 per cent in 2004, 10 per cent in 2005 and 8 per cent in 2006, thus creating economic space for a continuation and expansion of the vast social programmes started in 1999 alongside a “pacification” of the consumerist demands of the middle classes.

This period also saw the definite rise of a “Chavista elite”, joining the ranks of their “Fourth Republic” rentier brethren. When Chávez won a land-slide victory in the 2006 presidential elections on a socialist platform, the first “sally” occurred. Of this, the PSUV survived, but reform proposals to establish a community-based broadly socialist reform of the state apparatus were rejected in the constitutional referendum held on 2nd December 2007. Ironically, this first electoral defeat for Chávez since 1998 was down not so much to his electoral base’s dislike for socialism, but to their thorough dislike of the new “Chavista elite”, fuelled throughout 2007 by very high oil prices.

2008 has been a year of realignment: Years of redistributive struggle between the two camps had inevitably led to inflationary pressures that, by now, had become impossible to ignore. The nomination of Alí Rodríguez as Finance Minister in June 2008 put the economy centre stage and into the hands of a reliable ally, capable of rooting out at least some of the worst transgressions of the “Chavista elite” (as well as their opposition counterparts). Private sector interests and initiatives were welcomed back into the fold, while some important nationalisation – notably of Latin America’s largest steel plant (formerly Ternim-Sidor) and of the Bank of Venezuela (formerly Santander) – also went ahead, as did the construction of the PSUV.

The result of the regional elections of 23 November are, once again, ambiguous: As mentioned, it has very clearly established the PSUV as a force to reckon with, taking 17 of 24 states and 80 per cent of mayoralities. Yet, the opposition has managed to establish a foothold in the poorest area of Venezuela, the municipality of Sucre (Caracas), and to win the most populated state of Miranda from a close Chávez ally, Diosdado Cabello, who, rightly or wrongly, had become the public face of the “Chavista elite”.

The rhetoric coming out of Caracas at present points to an imminent second “sally” focusing on two goals: A constitutional amendment to allow not, as is often claimed, an unlimited reign of president Chávez, but his re-election beyond the current limit of two presidential terms of office, and a head-on legal-political confrontation of opposition leaders, such as Manuel Rosales, one of the leaders of the 2002 coup against Chávez, ex-governor of the state of Zulia and now also mayor-elect of Venezuela’s second biggest city, Maracaibo.

Clearly, the economy will have to take centre state in any such second “sally”: There is no danger from falling oil prices – even $40/barrel will not create foreign exchange shortages in Venezuela – and the deflationary pressures emanating from a world economy in the grip of the worst economic crisis since 1929 will, if anything, help to abide domestic inflationary pressures.

But inflation rates of up to 50 per cent for basic food stuff are not conducive to popular support. At the same time, the incipient structural change, gradually emerging from the “fencing game”, is vital to fulfil Chávez’s original brief.

This includes, for example, the formation of community councils, and more generally, the gradual reform of out-dated and profoundly clientelist state structures. It also includes the nationalisation of strategic sectors, hitherto under the control of transnational companies with no accountability to anyone.

In Venezuela, such radical-sounding reforms are not the dreamed-up ideology of dangerous demagogues, but the down-to-earth requirements of breaking the back of a degenerate rentist state. As such, any second “sally” will have to get the pace right, above all: If the opposition is to be faced down and Chávez is to be here to stay, it will be necessary to find the human resources to run nationalised companies efficiently as well as in an egalitarian manner, and to build a community-based alternative state structure competently.